Big pharma is facing many different pressures in a changing world. Drug regulation is becoming stricter, generics are becoming more competitive and governments are increasingly imposing drug prices. However big pharma is also doing badly at R&D. The list below represents my own summary of why that might be.
- Large organisations are inevitably bureaucratic and become incapable of change. They have internal politics where blame games and vested interests affect performance.
- A culture of innovative long term R&D is difficult to achieve as company culture inevitably changes once success is achieved. It then becomes a case of maximising the potential of what has been found rather than discovering new things.
- As companies start to manage innovation more and more they can destroy it. That’s because it is difficult to really grasp the essence of what makes people creative. Imposing artificial performance criteria on them takes away from the ‘thinking outside the box’ and ‘following irrational hunches’ side of things. The commercial people find it hard to grasp what innovation is really about and they can easily crush it if they are too powerful in the organisation.
- Risk taking is an essential part of innovation. However very few company cultures allow risk taking, and will tend to punish the inevitable failures that result.
- There are too many layers of decision-making in big pharma, countless committees that stifle creativity.
- Innovation requires protection from the commercial aspects. The bottom line is important, but researchers cannot work with the added distraction of having to worry about the economics of what they are doing.
Life Sci VC recently wrote about how to restructure big pharma R&D (see here), and In The Pipeline commented on that (see here). The essential ideas were to (i) reorganise R&D to ‘invert the periphery’ so that the core R&D was done by collaborative units acting as a biotech science park, (ii) get the commercial side out of the way of the researchers, and (iii) to adopt science based governance with a lot more science people in executive positions. That would produce a ‘a healthier culture that is both more entrepreneurial and empowered to take risks, and less encumbered by legacy baggage and short-termist thinking’.