I have a character flaw (insert collective gasp here). I’ve never been especially motivated by profit or accumulating wealth. That’s not to say that I haven’t profited or accumulated wealth from what I’ve done because I have. I’m just more interested in doing something intellectually challenging and worth doing than economically lucrative. Fortunately for me, the bar for “intellectually challenging” is low and I don’t have expensive tastes.
This personal flaw was rightfully pointed out to me by one of my former managers who, during a performance review, looked me straight in the eye and said “Do you know that you have a self-destructive personality?”. This was in response to my unwillingness to take on a role that checked an organizational box that would have supported a promotion. I appreciated his interest in my organizational progression but never regretted that decision. Some part of that was believing that I was already being better compensated than I deserved (driven more by market forces than anything I brought to the table).
Investments and expectations
Ironically for me, I’ve supported organizations who were motivated by economic profit for much of my career. No negative reflection on them because they had to be to continue to exist in an ecosystem that demands it to be sustainable. Interestingly, many of those organizations can trace their history back to one or a few individuals that were actually motivated more like me- i.e. advancing science and adding value to patients. At some point in the evolution of their efforts, they had to transition from a focus on advancing the science to finding ways of turning those advances into revenue. It turns out that “advancing science” takes resources and investment. Investors expect a return on that investment. Most of the time it’s a monetary return that can be directed to other ventures but occasionally it’s just for the satisfaction of having contributed something to society (i.e. so called “angel investors”).
It's probably not news to most that drug discovery and development is a business with an expectation from its shareholders that it generate more revenue than expenses (pretty simple balance sheet stuff). It is science-based which is a draw for many of us. Successful outcomes generally benefit patients which is why it’s worth doing. But, at the end of the day, it has to be profitable to be sustainable.
The distinction between a science-based business (like drug development) and business-based science (like that done by the government or academia that still requires resources but is less focused on generating revenue) was something that I recognized and reluctantly embraced early in my career.
Ironically, I think it might actually have made me a better scientist. I’ve learned to think strategically about the life cycle of taking an innovative idea to an impactful product. I’ve learned to rationalize a “value proposition” relative to all the ideas that an organization has the potential to move forward. I’ve thought more about “return on investment” (ROI) than I ever would have if I hadn’t worked in a profit-generating business.
Measures matter
Businesses like pharma have to consider unmet medical need as well as existing competition from other therapies, the complexity of the targeted disease, and also tolerance for toxicity. There is a whole lot more drug development in the area of cancer therapy than there is for neuropsychiatric disorders. A significant challenge to the ROI equation for drug developers is the unsustainable rate of development attrition I mentioned in my previous post.
Alternatively, the work we did at the National Toxicology Program was primarily to inform decision-makers- both public and government agency. Accordingly, the value of that work was measured by its line of sight to whomever was going to use it and the record of its use to inform policy or regulation rather than its use for generating revenue.
As confessed, I’m not generally motivated by profit but I am motivated by effectiveness (cf. the “worth doing” comment above). Having worked in pharma, academia, and government, I’ve come to believe that profit-seeking businesses like pharma are more effective at turning innovative ideas into products than non-profit-seeking organizations. As is true for most generalizations, that’s not a universally true statement but is probably more true than not. There are lots of contributors to that differential that I won’t explore here but a difference in how you rationalize value on the front end of an effort and how you strategically manage your resources to maximize that value are two key contributors.
It was interesting to me that these terms and concepts were less common in the U.S. government (and probably not unique to the U.S.) when I transitioned to my position at NIH (hosting organization for the National Toxicology Program). It wasn’t that the many great scientists in government didn’t recognize the importance of value or returns on investment but the words I used were unique, resources were less limiting, and what was considered “value” was different as noted above. Additionally, there were constraints on how resources were used that had nothing to do with optimizing value. Accordingly, I think the products cost more than they should have. Some of that was a product of the largesse of our public stakeholders who believed that science is good for society and a worthy investment. I believe that to be true but it doesn’t negate the need to challenge what science we’re investing in and what we’ll get from that investment. I think we need to bring more rigor into how we evaluate the value of scientific investments whether revenue-generation is the aim or not. Some of the current erosion in trust of science may be that we’re not doing a good enough job of representing the value of what we’re doing relative to what we’re investing in it. It’s time to up our game.
Products and paradigms
Now that I’m outside government, I’ve faced a different reality. Over the past year, I’ve worked with a number of colleagues to secure funding to advance ideas to leverage investments that we’re already making rather than building a new widget. These were ideas for how to design, test, and apply a novel “paradigm”- i.e. a new way of working.
As an example, we have a rapidly growing portfolio of so-called “new approach methodologies” or NAMs intended to replace the animal studies we use in drug development and chemical hazard assessment. The trouble with those NAMs is that they generally model a very small subset of the biology we evaluate in a whole organism like animals. We need an integrated way of using those NAMs to inform the usual questions we’re asking rather than necessarily more NAMs. We need to design, test, and apply an integrated way of using those NAMs to maximize their ROI.
It turns out that it’s easier to rationalize and quantify the value of a novel widget than it is a novel way of working. It also turns out that investors are often pressured into being short-sighted (no offense to them) and looking for a fairly discrete line of sight to revenue-generation. Consequently, that’s where the investment goes- i.e. new widgets with near-term commercial potential. Paradoxically, most of those investments aren’t actually expected to be commercially successful so the investment strategy is predicated on investing in lots of things hoping that one is commercially successful enough to mitigate the losses of all the others. We have essentially translated the current approach to drug development (i.e. large portfolios of effort with very high development attrition) to our approach to investing in the capabilities that support drug development. It’s not hard to see why the “trough of disillusionment” is a definable milestone in the Hype Cycle.
Strategies and values
I think we need to be more strategic in our investments and better at assessing the likely value of those investments both economically and otherwise. Our unique and unprecedented access to resources in this country as well as our lack of aversion to debt may be great for now but is likely not sustainable. We’re not as strategic or disciplined as we could and should be. There are a few ways that we could improve our scientific ROI.
We appear to be good at developing “roadmaps” so we have a sense of where we are and where we would like to be but not so much about how to get there. Relatedly and as I mentioned in my first post to this Newsletter, I’m not convinced that those roadmaps define the problem well enough to design the “how”. We need better alignment on the problem definition and then more deliberate plans for investing in the “how”. I’m sorry to say that “animal studies don’t predict human outcomes” isn’t a well-defined problem and building a large portfolio of individual tissue modeling systems as an alternative isn’t a strategic “how”. You can’t assess the ROI of a solution if you don’t really understand the problem that solution is intended to address.
Also, executing the “how” should include defined milestones, a critical assessment of those milestones, and pre-defined performance standards against which to assess progress. The performance standards should be defined by the scientists who will actually be applying the solutions as well as the decision-makers who will be using their outputs.
A “strategy” should consider all the contributing elements of the problem we’re trying to solve. We are currently investing billions of dollars in building systems to model pathobiology that we’ve crudely defined at best. I think that ignores our learnings and hopes that progressing with ignorance will keep us from having to deal with pesky details. I think dealing with those pesky details is where you get ROI. I also think that strategy should include as much investment in the approach to applying novel capabilities as it does in building those novel capabilities.
Now, I recognize that last statement might sound a bit like sour grapes because I haven’t been successful in convincing anyone to write a check to support our ideas for inventing a novel paradigm- and maybe it is. I clearly don’t have the secret formula here. But, engaging the process of developing an idea, articulating a strategy, and making a pitch to potential investors has exposed me to a whole new arena of ROI considerations. Though most of us are more energized by talking about the science and actively avoided majoring in business (no offense to our peers who did do that), all of our efforts would likely be more impactful if we spent a bit more time talking about “why” we’re doing the experiment before considering “how” we’re going to do the experiment. I’m trying to decide if the best return on my investment is to keep working the process or retire to my shop to build bookcases and my boat to go fishing. Both seem worth doing.