The State of Pharmaceutical Innovation
Bernard Munos
Founder
InnoThink Center For Research in Biomedical Innovation
Chicago
July 16, 2012
InnoThink
Outline
• The state of innovation
• Facts about innovation
• Where does innovation come from?
• Priorities for returning innovation to drug R&D
2
InnoThink
The pharma industry faces a ‘Kodak moment’
35
Number of NMEs
2010 Sales ($ bn)
80
total
30
R² = 0.6627
70
60
25
50
20
40
15
big pharma
30
10
20
5
10
0
0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
0
Pct of prescriptions filled by generics
4
6
8
10
R&D spending per NME ($ billion)
90%
80.0
flat
60.0
80
14
R&D spending ($ bn)
70.0
90
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Unaffordable innovation
Not enough innovation
100
2
50.0
70
40.0
60
30.0
50
20.0
40
10.0
Top 12 pharma
0.0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Undistinguished innovation
Death spiral or transformation?
3
Pharma has changed the business model that made it great
The ‘old’
pharma model:
Turning cutting-edge discoveries
into commercial products
and creating vast
new markets and
value for patients
Pharma now spends much of its time iterating on the same targets/scaffolds
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InnoThink
Pharma no longer lives the values that made it great
• Ethics:
 Pharma has paid about €20 bn in fines in last 20 years, 75% in last 5 years
(reimbursement fraud, kickbacks, off-label promotion, ghostwriting,
falsification…)
• Innovation:
 Not enough, marginal, unaffordable
• Risk-taking:
 Fear to disrupt
 Lots of breakthroughs waiting to be translated into something useful
(synthetic bio, nanomed, tissue engineering, stem cells…)
• Patient focus:
 Retrenchment from Rx areas (anti-infectives, neuroscience, cardiovascular)
 Drug shortages
 Pushing patients into bankruptcy
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Pharma’s triple challenge
• More innovation
• Better innovation
• Affordable innovation
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InnoThink
Outline
• The state of innovation
• Facts about innovation
• Where does innovation come from?
• Priorities for returning innovation to drug R&D
7
InnoThink
The innovation pathways
• High-risk, unconventional research
• Patient-oriented research
• User-driven innovation
• Disruptive thinking
• (Assembly-line model)
8
Innovation does not scale
10
R&D spending ($ billion)
Cumulative number of NMEs 25
9
8
20
7
6
15
5
Pfizer’s cumulative NMEs
4
10
3
Pfizer’s R&D spend
2
5
1
2010
2008
2006
2004
2002
2000
1998
1996
1994
1992
1990
1988
0
1986
0
Pfizer’s trebling of R&D spending since 1999 has had
no detectable impact on its rate of NME production
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Innovation is highly nonlinear
Timing of NME approvals
50 Cumulative number of NME approvals
45
40
35
30
25
20
schizophrenia
15
10
5
0
1/1/50
1/3/60
1/4/70
1/6/80
1950
1960
1970
1980
1/10/2010
1/9/2000
1/7/1990
1/6/1980
1/4/1970
2
3
4
5
6
7
1/7/90
1990
1/9/00
2000
1/10/10
2010
Innovation comes in waves
•
10-year dry spells are not uncommon
•
Long compund series are the exception,
not the rule
•
34% of drugs (for CNS) have a poorly
understood mode of action
1/1/1950
1
depression
•
1/3/1960
0
pain
8
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©InnoThink
Outline
• The state of innovation
• Facts about innovation
• Where does innovation come from?
• Priorities for returning innovation to drug R&D
11
InnoThink
Where does high-value innovation come from?
breakthrough
discoveries
+
+
creative scientists
+
open and
networked culture
transformational
leaders
• diversity (cultural, ethnic, academic, age, etc)
+
• cross-disciplinary, silo-free, equalitarian culture
enabling factors • few, fuzzy processes (adaptiveness)
• multiple, diversified sources of financing
• supportive authorities (policymakers, regulators)
• intense competition
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Breakthrough discoveries
• Breakthrough must be seen through the eye of the patient (user), not the
scientist
 Gleevec is a breakthrough… so is Augmentin, Zocor, Aranesp, Humulin
 Lipitor is not a breakthrough
• Breakthrough discoveries can stem from novel research, shrewd clinical
observations or the recombination of existing ideas
• Most science funding does not support highly innovative work
 Most public and private spending supports ‘regular science’, not novel original ideas
 Peer-review and committees foster compromises that do not reward boldness
• Alternatives?
 Need greater focus and selectivity, e.g., DARPA’s disruptive focus and milestone-driven
approach (“Is this disruptive? Why?”); GSK’s Discovery Performance Units
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Creative scientists
The marginal innovator
The disruptive innovator
Wants to grow and nurture existing markets
Wants to obliterate what’s there and replace it with
something better
Seeks competitive advantage from greater efficiency
Seeks competitive advantage from changing the game
Improves and optimizes
Disrupts
Aligned with the organization’s goals
Orthogonal to the organization’s goals
Analytical, cautious
Intuitive, bold
Sticks to process and job description
Knows no boundaries
fits in
sticks out
Risk-averse, change-wary
Risk-taking, change-friendly
Seeks consensus
Never minds being alone
Source: adapted from Munos, Clin Pharmacol Ther. 2010 May;87(5):534-6
Disruptive and marginal innovators
are different species separated by a
chasm that must be bridged
The crazies, the misfits, the
rebels, the troublemakers,
the square pegs…
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Open culture
• Innovation is a by-product of culture, not a by-product of
organization, six-sigma, or anything else
• Principles and values, not processes, define a corporate culture
 A few powerful principles are worth more than many standard-operatingprocedures
• Principles must value diversity and openness
15
Networked culture
• Networks are a powerful but underappreciated ingredient of
innovation
• Local networks help get things done but can reinforce
orthodoxies
• Global networks bring novel ideas into the fray
• Both are necessary
Transformational leaders
Roy Vagelos, Merck
Paul Janssen, Janssen
Art Levinson,
Genentech
Dan Vasella, Novartis
George Rathmann,
Amgen
Corporate leaders who left the most admired legacy
were also passionate de-facto Chief Innovation Officers
Steve Jobs
Jeff Bezos
Bill Gates
Bill Hewlett,
Dave Packard
When it comes to innovation, bolder is better, and it starts at the top
17
Enabling factors
• diversity (cultural, ethnic, academic, age, etc)
• cross-disciplinary, silo-free, equalitarian culture
• few, fuzzy processes (adaptiveness)
• multiple, diversified sources of financing
• (supportive authorities (policymakers, regulators))
• (intense competition)
18
Outline
• The state of innovation
• Facts about innovation
• Where does innovation come from?
• Priorities for returning innovation to
drug R&D
19
InnoThink
Priorities for returning innovation to drug R&D
•
Foster an innovation culture: welcome the curious, passionate scientist; let
boldness and vision drive decision-making; make it safe to be bold
•
Pick an innovation model that works. Stop doing what doesn’t.
•
Forget blockbusters, chase breakthroughs: don’t let sales forecast, NPVs and
ROI steer you toward the trap of marginal innovation and commoditization
•
Build broad innovation networks: no matter how big you are, most great ideas
come from elsewhere
•
Focus on translating breakthrough science that has the potential for creating
vast new markets
•
Restrict clinical research to candidates that have the hallmarks of
breakthroughs, backed by compelling evidence
•
Speed innovation and save money: embrace precompetitive collaboration;
leverage open innovation models
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©InnoThink
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