An Open Call for Help: Can Pfizer Find the Cure for Cancer… Outside the Walls of Pfizer?
The discovery of groundbreaking medical treatments may no longer solely rest in the hands of scientists; grassroots R&D efforts combine scientific expertise with the experiences and creativity and horsepower of the masses.
The new pharma paradigm: rising R&D costs and new innovation models.
For decades, the cost of new drug development has been rising at an unsustainable clip and pharmaceutical companies have had to look outside the proverbial four walls of their companies for the cure. The estimated cost to approve a new drug in the U.S. has ballooned to $2.6B, growing at an 8.5% CAGR since 2003. [1] In 2009, Eli Lilly pioneered one of the first open innovation platform for researchers to submit new chemical molecules for a particular drug target. [2] Since, pharmaceutical companies have intuitively partnered with academia, launching contests for scientists to submit proposals and awarding grants to winners. The results? Greater reach and unexpected discoveries at a lower cost vis-à-vis in-house R&D.
Growth in Capitalized R&D Costs per Approved New Drug [1]
Pfizer taps into open innovation to further its goal of helping people live longer, healthier lives.
Pfizer (NYSE: PFE) is the world’s largest biopharmaceutical company, achieving $52.5B of revenues in 2017 [3]. Despite its success, Pfizer has not been immune to the industry’s headwinds; patent cliffs on its blockbuster drugs such as Zoloft, Lipitor, and Viagra have made it necessary for the Company to launch 5-6 successful drugs per year to sustain growth. [4] As part of its medium to long-term strategy, Pfizer is addressing these R&D challenges by cultivating a culture of authentic collaboration, shared decision making, and aligned incentives. Crowdsourcing initiatives were launched in 2012 and are housed in the Center for Therapeutic Innovation (CTI), a R&D network that uses a collaborative model to bring ideas to market. Since, the Company has sponsored 100+ challenges and unearthed 11k crowdsourced ideas. [5] In the near-term, Pfizer will continue to stretch its innovative reach even further, by not only tapping into the ingenuity of top researchers, but also harnessing the insights, creativity, and horsepower of non-scientific contributors.
Pfizer’s Open Innovation Stats [5]
Calling all Coders.
In 2014, Pfizer collected millions of data points for its research on Chronic Obstructive Pulmonary Disease [a] study. However, in-house technology at the time would require ten hours to analyze genetic markers for a single trait, creating a coding bottleneck. Knowing its technological limitations, Pfizer launched a coding contest. The winner, a French coder who worked at a digital marketing company by day, developed an algorithm that reduced processing speed to 30 seconds. [6]
Calling all U.S. Residents.
As healthcare becomes increasingly consumer-centric, Pfizer is pioneering ways to collect novel data directly from the consumer. In 2016, Pfizer became the first pharmaceutical company to partner with Indiegogo, a website that helps individuals and corporations solicit funds and ideas. Through the crowdsourcing platform, Pfizer tapped into Indiegogo’s vast pool of entrepreneurs and challenged people across America to develop the next new big idea in healthy aging. This partnership exemplifies another benefit of open innovation: creating awareness around social issues such as challenging misconceptions of aging. [7]
The Future of “Failing Fast”
Crowdsourcing is analogous to attaching a high-tech battery pack to an existing machine (e.g. traditional R&D department) to improve power and speed at a fraction of the cost of upgrading the machine itself. Crowdsourcing enables large and risk-adverse companies to function as nimble start-ups, by allowing companies to move fast and fail fast. This “fail fast” mentality, however, is not without inherent risk. Pfizer must acknowledge the risks of crowdsourcing medical problems to potentially untrained individuals. As such, in the near-term, management should set quality standards, and define which questions are suitable for crowdsourcing. In the near to medium-term, management should be highly critical to crowdsourced ideas, particularly those with clinical implications, and be willing to shut down entire campaigns that show signs of failure. In addition, lingering in the background of open innovation is the issue of intellectual property. Particularly as the pharmaceutical industry is under fire for ethical issues such as price hikes, Pfizer must commit to fairly compensating and awarding credit to all contributors of its projects.
When it comes to one of the most devastating disease, cancer, researchers have already been using crowdsourcing to surface both professional and non-professional views on clinical trial design, care plans, and various other important R&D questions. [8] One can argue that open innovation is particularly effective in the healthcare industry due to the “do good” nature of the field as crowdsourcing taps into people’s intrinsic motivators to help improve global health and find a cure for cancer.
Questions
- Given the low barriers to starting a crowdsourcing campaign (e.g. launching a competition), how should Pfizer think about creating a sustainable competitive advantage against peers?
- Aside from Indiegogo, what other partnerships should Pfizer consider to further its goals in open innovation?
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Footnotes:
[a] Chronic inflammatory lung disease that causes obstructed airflow from the lungs.
Citations:
[1] DiMasi, Joseph. 2014. “Cost Of Developing A New Drug”. Presentation, Boston, MA, , 2014.
[2] Wang, Liangsu, Andrew Plump, and Michael Ringel. 2015. “Racing To Define Pharmaceutical R&D External Innovation Models”. Drug Discovery Today 20 (3).
[3] Pfizer Inc., November 13, 2018 Form 10-K (filed February 22, 2018), via Thomson Reuters/Thomson ONE.
[4] Thomke, Stefan and Nimgade, Ashok, “Pfizer: Building and Innovation Center,” HBS No. 609-037 (Boston: Harvard Business School Publishing, 2008), p. 3.
[5] Cohen, Brian. 2017. “Zen And The Art Of Crowdsourcing: How Pfizer Leads Innovation By Using Crowd Power”. Presentation, 2017 Digital Pharma West Conference, , 2017.
[6] Fujimori, Sachi, “Tapping Coding Virtuosos to Solve Research Challenges,” Get Science, April 6, 2017, https://www.getscience.com/innovators/tapping-coding-virtuosos-solve-research-challenges?linkId=37441008, accessed November 2018.
[7] “Pharmaceutical Companies; Help Pfizer Change The Future Of Healthy Aging”. 2016. Obesity, Fitness & Wellness Week. http://www.businesswire.com/news/home/20160616005160/en/.
[8] Lee, Young Ji, Janet A. Arida, and Heidi S. Donovan. 2017. “The Application Of Crowdsourcing Approaches To Cancer Research: A Systematic Review”. Cancer Med. https://www.ncbi.nlm.nih.gov/pmc/articles/PMC5673951/.
You’ve done a good job of highlighting the opportunity of crowdsourcing to help speed the process of discovery and R&D. I have two concerns, however. First, I think there is a risk of opening the gates to all ideas, good and bad, which has the potential to create more work for Pfizer as it has to weed out good/credible ideas from a larger pool. Second, I think there are concerns about fair compensation for ideas that are used. I wonder if another “disruptive technology,” blockchain, could help in this regard.
Great job! I believe that the power of open innovation in the pharma industry is extremely beneficial for both the company and the society as a whole. If companies like Pfizer can develop a robust and reliable open innovation platform, R&D costs will plunge, leading to efficiencies in the entire value chain and providing society with new and more affordable drugs.
However, I will be extremely conscious about how to apply open innovation in the medical industry. Let’s imagine that Pfizer launches an open innovation challenge to create a cure for liver cancer. First, top talent is mandatory. The incentives should be extremely clear and aligned to bring on board the best talented scientists and physicians. If the company fails to attract them, then the outcome will not probably be successful. Second, approving a drug from an open innovation challenge would require stricter procedures than those if the drug is developed internally. Once Pfizer makes sure it has the right participants, the company should analyze thoroughly every single proposal because of the implied risks in public health. This is not about toys or cars, medicine should be treated very carefully when opened up to distributed innovation.
On the whole, I feel there is a huge potential in the application of distributed innovation in pharma, but companies should be aware of the motivators required to attract the right talent and the implied risks of outsourcing drug development process.
Great job laying out the underlying spend issue, the key use cases and the inherent risks. Wanted to hone in on the competitive issue here – I would be concerned that the low barriers to entry in an open innovation environment would allow Pfizer’s competitors to have access to the same research they rely on which has historically been a differentiator. Pfizer and its peers are focused on bringing to market valuable medicines efficiently, but are also heavily focused on creating sustainable moats and shareholder value. The coders and US residents applications seem to be attractive from a low cost resource perspective and not very intrusive from a competitive standpoint. For the research / academia, would a better path be to develop machine learning to take vasts amounts of research/data to make suggestions on potential paths forward for internal research at Pfizer?
It’s interesting to see the partnerships forming between private citizens and companies, I think this article does a great job of outlining some of the positive outcomes that can come from a productive partnership. It seems like this avenue for innovation has become increasingly important for Pfizer over the past couple of years, and they have certainly benefitted from the relative novelty of open innovation. I’m curious how sustainable this will be as more companies jump into this space – what will incentivize people to work with one company versus another? I think that part of the challenge will be developing the appropriate incentives to reward people for outstanding contributions through the platforms, and I would expect that these incentives will need to increase in the coming years as more companies try to entice the public to work on their problems versus their competitors’ problems. Pfizer might be able to differentiate itself through their processes around converting these crowdsourced ideas into reality, which might draw more interest as the general public feels that their work is more valued by Pfizer than its peers, but this will take thoughtful investment and deliberate management decisions to implement.
I agree that open innovation/crowdsourcing is the ideal way to generate better ideas including finding a cure for cancer. But there are reasons I doubt Pfizer can and would implement something of this sort.
One – there’s no benefit to Pfizer if a crowdsourced cure to cancer is reached and thus puts them out of the market for cancer drugs. If the solution can’t be proprietary, there’s no balance to the tradeoff of lost sales of their incumbent drugs.
Secondly – similar to the point above, how will the contributors be compensated? There is no compensation baked into the structure of research, and even if the research is successful, it seems the only way to reward the producers is again crowdsourcing.
This is a super interesting article- thank you for sharing! As we’ve learned from many of our cases, the pharmaceutical industry cares a lot about intellectual property and the length of their patents. I’d be curious to learn how IP rights work when the innovation is being open-sourced and crowd-sourced. What happens if the French coder who won the Pfizer competition wants to keep their work product free and available to the public. While there is a ton of healthcare data available and a ton of opportunities in the open innovation space for using healthcare data more effectively, I’m also concerned about the various legal constraints like HIPAA compliance standards that might restrict use, storage, and publication of data.
Although I see the point of harnessing the power of crowds to think of solutions more difficult to think of in house, I also see that it would be wasteful to host one-off competitions, having individual teams reinvent the wheel over and over again. Perhaps instead of hosting one-off competitions, Pfizer would be better off creating collaborative communities where teams can build off each others’ ideas.
Very interesting article about Pfizer trying to harness the power of the masses in drug discovery and innovation. My biggest concern is on the proper compensation for these innovators, particularly if some of this innovation results in blockbuster drug discovery. I do appreciate the design thinking mentality that Pfizer is taking, but I do find it interesting that they chose to use aging as the topic, as their primary customer (older adults) are less likely to be aware of or have the capabilities to engage with this technology. This method of drug discovery seems very much in line with current trends of megapharmaceutical companies like Pfizer acquiring small startups, effectively outsourcing innovation, as opposed to funding their own R&D as they did in the 80s and 90s.
Really enjoyed this article about Pfizer’s efforts and I’m of course rooting hard for their success. Unlike some of the other commenters here, I’m inclined like Helene to agree that the “do good” nature of the project is likely to limit fraud and reduce the need for compensation of the individual contributors and Pfizer overall. One thing that I’m not sure I understand is how to define the size of the project to crowd-source. On the one hand, Pfizer was definitely successfully using crowd-sourcing for a specific coding problem in the article. Indeed, it seems that you’d want to gather folks’ views on a substantial problem, but with a challenge like “cure cancer” it is hard to see how you could actually add meaningful value without tremendous team efforts over a period of time. Can crowd-sourcing really be effective in this context with a problem of this magnitude and complexity?
This is fascinating. One advantage of opening this kind data and innovation up to the public is that previously overlooked people can participate in this process. It may have been previously strictly the realm of the medical profession to help innovate in medicine and treatment, but opening up this to coders, mathematicians, philosophers…etc. can potentially tap overlooked expertise and perspectives that can lead to more innovation. Very exciting future of these kinds of projects!
Very interesting read, thank you! You ask a great question about sustainable competitive advantages with this model. Nothing is really stopping any other biopharma company from doing the same thing, thereby either diluting the talent pool that would be engaged in Pfizer’s competitions or creating a competitive market for ideas. One idea in an effort to ‘lock in’ collaborators would be to ‘license’ certain collaborators and then give them more access to labs, research, computing power, etc. such that once a collaborator is engaged in research on your systems, it’s harder for them to leave.
Nice article! I actually love the idea of continuing with competitions. One idea from a competitive advantage and sustainability standpoint is to onboard the innovators (competition winners) into a sort of ‘master class of pacesetters.’ The program can be structured in a way that pacesetters receive funding for their research over, for example, a 2 year time frame, with all related research being property of Pfizer. By bringing the talent in house you create an even bigger buzz among the community of researchers who would love to be backed by a large organization like Pfizer while simultaneously building up Pfizer’s bank of intellectual property.
Interesting article! And very well written thank you for sharing! A few questions were top of mind for me as I read your post. Firstly, how does this method of research and development, which is open to the public i.e. competitors, ensure the same long term competitive advantage that a private patent would provide? Currently, many pharmaceutical companies depend on their blockbuster drugs as you’ve highlighted above and hence pursue such aggressive R&D programs to ensure a full viable pipeline for the next cohort of patented blockbuster drugs? Additionally, would this remove the incentive for other pharmaceutical companies to simply ride off Eli Lilly’s open innovation platform and lower the overall industry’s R&D pursuits and perhaps hurt development of new drugs that could help consumer/patients?
Interesting article! I had no idea open innovation was being used that way. One main concern I would have is how much access to data is Pfizer granting this ‘crowd’ and whether whatever they are coming up with is vetted by Pfizer.
As this is is a sensitive and highly critical topic, extra caution should be taken in adopting the open innovation topic in healthcare
Great read! I think the competitive advantage of a pharma is inherently tied to its IP (e.g., gene therapy manufacturing expertise), so I am also curious about how patents are awarded and how contributors are compensated in a crowdsource model. Perhaps another form of open innovation (albeit a more traditional approach) is to give early-stage research grants to scientists in areas that NIH and other gov’t funds are not addressing. In the long-run, I think a big innovation challenge pharma continues to face is prioritizing its funnel of novel drugs from P1 to P3 more akin to a nimble biotech…
Thank you for an interesting read! Overall, I’m skeptical that crowd sourcing can be effective in drug development. However, time will tell! It’s worth exploring if the process truly provides cost and time savings. You’ve done a great job highlighting risks and offering potential mitigation strategies. However, one additional risk a positive confirmation bias that could result in the testing of the drugs sourced through open innovation. Said differently, Pfizer should be careful to not assume that the drugs developed through open innovation always work and only work for the specific disease because that could lead to some short cuts in the testing process, which ultimately could expose the company and consumers to major risk if not properly tested.
My concerns are less for competition on the crowdsourcing itself (i.e. can Pfizer keep a competitive advantage in the world of crowdsourcing?) and more with what might arise from opening the gates to data and access to information. I could see a possibility where granting access to massive and valuable internal data sets might allow for a new entrant to get vital information. On the flip side, this could really help accelerate development in the pursuit of treating and curing devastating diseases.
I would think about crowdsourcing in a focused avenue like through university research departments. This would allow for Pfizer to have a little better handle on how the data might be used while getting insights from a talented, decentralized network.
Great article! My worry with this approach stems from my understanding of the Theranos situation. John Carreyrou, the author of Bad Blood, points out that the investigation of Theranos originally stemmed from suspicion that an relatively uneducated drop-out could develop breakthrough technology at such a young age and with such little experience. Does this leave Pfizer open to a fool’s errand, chasing investments that turn out to be flops? Do they over-commit to these new ideas and throw away good money on research? Time will tell. Thanks!
Very interesting topic! Exciting to see open innovation used in the healthcare industry and hopefully can speed up R&D for critical diseases. As an industry developed based on IP system, I agree with a few comments above that how to license and protect IPs would be the big challenge when implementing open innovation system. Also, I would like to understand the pharmaceutical experts about what will impact their choices of open innovation platform to contribute. Will Pfizer, a big company with a lot of resources, be the right company to promote open innovation?