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Where will innovation come from?
August 2010
SHARING OPTIONS:
Thirty years later, it is unsettling to note the regular
closure of R&D assets in the United States and the associated reductions in
scientific headcount. The chairman of the board at Pfizer Inc. assisted with my
high school science fair project on antibiotics (circa 1960). I won a great
prize and still feel grateful to Pfizer. More recently, the company announced
the complete shutdown of a very new R&D headquarters in New London, Conn. A
bargain was no doubt possible when the site was sold to engineer nuclear
submarines.
A decade ago, it was predicted that pharma would submerge
under the weight of patent expirations, and now we’re there and heading deeper.
The science has gotten harder, and R&D hasn’t been able to keep up the pace
under pricing pressure from the previous generation of inventions.
We have a government that many feel is unfriendly to
business, focused on what goes wrong versus what goes right and keen on
spending (which ultimately means taxing) as government headcount rises. There
is no doubt that free enterprise provides enough evidence of avarice and
malfeasance to justify the statist and Robin Hood instincts of the left. With
all its faults, it is only free enterprise that has successfully raised the
living standards for all, step by step. It has done so by incentivizing
innovation, most commonly by the small and nimble.
This is the principle of the Chinese miracle that introduced
private housing, personal cars, digital communications, modernized
universities, a rapidly growing middle class and yes, fashion and color. Once
Chinese individuals were free to create and be rewarded, they got to work.
Their great talent now affords investing in new research laboratories just as
our economy forces them to close. This is not to be feared, but embraced and
challenged.
We are beginning to innovate on how we innovate. There is
the concept of open innovation. There is crowd sourcing. There is a renewed
interest on the part of pharma in academic partnerships that are disease
focused and cover five to 10 years. There is developing government support for
translational or transformative research involving academic teams. Put these
terms into Google and you can have all sorts of fun and even buy books on these
topics.
Let’s be sure these ideas are new. They are by no means settled, and
there are sure to be rough spots.
For example, academic science was not built on teamwork
outside of an individual professor’s research group. We became professors to
follow our passions, not to be organized around an objective set by others.
Education is the primary goal, and 99 percent of the intellectual property
walks across the stage at graduation, as well it should. Turnover of laboratory personnel is not
the problem. It’s the goal!
Consortia of pharmaceutical companies are now working
together by sharing precompetitive information on topics as diverse as kidney
toxicity, Alzheimer’s disease and malaria. They are even investing together, as
evidenced by Enlight Biosciences in Boston, which is currently supported by six
leading companies.
Note as well the Critical Path Institute. When will we
similarly enlighten our immigration policy for science and engineering talent?
When will we work harder on R&D tax credits and reduce the grab on capital
gains from development stage companies in high-risk ventures? When will we see
more matching of SBIR grants with private resources to leverage the taxpayer
investment?
There is also debate about patent system reform and even the
legal definition of innovation. Squabbles between generic and innovative pharma
continue to consume huge resources. What’s new? What’s important? What’s just a
nit in the process to allow for delay and a battle of wits? Can I patent my own
unique DNA? Would you like to take a license? Might I suggest 5 percent with
minimum annual royalties of $100,000? Clone a curmudgeon today!
There is also debate whether university licensing offices
are stimulating or constricting innovation. A good case can be made that they
are doing both. Technologies and personalities differ widely and rules don’t
often work. Our Indiana neighbor Eli Lilly & Co. speaks of transformation
from a fully integrated pharmaceutical company to a fully integrated
pharmaceutical network. Their MBAs are as good as the military and systems
biologists at inventing acronyms. Imagine an organic chemist as CEO of a
pharmaceutical company. Is this even legal? The Lilly construct does make a
serious point.
Everything I’ve mentioned about the mechanics of innovation
involves a vertical and horizontal disintegration of organizations into an
ecosystem that is dynamic and global, with temporary assignments and
alignments. It is a system where loyalty is not valued and you’ve got to stay
on your toes and deliver results. Graduate students view these developments
with some trepidation. Credentialism will surely not protect them. They’d
better not stop learning at graduation or even think for a moment about
settling into a house for 30 years. In California and Boston, there is nothing
new about moving from startup to startup. It’s a way to further your education.
It does mean that dense clustering of like businesses is a requirement to build
healthy communities and families. It is interesting that this occurs in
sections of the country considered to have the most unfriendly business
climates and the highest costs of living.
Peter T. Kissinger is chairman emeritus of BASi, CEO of
Prosolia in Indianapolis and a professor of chemistry at Purdue University. Back  |
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