Another reason Chane is skeptical about the therapeutic-area trend is that it smacks of tactical opportunism at the expense
of long-term strategy—a holdover from the blockbuster model. Some companies are lining up to crow about their new oncology
franchises when in reality all they have is a single viable product. "What I want to ask is: Is it a real therapeutic area
or a virtual one?" Chane says. "If you want to be a player in a market, you need to say what kind of products you are bringing—what
novel approaches, what technical innovations, what targets, what your goals are over many years. This becomes the umbrella
that informs all decisions and processes."
The good news is that pharma's discovery engine is pumping out promising targets. The bad news is that the escalating economic
squeeze makes it even more essential to stake a claim in a therapeutic area of choice. And that will tempt researchers to
speed compounds through Phase I and II—garnering the minimum amount of data—to get to Phase III as fast as possible. Chane
says that's backward. "Because there are so many potential targets, because the commercial picture is so complex, and because
the price of late failure is so high," he says, "companies should be putting a lot more time and effort into Phase II."
He argues that "by running more early trials, such as dosing, therapeutic mechanisms, and multiple proofs of concept"—and
knowing as much as possible about the compound—"companies will be able not only to control risk better but, more important,
to build differentiation into the product and its value." A drug that comes to market with data to answer real-world cost-effectiveness
questions should require much less sales muscle. "Phase III will become almost mechanical, with a higher bar for success but
fewer surprises because so much data has already been generated."
Chane acknowledges that scientists have a deep-rooted—and well-founded—resistance to commercial influence. What the R&Ders
understandably object to is the imposition of marketing tactics on the scientific method. For Chane's early-commercialization
model to work, it requires a whole new breed of marketer for R&D to partner with. "You don't want sales reps or brand managers
who have been promoted out of the field to be doing this work," he says. "The right people are MDs and maybe RNs—people from
the medical affairs department who know both the science of the drug and the standards of care around the disease."
OPEN (AND OUT) SOURCE: A model to tap global expertise
What if today's spiraling costs and plummeting productivity are symptoms of a breakdown beyond the business model? What if
the problem lies not in pharma's value chain but in its values? Could the industry's instinct for self-protection and secrecy
have resulted in practices and mind-sets that are no longer functional? Could its obsession with competition have closed down
its capacity to compete effectively?
"Everyone agrees that when you introduce competition, quality goes up, costs go down, and customer satisfaction rises," says
Bernard Munos, an advisor in corporate strategy at Eli Lilly. "And nothing places you in competition with the skills and capabilities
that exist in the rest of the world like the open source model. Pharma might counter that, with each big company managing
hundreds of alliances, its R&D process is already open to external innovation. This is true—yet what goes on inside is visible
to the company at the center, but out-of-bounds to everyone else. Open-source changes that radically."
According to Munos, business models, like people, are not forever. They are born, they prosper, and they pass away, and the
symptoms of decay tend to be similar from industry to industry: sales growth flattens, product lifecycles shorten, fierce
competition causes periods of exclusivity to collapse along with prices. True innovation, demanding too dear an investment
of time and money, ends. And when innovation dies, the industry goes with it.