Business


Finally, it suggests that excessive growth and corporate stagnation could be to blame. Have pharmaceutical companies, and their R&D processes, become too big and set in their ways to produce true innovation? Whether it is one factor, or a combination of them all, the cost of R&D is increasingly becoming a burden as innovation and the associated pay off from new drugs fails to materialise.


Developments rising


It is not just the dearth of new products hitting the market that is a cause for concern for the industry. The cost of R&D is increasing too. Together with expiring patents, this represents a potential time bomb for R&D divisions across the industry.


The recent PricewaterhouseCoopers report Pharma 2020: Virtual R&D, Which path will you take?, highlights the issue: “If pharma is to remain at the forefront of medical research and continue helping patients to live longer, healthier lives, it must become much more innovative, as well as reducing the time and money it spends on develop- ing new therapies.”


And it goes on to claim that incremental improvements are no longer enough, stating: “The industry will need to make a seismic shift to facil- itate further progress in the treatment of disease.”


Offshore and more


How can pharmaceutical companies achieve this seismic shift in R&D practise? In several compa- nies we have already begun to see part of the answer: outsourcing.


The sector is likely to see an increasing reliance on contract research organisations (CROs) in both preclinical and clinical R&D. These organisations frequently use heavily automated, bioinformatics- based experimentation systems to develop new potential therapies.


Outsourcing is proving to be a common strategy, particularly in developed Western economies that are expensive in which to operate. RSA has seen a rising trend of terminating researcher contracts when projects end. These skilled workers are being replaced via outsourcing, or through the creation of new R&D departments in countries where labour is cheaper.


According to Reuters Business Insights, 15% of pre-clinical drug research operations are now out- sourced. And this is set to rise. For example, the UK Life Science Leaders Survey 2010*, carried out by the Science Technology & Innovation Partners and sponsored by RSA, revealed that


60


57% of supply chain managers in UK life science business expected offshoring to increase in the next two years. Yet offshoring as a purely cost-saving measure may not be a long term solution: for it to be sus- tainable, wages must remain low – which is not a given – and it carries other risks such as hidden costs related to differences in culture and loss of control over IP.


Open innovation


Many experts are now arguing that for the indus- try to adapt to these rising development costs, new approaches towards innovation itself are needed. Such is the need for a step change in the discovery model that pharmaceutical giants are now willing to break their long established inward-looking mentality, in favour of a more collaborative system of drug discovery and development.


Such open collaboration has the potential to benefit the industry as a whole. The process is often called ‘open innovation’ – a term coined by Henry Chesbrough, Professor and Director at the Centre for Open Innovation at The University of California, Berkeley, US.


‘Open Innovation’ means recognising the value of external ideas, and using internal R&D to add value to them and take them to market for profit. The model encourages sharing IP between compa- nies, in order that they can be employed in the best possibly way.


In the technology industry, the open source movement, where permission to use intellectual property is freely available to all, has enabled some companies to benefit from the wider knowledge base, before specialising and working with ideas and before taking their product to markets. Another industry where an open collaborative approach has blossomed is Hollywood. Studios do not own the entire process of creating and releas- ing a film: many smaller companies, from talent agencies, to special effects, to scriptwriters, are involved in the many separate constituents that must come together to produce a successful film. Indeed, some pharmaceutical companies are already forming partnerships with smaller biotechs to boost early stage discoveries. Open innovation doesn’t only mean looking to start-ups. Academia is a huge resource of innovation and development capability with which the pharmaceutical industry is increasingly forming partnerships. Pharmaceutical companies are hoping that this more open, partnership-based approach to drug discovery will finally lead to further innovation with realistic costing models.


Drug Discovery World Winter 2010/11


Page 1  |  Page 2  |  Page 3  |  Page 4  |  Page 5  |  Page 6  |  Page 7  |  Page 8  |  Page 9  |  Page 10  |  Page 11  |  Page 12  |  Page 13  |  Page 14  |  Page 15  |  Page 16  |  Page 17  |  Page 18  |  Page 19  |  Page 20  |  Page 21  |  Page 22  |  Page 23  |  Page 24  |  Page 25  |  Page 26  |  Page 27  |  Page 28  |  Page 29  |  Page 30  |  Page 31  |  Page 32  |  Page 33  |  Page 34  |  Page 35  |  Page 36  |  Page 37  |  Page 38  |  Page 39  |  Page 40  |  Page 41  |  Page 42  |  Page 43  |  Page 44  |  Page 45  |  Page 46  |  Page 47  |  Page 48  |  Page 49  |  Page 50  |  Page 51  |  Page 52  |  Page 53  |  Page 54  |  Page 55  |  Page 56  |  Page 57  |  Page 58  |  Page 59  |  Page 60  |  Page 61  |  Page 62  |  Page 63  |  Page 64  |  Page 65  |  Page 66  |  Page 67  |  Page 68  |  Page 69  |  Page 70  |  Page 71  |  Page 72  |  Page 73  |  Page 74  |  Page 75  |  Page 76  |  Page 77  |  Page 78  |  Page 79  |  Page 80