What is innovation?

The pharmaceutical industry is struggling (in parts) to achieve productive innovation – to launch products that at the very least return the investment needed to reach the market. Underlying this struggle are characteristic organisational, cognitive and behavioural factors that, broadly speaking, impede the kind of decision-making required to promote productive innovation.

The problem: the long decline in productive innovation.

The [pharmaceutical] 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 steady or 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 patterns of organisation, thought and behaviour that don’t work, on approaching strategy in a way that has lost sight of some pretty fundamental principles (principles that are largely rooted in common sense and therefore not difficult for the industry to begin applying once again).

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. Innovation is only innovation if you launch it. Having a great pipeline, or a great product, is only one predictor of success. It is a good starting point, but how well the molecule is developed and marketed is critical in its probability of commercial success.

A company that talks the language of innovation is saying that it is better at finding unmet need that others haven't spotted, or delivering / developing products that others can't, not just that it is discovering better raw products. The emphasis on 'clever' biology, mechanisms, science, diagnostics, etc., has not been matched (in most places) with an enhanced discipline of putting innovation onto the market. It provides the illusion of innovation, without any end product. 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 multiple [and largely internal] 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.

I am often asked how companies can make themselves more ‘innovative’, as if bolting on an incubator or establishing a link to MIT would magically make the company cooler or more successful. The truth is that companies like J&J are more innovative than most because they are doing it – J&J Innovation, JLABS, and other parts of their organisation started before most did, and they’re doing it meaningfully. And, here’s the difference – they’re doing it with purpose. That belief, that they don’t know everything, so they had better be ready to learn, is pervasive and the humility it engenders is wonderfully harnessed in pursuit of ways to develop better medicines. Too often, the conversation is simple code for ‘how do we make more dollars in 2020?’, and the people tasked with finding out are the ones whose jobs depend on not changing anything anyway.

No medicine is less effective than one that doesn’t make it to market, or then to patients. That takes joined up thinking from early in development – much earlier than many ‘development-led’ organisations are ready to hear – and needs the understanding that approval is just the start of the journey, not the end.