Somewhere around the time that Americans were forced to write checks to bail out companies “too big to fail,” it occured that maybe “big” was the problem all along. For these reasons, the small, nimble, intelligent organization maybe the star of the next decade.

Let’s look at some applicable statistics (especially given the post on Dvorak.) Here’s what a decade’s worth of mergers and acquisitions in the pharmaceutical industry has wrought in terms of new drug applications, according to the FDA: From 1998 – 2008, flat. There is no noticeable benefit in the number of saleable pharmaceutical therapies, despite the total growth of the industry, and its concentration in a few hands.

Pfizer put together, as the result of mergers with Upjohn, Searle, Warner-Lambert, Pharmacia, Parke-Davis, Kazakhstan, Australia, and the planet Saturn, the largest private R&D organization in the world. Their 2008 R&D expenditure was $7.5 billion. That’s right, they had an organization bigger than most corporations dedicated to working on things not yet proven to make money. This by itself looks pretty cool, but it seems that the real revenue – Lipitor, Viagra, etc – comes from acquisitions, not research. Smart is nice, but big is the real strategy.

And big may be deleterious to research organizations. According to Derek Lowe’s blog In the Pipeline – which is likely the best industry blog on the whole Internet:

First, of course, is sheer size. As I’ve said numerous times, I think that many things scale as a drug company gets larger, but research productivity isn’t one of them. If anything, it may go in the other direction. Pfizer is an excellent example of just what I’m talking about. If there were any reliable correlation of size to internal research success, this is where you’d expect to see it. But Pfizer has been notoriously unproductive in its own labs. Some of that has been sheer bad luck, but you can’t use that explanation to cover the whole problem.

Put simply, I think that really huge drug companies are a bad thing. A collection of smaller ones carved out of the same resources would probably explore more therapeutic avenues, and in a more nimble and focused manner. I also like competition in this business, because it keeps us moving, and because it leads to a wider variety of approaches being tried out for each problem. Mergers and buyouts have, I feel sure, not been good for the ecology of the industry, and Pfizer is the absolute champion of that style. Large and productive research organizations have disappeared beneath the waves because they had the misfortune of discovering something that Pfizer wanted to buy.

Strong words. And perhaps the trend for large R&D organizations may be coming to an end – even Pfizer is making noises that it will be cutting research expenditure due to the financial slowdown.

But that’s not the end of the culture of big. Pfizer’s looking at generic competition to Lipitor in 2011 and a thin pipeline despite the billions spent. What does that mean? Well, naturally, CEO Jeffrey Kindler is looking to do major acquisitions to grow revenues.

Big is a culture. It won’t change overnight, except in response to sharp financial pain.