Niladri Gupta, Lancaster University Management School The siren song of innovation revisited

The last few weeks have been busy with learning all about mergers and acquisitions and international finance as a part of my elective modules at Lancaster University Management School.

One of the highlights was learning from Prof Duncan Angwin about the yardstick used to define successful acquisitions and the fallacies of such approaches. Dr Kevin Wilson told us about the practical issues that come up during valuations of corporations. This was coincidently very relevant because of the extensive coverage in the Financial Times about the Pfizer and AstraZeneca acquisition talks. Everybody and his cousin had an expert view on it.

What surprised me was that the conversation was not about how both those two companies have systematically solved a number of healthcare issues and made people’s lives better, but more about saving taxes and the shifting of tax bases to bad experiences that might occur if it was allowed to go through.

I even read an article about how body language and food might have had a role in it. How could this have happened? It brought a lot of bad publicity and I am not sure if the biotech and pharma industry deserved it.

That brings me to my favourite topic of innovation. It is not an easy thing to do especially in the fields of healthcare and drug development. Proof is difficult to obtain. Tests and trials have to follow numerous regulations. It requires a lot of faith and belief and expenses. On the other hand the prohibitive costs of some of these products keep them out of the hands of a lot of people who might benefit from it.

Unfortunately trying to balance all these demands forces innovation to take a back seat. Sometimes unwritten rules become the norm. I have heard in a number of forums that treatments and products that cannot become blockbusters are nipped in the bud. Considering the number of pharma and biotech companies out there, a significant number of treatments with a reasonable potential are gathering dust while the elusive search for blockbuster products continue. These are different from Orphan drugs.

Wouldn’t it be wonderful if there was a way that a lot of these products could be developed by open-sourcing the discovery process? Is there really any justification in reinventing the wheel? The cost of the initial development has already become a ‘sunk cost’ as our accountancy professor likes to emphasise.

Crowd sourcing the funding for some of these products and open sourcing the discovery process would not only buy pharma and biotech companies a lot of goodwill but also reduce the cost of healthcare. It could also allow old medicine to be used for new symptoms in a properly tested way without breaking regulatory processes. It could also buy the drug development industry a lot of goodwill. Wouldn’t that be a disruptive innovation?

I am a firm believer in the value of disruptive innovation. It is not only about making a difference in the market but also affects the lives of a number of people. That’s why the siren song of innovation keeps calling me…….