Summary articles MLSI 2020-2021
List of articles in this summary:
● Munos, B. (2009). Lessons from 60 years of pharmaceutical innovation. Nature
Reviews Drug Discovery, 8(12), 959-968.
● Scannell, J. W., Blanckley, A., Boldon, H., & Warrington, B. (2012). Diagnosing
the decline in pharmaceutical R&D efficiency. Nature reviews Drug discovery,
11(3), 191-200.
● Lo, A., & Pisano, G. (2016). Lessons from Hollywood: A new approach to funding
R&D. MIT Sloan Management Review, 57(2), 47.
● Edmondson, A. C., Bohmer, R. M., & Pisano, G. P. (2001). Disrupted routines:
Team learning and new technology implementation in hospitals. Administrative
Science Quarterly, 46(4), 685-716.
● Metcalfe, J. S., James, A., & Mina, A. (2005). Emergent innovation systems and
the delivery of clinical services: The case of intra-ocular lenses. Research Policy,
34(9), 1283-1304.
● Pisano, G.P. (2006) Chapter 5: The autonomy of a science-based business. In:
Science business – the promise, the reality, and the future of biotech. Harvard
Business School Press, Boston.
● Lehoux, P., Daudelin, G., Williams-Jones, B., Denis, J. L., & Longo, C. (2014).
How do business model and health technology design influence each other?
Insights from a longitudinal case study of three academic spin-offs. Research
Policy, 43(6), 1025-1038.
● Willemstein, L., van der Valk, T., & Meeus, M. T. (2007). Dynamics in business
models: An empirical analysis of medical biotechnology firms in the Netherlands.
Technovation, 27(4), 221-232.
● Steinberg, D., Horwitz, G., & Zohar, D. (2015). Building a business model in
digital medicine. Nature biotechnology, 33(9), 910-920.
● Sim, I. (2019). Mobile Devices and Health. New England Journal of Medicine,
381(10), 956-968.
● Boon, W.P.C. Universitair medisch centra als innovatiehubs. In: Boon, W.P.C. &
Horlings, E. (2013) Kenniscoproductie voor de grote maatschappelijke
vraagstukken. Rathenau Instituut, Den Haag.
● Christensen, C.M. (2009) Disrupting the hospital business model. In: The
innovator’s prescription. McGraw-Hill, New York.
● Stolk, P. (2013). Background Paper 8.1: Public Private Partnerships. Retrieved
from: http://www.who.int/medicines/areas/priority_medicines/BP8_1PPPs.pdf.
● Aerts, C., Sunyoto, T., Tediosi, F., & Sicuri, E. (2017). Are public-private
partnerships the solution to tackle neglected tropical diseases? A systematic
review of the literature. Health Policy.
● Arora, A., Fosfuri, A., & Gambardella, A. (2001) Markets for technology and their
implications for corporate strategy. Industrial and corporate change, 10(2), 419-
451.
● Hopkins, M.M., P.A. Crane, P. Nightingale, C. Baden-Fuller (2013) Buying big into
biotech: scale, financing, and the industrial dynamics of UK biotech, 1980-2009.
Industrial and Corporate Change.
● Stuart, T.E., S.Z. Ozdemir, W.W. Ding (2007) Vertical alliance networks: the case
of university-biotechnology-pharmaceutical alliance chains. Research Policy 36,
477-498.
● Powell, W. W., Koput, K. W., & Smith-Doerr, L. (1996). Interorganizational
collaboration and the locus of innovation: Networks of learning in biotechnology.
Administrative science quarterly, 116-145.
, ● Smits, R. E., & Boon, W. P. (2008). The role of users in innovation in the
pharmaceutical industry. Drug Discovery Today, 13(7), 353-359.
● Gittelman, M. (2016). The revolution re-visited: Clinical and genetics research
paradigms and the productivity paradox in drug discovery. Research Policy,
45(8), 1570-1585.
● Blind, K. (2004) Chapter 2: A Conceptual Framework to Analyse the Relationship
Between Innovation and Regulation. Pp. 3-16. In: New Products and Services:
Analysis of Regulations Shaping New Markets. Fraunhofer Institute, Karlsruhe.
● Hansen, A. (2001). Biotechnology regulation: Limiting or contributing to biotech
development?. New Genetics and Society, 20(3), 255-271.
● Carroll, A. B., & Shabana, K. M. (2010). The business case for corporate social
responsibility: a review of concepts, research and practice. International Journal
of Management Reviews, 12(1), 85-105.
● Schurman, R. (2004). Fighting “Frankenfoods”: Industry opportunity structures
and the efficacy of the anti-biotech movement in Western Europe. Social
Problems, 51(2), 243-268.
Lect Article Main takeaways
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2 Munos, B. The level of investment in pharmaceutical research and development has increased
(2009) in the last 50 years, however the number of new drugs annually approved has not
increased. This article analyses the output of NME’s approved by the FDA over the
past decades,the rate of production of new drugs has been constant. For the 30
years between 1950 and 1980, the trend line is basically flat. There was a peak in
1996, but it’s speculated that it’s caused by the FDA backlogging the applications.
The article proposes a few reasons/solutions:
● Number of players
● The cost of NMEs
● Regulation
● Bigger = Better ?
● The effect of consolidation
● Scaling patent cliffs
Innovating in the pharmaceutical industry is difficult, 21 companies have produced
half of all the NMEs that have been approved since 1950, but half of these
companies no longer exist. As the trend line is constant, solutions are sought to
break this trend. One possible solution is a larger number of companies, which will
increase the expected NME output more than proportionally. One possible
interpretation is that a larger number of companies accelerates the acquisition of
,knowledge, creating what economists call a spillover — an industry-wide benefit
that enables all companies to be more productive. This has important implications
for the design of new R&D models.
Another explanation for the lower NME output is the increasing cost per NME.
Estimating the cost of NMEs is complex because the money spent on R&D is
returned in revenue over several years. R&D expenses should therefore be
depreciated over that period. However, the duration of this period is unclear, and
has probably changed over time, as science and regulations have transformed drug
research.
Regulation can also have an effect on the number of NMEs, countries with a more
demanding regulatory apparatus, such as the United States and the UK, have
fostered a more innovative and competitive pharmaceutical industry. This is
because exacting regulatory requirements force companies to be more selective in
the compounds that they aim to bring to market. Conversely, countries with more
permissive systems tend to produce drugs that may be successful in their home
market, but are generally not sufficiently innovative to gain widespread approval
and market acceptance elsewhere. In other words, a higher level playing field can
yield a higher NME output.
Is bigger better refers to the size of the pharmaceutical companies. Since 2004 small
competitors have consistently matched or outperformed their larger competitors.
Hypotheses to explain these trends could be:
1. The NME output of small companies has increased as they have become
more enmeshed in innovation networks
2. Large companies are making more detailed investigations into fundamental
science, which stretch research and regulatory timelines
3. The heightened safety concerns of regulators affect large and small
companies differently
M&A (mergers and acquisitions) activity is often seen as a strategy to tackle a
thinning pipeline. Only small companies show a slight, but significant, increase in
NME output at the 95% confidence level. For large companies, M&A do not seem to
create or destroy value. In fact, one can summarize the impact of M&A in the
pharmaceutical industry on R&D as '1+1=1'.
Scaling patent cliffs, underlying data shows that the probability that an NME will
achieve blockbuster status is ∼21%. Patent cliffs refer to the period after which the
patent expires and revenue drops for the company.
If the performance of the current business model cannot satisfy stakeholders, M&A
are not a solution, and the process improvements and cost-cutting measures that
are commonly used cannot make a sufficient difference, perhaps the industry ought
to embrace more radical change and seize the opportunity to redesign the model.
1. the industry needs to change its innovation dynamics to move beyond
constant NME output.
2. there are radical and successful experiments that can be used as building
blocks or for inspiration;
, 3. in many organizations, short-term priorities encourage marginal
innovation, which provides more reliable returns on investment, at the
expense of major change
4. the industry must rethink its process culture. Success in the pharmaceutical
industry depends on the random occurrence of a few 'black swan' products
Scannell, J. This article describes if the underlying problems of the declining R&D efficiency have
(2012) been correctly described. The Eroom’s law is Moore’s law backwards and can
be described as the opposite of it. Eroom’s law states that the number of
new drugs per billion US dollars of R&D spending in the drug industry has
halved approximately every 9 years since 1950. While the number of new
drugs that appear in the market is almost steady in time, the R&D expenses
have been increasing considerably.
This trend indicates that the cost of discovering and developing a newly
approved drug is becoming more and more expensive. It introduces four new
primary causes:
1. ‘Better than the beatles’ problem
a. This metaphor is used to describe the following: it’s very hard to
create a new drug that has to supersede the current therapy in
every way imaginable when there are already decently working
drugs on the market. The metaphor describes this as the
impossibility of having to write a new song that under every
circumstance has to be better than the best Beatles song ever
written.
b. The writers argue that this is related to the low-hanging-fruit issue;
that the drugs that are easiest to develop are already gone. The
Beatles metaphor argues that the medicines that are developed
(fruit that has been picked) reduce the value of new drugs, fruit
higher up in the tree.
2. ‘Cautious regulator’ problem
a. If a drug enters the market, the risk of using the drug should be as
low as possible, because the drug must be safe. That’s why drug
regulatory agencies are lowering the risk tolerance of a new drug.
As a result the barrier for introducing a new drug will increase and
the costs for R&D will also increase.
b. If there are less regulations, a drug could be easier approved and
that will decrease the barrier for introducing a new drug. However,
there will be more risks, for example negative side effects that are
not known. Besides, drug companies could more easily cheat the
system in some way. The more demanding the reporting
requirements are, the harder it is to cheat without leaving some
kind of error or inconsistency in what is reported.
3. ‘Throw money at it’ tendency
a. This tendency results from previous returns out of investments, a
lack of innovation process understanding, and the luck involved
with innovating. The need to be a first mover in this industry is
also important. GSK shows this as they want to develop new
products and grow their pipeline: a bigger pipeline is expensive
but also increases the change of a lucky one being in there.
4. ‘Basic research-brute force’ bias
a. The basic research- brute force bias relates to the idea that new
molecules can be easily found with basic research methods like
High Throughput Screening. The problem is that these new
screening methods could fail in the clinical trials due to an
under-appreciation of the complexity of the whole organism.
