Bruce Booth has opened up the number of authors who will be posting at LiveSciVC, and there’s an interesting post up on startups now
from Atlas Ventures’ Mike Gilman. Edit: nope, my mistake. This is Bruce Booth’s! Here are some of his conclusions:
here’s a list of a few of the perceived advantages of Pharma R&D today:
Almost unlimited access to all the latest technologies across drug discovery, ADME, toxicology, and clinical development, including all the latest capital equipment, compound libraries, antibody approaches, etc
International reach to support global clinical and regulatory processes to fully enable drug development programs
Deep and insightful commercial input into the markets, the pulse of the practicing physician, and the payors on what’s the right product profile
Gigantic cash flow streams that provide 15-20% of the topline to support a largely “block grant” model of R&D (fixing R&D spend to the percentage of sales)
Decades of institutional memory providing the scar tissue around what works and what doesn’t (e.g., insight into project attrition at massive scale)
This is a solid list of advantages, and they all have real merit.
But like the biblical Goliath, whose size and strength appeared to the Israelites as great advantages, they are also the roots of Pharma’s disadvantages. All of these derive their value as inward and relatively insular forces. Institutional memory in particular can serve to either unlock better paths to innovation or to stifle those that want to explore new ways of doing things. Lipinski’s Rules, hERG liabilities, and other candidate guidelines derived from legacy “survivor bias”-style analyses are case examples of this tension – unfortunately the stifling aspects rather than the unlocking ones often triumph in big firms.
Further, these impressive corporate R&D “advantages” are of course the product of Big Pharma’s path-dependency: single blockbuster successes discovered in the ‘60s-70s led to early mergers in the ‘80-90s, and bigger mega-mergers in the late 90s-00s, to form the organizations of today. Bigger and bigger R&D budgets buying up more and more “things” in the quest for improved productivity. In a sense, the growth drivers underlying these mergers acted like the excessive hGH coming from Goliath’s pituitary – the scale and constant growth pressure was a product of a disease, not a design.
He makes the point earlier on that constraints on spending, while they may not feel like a good thing, may actually be one. More money and resources often leads to box-checking behavior and a feeling of “Since we can do this, we should”. There’s some institutional political stuff going on there, of course – if you’ve checked off all the boxes that everyone agrees are needed for success, and you still don’t succeed, then it can’t be your fault. Or anyone’s. That’s not to say that all failures have to be someone’s fault, but this sort of thing obscures those times when there’s actual blame to go around.
The post also goes into another related problem: if you have all these resources, that you’ve paid for (and are continuing to pay for to keep running), then if they’re not being used, things look like they’re being wasted. They probably are being wasted. So stuff gets shoveled on, to keep everything running at all times. It’s certainly in the interest of the people in those areas to keep working (and to be seen to be keeping working). It’s in the interest of the people who manage those areas, and of the ones who advocated for bringing in whatever process or technology. But these can be perverse incentives.
The main problem I have with the post is the opening analogy to the recent Mars mission launched by India. I have to salute the people behind the Mangalyaan mission – it’s a real accomplishment, and if it works, India will be only the fourth nation (or group of nations) to reach Mars. But going on about how cheaply it was done compared to the simultaneous MAVEN mission from the US isn’t a good comparison. Yes, the Indian mission is eight times cheaper. But it has one quarter the payload, and is targeted to last about half as long, and that’s leaving out any consideration of the actual instrumental capabilities. It’s also worth noting that the primary goal of the Mangalyaan mission is to demonstrate that India can pull it off; any data from Mars are (officially) secondary. I’d find the arguments about small and large Pharma more convincing without this comparison, to be honest.
But the larger point stands: if you had to start discovering drugs from scratch, knowing what’s happened to other, larger organizations, are there things you would do differently? Emphasize more? Avoid altogether? A startup allows you to put these ideas into practice. Retrofitting them onto a larger, older company is nearly impossible.