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 / Summer 2007 / Issue 47(originally published by Booz & Company)


Gary Pisano: The Thought Leader Interview

On that front, there’s a big opportunity lurking in one of the great inefficiencies in drug R&D, which is that most of the valuable information never gets used. When drugs fail in clinical trials — and most do — almost all the data and knowledge generated by the trials is abandoned. Sometimes the company digs deeper into the data to understand what went wrong and apply that insight to another development project. But none of that knowledge from the failures gets shared. Companies repeatedly make the same mistakes as their competitors in the course of the trials and aren’t learning from them.

I’d like to see more data sharing at earlier stages of research and development. Maybe clinical trial databases can become public after a year’s delay, for example. That’s tricky, but such practices have worked in other sectors. When the U.S. semiconductor business was in trouble about two decades ago, having lost its dominance to Japanese firms and the equipment producers, the semiconductor equipment industry formed Sematech, a consortium of 14 U.S. semiconductor manufacturers and the U.S. government, to pool their insight into the market’s direction and to share road maps. At the time this was controversial, but it was also a critical factor in helping different parts of the industry build out their capabilities in tandem — and arguably it helped the U.S. semiconductor industry return to growth.

Is there a mechanism to allow firms to share data on the failed projects in a way that would protect their proprietary interests? That one organizational innovation would be a big step toward boosting research and development productivity in both pharma and biotech.

We also need to look at universities. In the last 20 years, universities have become tied up with the idea of creating new firms. It’s now very much part of the mission of universities to make sure that their knowledge gets transferred from academia into practice. Sometimes the right way to do that is to create a new firm, but not always. In fact, sometimes the creation of a new firm works against the goal of broad dissemination, because once you take knowledge and put it into a firm, that firm has the IP rights over it, and now you’ve isolated it there. Universities have to become much more reflective about their position and how they approach their role in sharing knowledge.

S+B: How do we get there from here?
Universities could play a role in driving the industry to share clinical knowledge. They could become the disinterested, noncommercial third party that collects the data and disseminates it in a way that’s equal and fair to everyone. Or government could play that role, the way it did with the Internet.

One thing that may start to catalyze better information sharing is the rise of China’s pharmaceutical industry. If you think about what drove change in other industries, such as semiconductors and autos, it was competition from outside the U.S. But the pharmaceutical industry hasn’t had that. Theirs is a global industry, but it has largely been dominated by U.S. and European companies.

There are maybe a couple thousand pharmaceutical companies in China, and they’re moving down the science curve very quickly. What happens if you get a bunch of Chinese companies coming in with very different cost structures, very different organizational structures, doing first-rate science? What happens if some of those companies get their drugs approved in China? And what if those drugs treat diseases like Alzheimer’s? Americans are going to demand access to them. That kind of global competition will make the industry take notice and change.

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