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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.

Blind man's buff

Evolution can explain, and reduce, industry failings as well as its successes

Develop

One of the most common mistakes about evolutionary processes is that they are directed towards some goal. This mistake is not only common, it’s egregious because it leads us into misunderstanding what is going on in our industry.

I was reminded of this by a recent publication, in the British Journal of Medicine, about innovation in our industry. As usual, allow me to perambulate around the evolutionary thinking a little before I come back to the practical implications.

The appearance of purpose

As many have written, evolution gives the appearance of purpose. In biology, we seem to see ‘higher’ organisms evolving out of ‘lower’ ones. And that ‘progress’ seems linear, as if there were some sort of predestined goal towards which evolution progresses.

But that is an illusion, caused by two very common cognitive traps to which we humans are prone. The first is that we are biased to consider what we can see (for example, evolutionary steps that succeed) at the expense of what we can’t easily see (such as evolutionary steps that fail).

The second is to ‘frame’ an evolutionary advance as ‘better’ rather than just ‘different’. In fact evolution is blind, to quote Richard Dawkins, because ‘it does not plan ahead, does not see consequences, has no purpose in view’. In biology at least, it is the result of random variation – most of which has no or negative consequences – and subsequent selection by the environment.

We don’t see unsuccessful variations – such as embryos that fail to develop – and the result of evolutionary change is not a ‘higher’ organism but only one better adapted to the way the environment is now. As a result, evolution is terribly wasteful, requiring innumerable failures to produce one success.

Biological evolution

Now, back to practical implications. Just as in biology, we tend to see changes in the industry as steps towards better business models. But by considering the biological analogue we learn two things.

Firstly, new business models are not ‘better’ than their predecessor in any absolute way: they are only a better fit with today’s environment. To illustrate that, just think how effective today’s digitally based business models would have been in an era before cheap, easy and pervasive internet connectivity.

Secondly, our cognitive biases are leading us to ignore all the failures. I was reminded of this second issue recently when I read a paper in BMJ.

Research carried out by the German health technology assessor IQWIG that found that very few new drugs offer any significant improvement on what is already available. What we see in drug development is very similar to what we see in biological evolution – a lot of failures, very few successes.

And when we look at what is happening in the pharma industry, we’re prone to the same cognitive errors that we fall prey to when we observe biological evolution.

In IQWIG’s words, ‘the rhetoric of novelty and innovation creates an assumption that new products are better than existing ones’.

Evolutionary theory

So evolutionary theory is giving us a better understanding of what is happening in our industry. But how can we act on that? Well, consider that business evolution is not driven by random mutations but by deliberate choices – at least in part.

We could, then, make better choices about what to develop and, just as important, what not to develop. Done well, this deliberation would reduce wasteful activity and accelerate the adaptation of the industry to our changing world.

In fact, IQWIG’s BMJ paper suggested something along those lines. The company argued that policymakers should be more proactive, not just accepting what companies develop but making clear what the clinical needs and economic unmet needs are.

The paper gives more detail on that and the authors pull no punches. But the ball doesn’t lie only in the policymakers’ court. Pharma and medtech companies could be clearer about the clinical and economic goals of development programmes.

They could kill failing programmes earlier using those goals as guides. They could focus on genuine clinical and health economic advances and not on launching products that are not advances. Of course, many companies are talking about doing this.

Market access leaders are getting to have a say earlier in development. Some trial designs are changing to demonstrate differences versus incumbents rather than just placebos. Real-world evidence is beginning to be used to demonstrate real-world outcomes and value.

But, as the BMJ paper shows, progress is too slow and our ‘innovative’ industry still wastes too much effort on being imitative. Looking through an evolutionary lens makes us aware of the tendency of evolution to be wasteful.

The IQWIG evidence tells us that our industry is wasteful of its innovative resources. But business evolution need not be so wasteful, because its variation is not random but at least partly deliberate. It’s up to us how much we deliberate and how much we waste.

Professor Brian D Smith works at SDA Bocconi and the University of Hertfordshire. He is a world-recognised authority on the evolution of the life sciences industry and welcomes questions at brian.smith@pragmedic.com

Article by
Brian D Smith

6th December 2019

From: PME

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