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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.

Nature's way

There are business lessons to be learned from biological tragedies

I was especially delighted when some good friends announced the arrival of their baby girl because I knew of their long history of miscarriages.

Those personal tragedies were a little elephant in the room as we cooed over the new arrival via Zoom. Then, in a touching moment, the new mother acknowledged it with a shrug and said: “It’s nature’s way.” She was right, of course, but I admired her bravery. Later, I reflected on the significance of what she had said. Stay with me for a few minutes and I will get to what it means for biomedical companies.

Chromosomal abnormalities

Most miscarriages happen in the first trimester and about half of those are due to chromosomal abnormalities. Without forgetting that every one of these data points is a heartbreak, this is a normal part of life.

We evolved this way of dealing with the issue of genetic imperfections because it saves a waste of biologically valuable resources. Many of us are alive only because our potential older siblings are not. In its cold efficiency, evolution says, like Macbeth, that if it is to be done it is best done quickly. I flinch as I write those words but evolution is cruel to be kind.

Stage-gate scepticism

My colleagues in R&D call their projects their ‘babies’ and, without making any fatuous comparisons, it is easy to see why. I well remember the emotional investment I used to make into my own ‘offspring’ when I was a research chemist.

But business processes evolve just like biological processes do. Those that confer the best chances of survival are selected for by the harsh business environment. The most salient example of this in our industry is the stage-gate process in new product development. At each stage-gate, we question the viability of our creations and withdraw resources from those we do not think will thrive in the market.

If you have ever been in the room when that happens, you will be familiar with the emotional tension, amplified as it often is by ambiguity in the data and interpersonal conflicts. It is not fun; rather it is difficult but necessary and, if it is to be done, it is best done early. No one questions this logic and ‘fail early’ has become a recognised capability advantage in biomedical R&D.

When I reflected on our friends’ tragedies, I could see an example of parallel evolution. Biomedical companies have evolved their own equivalent of miscarriages.

Lagging behind

Stage-gate processes emerged years ago because the high cost of failing to achieve either regulatory approval or clinical acceptance acted as a strong evolutionary selection pressure. Where selection pressures are absent, evolution is more lenient. That is why the dodo survived on the island of Mauritius until rats arrived by ship.

And in the biomedical industry, market access pressures are a much more recent phenomenon than regulatory or clinical pressures. Evolutionary theory would predict that our processes for stopping projects on the grounds of market access viability would be less well developed than the equivalent processes for stopping unsafe or ineffective products.

And indeed, that is exactly what I hear in my research interviews. In one recent call, a senior American executive lamented that they were “world class” at stopping progression for poor safety or efficacy but “little league” at the equivalent capability of “stage-gating” for health economic viability. I have heard the same regret expressed in a dozen innovative pharmaceutical companies.

Co-evolving market access

The relatively recent emergence of market access selection pressure explains the slow emergence of health-economic stage-gating, but only partly. There are two other issues at play, both explained by co-evolutionary processes. Firstly, governments and other payers have been slow to evolve their capability to signal to innovators what they value.

Led by headlines and public opinion, they are not good at, for example, demoting an ultra-rare disease or incremental oncology gain to a lower priority than, say, new antibiotics or respiratory drugs that would affect millions. Second, the science of health economics is still in its infancy.

Not to belittle recent advances or the brilliance of my colleagues in that area, but health technology assessment (HTA) is both harder and more difficult than drug or device safety assessment and monitoring.

Combine recent emergence, payer platitudes and primitive science and we are better able to understand why about two-thirds of the drugs that reach the market offer no additional value to the drugs already on the market.

Nature’s lessons

So, forgive the Darwinian diversion but I think we can learn business lessons from biological tragedies. Biological evolution has focused on early failure and, in parallel, our R&D scientists have done the same. But our health economic capabilities are not there yet.

If we focus on ending development projects early for market access reasons and encourage payers and HTA bodies to co-evolve with us, the result will be faster, cheaper innovation. That would be a good lesson to learn from nature’s harshness.

This column is also available as a podcast on spotify, or search your podcast provider for ‘Darwin’s Medicine’.

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

22nd June 2021

From: Research

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