Big pharms sees promise in incubators, crowd sourcing

First published in UT San Diego, October 2, 2012

Big innovation requires big new thinking, and big pharma knows that simply throwing big billions of dollars at a problem isn’t efficient and effective. How they’re shaking things up was the topic of a recent seminar sponsored by Prescience International and Janssen Labs at Janssen’s San Diego incubator facility.

In the past, new pharmaceutical products have primarily come from their own internal research and development, mergers and acquisitions, research partnerships with biotech companies, and corporate venture capital investments.

The new approach includes more emphasis on corporate venture capital, an increased number of collaborations with academia, the establishment of incubators, and using crowdsourcing techniques to provide grants.

More than half of the innovative drugs that address unmet medical needs started originally with biotech companies or in universities that first created the technology and then licensed it for later development, according to a November 2010 article in Nature Reviews. The same article says that biotechs license twice as much as big pharma from universities. In essence, small companies succeed by acting more quickly and entrepreneurially than their large competitors.

In addition to licensing, incubators are another promising model. Last year, Johnson & Johnson established Janssen Labs in San Diego, and Bayer HealthCare Pharmaceuticals recently opened an incubator close to the University of California San Francisco.

“We are providing no-strings attached space,” said Diego Miralles, head of the Janssen Research & Development West Coast Research Center. At first J&J was unhappy with this approach because “we’re used to having control,” he said. “But entrepreneurs don’t want to be limited … My philosophy is to tie people up by being nice to them. Soon we will have 15 companies here. It’s hard to find 1,000 square feet of space with exactly the right (and expensive) equipment.”

At Bayer, the decision process to start the incubator near UC San Francisco, or UCSF, took only three months, and it was one year from idea to opening, said Christopher Haskell, head of the U.S. Science Hub, Bayer HealthCare Pharmaceuticals. “We see it as a sandbox that will evolve over time.” The key to getting it done so quickly was “asking the right people.”

“We have a master agreement with UCSF so the researchers can work with us within a month,” he said. “People with a Small Business Innovation Research (SBIR) grant and a credit card are our sweet spot for the incubator. They have an interesting idea, excellent science and are still shaping it.”

Haskell said that he had to battle the corporate bureaucracy to get Bayer to agree to use crowdsourcing techniques to determine grant recipients and to be willing to give up control. “It’s a relationship-building tool. We give the researcher some money and ask them to stay in touch. If you try to work out everything in advance, you’re going to spend six to eight months with attorneys before you start doing the science,” he said.

The role of universities in conducting basic research remains very important, said Neela Patel, director of Global External Research at Abbott Laboratories, since they have a depth in expertise in biology and “we know how to do drug discovery.” Crowdsourcing can answer a specific problem but it’s unlikely to develop a novel and transformational platform.

The pharmaceutical industry was always capital rich and now needs to be more efficient, said Bhasker Shetty, vice president of Pfizer Worldwide R&D and site director of Pfizer La Jolla Laboratories. “We weren’t using our capital appropriately. What we are going through now is painful and is the right direction. To maximize your capital, you need to focus,” he said.

Patel said that Abbott is also focusing on smaller interest areas “where we think that we can win. We are putting bigger bets on a smaller number of areas which can be riskier in the long-run.”

Rule No. 142

Changing the corporate culture of a large company is like turning around the Queen Mary. You need to give it a wide berth at its birth.

Leave a Reply

You can use these HTML tags

<a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>