Disruption is the new normal
Chris Doherty, Managing Director, Alderley Park
We live in an age of change where technology is allowing markets to move with breathtaking speed. Radical disruption is now a given. Companies that fail to expect and embrace it are left behind. Global brands that have grown spectacularly in recent years – such as AirBnB and Uber – have come from nowhere to transform entire sectors with their revolutionary approaches. Their ability to innovate – in terms of both products and the business model – has provided food for thought and inspiration for CEOs in every sector, including those attending BioTrinity this week.
Pharma is, of course, not immune from this technological acceleration. There is much discussion across the industry about how to embrace disruptive change. That dialogue has tended to be private, but it’s happening because it’s clear the old ways of working are evolving.
The challenges facing the pharma sector transcend geographical boundaries and require an internationally-cohesive approach. The panel session I am participating in at BioTrinity is set to discuss how best to evolve the industry and ensure this collaboration in a shifting geopolitical climate. Without question, it requires a combined effort from governments, lobby groups and businesses in the sector, and the Wednesday morning’s discussion comprises representatives from all three.
The UK Department for International Trade’s Kevin Holland – the Minister-Counsellor for trade and investment at the British embassy in Beijing – is alongside me on the panel. He has unique insight into the way China, the most densely populated country in the world, has leveraged technology to address its healthcare challenges, and drawn upon research from UK universities to do so. It will be fascinating to hear from him.
It’s all too easy to get caught up in the Brexit-debate and lose sight of the fact that the problems faced by pharma – and which require international collaboration – existed long before the UK’s vote to leave the European Union.
The major worldwide trends in pharma all have a disruptive thread. For example, the immediate global debate about pricing is only set to intensify and is going to mean change. It’s not just President Trump that is banging this drum; Malta has made drug pricing a priority area for its presidency of the European Council.
Longer term, the fact that healthcare and technology sectors will continue to converge is going to change markets. Growing healthcare investment by technology giants, such as Apple and Google, means the arrival of more health wearables. This will have implications in areas such as data-gathering, disease monitoring and drug compliance. In a similar vein, the rising cost of healthcare and particularly paying for breakthroughs is creating a market necessity.
For large pharma corporations there’s an overarching concern with the question of how to create something that is more flexible, agile and better at the business of pure innovation. This may involve lowering headcounts and reducing floor space - and working more with third parties, perhaps to reduce risk. The end game is still the same: better performance in R&D and, ultimately, profits.
At the other end of the scale, there is a pool of pharma start-ups which lack capital resources but have a lot to offer in terms of highly focussed research specialisms.
We have many examples of these contract research organizations (CRO) at Alderley Park and, in the future, expect to see much more collaboration as companies blend both internal and external expertise to solve the most pressing research challenges. There is enormous pressure to expedite the process of getting drugs out of the lab and into medicine cabinets and IV pumps all over the world.
This collaboration could take many forms. We might expect to see the ‘co-creation’ or incubator models adopted, in which, in the first instance, companies recruit their own in-house entrepreneurial unit, or provide financial backing for start-ups in return for a slice of the intellectual property pie.
Recalibrating the way pharma works can help solve a broad range of challenges, not just the ones relating to research. There is an increasing trend for example, for larger pharma businesses to reduce the financial demands on them by shedding employees, and lab space, and then re-investing this money by buying in research from smaller start-ups. The research output stays the same or improves, while the overheads go down. Crucially, businesses become more scalable and are able to flex up or down according to commercial requirements.
As the 21st century moves on, we will inevitably see increased collaboration between pharma businesses of all sizes. A successful multi-occupancy site like Alderley Park with its 1m sq ft of bioscience research and office space, an ecosystem tailored to the biotech sector, and flexibility to host large multi-national corporates and innovative start-ups side by side, is ideally positioned to support the pharma sector as it adapts to this brave new way of working.