Now Merck's new head of research, Roger Perlmutter, has announced plans to revamp research at Merck with a plan that will involve cuts to R&D. I have no access to the organizational structure of Merck, or it's costs or infact any inside information. However, I do know that when a research organization has problems, it almost never resides in the foot soldiers who carry out the day to day research. The choice of therapeutic areas, staffing, funding basically everything but the day to day research is a senior management problem.
Bringing in a new head of R&D is a start, but laying off the researchers will do nothing to make the pipeline more robust. The issues at Merck are deep. The shareholders should consider the way the military handles problems with performance in the field. They fire generals, not privates. If a division fails, the commander is gone. They don't cashier 10% of the privates to make a "leaner more efficient" division keeping the chain of command intact.
I firmly believe that no one has ever reorganized themselves to greatness. I believe that this is why most organizations fail over time. There is too much power in the upper echelons and the tendency to shift blame downward is too entrenched. Even the shareholder activist investors, when they wrest control from an ossified senior management, gut the company to see how they can get the largest sum, for the best parts of an organization and the devil take the hindmost. Tomorrow I will continue this thread with why I feel the merger and acquisition mania that has swept the pharmaceutical industry over the last two decades has caused this problem of weak pipelines and low levels of innovation.