Advisor

For Innovation, Pharma Follows a Particular Path

Posted May 15, 2008 | Leadership |
Erin E Sullivan

I was struck by Cutter Fellow Rob Austin's comment in terms of the rather beleaguered industry I know best, pharmaceuticals (see "Learning and Unlearning in an Innovation Economy," Vol. 1, No. 1): "Management processes that maximize the value of emergent features of your products and services are very different from those that assure that you efficiently achieve predetermined outcomes." This statement is particularly poignant in terms of pharmaceutical industry innovation because, by its very nature, drug development depends on an unpredictable and uncertain discovery and development process. The industry, however, would desperately like to see product innovations conform to a development process that is predictable, reliable, and replicable. Perhaps, instead of striving for efficiently achieving predetermined outcomes, the industry should embrace its current way of operating/innovating, which allows for, and even depends on, emergent features.

Currently, the pharmaceutical industry's best entrée into innovation involves hiring talented and well-educated people. Recruiting top talent from universities or industry is a top priority for most firms. Managers count on the notion that recruiting a talented staff and providing them with a measure of freedom and access to resources will produce innovation in processes and products. In this scenario, scientists are limited only in terms of their own imaginations and the boundaries of biology. Not only that, but PhDs bring a high degree of specialization in a particular scientific discipline to the organization. Because the drug-development process depends on maximizing knowledge from different scientific disciplines, firms often focus more on bringing specialists, with specific and targeted bodies of expertise, together to problem-solve as opposed to educating or forcing the entire team to think beyond the boundaries of their specialties.

For pharmaceutical companies, their business is so tightly tied to science that they must stay on the lookout for new talent and collaborate with outside partners (in the form of biotech firms, other pharma firms, or universities) in an effort to keep on top of the latest scientific knowledge, research, discoveries, and advances. The industry operates within, and depends on, a scientific universe that is not completely defined; the body of knowledge and definition of this universe expands and changes constantly. This contributes to an environment in which nothing is ever the same.

In comparison with other industries, pharma experiences much longer timelines as well as higher attrition rates and substantial amounts of uncertainty throughout the product-development process. In practice, projects often do not progress along the lines of carefully defined development phases. While these characteristics are inherent parts of the industry, that has not stopped firms from addressing them via new processes or strategies. Firms believe that shorter timelines, lower attrition rates, and reliable drug discovery and development can all positively affect drug-development outcomes as well as firm profitability.

Thus, many have expended serious resources in creating cross-functional and multidisciplinary teams throughout the drug development and discovery process only to find that, while some of the best science happens at the interface of two disciplines, in many cases, biologists and chemists do not like working with each other. Biologists and chemists each chose their respective discipline because they were avoiding the other. Many firms have overhauled their entire research-and-development programs to find that does not automatically result in getting better products out faster. The industry still quotes a drug-development timeline of 10-15 years, Wall Street remains frustrated with high attrition rates, and scientists continue to wait for basic science discoveries to jump-start their process and mitigate some of the complexity underlying their products.

For now, the pharmaceutical industry must rely on uncertainty and making discoveries along the way. Sometimes, emergent product features stumbled upon along the way are overwhelmingly positive, such as a diabetes drug that has a weight-loss side effect. Some blockbuster drugs have been developed for one disease indication but have seen a greater profit when unexpectedly used for another unrelated condition. So, to return to Rob's opening quote, the pharmaceutical industry would rejoice to find an efficient process with predetermined outcomes, to have a much lower product attrition rate, and to be certain that products that start clinical trials will ultimately reach the market. However, that is far from the industry's current reality. In future articles in this series, we'll discuss other aspects of how innovation works in pharma and what we can learn from that.

About The Author
Erin Sullivan
Cutter Expert Erin E. Sullivan, PhD, is an Associate Professor of Healthcare Management at the Sawyer School of Business at Suffolk University and also holds a position on the faculty of Harvard Medical School’s Department of Global Health and Social Medicine/Center for Primary Care. Professor Sullivan’s research and teaching interests focus on building leaders, teams, and culture in healthcare. She is also a member of Arthur D. Little's AMP… Read More