Collaborative Innovation in Biomedicine: IBM Stuart Henderson


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Stuart Henderson: IBM: Presentation from Collaborative Innovation in Biomedicine Conference

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  • Thanks for the interesting study Stuart. Couple of comments: Are there examples in pharma/biotech that are leading the trend in market place and collaboration like google and P&G? Looking at difference in levels of importance of drivers/interests in partnerships, it seems matching the right development and scientific expertise is likely to offer a fine recipe for success.
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Collaborative Innovation in Biomedicine: IBM Stuart Henderson

  1. 1. IBM Institute for Business Value: Life Sciences2010 Biopartnering Study: Collaborative InnovationPartnering for success in life sciencesStuart HendersonStrategy & Transformation – Life Sciences Innovation & Growth Practice © 2010 IBM Corporation
  2. 2. Big Blues Tiny Bug ZapperIBM Researchers collaborate with Institute of Bioengineering and Nanotechnology,Singapore to develop Nanoparticle to Destroy Antibiotic-Resistant Bacteria IBM Research worked with the Institute of Bioengineering and Nanotechnology in Singapore on the discovery of the new antibiotic nanoparticles, Methicillin-resistant Staphylococcus aureus (MRSA) killed 19,000 Americans in 2005. A MRSA cell before treatment with nanoparticles. Other Potential Uses: For example, it could be employed in low-end products where bacteria "play an adverse role" like deodorants and mouthwash. As well, it could be used in things like bandages or sutures, and other products used in healing wounds, and catheters, since about 20 percent of people who use them end up with infections that are expensive to treat. Whats left of the cell after getting zapped.2 © 2010 IBM Corporation
  3. 3. Background This is the sixth in the series of IBM Biopartnering studies started in 1991, covering the top 24 biotech and pharmaceutical companies (by revenue). This point-of-view presents analysis of 242 study respondents, with representation across pharma, biotech and academia Study Objectives:  Current trends in partnering as reported by industry (biotechs/pharmaceuticals) and academia  The biopartnering capabilities and performance of the top 24 biopharmaceutical companies  The drivers of successful partnerships3 © 2010 IBM Corporation
  4. 4. Changing Innovation ModelsCompanies that have been primarily in the “Innovation through rigor” modelare increasingly moving to “Innovation through Collaboration” Marketplace of Visionary Innovation through Innovation through ideas (16%*) leader (22%) rigor (37%) collaboration (25%) People Leadership  “Bottoms up” approach  “One man show”  Involved Leadership  Leadership sets framework for collaboration  Content with “leading from  Leader determines direction  Sets priorities, raises behind” of innovation & selection of urgency, and allocates  Ideas generated with ideas resources partners & customers  Fully uses employees  Adept at the teamwork  Small groups dedicated  Collaborators necessary to execute to problem-solving  Recruited for creativity  Empowered to make deals leaders’ plans and passion  Strong team culture with outside vendors  Well-stated innovation  Fast implementation of select  Fewer ideas, with strong  Robust stage gating and goals for individuals ideas formal vetting process implementation mechanism Process  Effective stage gate  Portfolio maps and strategic  Strong focus on cross-  Frequent pilots and trials, process, pilots and trials plans to link executive vision functional teams for rapid involving partners and to daily activities execution customers  Clear metrics of success and failure  Environments that  Few inter-dependencies with  Diffuse product lines  Understanding of customer Environment allow experimentation outside parties impossible for a small set needs and partner of visionary individuals to participation  Generates Large number  Select ideas generated and control of ideas – mainly internal pursued  White space innovations  Rigorous scanning Source: IBM Innovation Archetype research and analysis * Percentage of the S&P 5004 © 2010 IBM Corporation
  5. 5. Biopartnering Results and TrendsCompanies that partner well – Preferred Partners – are displaying strongerfinancial performance Average Sales Growth and ROI vs. Biopartnering Performance Companies that were ranked high 24 among study respondents across 2006, 22 2008, and 2010 – the Preferred 20 Partners – had better financial 18 16 performance compared to lower ranked Percentage 14 companies 12 10 Preferred partners: 8 – Averaged the highest return on 6 4 invested capital – over 70% than 2 the least desirable partners 0 Preferred Partners Average Partners Least Desirable – Gaining the most points in sales growth – 133% over the least Average across 2006, 2008 and 2010 study rankings desired partners Net Sales CAGR (% ) Avg 2006-2008 ROIC (% ) Preferred Partners = 7 highest ranked averaged across 2006, 2008 and 2010 study results; Average Partners: average of 6 middle ranked; Undesirable Partners: average of 7 lowest Partnering is a key component ranked. Average of annual ROIC % from 2006-2008. Source: ROI - WorldScope Fundamentals, Thomas Reuters, August 18, 2010. to overall success5 © 2010 IBM Corporation
  6. 6. Biopartnering Results and TrendsObservations & RecommendationsKey observations: Patterns seen behind performance: – High performers have an explicit R&D externalizing strategy and an operating model that utilizes both internal and external collaboration – The risers are implementing a partnering strategy, starting with a focus on the basics – The fallers and low performers appears to be narrowing or losing focus on partneringRecommendations: In the future, Biopharmaceutical R&D will be heavily networked and collaborative Companies need to: – Put in place an R&D Operating Model that has networks of collaborations at its core – Establish an “infostructure” that can support extensive collaborations – Evolve their collaboration skills set to meet the demands of a networked R&D model6 © 2010 IBM Corporation
  7. 7. Results and TrendsOver the last three studies (2006, 2008, 2010), top ranked partners have beenconsistent in their performance across three key elements, deal sourcing, dealmaking, and partnership management Deal Sourcing Top 5 Rank The top 5 performers in 2010, based on the 2006 Rank 2008 Rank 2010 Rank average of all study questions, were: Roche Genentech Eisai 1. Roche 4. Lilly Genentech Merck Eli Lilly 2. Genentech 5. GlaxoSmithKline Amgen GlaxoSmithKline AstraZeneca 3. AstraZeneca Abbott Roche GlaxoSmithKline Novartis Boehringer Ingelheim Roche  Over the past 4 years, Roche has been the most consistently highly ranked partner across all areas Deal Making Top 5 Rank of partnering performance 2006 Rank 2008 Rank 2010 Rank Roche Genentech Roche Amgen Merck Eli Lilly  AstraZeneca, Lilly and GlaxoSmithKline have also Eli Lilly Roche GlaxoSmithKline appeared in the top 5 rankings multiple times Genentech Eli Lilly AstraZeneca J&J BMS Teva  The exception is Genentech1 which was highly ranked in all categories in 2006 and 2008, but failed Partnership Management Top 5 Rank to make the top 5 in 2010. Study results indicate 2006 Rank 2008 Rank 2010 Rank that Genentech has been able to maintain its high Roche Genentech AstraZeneca overall rank through its reputation as the leader in Amgen Eli Lilly Roche innovation and talent and a strong commitment to Genentech Novo Nordisk Eli Lilly partnership by its leadership J&J Takeda Takeda Source: IBM Analysis and Silco Research, 2010 (1) For the purposes of this study, Roche and Genentech were identified as separate AstraZeneca Merck GlaxoSmithKline companies by the respondents. The companies merged in March 20097 © 2010 IBM Corporation
  8. 8. Results and TrendsThese top ranking companies also lead the industry across other individualpartnership drivers Genentech leads companies across strength and dedication in leadership, innovation and people 100% 90% 90% 87% 86% 82% 83% 84% % of Maximum Score (2010) 80% 70% 76% 71% 70% 69% 70% 68% 60% 50% 40% 30% 20% 10% Trust: “Its Leadership: “Having Innovation: “Its People: “Having an Finance: “The Social: “Its attention commitment to trust, a strong leadership commitment to ability to attract, strength and to social reliability and an and a commitment to innovation internally develop and keep consistency of its responsibility” ethical approach to excellence” and across talented people” financial partners and organisational performance” stakeholders” boundaries” Lowest Performer Average across all Highest Performer More Important Driver Importance Less Important Source: IBM Analysis and Silco Research, 2010. Level of Importance for each driver in partnerships were scored on a 1-7 scale with8 7 being the highest. Companies were rated on their performance against drivers on a 1-7 scale with 7 being the highest. © 2010 IBM Corporation
  9. 9. Results and TrendsAcademics also largely agreed with industry respondents on theimportance of the top drivers 5.75 Scientific expertise 6.77 Scientific expertise, the deal on 5.44 offer, partnering culture, reputation Deal on offer 6.71 and development expertise were 5.56 Partnering culture 6.64 leading drivers among academics and industry respondents alike, Reputation 5.34 6.35 although academics scored each Development expertise 5.65 area of a greater level of 6.31 importance 4.86 Prior relationships between parties 6.08 Prior relationship and access to IP 4.74 Access to intellectual property assets 6.08 ranked significantly higher for academics Partnership management skills 5.45 5.85 Partnership management skills, Manufacturing capabilities 4.14 5.12 while rated nearly the same by Market presence 4.42 academia and industry, was much 4.81 lower in relative importance for 4.13 Distribution channels 3.71 academics Sales and marketing channels 4.57 On the other hand, commercial 3.24 channels and geography were Geographical position 3.57 Industry 3.08 ranked higher by industry Academia Source: IBM Analysis and Silco Research, 2010. Average of level of Importance for each driver in partnerships, rated on a 1-7 scale with 7 being the highest.9 © 2010 IBM Corporation
  10. 10. RecommendationsOur research indicates three critical elements need to be in place to drivesuperior performance as a collaborator Become a Partner of Choice … … and a Top Performing R&D Organization Enterprise R&D Collaborative R&D Networked R&D Innovation Internal focus plus some An Innovation Network that Sourcing Internally focused extend beyond the external collaborations enterprise Processes Managed by functions Managed by Therapeutic Managed by Projects + Areas Deal Deal Partnership Organization Fixed Functional (Chemistry, Tox, etc) Fixed Therapeutic Areas Plus supporting functions Flexible Project Teams Plus select large scale support functions Sourcing Making Management Culture “We are the World” “We are Part of the World” “The World is our Laboratory” Investment Science driven internal Science driven external Internal hurdles criteria hurdles comparative hurdles Traditional In- and Out- Empowered In-Licensing Embedded in the Licensing Licensing Large Function Organization Small Function Small orchestrating function Mergers & Ingest & Transform Ingest and Co-exist Integrate into the Network Acquisitions Element Recommendation Ensure that the company is able to utilize 1. Put in place a Strategy and Target Operating Model external R&D for partnering with collaboration at the core Ensure that the company is able to utilize 2. Build a collaborative “infostructure” to support the collaborations Target Operating Model Go beyond partnering and start building 3. Experiment with and learn to use the components of the collaboration organization of the the Networked R&D model future10 © 2010 IBM Corporation
  11. 11. RecommendationsRecommendation #1: Establish a Strategy and a Target Operating Modelfor R&D with collaboration at the core Target Operating Model that Supports Partnering Establish a Strategy and Target Operating Model for collaboration that allows the Business Goals and Strategy company to take advantage of external R&D – An explicit strategy for collaboration is Partner fundamental to engaging external sources Experience of innovation and product opportunities Assets & Sourcing Locations & Scouting – A Target Operating Model that supports the strategy is fundamental to Target implementation Technology Operating Processes Model The strategy should also be backed by an ongoing corporate commitment Culture Skills, Organization & – Collaborating successfully is hard and & Capabilities Governance Performance takes an ongoing and deep organizational Metrics commitment Roadmap for Implementation11 © 2010 IBM Corporation
  12. 12. RecommendationsRecommendation #2: Build a collaborative “infostructure” to support theTarget Operating Model A model that sources innovation externally should be supported by a Collaborative Infostructure Recommendations  Build an infostructure to support collaborations  Utilize this system of tools fully to change how collaborations are managed  Establish the processes, organization and culture to around this infostructure  Extend the infostructure outside the enterprise – To closely collaborate with partners – To create a competitive advantage in sourcing and using partnerships12 12 © 2010 IBM Corporation
  13. 13. RecommendationsRecommendation #3: Start learning and implementing the fundamentalsrequired to move to a Networked R&D model Increasingly Outward Focused R&D Target Operating Model (A Target Operating Model defines the best deployment of elements to achieve a strategy) Enterprise R&D Collaborative R&D Networked R&D Innovation An Innovation Network that Internal focus plus some Sourcing Internally focused extend beyond the external collaborations enterprise Processes Managed by functions Managed by Therapeutic Managed by Projects Areas Organization Fixed Functional Fixed Therapeutic Areas Flexible Project Teams Plus select large scale support (Chemistry, Tox, etc) Plus supporting functions functions Culture “We are the World” “We are Part of the World” “The World is our Laboratory” Investment Internal hurdles Science driven internal Science driven external criteria hurdles comparative hurdles Traditional In- and Out- Empowered In-Licensing Embedded in the Licensing Licensing Large Function Organization Small Function Small orchestrating function Mergers & Ingest & Transform Ingest and Co-exist Integrate into the Network Acquisitions No one company can support sufficient internal innovation to meet pipeline requirements To be competitive, Pharma needs to utilize a highly networked externalized R&D model13 © 2010 IBM Corporation
  14. 14. Contact Details Stuart T Henderson Blog: Twitter: stuarthenderson14 © 2010 IBM Corporation