Picture this. It's the mid-1880s. The light bulb and the phonograph have just been invented. Mendel has announced the laws
of heredity, and the first combustion engine is just a few years away. You're an executive at a pharmaceutical company, charged
with some strategic planning. Your challenge: How is your company going to deal with the threat of generic recombinant human
It sounds ludicrous, I know. But it's not that far from the situation the industry finds itself in today. Or so argued Newt
Gingrich, formerly Speaker of the House of Representatives and currently a crusader for improved healthcare, at a presentation
I attended last week.
More scientists are alive today than in previous history combined, Gingrich said. That means there will be more new knowledge
in the next 25 years than in the past 100—planning how to get from 2006 to 2030 is going to be just as complex as planning
for 2006 from the standpoint of 1880. (One scientist wrote Gingrich to correct his estimate, saying the rate of change will
be closer to seven-to-one. That would make planning for 2030 more like thinking about 2006 in 1660. Imagine William Shakespeare
on your strategic planning committee.)
On the one hand, this is great news. We all want to learn more of the body's mysteries and to treat diseases that have never
been successfully treated before. But unless money somehow becomes irrelevant in the next 25 years, pharma companies in the
future are still going to need a business model to develop medicines. And pharma's business model, unfortunately, doesn't
measure up to the challenges of today, much less a hundred knowledge-years from now.
Just think of the way pharma has changed in the past 25 years, from the birth of products based in recombinant DNA to the
latest insights of proteomics and metabolomics. Think in particular of the diseases whose treatment has been utterly transformed—from
HIV, which turned from a death sentence to a relatively manageable condition, to cervical cancer, one of the world's great
killers, which now we can envision eliminating as completely as we eliminated smallpox.
Now, imagine what happens as the pace of change accelerates, and diseases like heart disease start yielding their secrets.
It's splendid to contemplate, but difficult to imagine that a single business assumption pharma relies on today will be unchallenged.
What kind of assumption? Well, today, R&D is expensive, and the barriers to entry into pharma manufacturing are high. That
could change. The state of the art in in many clinical areas is chronic treatment with moderately expensive drugs—statins,
insulin, etc. But there are already inklings that we may be entering an era of cures, the likes of which we haven't seen since
the arrival of antibiotics 50 years ago. Today, desperate conditions such as cancer justify high-priced medicines. Tomorrow
(if prophets like Harvard's Judah Folkman are correct) we may prevent cancer from developing by the use of simple, low-priced
treatments given long before tumors start to grow.
Again, great news, but not if you were planning to run your business as you run it today. History has shown repeatedly that
new knowledge transforms not just what we can do, but how it is financed and commercialized. As Newt Gingrich put it, your
future is not just choosing between Path A or Path B, "People like you," he said, "are going to invent the path." To the public,
the glory of the years to come will be in new science, new medicines, and new cures. But someone has to do the hard, scary
work of guaranteeing the survival of the businesses that bring new cures to patients. Like it or not, it's in your lap. Best