Here an is interesting post from the PharmaExec Blog. It discusses the model Big Pharma R&D should adopt for its future success. This piece advocates a "radical transformation", ie. Extreme Makeover. The concept promulgated would indeed represent big change - and one I don't think most current R&D staff and management would easily embrace.
Basically, the argument is that Big Pharma should no longer pursue basic science and high cost in-house research. WHAT? Rather, it should focus on developing service skills that allow it to build big markets for the best new ideas in medicine - gain margin by being the best implementer. In some ways, this is not as radical as it may sound. Even I have opined from time to time that Big Pharma is now outsourcing everything - sales, research, manufacturing, clinical trials, etc. It is starting to look like a finance, marketing and distribution organization when you strip away other functional areas.
Will this work? Can an industry that historically has been said to survive on internally developed innovation and intellectual property portfolio's become a giant distribution platform? Or as the article puts it, will a company transform from Wellcome Trust to Wal-Mart? A comforting thought for most scientists I'm sure.
Bain & Company recently conducted a survey of R&D leadership of the top 20 biopharma firms. What did it conclude from these interviews?
- Current efforts to redirect R&D will not transform a discouraging ROI profile
- External licensing efforts will not compensate for the so-called patent cliff
- Bain says only 100 projects of the 6000 in biotech right now show potential for commercial success [OUCH! If true] - and would only make up 1/3 revenue lost by "the cliff"
- Big Pharma funds projects and builds scale best which promotes centralization and kills innovation
- Big Pharma needs management autonomy, flexibility and speed - something it is not structured to deliver
What do we do now? According to the author, R&D should become managers of an investment portfolio focusing on the commercialization of externally acquired molecules - using financial metrics/hurdles to assess progress and not traditional measures like number of compounds into late stage trials. Oh my God! The Attack of the 50 ft MBAs! I can see R&D rolling over in its grave as I type.
The head of R&D is now cast as 'lead Venture Capitalist". Everything progresses only by meeting the financial targets and is outsourced for execution. The Big Pharma Co. becomes a financing and commercialization platform. Traditional R&D basically then supports late stage development and marketing - presumably we won't need as many bodies for this purpose. Again, no doubt, a very popular suggestion for the current R&D staff to swallow.
One last thing, HR becomes critically important as we need to recruit heavily from the outside to bring in all these new innovative skill sets -- especially to disrupt and displace the current R&D culture. Yikes! We said it was an Extreme Makeover.
Posted by Bruce Lehr September 16th 2010.