I've been meaning to link to Matthew Herper's piece on Bernard Munos and his ideas on what's wrong with the drug business. Readers will recall several long discussions here about Munos and his published thoughts (Parts one, two, three and four). A take-home message:
So how can companies avoid tossing away billions on medicines that won’t work? By picking better targets. Munos says the companies that have done best made very big bets in untrammeled areas of pharmacology. . .Munos also showed that mergers—endemic in the industry—don’t fix productivity and may actually hurt it. . . What correlated most with the number of new drugs approved was the total number of companies in the industry. More companies, more successful drugs.
I should note that the last time I saw Munos, he was emphasizing that these big bets need to be in areas where you can get a solid answer in the clinic in the shortest amount of time possible - otherwise, you're really setting yourself up with too much risk. Alzheimer's, for example, is a disease that he was advising that drug developers basically stay away from: tricky unanswered medical questions, tough drug development problems, followed up by big huge long expensive clinical trials. If you're going to jump into a wild, untamed medical area (as he says you should), then pick one where you don't have to spend years in the clinic. (And yes, this would seem to mean a focus on an awful lot of orphan diseases, the way I look at it).
But, as the article goes on to say, the next thought after all this is: why do your researchers need to be in the same building? Or the same site? Or in the same company? Why not spin out the various areas and programs as much as possible, so that as many new ideas get tried out as can be tried? One way to interpret that is "Outsource everything!" which is where a lot of people jump off the bus. But he's not thinking in terms of "Keep lots of central control and make other people do all your grunt work". His take is more radical:
(Munos) points to the Pentagon’s Defense Advanced Research Projects Agency, the innovation engine of the military, which developed GPS, night vision and biosensors with a staff of only 140 people—and vast imagination. What if drug companies acted that way? What areas of medicine might be revolutionized?
DARPA is a very interesting case, which a lot of people have sought to emulate. From what I know of them, their success has indeed been through funding - lightly funding - an awful lot of ideas, and basically giving them just enough money to try to prove their worth before doling out any more. They have not been afraid of going after a lot of things that might be considered "out there", which is to their credit. But neither have they been charged with making money, much less reporting earnings quarterly. I don't really know what the intersection of DARPA and a publicly traded company might look like (the old Bell Labs?), or if that's possible today. If it isn't, so much the worse for us, most likely.