The potential and pitfalls of openness
In the last few years, the European life sciences sector has seen more than one sea-change. It’s faced new types of collaboration, and watched as a range of business models sought to foster research and favour opportunity development. During that time, a global all-time record 12,300 drugs (Citeline’s 2015 Pharma R&D report) entered the development pipeline – twice as many as 13 years ago. Interestingly, in the competition for the fattest pipeline ever, four European-based firms topped the list: GSK, Novartis, Roche and AstraZeneca. In these exciting days, however, the world’s top 25 pharma and biotech companies only account for a meagre 10.7% of recorded drug candidates. The vast majority remain in the hands of small or very small companies – 3,261 at last count. Citeline says that’s because “more and more companies (are) starting to do R&D” and concludes that there is “plenty of bite-size collateral for Big Pharma to potentially gobble up.” There’s no question that all those major players have the money to snap up interesting candidates. But which ones?
A cost- and time-effective way to bring drugs to market
That’s where ‘open innovation’ – shifting innovation processes from behind closed doors to a more public stage – comes into play. “Open innovation is gaining an important foothold across a number of major industries, from information technology to retail,” according to Deloitte & Touche LLP’s Jennifer Malatesta. “Today, healthcare leaders are starting to recognise that open innovation can have great value in R&D and in marketing strategies to build or recover market share.” Published in early 2015, the sector consultant’s “Executing an open innovation model” concludes that there are reasons the concept is gaining so many adherents in biopharma. “It appears to be a more cost- and time-effective way to bring drugs to market.”
Expert in innovation management Andreas Braun, on the other hand, points to the “R&D Productivity Paradox, whereby especially Big Pharma continuously spends more R&D resources and gets less NMEs and NBEs approved.” Managers in many of these companies have therefore initiated programmes to transform R&D organisation in order to make it faster and more cost-efficient. Streamlining internal processes has grown crucial, including cutting large groups into functionally smaller teams, promoting networking and knowledge-sharing, and opening up to and collaborating with the external world. “Our research shows that there is a clear positive correlation between inbound openness and the number of successfully finished innovation projects,” says Braun.
Read the full background on Open Innovation in our print magazine!
- The Top 10 European pharma companies and their Open Innovation projects
- The different types of 'outside' innovation generation
- Europe’s most influential biotech incubators
- The experts’ view