George Washington University's management professor, Jackson Nickerson (of recent "Drug Manufacturing Wastes Over $50 Billion Per Year fame) and some colleagues have developed a new method for managing R&D that, they say, would improve profitability by 30%.
This process would eliminate pharma's "desperate dater" syndrome, in which a company envisions a blockbuster, allows its pipeline to become paper thin, then licenses or buys a company to acquire some new technology, fast, and waits to see what happens.
Nickerson, his GWU colleague Tat Chan, and former GWU professor Hideo Owan, now at Aoyama Gakuin University in Japan, say that using this method could improve long-term profitability by 30% or more.
Using this approach, companies would partition their R&D porfolios, based on the specialized manufacturing, marketing and sales assets required. They'd focus on keeping pipelines full, even if that meant they weren't always focusing on blockbusters, but on drugs with smaller, targeted markets, until conditions favored setting their sights higher.
The professors will be publishing a paper on this new method, " "Strategic Management of R&D Pipelines with Co-Specialized Investments and Technology Markets" in the journal, Management Science. But here is a summary article and a brief video clip explaining the concept.
