For my master’s thesis I performed a case study of a very large multinational drug company to evaluate how it innovates in text mining to drive its central mission of drug innovation. Drug discovery is hard and therefore expensive, but with high performance computing now a commodity, drug companies should be at the bleeding edge of text mining innovation, particularly in the area of virtual hypothesis formation and testing (deriving novel insights from mining multiple inputs, from clinical data stores to genetics databases to research literature collections and even the so-called grey literature). But guess what? At least with respect to the case I studied, they aren’t. They are highly focused on circa-1997 extraction tasks with little to no interest in statistical learning and a confused interest in taxonomies and automated inductive reasoning. They invest in formal logics and in information extraction but the meat in the middle, the statistical learning, is kept strictly to data mining of data sets severly limited in scope. Simply put, the company has little to no coherent and well-articulated vision of how it can tackle its most daunting problem for drug discovery: information overload.
How can this problem arise? Isn’t the central mission of a drug company, its core competency, to create new drugs? Well, historically it has been. But competing with the core competency of the drug company is another, oft conflicting, central mission, to make money. What this means for drug discovery is that it is only kind of important. The company I studied was laying off key drug innovators globally as it was focusing its investments further down the drug pipeline, placing more and more emphasis on Phase 2 & 3 projects, more on lower risk short term gains. What this means is that the central mission has become, to get drugs to market, particularly ones with a recurring revenue model.
Historically the drug companies could hang their hats on introducing drug treatments that have contributed to huge improvements in human health over the last century. Drug companies have been in the business of saving lives. Drugs are largely responsible for the 50%+ increase in life expectancy in the US over the last century.
Sometimes, however, human health improvements are not profitable. Sometimes drug companies will select strategies far less beneficial to human health that are far more financially beneficial to the organization. Consider the focus on marketing deregulation in the US, or FDA deregulation. Why invest in developing drugs when you can invest in removing barriers to sales? Now that deregulation has just about all but run its course, drug companies will soon face the fact that they will need to depend more and more on releasing new drugs. When the two largest drug companies in the world can’t combine for more than a dozen new drugs in any given calendar year, you can tell that something’s clearly broke. You can’t hang the shortage on regulation or on a shortage of actionable research.
So why the institutional emphasis away from innovation? One can only speculate; I will use Portfolio Theory to speculate. The dominant forces controlling large multinational drug companies are people of a certain kind, namely, aging investors. They have invested their dollars and expect something in return. Portfolo Theory tells us that our optimal investment trend as we age is to go from high risk to lower risk, income-generating investment. For example, I’m 35, and if I expect to live to, say, 80, I’m probably at least three decades from retirement, from a time where I need my investments to generate income. Because I have decades to invest, I can handle the risk of higher risk investments, namely because I don’t need the reliable income, and because I have time to recover if I lose. The game of investing depends entirely on how much time you perceive yourself as having, namely because on your death bed all the money in the world is worth nothing, but having a lot of cash on hand that last week before your death bed is pretty damned important. A promise for a check next week won’t do you good if you’re dead. And so I think, unlike me, the investors in large mutinationals are old men, frankly. They need to allocate their assets on the income-generating end of the spectrum. They need that cash and they need it now.
This asset allocation model is confirmed by the reduced interest in technological innovation and the increase of interest in being merely early adopters. Adopting established technologies carries a lower risk, as it has a higher probability of some payoff.
And so why invest in high risk, in innovation? The argument for it would be three-fold: to attract younger investors, to focus on the longevity and long-term stability of the company, and to be true to the core mission, which should be to treat health ailments. Maybe my experience is anecdotal, but at least to me it appears that investors in my parent’s generation (they’re 65) are far more likely to invest in, say Pfizer or GSK, than investors my age. They’re safe, they’ll do OK next quarter, but that picture is very murky a decade from now. Not to mention that younger investors no longer see drug companies as beneficial to human health. There’s nothing attractive for the average younger investor.
One of the saddest consequences of this reluctance to innovate, this focus on profit, is the impact on human health. Drug companies are far more willing to repackage old drugs and market the heck out of them, renewing their proprietary charges, than to find new drugs. And when the drug companies choose new drugs to invest in, they are going to look for “comeback” drugs, drugs that cure nothing but treat indefinitely. No new antibiotics are reaching market because there’s no incentive
Hypothia 