The Op-Ed: Pharma Is Laying Off The Wrong People
9 CommentsBy Ed Silverman // May 20th, 2008 // 7:43 am
Once again, we are running what amounts to a guest column. Why? As we have indicated before, we like the idea of livening up the usual menu of items with input from a loyal reader, but also one who has experience in the trenches and a refreshing point of view. This piece offers some interesting insights into where pharma is headed over the next few years. And yes, we will run another op-ed or two. We do not wish to be flooded with requests, but we are open to suggestion. Meanwhile, we hope you enjoy this little contribution…
by Jonathan Peck, President & Senior Futurist, Institute for Alternative Futures
We are heading for a phase transition that at some point, the tipping point, will bring a cascade of change to society, health care and biomedical R&D. Organizations struggling with change before a tipping point find that after a period of chaos comes a higher level of organization. That is what we see coming.
The Institute for Alternative Futures forecast where change will occur in biomedical R&D in The 2029 Project. Started in 2004, this looked at the most important biomedical research advances over the next quarter century. We found not only remarkably important developments in science, but also promising steps toward making health care sustainable for generations to come. In the four years following the study, we have been working on and collecting evidence for the large scale changes that can lead biomedical R&D to contribute more to health globally than ever before.
Our biggest insight was an understanding how biomedical R&D fits into a larger construct showing its contribution to health care, the economy, politics and ethics in human evolution. This is a big change. Jonas Salk described it as a shift from Phase A of human evolution to Phase B. Twentieth-century systems are already groaning from the weight of just 6.7 billion of us. The world is slowly becoming aware that the world will strain to grow 7 billion people. Then just 15 years later, there will be 8 billion people on the planet. This awareness signals a new consciousness and value system, which is part of the phase transition that Salk anticipated in his book, ‘The Survival of The Wisest.’ Biomedical R&D, government, industry and health care will have to contribute to our collective survival because that is the ethical challenge of our time.
In the 2029 Project, we forecast that there will be a new ethical level emerging to reshape politics, economics and health care. This forecast subsequently led me to study how developmental psychology characterizes the different stages adults can pass through. We call these stages “The Evolutionary Spiral” which moves upward along a path of growing complexity.
At the higher levels, problem solving improves remarkably because as each level transcends but includes the levels below there is a much larger solution space available. Leaders in the pharmacy profession are now using this understanding of the spiral to develop a curriculum that can make healthcare practitioners remarkably effective guides for healthcare decisions, including shaping health behaviors for patient/consumers at different levels of development.
In order to both see and show how this Evolutionary Spiral applies to pharma, I worked with a team of smart scientists and strategists who consult to pharma to develop a survey. The survey was sent to senior executives in the industry and key stakeholder organizations (e.g., the FDA and the Critical Path Institute). We asked people to select strategies that address today’s biggest pharma challenges in discovery, development, regulation and business models. The strategies were designed to appeal to different stages as described by the Evolutionary Spiral.
The good news from the survey results and a series of interviews is that pharma executives do show a capacity to recognize and support the more complex strategies that will be needed to navigate the cascades of change that will come when we reach the tipping point. (Please look here).
The less good news is that evolution is only an option, not a given, and pharma may be arrested or go into regression. There is some evidence from many companies that this is indeed the case, and some that are shedding employees are seeing the very people most capable of grasping the complexity of problems leaving. Many of these people are going where they can do more of what they see needs doing than they could with the companies they left.
So they go to biotech companies, consultancies or other endeavors where they can make progress on problems that now stymie pharma. That leaves their former companies struggling do more with less, to try to work faster, which is generally code for trying more of the same only more so. It won’t work. In part, it won’t work because the people who could help them work smarter rather than just faster are the people who left.
The much better news is that there are great prospects ahead for those who can grasp the higher ethics and take advantage of the advances coming through biomedical R&D in a dynamic period of change in health care. Once we reach the tipping point of the health care crisis (best guess: 2012 plus or minus three years) there will be a tremendous opportunity for expanding the value proposition of pharma.
IAF will be describing the best case in health care in a series of papers on 2019 Health Care That Works For All (peek here). In the best case, the crisis comes earlier when there are more degrees of freedom to operate and there is time to learn as we go putting new policies in place so we pay for and get the health care we want. In this best case there will be remarkable resources, from science and from people who work with an authentically complex level of understanding.
Paul
Like most other “think-tanks” they are very idealistic and out of touch with the realities of today’s healthcare needs and the realities of the business machinery.
More R&D is not the answer any more than more marketing & sales.
The answer always has to be about making the right choices of what to pursue and what not to pursue. Unfortunately, in this area the cycles are so long that if you chose a path that seemed right at the time, it will be years before you know that it was not the best path. It’s not like making ketchup; if you make green ketchup and people don’t like it a few months later, you just change and make yellow ketchup.
This is an unforgiving industry! In every sense of the word.
Jack2
This guy’s too smart for me. I can’t find a specific recommendation.
Just A Thought
Ethics are not hard to grasp now if the industry would only choose to. They will not be voluntarily grasped by a bank of attorneys trying to minimize damage. I do not find this article to be positive despite the tone it is trying to set. The “great prospects ahead” were due yesterday.
Maybe I’m missing the point.
Jonathan
Thanks for the comments. Paul is right that IAF is idealistic, but why the assumption that we are therefore out of touch with the realities of today’s healthcare needs and the realities of business machinery? I think we can comprehend both the idealistic possibilities and the pragmatic needs in health care and business. In fact, I suspect that if Paul knew how many different healthcare stakeholder groups IAF works with he’d acknowledge that we are at least as “in touch” with their needs as he is, though we bring a different perspective. I agree that more R&D is way to simple an answer. Better R&D–and sales & marketing, for that matter–is a better answer. In fact, the companies betting heavily that more of the same R&D is going to pay off in ten years are on the wrong path, and I don’t think the markets will be as forgiving in ten years as they are today.
Jonathan
Jack2–There’s lots of different kinds of smart and mine comes with a healthy mix of stupid. The specific recommendation I have is for pharma companies to keep their operationally smart people tending the business they have and make sure their strategically smart people are working on new and more complex solutions. Instead many companies are letting their more strategic thinkers go, and they’ll make the bad bets that Paul points out will hurt the companies in the long run.
Jonathan
Just A Thought–There are different levels of ethics, and the higher ethics are harder for people to grasp if they are working from a lower level of development. Under stress, people tend to regress to lower levels of ethics. Some people never get much above the law of the jungle in terms of ethics. Some revert to that ethic when conditions get tough. So pharma is vulnerable, particularly if the public interprets events like the $58 million settlement as confirmation of unethical behavior. If there is a significant societal shift upward, and there are signs in the political arena that there may be, pharma better not be caught at today’s level, much less regressing.
Afordist
As a pharma strategist recently pushed away by my former company with little fanfare or thought, I have joined the ranks of the similarly displaced from the same company and others who now observe the din from an alternative vantage point. From that point I can quite conclusively say that Jonathan is not only right in his observations, but probably being kind in his expectations of the industry. Far from being Ivory Tower, 2029 embraced some of the best thinkers from across the various healthcare sectors to lay out a blueprint for success that is far different from today’s business model. I would daresay that the tipping point is already upon us and already leading to dislocation and attendant organizational crises that will not be solved by mere efficiency and business process improvement efforts. Genuinely new business models are needed across the entire enterprise from R&D through to commercialization. Those companies that are able to look beyond established practice to those new models will succeed and be able to participate in the expanding value proposition for pharma Jonathan talks about, I just don’t see many of them yet…
Former Strategist
Unlike Jonathan, I don’t believe progress is inevitable. And the period of chaos we are experiencing now in BioPharma may not preceed a higher-level order anytime soon. History is full of examples where chaos slides into decline, for some period of time.
That said what I see happening is the extinction of the dominant species, fit for yesterday’s conditions and unable to adapt quickly enough to avoid mass die-off. As in evolution, some peripheral groups trying new (more adaptive)strategies may replace the behemouths that are dying as you read this. Big Pharma is too big, and constrained by a revenue base and financial expectations, to be the ones that emerge with a new business model. Or maybe a phoenix will rise from the ashes.
Jonathan
Thanks for the kind words Afordist. We see the same thing. Actually I agree with Former Strategist too that progress is not inevitable and there is a real prospect for pharma to regress, particularly when it sheds the people who are best able to see how to achieve progress. Eventually, regression leads to a crisis that either promotes opportunity through rapid change or the danger of extinction. It can go either way.