Deloitte Report: Open R&D Models Increase Chances for Late-Stage Success

Deloitte's Center for Health Solutions released its report  "Executing an Open Innovation Model: Cooperation is Key to Competition for Biopharmaceutical Companies."  The report presents a construct of four levels of open innovation, starting at the low end with "pure outsourcing" and moving up the scale with "licensing and variants," "collaboration and variants" and "open source," which involves companies sharing data, governance, operating procedures and risk in a highly-collaborative environment. Deloitte also analyzed 281 biopharmaceutical companies from 1988 to 2012 in determining that drugs sourced via open innovation have a higher chance of late-stage success. More specifically, of 355 products developed under an open innovation mode, 119 were filed (34 percent), whereas out of the 463 pursued under a closed mode, only 51 were filed (11 percent).

Yet biopharma companies appear reliant on the more closed approaches. The report examined development alliances across the sector and found that fewer than 20 percent of products are being developed under the two higher forms of open innovation – "collaboration and variants" and "open source."  Overuse of traditional R&D could cause a company to fall behind a creative competitor, while adopting a more open approach "provides the opportunity to access a large, diverse pool of ideas and experts which could spur product innovation, speed to market, reduce costs and increase competitiveness," stated the report.

Perspective is provided in managing five elements that make for a successful transition to open innovation:  1) network characteristics (number and types of partners); 2) talent; 3) intellectual property management and contracting; 4) participant contributions and impacts; and 5) governance.

Read the full release here.