Overcoming Inertia: How Pharma Is Embracing Open Innovation

Gates Foundation: Melinda French Gates, Bill GatesA hot topic in the pharmaceutical industry for more than a decade has been the debate over open innovation. Everyone in the business knows the reasons—the stagnation of R&D; the high-profit branded drugs coming off patent; the explosion of information available, and the dilemma of accessing the right information needed for specific research.

The traditionally secret, protective nature of the industry has been an obstacle. For decades, the way to massive success in pharmaceuticals was to discover and nurture a blockbuster drug for a broad market, then enjoy protected profits. The rewards were tremendous—profits could be in the billions—but it also created tunnel vision within the business: a company may discard scores of development avenues to focus on the one that could be a big winner. The discarded research could have significant value—but not in the corporate environment that pushed for home runs.

Most of the industry acknowledges these issues, but how do you change corporate cultures that for decades have been based on keeping secrets rather than collaborating? How do you overcome that inertia?

The answer is in stages—and by proving the value of open innovation.

There are a growing number of success stories of pharma companies—even those entrenched in traditional ways of thinking—using open innovation to their advantage. Some of this is due to groups outside the business encouraging the process—then showcasing it to the industry. Three years ago, the Gates Foundation’s work to eradicate malaria (a massive undertaking) provided an intriguing model, as reported in Forbes. The Foundation helped a startup, Amyris, fund a malaria treatment which programmed bacteria to excrete useful chemicals, then license it to a larger company for distribution. The collaboration created a new drug, but the agreement also allowed Amyris to keep the rights to its process for use in biofuels applications.

So instead of the research being focused on a single purpose, the collaboration allowed the firms involved to explore multiple avenues of opportunity. And that is perhaps the greatest advantage of open innovation: the ability to assemble pieces of innovation and ideas from different sources to make powerful things happen.

Open innovation also keeps more work in play—ideas that didn’t pan out for their initial use are less likely to be shelved, and as more information becomes available for other groups to consider, the pieces can fall into place for successes that no single group could have seen. The possibilities grow exponentially. Pharma can pull itself out of the doldrums of R&D—with a different model that everyone has to get used to, to be sure—but the momentum is again there to drive the industry forward.

Collaboration doesn’t always have to be of the purely “open” variety to be productive, either. Partnerships and other agreements that make fruitful connections are also effective catalysts for innovation. At Emergent Technologies, we’ve found that even if companies come together under carefully structured license and development agreements, the more support we see for the concept of successfully sharing useful information. Last month, we were very proud to announce an agreement based on open innovation that lets two superb firms concentrate on the talents and technology that made each successful.

The agreement between PhosImmune and PureMHC creates the opportunity for bold new treatments for cancers—particularly in areas where mainstream research may not reach—and it gives each group value-added benefits by adding strengths that each group would not have had on its own.

PhosImmune’s highly tumor-specific peptide antigens are a natural match for PureMHC’s innovative TCRms, and the resulting TCRms will be jointly commercialized. Moreover, when you look at the scientists who will collaborate on this project—some of the most prestigious names in biotechnology—you can see an entirely new dimension of open innovation. You connect some of the finest minds in the world, and open new lines of communications that could lead to unexpected ideas.

That’s the ultimate value of overcoming the inertia behind the reluctance to use open innovation. Once things are set into motion, the acceleration can bring big ideas in a hurry.

What do you want to build today?