Science translation as a “free-market”?
By: Panacea Innovation
Tags: Research, Startup, Entrepreneurship, Science, Pharmaceutical

If you have been following the Pharma market for the last couple of decades, you will probably have heard the whispers and seen the evidence of a fundamental change in the classical R&D model. You may also have heard a number of predictions about the ability of the Pharma industry to adapt and survive to such changes. There are a number of reports and articles explaining such theories. I am not going to reiterate those here, rather, I would like to explore a more holistic point of view, based on my exposure to early-stage life science and healthcare ventures. Instead of examining the implications this shift will have on big Pharma, I would like to address the effects it will have on the state of research and society as a whole.

If we quickly go over the facts, it is clear that the R&D model in Pharma is changing. Over 50% of the R&D budget of “Big Pharma” is now allocated to strategic partnerships or outsourcing of research, in line with an increase in partnerships with academic institutions and an attempt to foster more “creative” research models (1, 2). As described by many analysts, this new allocation of resources and change in strategy come as a result of the realisation that the pharma business model has failed to evolve along with technology and is now seen as inefficient and outdated in a fast moving world.

At the same time, from a research point of view, it is getting increasingly easier to get involved in science. There are a growing number of companies, such as Clustermarket, and incubator spaces, such as UnitDX and Open Cell, which provide access to equipment and lab space to any entrepreneur with a promising idea. Additionally, as techniques are refined, the technical learning curve to becoming a “scientist” is getting smoother. For example, the first genome sequenced cost an estimated $2.7 billion while nowadays you can sequence someone’s genome for around $1,000. This is a well-known example,but seasoned scientists understand that this is a widespread phenomenon, with the increase in commercially-available molecular biology kits, which seem to be replacing the tedious and complicated assays that used to be developed in-house. These kits are the scientific equivalent of buying a pre-prepared meal that you simply put in the oven as opposed to buying the raw ingredients and making the meal from scratch, thus allowing anyone to become a gourmet chef.

In parallel, there has been a growing popularity towards entrepreneurship, originating from the Tech and what used to be called Computer Science worlds. Slowly, this maker culture and startup mentality is expanding into the different academic science fields and disrupting traditional research. As a result, many organisations, including Panacea Innovation, have grown with the purpose of supporting scientists interested in entrepreneurship. Additionally, investment vehicles have turned towards biotech, medical devices, digital health and other deep science fields for new investment opportunities.

The combination ofa lack of efficiency in internal Pharma R&D, easier access to science for entrepreneurs and a growing support network for scientists interested in entrepreneurship leads to what I like to call a free-market of ideas. It means that any entrepreneur or recently graduated PhD student with a great scientific idea, aiming to address a pain point for society or a patient group, is increasingly able to get access to lab space, expertise, and funding to test their idea. This results in a wide array of ideas, from a diverse group of people, with different expertise and experiences; leading to more potential solutions than a select group of scientists within a “Big Pharma” may have been able to think of. As best-seller author, James Surowiecki,describes in his book “The Wisdom of Crowds”, the combined judgement of a crowd of diverse individuals is better than a limited panel of experts (3).

Importantly, the limited amount of funding and services available to these new scientist-entrepreneurs, via angel investors, venture capitalists, or accelerator programmes, acts as early-stage validation. This means that ideas with great potential get support and funding,whilst others fail early. When thinking of creating societal value through research, this appears to be a more efficient model than classical R&D, where a panel of experts decide upon a research focus and follow it through for years before realising whether the idea has potential or not. As Forbes contributor, Stan Fleming, puts it in his article: “Pharma’s Innovation Crisis, Part 2: How To Fix It”, the only way for Pharma companies to increase discovery efficiently is through external innovation, due to the cost structure of the pharma industry (4).

Whilst we are already observing an increasing shift towards external innovation, academic partnerships and innovation seeding provided by “Big Pharma” players, it begs the question, is this shift happening fast enough? Should more resources allocated to internal R&D be used to support entrepreneurs and scientists and provide them with the infrastructure they need to succeed in this space? As reluctant futurist, Mark Stevenson, explains, it is hard to predict the future. However, the inherent flaw in predicting the future is that it sets us up to react passively to it when in actuality we have the power to actively influence it (5). The question then becomes what do we want to achieve?