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If adopted, open innovation, beyond outsourcing and licensing, could boost biopharm pipelines four-fold, a recent Deloitte study suggests.
A recent study by Deloitte Consulting suggests that open innovation may be a more effective way to boost biopharmaceutical pipelines than traditional, closed approaches to R&D. Currently, the analysts say, only 16% of biopharmaceutical candidates entering clinical testing wind up being approved. An open model for R&D could increase the number of candidates significantly. Studying 281 biopharmaceutical companies between 1988 and 2012, Deloitte analysts found that drugs sourced via open innovation could have a three-fold higher likelihood of success than those sourced using traditional R&D collaboration.
Open innovation, practiced in IT and consumer products industries, by companies that include Akzo Nobel, creates an open space in which contributors can share ideas. Where traditional partnerships typically involve 1 to 5 participants in a single country, open models can include over 20 partners in over five countries.
The concept is very new in biopharma. Currently, most biopharm innovation is done via outsourcing with a university, research institute, or CRO, which Deloitte describes as Type 1 open innovation, or through licensing agreements (Type 2). However, a growing number of companies have launched open models based on global networks of innovation hubs (Type 3). These include Johnson & Johnson, Eli Lilly, Pfizer, AstraZeneca and Sanofi. The most advanced models for open innovation in the field (Type 4) include such research partnerships as the transSMART Foundation, the Structural Genomic Consortium, and Asia Cancer Research Group.
In 2014, among the 12 largest biopharma companies, 54% sourced new drugs via open innovation vs. 46% from traditional, Deloitte consultants found, but 83% of the open innovators accomplished this via outsourcing or licensing. Only one in five drugs was developed using the Type 3 model, and none, so far, have been developed using the Type 4 approach.
Open innovation is often feared as weakening intellectual property protection. However, Deloitte analysts argue, IP protection is the currency for open innovation, and contracts can strictly protect IP, yet allow partners to look beyond their own boundaries for new technologies and ideas, and inspire innovation, in areas where they do not compete, to those sources as well.