For years the pharmaceutical industry has contended that the cost to develop a new drug is somewhere in the neighborhood of $1 billion (and that, on average, it took about 11 years). These numbers come from a study by Joseph DiMasi of Tufts University and was funded largely by companies in the industry. One of the motivating factors of the study was to show the American public just how much it costs to develop a drug so that when they have a prescription filled they will understand why it costs so much.
However, research conducted by Bernard Munos of the InnoThink Center for Research In Biomedical Innovation (quite a name!) thinks that that number is not only low, it is absurdly low. He contends that if you take into account current failure rates (because the drug did not perform as expected..not because of project management) he suggests that it actually costs $4 billion to get a successful drug to market. But, hang on there’s more. He says even $4 billion is low if you divide each drug company’s R&D budget by the average number of drugs approved. Forbes author Matthew Harper, whose article The Truly Staggering Cost of Inventing New Drugs, was very helpful in my writing this post, took Munos research and went back fifteen years in a Thomason Reuters database and determined that the cost could approach upwards of $11 billion. You’re talking real money now!
Looking for that molecule that is eventually going to develop into a drug that can be prescribed by your doctor and mine is much like “looking for a needle in a pile of needles.” It’s more risky than a crap shoot, drilling for oil, or potentially finding the Lost Dutchman’s Mine. Project management has only one part to play in all of this, but it is a big part to be sure. The approach the pharmaceutical industry takes in drug development is to determine failure (of the molecule) as quickly as possible. And the reason for this has to do with drug development economics. It costs substantially more to move to the next phase of the drug development life cycle than the one just completed. Not a lot more: several orders of magnitude more. That’s why they adopt a “Fail Fast” mentality.
One Big Pharma company I consulted with for more than 10 years had this philosophy so ingrained in their culture that when a project manager presented project status to its Innovation Management Board he or she had to justify “why the project shouldn’t be killed?”, rather than the common question in such meetings which is “why the project should continue?” It’s a completely different perspective.
Two things strike me. First, if you’re not in the pharmaceutical industry shouldn’t your organization adopt a Fail Fast mentality and have your portfolio committee ask “why the project shouldn’t be killed?” at each major milestone? I think your conversations around the table will be much different than they have been; and, second, if you are in the pharmaceutical industry, and given that you put credence in these numbers, shouldn’t you be looking for ways to fail even faster?
I hope so, I just had a prescription refilled. Yikes! the price is through the roof.
Return to leroyward.com and read “Top Five Project Management Certifications”