Supply chains in Drug Development?

This is a response I made to a recent post at Xconomy about the idea of drug development adopting a supply chain approach.  All opinions are my own and do not necessarily reflect those of Novo Nordisk.

I really appreciate the ongoing conversation about how to fix the problems that appear to be facing drug development–specifically a lack of truly transformative, life- and health-changing new drugs.  I think the idea of a supply chain process in drug development is worth looking at.  However, I am not convinced it will actually fix the problem.

In this piece, Standish Fleming suggests a market driven process isn’t meeting the needs of drug development because the potential suppliers in the market (the startup biotechs) don’t have a clear view of what the eventual buyers (the pharma) really want as part of their strategic goals.  Alignment is often a good thing.  I believe many startups may not have a clear idea of what actually constitutes a good drug as many of them arise out of academia. This is not a criticism, just a statement of how the academic and industrial systems have different cultures, goals and knowledge bases. I also appreciate the point that, with capital harder to get via venture funds, pulling pharma in to replace that investment at an earlier stage requires some sacrifice of control on the part of the biotech, with a corresponding gain in risk sharing and predictability.

But I don’t think alignment is enough.  I worry instead that the key problem is one that’s been suggested by David Shaywitz and others–we just don’t understand enough about diseases to make the next generation of drugs.  It seems that the buyers themselves don’t have a clear idea of what is most likely to make a good drug.  As evidence, I’d suggest that if pharma really knew what they wanted, failures in Phase I-III would be far lower since drugs would never be tested in humans until pharma were sure of an 80-90% success rate.  Baseball aside, a 30% or lower success rate generally doesn’t make for a good business strategy, but that’s what we’ve got.  And I agree with the point that there are a lot of smart people working on the problem across pharma, so it’s not just a question of brainpower.

If pharma can’t easily predict what kinds of drugs will succeed, then this model may just swap out VC funding for pharma funding with the same net effect.  Also, the development of a drug is an incredibly long process.  For a pharma to be able to predict the market ten or more years ahead of time is adding another uncertainty yet.

Since I live in Seattle, I’d like to throw out the analogy of the Dreamliner.  A key reason the Dreamliner exists is because of 9/11.  Before that, Boeing was designing a supersonic passenger jet.  After 9/11, the pressure for nations to become more fuel-efficient to allow less involvement in the Middle East led Boeing to change course and design a plane that would instead be a model of efficient design.  So there’s an example in which changes in the market outside of a company’s control can render all its best plans moot.

Another point about the Dreamliner is that that project relied on a supply chain that ended up delaying launch for over a year.  I know people at Boeing and they have good project managers and good communicators and they told their suppliers exactly what they needed, and problems still arose.  Ever after launch, unexpected issues with batteries grounded the jets again.  How much messier might a supply chain relationship be between biotech and pharma?  Can deadlines and milestones be guaranteed when we won’t know until Phase I if we’re dealing with the next best thing in air travel or a flaming battery?

All this is not to say it couldn’t work; just that I’m skeptical.  I agree the current method seems inefficient and difficult to make work in the current funding environment.  I just wonder if maybe there is a third way.  Now, if only Bill Clinton could get into drug development…

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