Executing an open innovation model

Cooperation is key to competition for biopharmaceutical companies

Biopharma companies’ reliance on a traditional, closed R&D model might stifle true innovation. However, companies that adopt a cooperative, open innovation framework are likely to spur product development, speed time to market, reduce costs, and increase competitiveness.

Executing an open innovation model

Many biopharmaceutical (biopharma) companies are facing a challenging research and development (R&D) environment and increased competitive pressures. Their heavy reliance on a closed, traditional model of product development might stifle true innovation and may cause biopharma companies to lag behind their more creative peers. Companies in other industries have turned to open innovation (OI) – along a spectrum of openness that ranges from closed/traditional to open/emerging – as one way to successfully overcome many R&D and marketplace challenges by sourcing innovative ideas, knowledge, and new skills/technologies from outside their organization.

Deloitte’s analysis of the current state of OI in biopharma reveals a higher success rate for OI pursuits than for closed-model product development. However, companies have sourced around 80 percent of their R&D pipeline via the more closed end of the OI spectrum. Adoption at the most open end is still infrequent and slow, mainly due to concerns about intellectual property (IP) rights, adopting new OI-based R&D models, and cultural and management style issues. Nonetheless, for biopharma companies, OI seems to be the way forward, as it appears to be a more cost- and time-effective way to bring drugs to market. In fact, several key trends will likely continue to drive the adoption of OI, especially at the most open end of the spectrum.

Biopharma companies looking to initiate or expand an OI effort should consider evaluating its maturity against this paper’s openness spectrum framework and taking steps towards aligning the OI operating model with the effort’s specific goals and desired outcomes.

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Three-fold probability of success when drugs sourced via open innovation

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