In all industries, companies compete with each other. First to market with something new usually means a larger piece of the cake when the product hits the shelf.
Being first, and especially in the pharma industry, is a game changer as it often equals patents, increased brand recognition, and long term monetary benefits as a result of the first two. With research, technology, and industry innovations constantly evolving, the importance of adopting and following industry evolution keeps increasing to enhance the chances of becoming that first mover.
In a webinar hosted by the Swedish-American Chamber of Commerce San Francisco where Captario participated, watch it here, it was shown that pharma is currently moving towards new approaches for curing diseases and illness. During the webinar, it was stated that the top ten drugs on the market in 2010 were all chemical drugs, whereas a decade later, 80% had been replaced by biological drugs. Thus, pharma R&D is transitioning from firing wide on all the bodily cells to cure an illness, to more targeted treatment using biological drugs and measures, like antibodies or gene therapy.
A shift like that is by no means simply just a trend. Especially not within the pharma industry, as the amounts of money invested in research don’t justify to just ”join a trend”. Rather, when a trend emerges within pharma, it’s no longer a trend but a genesis, a way of looking at pharma with a new point of view, something that will not fade away as the novelty fades, and something your company definitely should consider incorporating.
Diffusion vs Adoption
Branching out a little further from the pharma industry, both the fields of economics and marketing have similar models that shows why adopting technological advances and other innovations within pharma is so important.
Below this paragraph, you can see a bell curve. This curve is commonly known as the Diffusion of Innovation Model, and illustrates how people in general adopt new innovations, and how eventually these products diffuse into various groups of people (the classification of group depends on a persons willingness to adopt new innovation over time). Product adoption is a process, detailing the series of stages a person undergoes from first hearing about a product to finally adopting it, whereas diffusion rather signifies a group phenomenon, which suggests how an innovation spreads within that group.
In the beginning of the curve are the people who are very keen on staying on the frontline of innovation, always keeping up with the latest, whereas on the right are the people who are very risk averse and keen on seeing a proof of concept before committing to anything. In between is the vast majority of people, accounting for almost 70% of the intended target audience. Thus, the Diffusion of Innovation Model represents the process of how any innovation is embraced by the larger mass, contingent that it gains traction in the earlier stages of the curve/ groups. In order for an innovation to gain traction, there are five main factors that influence its adoption:
Relative Advantage – The degree to which the new innovation is seen as better than the idea, program, or product it replaces.
Compatibility – How consistent the new innovation is with the values, experiences, and needs of the potential adopters.
Complexity – How difficult the new innovation is to understand and/or use.
Trialability – The extent to which the new innovation can be tested or experimented with before a commitment to adopt is made.
Observability – The extent to which the new innovation provides tangible results.
All these factors applies neatly to pharma R&D, as new innovations must tick off each one of the factors in a positive manner to be able to penetrate the industry’s tenacity for change. But seeing that this model is actually suited for B2C consumption, why does it matter to pharma R&D?
Why A Marketing Model Applies in Pharma R&D
The reason why I argue that the Diffusion of Innovation model is relevant in pharma R&D is simple: the ones making the decisions on whether to incorporate innovation or not are still people, all prone to belong to any given group in the Diffusion of Innovation spectra.
The difference is that on a personal level, there is also only personal loss. You will be the only one affected by reluctancy to incorporate new innovation, waiting for a proof of concept, depending on which kind of person you are. (I.e Innovator, Early Adopter, Late Majority, etc.) On the organizational level, that reluctancy can mean the end of the company, as it increases the risk of being left behind and outperformed by competitors.
As pharma is an especially slow moving industry, adopting new innovation is not always an easy task, but nevertheless still extremely important! It must be acknowledged though that to always be at the front of adopting new innovation is no guarantee that it will outperform previous technology. Initially, sticking to old innovation can actually be more efficient or profitable, as that way of doing things is already diffused within the industry, is well known, and accepted. Thus, from a strategic point of view, there is absolutely value in sticking to what you know, as adopting something new is always followed by some degree of risk, should that new innovation not get any traction in the industry.
On the other hand, if the innovation does get traction and outperforms a previous method, not being absorptive for new innovation is definitely a disadvantage within pharma R&D. With stale adoption processes and too much trust in previous technology/innovation, the longer you wait, the more companies will most likely incorporate the new innovation themselves, providing them with an advantage. Depending on the kind of innovation, whether it’s a game-changer for the industry, or rather a tiny improvement, there could be serious consequences for your company. As many pharma companies rely heavily on being first to market to reap the benefits of product protection, brand recognition, and free pricing periods to regain investments in R&D, not being absorptive to new innovation is constantly a risk. Actually, the minute a new innovation proves itself equally good or better, you are at a disadvantage against any competing company using the new innovation for its intended purpose. This means that the longer you wait, the more time there will be for your competitors to leverage this innovation advantage against you, perhaps rendering your company obsolete and forcing you out of business.
Understandably, it’s hard to know what innovation will get traction, and what innovation will not. For that, there is no simple solution. Instead, it comes down to being aware. Aware of the new innovations coming, aware of the new innovations that is currently existing, and with that, keep track of your competitors. Benchmarking your competitors is a good practice in trying to estimate what new innovations will get traction or not, and here you would have to individually value what competitors to benchmark, as some may be more important to stay on par with than others.
Lost opportunity costs due to a lack of adopting new innovation by far exceeds the threat of failure of new innovation adoption. While it’s hard to determine whether to adopt new innovation or to continue on the path you are already on, you continuously have to rank one innovation against another and determine whether it will provide a competitive advantage or not. The billions of dollars invested in pharma R&D really puts the industry as a whole on the edge of valuing new innovation, and with exponential effects it’s safe to say that being the last one to incorporate new innovation that has gained industry traction will leave you if not run out business, then at least in a very difficult position to be competitive.
Don’t be a Laggard.