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Darwin's Medicine blog

Professor Brian D Smith is an authority on the pharmaceutical industry and works at SDA Bocconi University and Hertfordshire Business School.

Strategic symbionts

Strategic alliances are becoming more interesting and more important 

We are probably all familiar with the biologists' term symbiosis, when organisms live in close proximity to each other and work together to optimise each other's chances of survival. Nature is replete with examples, ranging from remora fish cleaning sharks' teeth to orchids growing on trees. Biology textbooks categorise varieties of symbionts, ranging from the parasitic to the commensal to the mutual. And within mutual symbiotic relationships, we talk about those that merely facilitate survival to those that are essential to it, known as obligates. It's an interesting topic but, as you know, this isn't a biology column; my work involves applying evolutionary theory to understanding the life science industry. I only mention symbiosis because understanding it a little better can help explain some interesting new developments in our sector. As usual, let me get to the practicalities by way of some of the science.

As I describe in my work, business models are analogous to species: they can be thought of as a set of choices about how to compete in the environment. To survive, species and business models need a full complement of capabilities. An example of a necessary capability set that humans have includes digestion, which of course has many stages. Equally, a necessary capability set for many business models is innovation, which is also a multistage process.

But this analogy can usefully be taken further. For all their complexity of systems and processes, humans can't digest their food very effectively on their own. As you almost certainly know, our digestive processes are heavily dependent on our gut microbiome. Few of us are unfamiliar with the unpleasant consequences when our gut flora get out of balance. What is interesting about this phenomenon is that human evolutionary history has made an interesting 'choice' (I say choice but of course it is a process of natural selection). We might have evolved our own self-contained ability to break down fat and other large molecules but natural selection decided that it was better to co-opt and rely upon a population of bugs. The analogy gives us an interesting take on what we see happening in the industry right now. Faced with a market that demands not only technological innovation but innovation that delivers better health economic outcomes, our industry is making a similar set of choices. Pfizer could, for example, try to develop immuno-oncology treatments alone, but it has decided that it is better to do so with IBM. It is not alone in this: Teva, Celgene and numerous other pharma companies are also working with IBM, as are Quest diagnostics, among others. In a different disease area, we see the same phenomenon as GSK, AZ and others work with smart inhaler companies to enhance compliance and minimise exacerbation. In many therapy areas, pharma's partnerships with companion diagnostic companies are a more established form of symbiosis.

Increasingly, we see the emergence of symbiotic relationships as a common choice of how to compete in life sciences

Of course, life science companies have always worked with partners. Co-marketing arrangements have a long history as has outsourcing some parts of the research and sales processes to contract organisations. But the choices to work with symbionts, illustrated in the above examples, have very different characteristics. These are not merely choices to outsource a non-core capability or to cooperate with a non-competitive peer. They are a deliberate choice not to develop certain capabilities internally, even though they are core and essential to competitiveness. And they involve not peers or sub-ordinate suppliers but symbiont partners with very different assets and resources. Increasingly, we see the emergence of symbiotic relationships, either bilateral or multilateral, as a common choice of how to compete in life sciences.

This is more than an elegant and interesting analogy. It has very real implications for what life science firms need to be able to do to compete in the market. You see, the capabilities to manage contracted suppliers, such as CROs, or marketing partners, are very different from those needed to find, approach and engage strategic symbionts. In my research, I hear stories that explain failure in terms of 'they treated us like commodity suppliers' or 'they weren't willing to share the value fairly'. Equally, successful symbionts talk of 'inbuilt' mutuality and jointly recognised interdependence. To an evolutionary scientist, this is obvious. It is what we would hear if we interviewed a shark and a remora fish, or if we could talk to the bacteria in your gastrointestinal tract.

All of which means that we can transfer perhaps three practically useful lessons from biology to business. The first is that symbionts are often a better route to essential capabilities than self-reliance. The second is that the most valuable symbionts are typically those most different from you. The last is that winning and keeping symbionts means recognising managing for mutuality.

19th January 2017

From: Sales

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