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Mutate the DNA of Pharma Externalization

By Michael Shanler | May 12, 2016 | 0 Comments

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Here’s a prediction.  Life Science CxOs that continue to oversimplify “externalized innovation” strategies are in for a career-ending surprise in a few years.   For details, check this out:  Industry Visions: Life Science R&D as a Digital Innovation Orchestration Engine.  A generation ago, before the “patent cliff,” we heard from investment analysts about how “externalized innovation” will become the new normal for pharma R&D.   The evolutionary pre-cursors were fairly obvious and the “externalized” mantra continues to this day.   Yes, M&A and licensing is driving new pipelines.  Outsourcing was a natural reaction.  Innovation work has moved beyond the firewall…. Let’s go invest in biotech, baby! ….because “externalization” is now built into the DNA of pharma.

Mutation Innovation

(Source: DNA, Genes, – Google Images)

However, after 15+ years is the life science industry really in a better place?   Are the R&D returns any better?  While I feel good about increased number of FDA approvals for drugs driven by biotech , research hospitals and academia….unfortunately, the total sector commercial value vs. the total R&D investment isn’t all that hot. It is actually pretty cr@ppy for a large number of companies.  Financial analyst firms are not impressed…And this is all going on while trials get more expensive, drugs designs become more complex, and regulatory hurdles increase.  Net-net:   It “kinda sorta works, but not really”. So…..Should today’s “externalized R&D” model change?

I say, “Yes.”  Loudly.  Emphatically. Unequivocally.  We need a variant mutation in our R&D DNA.

Today, there are ~30% more entities performing molecule R&D than 10 years ago. The vast majority are small companies (<50 employees) with a “science first, IT second” mindset.  This is great news.  They have a desire to co-collaborate more synchronously and more openly than ever before.  However, while the R&D staff dwindle at big pharma, the model for harnessing all that intellectual property gets a whole lot more complicated if we are still relying on legacy point-to-point, transactional innovation architectures and business processes and thinking    My beef with “Externalized R&D” is that in today’s pharma, 99% of the time it still equates to  transactional relationships and tightly governed sequential (paper-electronic hybrid) processes. It oversimplifies an evolving environment. The next wave of innovation requires more multi-disciplined connections of scientists collaborating synchronously with live data along networked, dynamic boundaries.

The DNA of R&D innovation for retail, consumer, retail, education and automotive sectors has already mutated with the millions on Facebook, Twitter, Yelp, Instagram, Pinterest, and LinkedIn.  These organizations’ new behaviors are on adaptations to the new environment…where the physiology of the enterprise itself was enabled by the power of the Nexus of Forces – Social, Mobile, Cloud and Information. They have adapted with new traits.   Innovator, customers and R&D groups are sharing information in more open environments…well beyond the walls of the traditional R&D labs… Open methodologies, engagement in public is the new kale.  Information with context makes you super-human.  Mobile isn’t a phone.   Cloud isn’t even a question anymore.  Those other industries are already talking about innovating in a connected world and leveraging the “many-to-many” relationships via technology, practices, governance, and new skills.

Life Science CxO’s need to engineer in some  variants which future R&D groups will inherit, too.  At a high level, here are a few suggested mutations:

  • Move from “externalized” to “distributed” innovation models..where we leverage R&D networks… Let your friends make more friends.
  • Shift from “internal tech stacks” to “shared burdens” especially when there is a “pre-competitive” upside. Come clean about how much better it would be to share some infrastructure.
  • Change from “managing” man individual projects to “orchestrating” a variety of programs. Ditch the hubris and micromanagement.
  • Embrace  putting people, business processes and things on equal footing, leveraging IoT and connectivity, “digital” practices and workplaces, smart machines,  and how all this will transform…well, just about everything.

Over the next decade, this “R&D network vision” is one that will soon start to be recognized by CEOs and you’ll begin to read about it in the main stream media. It will also continue along the ‘hype’ curve, as expected –  triggered and supported with new technologies, elevated by the management consultant firms, bashed by media in the trough of disillusionment after some misses, and then finally adopted as the new defacto gold standard in the main stream.

This note goes into detail and actions:   Industry Visions: Life Science R&D as a Digital Innovation Orchestration Engine.

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