In an article in Forbes, healthcare contributing writer Standish Fleming dissected the theories of blogger Kelvin Stott in his recent posts, “Pharma’s broken business model, An industry on the brink of terminal decline.” Stott thinks technology can solve pharma’s problems, while Fleming thinks “but the solution to the innovation crisis, if there is one, lies not in technology but a new business model.”
First of all, Fleming points to the decline in productivity in pharma, which could reach a no-profit status by 2020. According to Fleming, Stott “diagnoses the problem as a failure of technology and so looks for a science-based solution to the innovation crisis. What he finds provides no way out of the dilemma.”
According to Fleming, the industry still provides good opportunities in a long-term sense, with the number of drugs approved each year flat, as opposed to declining. There have been modest increases during the last 10 years. Fleming describes the trend as “inadequate productivity to sustain the industry, but nothing resembling the decline reflected in the data on returns.” He adds that drugs are not declining in value, revenue per drug is not declining enormously and revenues are increases in the industry. In addition, the industry has produced a number of “blockbuster” drugs selling $1 billion or more.
To fix the productivity problem, Stott suggests getting large molecules into cells. Fleming disagrees, saying that, “The industry has worked for decades to improve the delivery of large molecules and still doesn’t know how to do it. The we-can-figure-this-out approach that put men on the moon doesn’t work here, because drug development is experimentation, not engineering. Progress in the delivery of therapeutic proteins has been slow for good reason. Cells, tissues and organisms evolved to keep foreign proteins out.”
Stott also suggests looking at many kinds of technological solutions to the productivity problem. Fleming disagrees, saying that “multiple technological improvements are even less promising.” He thinks that each one is “unpredictable, takes too long and is dependent on many other discoveries to have a transformative impact.” While the potential of such a solution is compelling, but technology does not provide the opportunity to achieve significant gains gain in the timeframe that the industry requires.
According to Fleming, “Pharma lives on the bleeding edge of scientific knowledge and operational excellence, where improvements are likely to be hard won and incremental.
It took 30 years to get the first anti-sense drug approved, 20-plus years for RNAi, hampered in large part by delivery problems. Yet, while technology has advanced, albeit slowly, the pharmaceutical business model has hardly evolved at all, despite tectonic shifts in the commercial landscape. The inefficiency of the industry's outdated operating plan offers far more room for productivity gains than does another research project.”
Fleming plans to follow up this article with a business-based solution to the innovation problem and believes that pharma can begin to use it to solve the crisis immediately.