From 1995 to 2015, the pharmaceutical industry raised its annual research and development spending by almost 300%, to about $60 billion a year. However, this investment did not result in a corresponding increase in new drugs approved by the FDA, according to the Johns Hopkins Carey Business School’s Phillip Phan, PhD.
In fact, it takes longer to bring new drugs to the market now than ever before, says Phan, who is the Alonzo and Virginia Decker Professor of Strategy and Entrepreneurship and an authority on agency theory and innovation management.
This lack of yield is the result of the pharmaceutical industry’s ignoring the practice of open innovation, where companies in the same field share basic knowledge like techniques, tools, and standards so that they innovate in sync, says Phan. Software and automobile industries are examples of open innovation spurring growth.
“Working in silos, pharmaceutical companies keep repeating each other’s mistakes, they abandon programs, public health suffers, and profits are lost,” according to Phan, who holds a joint appointment at the Johns Hopkins School of Medicine.
To address this problem and change the trajectory of pharmaceutical productivity, Phan participates in the Academic Drug Discovery Consortium, an initiative started at Johns Hopkins which now involves medicine, basic science, and business experts from five institutions, partnering with pharmaceutical companies to utilizing principles of open innovation to motivate sharing and collaboration.
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Topics: Alumni, Carey Business School, Fuel Discovery, Promote and Protect Health