When we are engaged in conversations about developing medicines, how often do you hear language thrown around, such as “capturing the value”, “fast to the next value inflection point” or words to this effect?
Drug development is a complex and risky business where remuneration for value creation occurs, by analogy, by passing the baton from one relay runner to the next.
It should come as no surprise, that all engaged in the broad church of “medicine development”, seek to create value and be paid, and that this mostly involves attention placed on needs of their adjacent customer, i.e. the next baton change.
For example, an academic innovator desires to capture the interest of an Angel investor or venture capitalist (VC) to finance their invention. A VC requires a multiplier, often over a short time, to satisfy their institutional investor customers. A biotech needs to woo the interests of a pharma transaction. A pharma needs to create a compelling case for registration, and crucially, reimbursement.
And somewhere in the distance out of sight, is the relay’s finishing line, the needs of the patient and society.
Now, the drug development process with multiple baton changes might just work seamlessly, if only everyone had a common interpretation as to who the ultimate customer was, and what the customer actually valued. It would mean every stakeholder would perform just those key development activities that focused on the value creation desired by that end customer.
However, the truth is the interpretation of what constitutes value gets ever more murky, the greater separation between stakeholders in the drug development process.
This information asymmetry creates important misalignments, where key questions are sidelined as other less critical issues are addressed resulting in financial and time wastage.
Indeed, it is not uncommon for a licensor to have to expend substantial resources and suffer serious delay repeating parts of the development programme for in-licensed drug candidates.
Additional value could have been captured by the licensee had they known what their customer actually wanted. In some cases, decisions to terminate programs due to insufficient patent life highlight systemic failures, resulting in important medicines never reaching patients in need. This is exactly analogous to dropping the baton!
It is important to ask seeminlgy innocuous questions like “what is value?” and “what does value focused development mean to you?” to the various sectors involved in developing medicines.
By doing so, one can begin to recognise both the divergent and shared perspectives on these key questions from stakeholders including the payor, pharma, biotech, life-science investors, academia, not-for-profit developers and entrepeneurs.
By increasing awareness and reducing information asymmetry, it may be possible to have stakeholders develop an shared view of each other’s requirements and importantly a more consistent view of the finishing line. Perhaps via better alignment, cross sector collaboration can be improved and waste reduced, increasing the likelihood that new medicines will reach patients.