In Thought Leadership

By the late 1960’s the pharmaceutical industry found itself on the brink of the first pharmaceutical innovation crisis. Running out of ideas, this deepened further during the 1970’s; and by 1980, the industry was in the grip of its first full-blown innovation crisis.

Increased regulatory scrutiny and spiralling R&D costs brought innovation to a crawl. With R&D typically eating up 12 or more years of the patent-protected lifespan of the product, it left little time for the industry to recover those costs.

Then, in 1990, an apparent solution arrived: Business Process Re-engineering gripped the industry.

The logic seemed inescapable. By reducing cycle time we increase development speed. Increased speed means quicker approval and a longer period of patent-protected sales. And, with a moderately successful drug grossing $1bn in sales per annum, every week saved meant another $20m.

The industry threw itself into re-engineering their R&D processes. Except where constrained by the laws of physics or nature, the goal was to minimise development cycle time. (A two-year stability study might not take less than two years; and reproductive studies might not be shorter than the gestation period. Otherwise, everything else was fair game.) There were no rules. Development activities that had traditionally been performed in series were now conducted in parallel to minimise cycle time.

And by the year 2000 the industry was feeling pretty pleased with itself[1]. Development times had fallen dramatically, the industry was able to report year-on-year reductions in the average time to marketing authorisation approval, and we waited to harvest the fruits of this labour.

And we waited.  And we waited.  But the fruits never came. What had gone wrong?

The answer was obvious. In our haste to maximise development speed and minimise development cycle time, we had forgotten one of the fundamental laws of drug development – not all drugs make it to market.

Less than 10% of drugs entering Phase 1 will make it to marketing authorisation approval. In re-engineering R&D we had optimised the entire development process around that tiny minority of molecules that will make it to market. We had optimised the development process around an event that happens just 10% of the time, and we had forgotten about the 90% that don’t make it.

By switching from a highly serial process to a largely parallel process, we had lost opportunities to discontinue the development of unsuccessful molecules early in the development cycle. We had lost the ‘option value’ that comes from opportunities to discontinue development before incurring the full cost of development[2]. By placing development tasks in parallel we increased the ‘burn rate’ in R&D. And – wait for it – we actually increased the average time to marketing authorisation approval.

This is known as the Development Speed Paradox[3, 4].

The Development Speed Paradox – the faster you go, the longer it takes – arises because failing molecules clog the development pipeline, denying successful molecules the opportunity to enter development. As a result, the industry became really slick at delivering late-stage failures to the market place, precipitating the current pharmaceutical innovation crisis. Late-stage attrition now characterised the R&D process[5].

So, what to do?

We do what we usually do: we flail around hoping to latch on to a solution when we don’t even understand the problem. Every year the latest, latest-thing is bandied around as the solution to our woes. The industry is just as prone to fads as ever.

Not everyone believes there even is a problem. Denialists claim that there is no innovation crisis. That the crisis is either manufactured by pharmaceutical lobbyists seeking government tax concessions; or that the innovation crisis is the result of a poor choice of innovation metrics.

But, in truth, the industry has never been especially good at innovation.

Slowly, the industry is coming to recognise where it went wrong. Slowly, we’re in the process of unpicking some of the changes introduced in the 1990s. Slowly, the focus is switching from pushing molecules as quickly as possible, to eliminating failing molecules from the pipeline as quickly as possible. From progression bias to rational optimism.

The emphasis has changed. If you’re looking for a needle in a haystack, torch the haystack[6].

  1. Getz, K.A. and A. De Bruin, Breaking the development speed barrier: assessing successful practices of the fastest drug development companies. Drug Information Journal, 2000. 34: p. 725-736.
  2. Burman, C.-F. and S. Senn, Examples of option values in drug development. Pharmaeutical Statistics, 2003. 2: p. 113-125.
  3. Lendrem, D.W., More haste, less development speed., in Scrip Magazine. 1995. p. 22-23.
  4. Lendrem, D.W. and B.C. Lendrem, The development speed paradox: can increasing development speed reduce R&D productivity? Drug Discov Today, 2014.
  5. Arrowsmith, J. and P. Miller, Trial Watch: Phase II and Phase III attrition rates 2011-2012. Nat Rev Drug Discov, 2013. 12(8): p. 569-569.
  6. Lendrem, D.W. and B.C. Lendrem, Torching the Haystack: modelling fast-fail strategies in drug development. Drug Discovery Today, 2013. 18(7–8): p. 331-336.
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