recent opinion piece in Nature Reviews Drug Discovery (NRDD) investigates indicators of R&D (research & development) productivity (as measured by project success rate or Return on Investment, ROI) in pharmaceutical organisations. The findings presented in the paper have relevance for life science organisations with R&D focus as a whole.

As a basis for the study, the study authors looked at 842 drug molecules with known scientific or commercial outcome that had been investigated by 419 companies between 2002 and 2011. In an attempt to identify indicators of productivity, the paper considered factors such as ‘company R&D spend’, ‘company head quarter location’, ‘prospective market size of drug molecule’, ‘therapeutic area’, ‘target area’ and ‘properties of the molecule under investigation’.

Of the above, none was found to have a significant correlation with success rate or productivity. While this seems obvious for some of the putative indicators (e.g. company HQ location), for others the findings go against common believes. For example, it has been widely assumed that large organisations are less creative, less innovative and less productive with respect to R&D owing to institutional inertia and bureaucratic pressure. However, the paper in NRDD suggests that there is no significant correlation of organisation size and success rate.

Factors that positively correlate with R&D success rate

The first set of indicators that positively correlate with R&D success relate to the scientific track record produced by the corresponding organisations (in prior years). This is measured by ‘publication per USD R&D’, ‘patents per R&D’ and ‘citations per publication’. Overall, these are mainly indicators of quality of science or excellence in research.

In addition, the authors found that productivity is positively influenced when R&D organisations are situated in vibrant science hubs. This suggests that working in vicinity to large pools of human talent can have a positive effect on project success rate.

Another set of indicators relates to the ability to make judgement calls about project in R&D organisations. In the study, this was measured by assessing ‘R&D tenure of key personnel’, the ‘frequent of mention of ROI in official publications’, and the ‘frequent of mention of decision making in publications’. The findings indicate that project success rate increases when projects are run by veterans with a wealth of experience. Considering the 10-15 year time horizon in pharmaceutical R&D projects these tenures will be significantly longer than what may today be considered adequate for scientific personnel in R&D organisations.

Positive correlation of  ‘ROI’ and ‘decision making’ indicators with R&D success may be an indication of an organisational culture that is geared towards creating value – rather than ‘just good science’.  In fact, these factors may be seen as antecedents to another crucial productivity indicator the authors identified, namely ‘early termination of projects’. This indicator relates to the ability of R&D organisations to make hard decisions about  projects with little or no likelihood of succeeding in later stages of development.

As noted in the paper, a major obstacle to achieving greater R&D productivity is the likelihood that low-viability projects are knowingly progressed despite available evidence to the contrary. With an industry that spends 90% of R&D expenditures on molecules that never reach the market, such behaviour cannot be considered an ingredient for considered growth.

As a possible explanation, the authors cite the known ‘truth vs success’ conundrum that is common in many R&D organisations. Where personal success (e.g. measured by continuation of employment or career advancement) is contingent on the successful completion of projects, it is rationale for individuals to continue ‘riding the dead horse’ rather than to terminate a project that will likely fail.  This type of behaviour shows itself in the tendency towards over-emphasizing positive data while arguing away or neglecting negative results.

To counter such behaviour, R&D organisations should incentivise ‘truth-seeking’ behaviour, showing itself in a more critical assessment of data (including validation of data) and adequate reporting of negative results; rather than the successful completion or progression of projects at all cost. Governance in such organisations is likewise characterized by an emphasis on return on investment and a culture of enterprise value creation.

What lessons can R&D organisations learn from this?

  1. R&D success doesn’t come out of nowhere; it stands on the shoulders of prior success. Organisations that are more efficient in spending their R&D budget (publication per USD spent on R&D, patents per USD R&D, citations per publication) – or, more generically, utilise their resources more efficiently and effectively – are more successful.
  2. Organisations that conduct R&D in vibrant science hubs are more successful. Where physical location is not an option alternative means of extensive networking may be a solution.
  3. The more complex the R&D endeavour, the more experienced the people involved ought to be. The necessary experience relates to the ability to do excellent science as well as the capacity to make hard project choices. The individuals involved should be rewarded for seeking the truth, not blindly progressing or completing projects for the sake of it. This requires an appropriate organisational culture and adequate project ‘success’ indicators.
  4. Organisations that focus on value creation and some form or ROI (‘value for money’) are more successful