Pharma companies where open innovation becomes an attitude rather than a process will reap the rewards in the future. [© deanm1974 - Fotolia.com]
“For many years the R&D spending in pharma has been growing, while the number of drugs approved has been diminishing. The good news is that R&D spending is now reducing ($35 billion worldwide in 2009–2010) and the pipeline of new drugs is growing. I believe there is a link between those pharma companies that are becoming more outward-facing and their increasing productivity,” comments Patrick Vallance, president, pharmaceuticals R&D at GlaxoSmithKline, speaking at the recent “Open Innovation in Action” Summit at Stevenage Bioscience Catalyst (SBC).
According to Clare O’Neill, Ph.D., founder of innovation consultancy, Original Ventures, open innovation is a form of collective intelligence. O’Neill explains, “Those in companies who are more connected have a higher risk of having a good idea. If you are connected to people, then ideas can be challenged from multiple angles.”
As many big pharmas are maturing they have become more akin to manufacturing organizations with less internal innovation. This is where accessing science from academic centers of excellence and SMEs can help, and delegates at the conference believe many pharmas are now altering their business model and will increasingly access innovation in drug discovery from external sources.
Vallance comments, “We have pushed the externalization agenda and have many models of how it works. We’re believers in harnessing external expertise because it is now crucial for our business to progress. We have 10,500 scientists working for us worldwide, and there is no way we’ll even have one percent of the good ideas in the world. This is why we were keen to be involved in setting up SBC as the UK’s first open innovation biomedical campus at our Stevenage site because it allows us to have links with some of the highest caliber scientists in the world without having them in-house.”
Vallance detailed that GSK now has 42 discovery performance units, which are small teams of GSK scientists focused on the discovery of medicines for specific areas of disease that are operating an open innovation strategy. These are partnerships focused on developing assets that are currently pre-proof-of-concept and include in-licenses, option collaborations, technology deals and academic collaborations, all ultimately focused on producing new molecules.
A number of open innovation successes were highlighted at the conference. O’Neill says: “Open innovation leads to increasing success and early adopters such as Procter and Gamble have seen their revenues increase twofold, and Eli Lilly is a strong leader in open innovation with their current open innovation TB program.”
Duncan Judd, founder of drug discovery services consultancy, Awridian, presented other good examples of where open innovation is being utilized in drug discovery. These include the development of 47 lead compounds to treat malaria which have come from open access to the compounds and facilities at GSK’s site at Tres Cantos in Spain; Shire funding a rare diseases R&D partnership with Italy’s TIGEM to the tune of $22 million; the SGC at Oxford seeking to solve the structures of human proteins of medical relevance and allowing their use without restriction, and the MRC-AstraZeneca collaboration where researchers have access to 22 AstraZeneca compounds to potentially treat Alzheimer’s disease.
Open Innovation consultant Stefan Lindegaard explains where he believes open innovation currently sits in big pharma, saying, “96% of all product innovation fails, so this means around 2% of new products produce 90% of the value so you have to keep innovating. Procter and Gamble started their open innovation program 12 years ago; now they are so used to working in teams where there is an external element that they just call it innovation. In seven years time in pharma it will be the same, where open innovation will become systematized and strategic in many companies, and those that don’t do this will struggle.” Lindegaard adds, “Small companies are roadkill and they have to be entrepreneurial to survive, it is only the large pharmas that can afford to do the innovation because their size provides some protection should certain approaches fail. This is why open innovation needs to be part of the toolbox for big pharma.”
The Other Side of the Coin
It is clear that open innovation does have a number of benefits for big pharma but what’s in it for academic scientists? Christine Martin, Ph.D., manager, drug discovery, at Cambridge Enterprise, the technology transfer company of the University of Cambridge, explains why some groups at Cambridge want to locate at the open innovation, SBC campus: “We help researchers convert their validated targets from aspirational to de-risked, investable assets. Many academics appreciate how challenging the transition from target to drug candidate can be; so what we are doing is identifying those research groups that would benefit from access to drug discovery expertise by co-location with industry at the SBC. Through their Scinovo group, GSK is happy to help because at this stage the assets are pre-competitive.”
Martino Picardo, Ph.D, CEO of SBC, continues, “Several groups at the University of Cambridge want to be here, as their scientists need access to GSK's drug discovery expertise, as well as that of Scinovo, the organization within GSK that provides consultancy in that area. Our open ecosystem here also provides state-of-the-art facilities and equipment that academics and small companies would not otherwise be able to access.”
A Shift in Perceptions
A culture of open innovation seems to offer a number of advantages in terms of cost reductions, access to new ideas, and crowd-sourced funding, yet many speakers at the conference stated that its adoption has been slower in big pharma than other industries. O’Neill says, “Open innovation is not a panacea but is underutilized in this sector and opportunities are being missed.” Some cited the fact that open innovation projects sometimes come up against the ‘not invented here syndrome’, where employees are less willing to engage with external partners. According to panelists at the conference, to overcome this mindset, their firms have systematized open innovation more rigorously with targets that reward staff when they deliver projects which have utilized an open innovation element.”
Another issue cited was intellectual property rights. Vallance explains, “All our 13,500 compound hits against the malaria parasite are in the public domain and this caused an interesting reaction from our lawyers as they believed we were throwing away our IP.” He adds, “Our biggest challenge now is overprotection of IP, especially in the university sector because it is more restrictive than is appropriate. Tech transfer offices overvaluing ideas could become a problem for open innovation if it continues.”
A knock-on effect has been that funding of projects with open innovation elements is sometimes more difficult to access, especially in Europe. Vallance comments, “VCs in the U.S. are changing, and they are happy to own a part of something rather than the whole. I’m not sure we’ve had that shift of thinking with the VCs in the UK. I think they need to ask themselves if they want to own 100% of something that is diminishing or to own a bit of something that is growing.”
Where to Now?
With the blockbuster model in pharma now becoming unsustainable and expensive drugs not being reimbursed, it is clear that big pharma has got to be creative and decrease the amount of money spent developing those drugs. Open innovation looks set to continue being a popular strategy for potentially reducing these costs. O’Neill concludes, “The train has left the platform and is moving. It is 10 years since early adopters begun their open innovation programs and it is those pharma companies where open innovation becomes an attitude rather than a process which will reap the rewards in the future.”