Pharma Execs Confess Innovation Is Lacking
11 CommentsBy Ed Silverman // July 12th, 2011 // 9:27 am
When the going gets tough, do the tough know now to innovate? Apparently not. At least that’s what a bunch of pharma execs confess in a new survey that finds only 54 percent - including those who admit to having poor or ineffective innovation strategies - consider innovation to be a leading priority. And only 49 percent rank their overall innovation strategy as just moderately effective, at best.
More specifically, improving innovation was cited as the single most important priority that will define success by 16 percent, while 38 mentioned this is a one of a handful of top priorities. Interestingly, 26 percent reported that change is important, but really just one priority among many others. And 11 percent say change would be good, but it is not a priority. And 7 percent say ‘why change?’
Meanwhile, just 47 percent report their R&D model is capable of meeting corporate needs and only 42 percent say their strategy is more than moderately successful at replenishing the pipeline. These sobering results reflect comments from 282 senior execs, including 58 percent from the c-suite, by the Economist Intelligence Unit and was done at the behest of Quintiles, the clinical research organization.
“In any other industry you can measure using metrics, but you can’t really do that in this industry,” Peter Hongaard Andersen, exec vp for research at Lundbeck, tells the questionnaires. Instead, potential improvements need to be assessed against non-tangible criteria, such as measuring the quality of efforts before knowing if a pay off exists. “That is why we are all struggling to get this right.”
But what are the impediments to improving innovation? Not surprisingly 47 percent cited cost as a leading barrier, followed by 38 percent who pointed to the time involved in product development and 33 percent who fault regulatory restrictions. However, cultural attachment to existing ways and a lack of talent were cited by 24 percent. And difficult corporate structures were mentioned by 21 percent.
“Right now the industry is very much driven by fear rather than by ambition,” Paion ceo Wolfgang Soehngen tells the questionnaires. He acknowledges that there are legitimate issues that make innovation difficult to achieve. But, he adds, these are “partially fact, partially an excuse.”
The survey found that drugmakers and biotechs are experimenting with a number of possible improvements, but none of these strategies is becoming widely popular within their organizations. In fact, Nine different ideas have each been adopted at more than 20 percent of the companies, but the most popular were only taken on by one-third of the respondents (You can read the complete report here.)
When it comes to finding ideas, here’s an interesting contrast: over the last three years, 59 percent of employees in clinical development at device makers, generic makers and service providers cite doctors and medical experts as sources, while 41 percent point to academic research and 35 percent named patients and patients groups. The rest of the employees have differing views: 51 percent cited internal R&D; 44 percent named existing intellectual property and 34 percent pointed to doctors.
In biopharma, academic research was cited as the second most common source of ideas over the coming three years - 38 percent, to be exact, while only 24 percent of other employees pointed to such research. Internal R&D remains the leading source of innovation as a whole, cited by 60 percent, but over the next three years, just 46 percent of the execs say internal R&D will be a good source.
Meanwhile 63 percent of those who believe they have effective innovation programs say they are successfully using open innovation, compared with 35 percent of the rest of the respondents. Which barriers are mentioned? A lack of certainty over the resulting intellectual property, difficulty in coordinating the process, and research costs that can impede effective open collaboration.
When asked how well their companies use data to support its product innovation, both internal and external data - 34 percent say they use internal data very well, but only 21 percent acknowledged making similar use of external data. All totaled, 51 percent say sharing data across companies is either very useful or simply useful.
By the way, over the last three years, 37 percent of execs who say their innovation programs are very effective have adopted new technology to access and mine data, and 33 percent have invested in technology to speed the way that drug candidates are filtered. This compares with 22 percent of those who do not describe their innovation efforts as effective.
The findings maintain this correlates to success - 67 percent of the so-called innovation leaders say they use internal company data to support innovation very well, compared with 25 percent of the rest; and 38 percent say the same about external data, compared with 17 percent among the others.
But how does one go about creating a good innovation environment? Consider rewards. More of the self-proclaimed innovation leaders offer financial rewards for contributions - 53 percent compared with 29 percent. And 47 percent of those with who rate their innovation systems as very effective also provide recognition for contributions to innovation, compared with 39 percent of the others.
original industry insider
This seems somewhat counterintuitive. Already this year FDA has approved only one less NDA than it did in all of 2010, and more are to follow. Most of these are novel drug for unmet medical needs. Even Dr. Woodcock, who is not one for making public statements has gone on record praising the efforts of the industry in coming up with truly innovative drugs and not the old me-too’s.
Betsy
It is much cheaper, as we know, to manufacture another me-too drug. And what\’s most important? The bottom line. According to the Kansas City Star, \’10% of all scripts for adults are for pain management,\’ yet over 1/3 of the people in America experience chronic pain. It\’s economics, of course, and we DO have to figure out a better way. We have to encourage more than the 5 medical schools of the 133 in America to require courses in pain, impress medical students about the importance of treating it, and then teach classes in how to earn a living - NOT BECOME SEERINGLY RICH - researching & treating pain.
People in medicine, both doctors and industry, should re-think the focus of their work.
I know, I know. Naivete rears its head again.
Mike Wokasch
Despite increased pharmaceutical industry R & D spending, some time in the late 1980’s the percentage of Pharma spending on discovery research started to diminish while the percentage spending on development (get products to market…any product…and fill out the indications to expand market opportunity) increased dramatically.
It may be that pharma felt they could just buy innovation from biotech or acquisition while they focused on the easier, faster way to market “me too” development strategy.
Discovering truly innovative drugs will take time and well funded multidisciplinary teams of expertise collaborating around a disease-specific focus. http://www.PharmaReform.com
Regulatory Expert
It is very interesting to note that \"Cultural attachment to current approaches\", \"Lack of necessary research/business talent\", and \"Company structures that make increased internal collaboration difficult\", jointly can be viewed as one aspect (total 69%) and poses the top challenge for innovation and at the same time could be solved more easily than raising capital,removing time barrier and regulatory restrictions which are inevitable. Also, the incompetent managers are solely responsible for creating the environment that leads to all three obstacles (i.e.\"Cultural attachment to current approaches\", \"Lack of necessary research/business talent\", and \"Company structures that make increased internal collaboration difficult\"). So if one hires the competent research talent (not the politically savvy/BS talent with degrees) then one can solve the other two.
company insider
REgulatory expert, you got it right. THey got rid of their talent and experts and filled their team with incompetent managers willing to do anything they are told to please their boss.
PharmaDoc
As a physician who has worked in the pharmaceutical industry for over a decade I can state without equivocation that pharma, especially big pharma, is a paradigm of the “Peter Principle.” Never have I seen a cultural environment that rewards failure more. Rising to the level of one’s incompentency is de rigeur. This was especially true of my experience at that big pharmaceutical company whose headquarters is based in Midtown East NYC.
The assumption that technical expertise translates to managerial acumen or to a high level of emotional intelligence is unfortunatley ubiquitous in industry. Very smart people don’t necessarily make good managers. And most managers are not good leaders. At the aforementioned company the questioning of convention or authority was a ticket out the door. I witnessed it many times.
Until there is a paradigm shift in assessing and promoting essential capabilities and a cultural transformation that rewards challenging the status quo innovation in pharma will lag.
John
Mike, I’d be interested in the source of your statistics on research vs development spending. Having been hired into discovery research in the early 1990s, I remember it as a time when companies were hiring discovery scientists hand over fist and putting up new discovery research facilities left and right. With a few hiccups, this continued right through until the end of the biotech boom in the early 2000s.
It may be that the ratio of development to discovery research spending increased, but judged from the job market and the experience of my friends, discovery spending was increasing at a remarkable clip.
Cassandra
Great article Ed!
And it is real. I find it interesting that the c-suite recognizes the problem but does not understand that it is the policies they foster,implement and the tone they set that continues the downward spiral in innovation. With probably very few exceptions, large companies cannot innovate, they can only gobble up small companies that still can innovate. This is because the large companies and the management staff in them are vested and rewarded with maintaining status quo which is the sworn enemy of innovation. People who think outside the box are beaten into conformity or pushed out, yet they are the idea people whom the organizations so desperately need to shake up the status quo. IMHO
original industry insider
Agree with pharma doc. My first clinical R&D job was with Abbott, starting in 1983. In that same year we submitted four NDA’s, a company record that I believe still stands. All were approved in timely fashion. I was in Phase IV. We submitted four sNDA’s that same year. All were approved. Thus in a SINGLE year we submitted EIGHT New Drug approvals of different types and all were approved. It was the most successful year in company history before or since.
That was 28 years ago. Except for Biaxin and a few ARV’s, the company has not really excelled R&D-wise since that era, and some of my same ex colleagues are still there, resting on their 1983 laurels, and taking home salaries well into the six figures.
Mike Wokasch
John,
Good article and numbers at this site: http://tinyurl.com/6jba43k
Original insider, we were at Abbott at the same time. Biaxin was actually in-licensed from Taisho but the Abbott venture team did a great job developing it.
http://www.PharmaReform.com
original industry insider
Mike, you might agree with me that when we both wre at Abbott they were at the top of their game in drug AND diagnostics development. I remember the day when Bob Schoellhorn jetted off to the White House after Abbott received FDA approval for the world\’s first blood diagnostic test for HIV in the middle of a raging AIDS epidemic.