Only 47% of life sciences companies have R&D models that meet their needs

Life sciences companies have seen rising research and development costs in exchange for flat, or even diminishing, innovation returns. Many are staring over the edge of a patent cliff that will see the loss of intellectual property protection on drugs that are currently bringing tens of billions of dollars in sales - and that subsidise expensive R&D efforts.

This concern is greatest for the biopharmaceutical sector, but other life sciences firms are suffering as well: medical device companies, for example, are also experiencing difficulties with their innovation programmes.

So how severe is this problem? And what can be done to ease these pressures and reinvigorate innovation efforts within the life sciences industry? These questions are addressed in a new report, ‘The innovation imperative in biopharma,’ written by the Economist Intelligence Unit in London and sponsored by the contract research organisation Quintiles.

The report is based on a worldwide survey of 282 senior executives from the life sciences industry, including respondents from pharmaceutical and biotech companies (39% and 21%, respectively), medical device manufacturers (22%) and service providers such as contract research organisations (14%).

Its key findings include:

Executives in the industry are ambivalent about the quality of their existing innovation programmes. Less than one-half (47%) say that their R&D model is capable of meeting the company’s needs, while a similar proportion of respondents (49%) rank their overall innovation strategy as just moderately effective at best. More worrying, just 42% say that this strategy is more than moderately successful at restocking the product pipeline as biopharma, in particular, goes over the patent cliff.

Companies often are not rising to the challenge. Although almost every company is trying something to improve innovation, only 54 per cent of respondents overall - including those who admit that their companies have poor or ineffective innovation strategies - say their companies consider change to innovation processes to be a leading priority.Moreover, for those who plan such changes, survival rather than growth may be the guiding rationale.

Culture is the primary barrier to improved innovation among the most laggard firms. The life sciences industry faces several impediments to innovation that are less common in other fields. The leading ones cited by survey respondents are costs (especially for smaller companies), R&D time scales and regulation.

But among companies with the worst innovation record, cultural attachment to existing practices is cited as their leading problem.

Leading life sciences innovators create the right culture, are more engaged in open innovation and make better use of data. The one in five companies surveyed who call their innovation programmes “very effective” typically produce about twice as many new products as others. They also act differently from the rest in several key ways, according to the report.

One is that they work hard to create the right environment, by finding appropriate ways to recognise and reward efforts, without penalising failure. A second is that they are more engaged in open innovation, with a more flexible perspective on intellectual property, embracing a wider range of new ideas and ways to benefit from their discoveries. A third is that they make better use of data, both internally and externally, to support their efforts, thereby helping to improve research, development and use of existing IP, the report says.

‘The innovation imperative in biopharma’