Photo: WealthofHealth4 via flickr
One of the most worrying trends in business has been the slow pace of innovation in health care. While plenty of interesting work is going on, there haven’t been many blockbusters.Basically, massive R&D spending (there are 8 pharmaceutical companies among the top 20 spenders on research) hasn’t led to anywhere near as many new and profitable medicines as companies had hoped.
That’s why a survey of senior executives by the Boston Consulting Group didn’t find a single business focused primarily on health care in the top 50 of the world’s most innovative companies.
That’s of concern to companies that can’t get a return on their investment. It’s of even more concern to society. Plenty of great research gets done outside of pharmaceutical companies and large biotechs. But when it comes to the process of actually developing an idea into a pill, powder, or something injected (much, much harder than you think), going through clinical trials, and getting a drug approved, they’re pretty much the only game in town, because that process is so unbelievably complex and expensive.
So on one hand, we’re not getting many breakthrough medicines. And on the other, few companies have extra resources to devote to low margin, but essential things like new antibiotics. We haven’t discovered a new class of antibiotics in over 20 years, even as diseases become more resistant to the drugs we have.
What’s evolved is an industry that’s scared to take risks or make big bets. They often wait for smaller firms to prove a concept before getting involved themselves. That hasn’t proved to be a sustainable long-term strategy either.
This is not a recent development, and it’s one that’s getting worse, as this bcg.perspective chart of the survey’s results shows:
There’s no easy fix; you can’t flip a switch to make better science, and pouring money into the problem clearly doesn’t work. What’s needed is a greater focus on process, on getting more from less.
Part of that is a management question, making sure that big, in house R&D is accountable for results. Whether that’s smaller, more focused teams, or better approaches, that’s an experiment that’s still in progress.
The other is being more efficient in coming up with ideas, for example, using new imaging technologies that can help reveal how much energy a tumour is using, and thus how well a molecule is working. Essentially, it’s about finding a way to industrialize the discovery process, along the lines of what’s already happened with sequencing people’s genes.
The most important step is admitting that what’s going on now isn’t working, and aggressively changing sooner, rather than later.
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