Open innovation – Is the pharmaceutical industry ready?

Open innovation is a fascinating topic. According to Dr. Henry Chesbrough, who is the co-founder of the Open Innovation Community, “Informally, open innovation is the idea that companies should make greater use of external ideas and technologies in their own business, and allow unused internal ideas to flow out to others for use in their business. It is the antithesis of a closed innovation process which relies on internal R&D and deep vertical integration.”

The traditional business model of pharma (based on blockbuster multi-billion sales generating products) has shown its weaknesses and is today doomed to fail. The industry must reinvent itself and open innovation is thought as one tool among others to help reconnect with R&D productivity and profitability.

What could be the advantages of open innovation for pharma?

  • go beyond the closed model of innovation. Collaborate and try to find the best companies for each project instead of the companies focusing on the same targets with differentiated successes…
  • focus on what you do best. The cost of R&D will thus not be duplicated and will be dramatically lower. It will benefit the industry as a whole.
  • concentrate on specific markets and sell the IP for the other ones.
  • open your R&D to other industries and take a look at them too as cross-fertilization could lead to fantastic and awesome ideas.
  • expand your network to exchange ideas and challenge your own ones.
  • use crowdsourcing when you are stuck. Somebody in the world has maybe already encountered such an issue or the wisedom from the crowds could help you.

Companies like AstraZeneca and Eli Lilly have already started their own transformation by opening up to the external world. They are not alone and the transformation is on track…

As a conclusion, I propose you to watch an pretty old but excellent TED Talk on the subject, not dedicated to the pharmaceutical industry. He talks about the role of consumers and end users but also about the fact that creativity is both collaborative and interactive. The pharma industry absolutely needs (an it has already started to do it!) to think out of the box. It has definitely to look toward other industries to learn from them. Another point highlighted by the speaker is the fatal error of looking for incremental innovation instead of striking/disruptive innovation because of the perceived risk. We know that big companies are far more risk averse that smaller ones. Attitude has to change.

Additional resources:

Measuring Open Innovation_Creativity_Innovation_Management_2015 – A brilliant article on how to measure open innovation

Open Innovation in Pharmaceutical Industry: A case study of Eli Lilly – Master of Sciences Thesis by Borja Hernandez Raja & Priyadarsini Sambandan – 2015

Managing innovation in Pharma – PriceWaterhouseCoopers – 2014

Restructuring The Pharma Industry Mizuho 2014 – On page 30, the open innovation model is compared to the traditional model. This report brings to light which company leads the way when it comes to open innovation.

Connecting Knowledge: How big pharmaceutical companies invest in Open Innovation? – Futuribles – 2014

Models for open innovation in the pharmaceutical industry – Drug Discovery Today – 2013

Pharmaceutical Innovation Hits the Wall: How Open Innovation Can Help – Forbes – 2011

JNJ_Open Innovation An Imperative for the Pharma Industry_BIF_Spring_2010 – An excellent presentation by the head of external research at JNJ

Is open innovation the way forward for big pharma? – Nature Reviews Drug Discovery – 2010 (subscription required)

Future of OI – R&D Management – 2010

Pharma 2020: Challenging business models – PriceWaterhouseCoopers – 2009

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