January 2, 2009

Biotechnology 2.0 in 2009

First of all, Intangitopia wishes everyone a Happy New Year! We started Intangitopia relatively late during 2008, but it seems as we already have attracted a number of regular readers which we are all thrilled to see.

Tobias’ blog focus for 2009
Many of my previous posts have been about open innovation in the biotech industry, which I intend to continue during this year. My opinion is that the future of the biotech market needs to be modified to create an equilibrium in the now asymmetric relationship between large pharma and the (often smaller) biotech players and one of the remedies, in my opinion, will be through gathering and utilizing collective intelligence in platform constructs. This will obviously not be my sole focus as I will try to stay up to date with current events in the biotech industry, and there will hopefully be some in-depth analysis of some business models since I will write a M.Sc. thesis about how roles, relationships and transactions are constructed in intellectualized bio-business fields during this spring. Marcus, Mathias, Johan and Fredrik will also write their M.Sc. theses during this spring so I am guessing that they will contribute with in-depth analyzes in areas that they probably will introduce themselves in upcoming posts.

Wikinomics and FDA’s Priority Review Vouchers
There has finally been some time to catch up with reading during Christmas, and I have read a book which I warmly recommend: Wikinomics (book & blog). The authors have looked at a number of platform constructs with different degrees of openness. Most of the constructs are from the IT market for the obvious reason that the most advanced platforms exist there, but some biotech platforms are also mentioned along with other types of platforms, such as constructs based on governmental data (pollution, crime, etc). The authors, among many other intersting things, stress the importance of managing incentives for platform participants which I think is one of the crucial points that the IMI platform (in my previous blog post) fails to fulfill for small biotech players. Wikonomics mentions Amazon as one of the more successful models where revenues from sales are shared with those joining the platform and contrasts this with Flickr which does not compensate or merit their ‘best’ participants in a satisfactory way (according to the authors).

It was therefore interesting to read the December issue of Nature Biotech (Vol. 26 No. 12 ) where FDA’s new strategy of offering priority vouchers for neglected-disease drugs was described. The new scheme, launched in October as part of the FDA Amendments Act, awards priority review vouchers to any company obtaining FDA approval for a product that prevents or treats a neglected disease. These vouchers can then be used to accelerate approval of any drug in any disease indication by placing a new drug application (NDA) on FDA’s Priority Review list. Undertakings such as this one incentivizes development of neglected-disease drugs by using existing market mechanisms in new ways. It does not feel like a farfetched assumption that these vouchers could become very valuable either as part of a biotech company’s value proposition to a pharma actor or on their own as rights to future value extraction or as negotiation tools. The articles mentions the possibility for larger biotech companies to repurpose their already approved drugs for diseases rife in developing countries, thereby gaining access to priority vouchers to be used for more lucrative programs. The problem however, as usually is the case, is that the incentive is somewhat skewed to favor large pharma more readily than early-stage biotech actors since the development time towards a voucher can be longer than what such actors often can afford.

The important thing, in my opinion, is to recognize that the market is getting ready for a shift into a knowledge paradigm where collectivization and collaboration will be the governing vehicle to sustainable development. However, the million-dollar-question still remains: how can incentive systems be managed to incentivize small and large actors in open biotech innovation platforms?

Tobias Thornblad


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