The industry has a well-recognised problem. There is a prevailing view that developing drugs is hard, and that attrition is natural. Most observers accept that this is broadly true (despite the widely-varying rates between companies). To then go on to say that one in four to one in five drugs that launch do not go on to cover their own R&D costs is not, however, the statistic of a healthy industry. Failures in development may be largely unpredictable; failure to launch a successful product is less forgivable. Launching products that the market wants and will pay for can be an exercise in rational foresight and creative insight. However, despite declining numbers in registration, this figure has not changed - fewer drugs may be launching, but the proportions of successful drugs are not rising. The industry has a problem, and that problem lies in the continued reliance on things that don’t work.

Innovation is what you launch. Innovation that reaches the patient is productive innovation. A ‘culture of productive innovation’ is one that identifies and then successfully launches products that deliver value in the marketplace – that is, they uniquely meet the wants and demands of payers, patients and physicians at a price that is considered worth paying.
The problem in pharma isn’t to put more products into the top of the hopper – it is to identify system losses that can be stemmed, and turned into productive innovation. Ask yourself the question: out of the 9,999 drugs investigated that didn’t make it to market, what are the odds that at least one wasn’t potentially the blockbuster the  become?

Here are five key enemies of innovation: the TPP, the silo, the template, the view of marketing and the past.

The TPP

The Target Product Profile (TPP) is the opposite of possibility. It says ‘hit these targets and we have a drug.’ That is fine, if the targets are creatively derived, against a clear-cut opportunity. Two problems: TPPs are almost never creatively derived against a clear-cut opportunity 5 to 10 years hence, instead being (in many cases) a best guess as to what the drug will do in the clinic (so the TPP becomes self-referential). Also, failure to hit a TPP doesn’t make a drug a failure. It may well have just shown a profile that produces another, different opportunity. Companies that do well in Productive Innovation have mechanisms to evaluate a drug for what it might be, rather than what it is not. Like the many record labels that turned down The Beatles because they weren’t ‘the right fit’, rejecting drugs that don’t hit a predefined wishlist puts an awful lot of faith in the wishlist being exhaustive and predictive.
Many recent successful innovations have resulted from the harnessing of serendipity. Molecules have possibilities – yet from phase I onwards, there is often little evaluation of ‘what else’, only a single-minded pursuit of a registration. What is not known at any point from that decision is ‘if we don’t hit this TPP, is the product still potentially of value as something else?’

Without a concept, an IDEA, to prove, there should be no Proof of Concept. Tight, working concepts can be proven. ‘Preventing or delaying progression in RA’ is a concept; ‘blocking an immune pathway that may or may not be involved in RA’ is not a concept. Proving the latter may provide clues to the former, but it is not Proof, not a sufficiently defined ‘concept’ to consign a molecule to development in RA and only RA?

When you only have one option you have no choice: Carry on, or kill. The problem of sunk cost is then apparent – the greater the momentum behind the option (clinical evaluation, market analysis), the lower the likelihood that any alternative options will be considered – there is too little information, too little time, too much emphasis on delivery, rather than ‘what else?’, too little ‘maximise this option’ versus ‘is there a different way, with a higher potential?’ The desire to avoid failure of a project then makes companies lower technical hurdles, leading to lower probability of regulatory and, crucially, commercial success.

‘Keeping options open’ is efficient only at one stage in development. Parallel studies versus sequential studies is a consideration (for most companies) only at Phase I, and Phase IIa.

The TPP’s rise in the industry has coincided with declining productivity. Coincidence? Not on the evidence so far. It has been said “no plan survives contact with the enemy; plans are useless, planning is essential” and nowhere is this more true than in pharmaceutical development.

The template

Templates are the last bastion of the company, or the consultancy, that wants to standardise inputs in the hope of raising the floor level of quality, to take the unfortunately rather heterogeneous quality of the people out of the process. Well, the unfortunate and inconvenient truth is that it is entirely possible to have zero quality WITH a well-filled template, to have no thinking of any value, whereas it is also possible to produce a high-quality concept or world-class thinking without any template at all. Psychologists (and gamblers) call this a 'bad equilibrium' - where everyone involved knows the rules of the game, but where no-one is taking part with a view to a great outcome.

Filling out a template is what you do AFTER you've done the thinking. You can perfect a Target Product Profile template to within an inch of its life, and still have no product concept in it. You can mandate a forecast template that looks NASA-standard, and still have whomever completed it miss the big thing that matters the most. You can train staff on what good looks like in a well-filled positioning template, and still sit back and wonder what it was they missed.

Unfortunately, templates give the air of competency without the substance. They provide a shield between the absence of an idea and the reader. "Hmmm. Look at all these well-filled boxes, with their decimal places, and references. This must (because the template was designed for this purpose) be the answer.'

Where is the template that produces value in our industry? Is it in positioning, Target Profiling, NPV  assessment, brand planning? That list could be as long as you like, and the truth is that the template will be almost singularly unhelpful to real value. It is Marketing 101, for an industry that expects to see revenues head over the $1 billion mark for its products; it is 'make sure they do the minimum steps' for an industry that is meant to add value to physicians and patients' lives.

The problem with templates is the premise. That anything of any value can be generated with a pattern. Templates assume linearity: that if you do Step A, then Step B, then…, that you will eventually produce 'it' - the thing that you wanted to produce. That’s fine I you want to produce yet another “me-too”. Unfortunately, strategy, creativity, concepts, ideas, don't work that way. Management consultancies work that way, so that they can standardise outputs regardless of which team of juniors they put on your project. Computers work that way, and even if they can compose music, they can’t compose music that moves. Templates don't allow disruptive innovation, the crystal-clear elegance of a perfect concept. They give the appearance of depth, but are just a thin veneer of work on top of some cheap plywood.

The silo

Differing targets and objectives – produce a candidate, deliver a registration, deliver commercial success – mean different priorities are constantly at play within the same project team.., Pharmaceutical development is an exercise in trade-offs. In the least innovative companies, these trade-offs are considered in a hub and spoke arrangement, where the hub hears the inputs and decides. Even worse, commercial decisions (‘there is no unmet need for a product that does that…’) are made by non-commercial members of the team (or decided before it gets to the team); clinical considerations (‘the product won’t beat that comparator in a head-to-head’) are pre-judged by commercial teams. In the most innovative companies, the trade-offs are considered by the matrix team as a team (not by rounds of email and PowerPoint exchange).

Ergonomic systems need feedback loops. Ideally, feedback loops are instantaneous. Ergonomics (the study of how humans interact with systems) shows that, in the absence of stimulus, patterns of behaviour become locked in and ingrained – when exploring, you want someone to respond to your ‘I wonder if…’ with a response that helps inform your own thoughts.

Teams that work together can see and understand the consequences of their thoughts and ideas for the other members of the team. Reducing technical risk by one route may substantially increase commercial and regulatory risk; if a team waits 3 months to understand that, the thinking may already be locked in, or it may be too late to change.

When you consider only one option, your role is limited to improving that one option. ‘Improvement’ in that scenario is dependent on your target – registration, commercial success, technical success. These are often conflicting directions. This tension is seen in almost every company in the industry. Relieving that tension is not simply a case of agreeing on a single objective. The resolution can come from evaluation of more than one option. Having several options for one product under evaluation by the team at the beginning of Phase II allows consideration of which options represent a good overall picture, which a better, and which the best.

The silo, or departmental, view is like trying to play Battleships without any feedback from the other player. There may well be a direct strike, but it is a lot easier to recognise that when there is collaboration.

The view of Marketing

In most industries, Marketing informs the organisation about the market and what it might want. In pharma, it is regarded as a way for the organisation to inform the market about a product it might not want or need. Understanding Value in the market is the first step in delivering Value to the market. Value cannot be bolted onto a product that didn’t study what the market actually wants – the decision that is needed is ‘tell the best story you can with the data you have, or collect the data you need to deliver the Value proposition.’ If, tomorrow, the words ‘Unmet Need’ were replaced with Value Opportunity, the industry could start to focus on real innovation instead of incrementally increasing efficacy by 5%.

This is not an organisation problem. Marketing departments themselves have contributed to the view that they can sell whatever is given to them, and that their roles are to support sales activities. This is unsustainable in an environment where, if you can’t show it, you can’t say it. If you want to say it, show it. The only way to show it is to have thought about it beforehand…

The past

In one assessment in 2010, 95% of all market research was conducted looking in the rear-view mirror. It may have been labelled as unmet need research, landscape assessment, or positioning research, but its methodologies invited physicians and payers to offer up views that they already held about what they want, to say what they think about something based on their current view of the world. Analogues are mined not for clues, but for guidance as to what to do. Precedence is regarded as a good thing in clinical trial design and regulatory approach, but trying to assess what the world might want in the future by conducting rear-facing market research will kill any new idea at source. As Henry Ford famously said, “If I’d asked what people wanted, they would have said ‘a faster horse’.”

The past is where we’re all comfortable – we’ve all been there. The future makes a lot of people uncomfortable, but the harsh reality is that the future is the only place your product needs to succeed. The Manobo people of the Philippines are the only group, when asked to represent people and time, who show themselves facing the past with their backs to the future. Their reasoning is that they can see what has happened with some clarity, but that what is coming is much less certain – they believe they walk backwards into the future. Unfortunately, a great deal of what passes for market research in pharma has the same perspective: like the old joke about the man looking for his keys in the wrong street because it has better street lighting, there is a tendency to look in the best-lit spots, despite there being a lot of others looking in the same pool of light. The past is self-evidently not the market where innovations succeed, so it makes little sense to continue to look there for evidence that they will succeed in the future.

Conclusion

No-one said it would be easy. However, there is the very real threat that the serendipity, talent, team work, discipline, principles (instead of process) and future-thinking that produced the major brands of the previous two decades are now buried by the enemies of innovation. The figures back that up – there is more innovation than ever, but far less productive innovation. It is on productive innovation that the industry is measured, and earns its budgets – its enemies must be confronted and managed for the industry’s future to be as bright as its past.

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