Securing the future

C&I Issue 3, 2017

On both sides of the Atlantic, political concerns are uppermost in the minds of researchers and product developers, particularly those in the pharmaceutical sector. In the US, the concerns centre on cuts to the governmental funding of science, while in the UK, the focus is on Brexit and all that it entails - from the future of the European Medicines Centre in London to future EU Horizon research funding.

In the US, moves by President Trump reduce the funding of various organisations that support R&D, including the National Institutes of Health, which is slated for a double-digit cut of 18%, around $25.9bn. Similar funding cuts will hit the Environmental Protection Agency, thereby impacting climate change research; the Office of Science at the Department of Energy; and the National Science Foundation.

Commenting on the potential impact of funding reductions on microbiology, Jason Rao, director of international affairs at the American Society for Microbiology (ASM), said: ‘Cutting [R&D] funding from our budget is the same as cutting the engines off an airplane that’s too heavy for take-off.’

Despite this apparent rejection of science, however, some observers have remarked on small signs of positive support. An Emergency Response Fund has been established, for example, designed to counter emerging biothreats, such as a pandemic crisis – something proposed to the incoming administration by the ASM.

There is also support for the Department of Agriculture’s Competitive Research Program and for major global health initiatives, including the Global Fund, established to ‘accelerate the end of AIDs, tuberculosis and malaria as epidemics’, and the President’ Plan for AIDS Relief, a US government initiative to combat AIDS and HIV around the world.

Meanwhile, in the UK, the road to Brexit does not appear to have deterred investment in the pharmaceutical sector. This despite concerns about the drug registration process post-departure, and the expected relocation of the European Medicines Agency. A number of EU member states have put in bids for the agency, including perhaps over-ambitiously Finland, already the host for the European Chemicals Agency, with responsibility for REACH.

There has also been much discussion in the UK recently about the shortages of qualified technicians and scientists, and the possible impact of controls about researchers moving to the UK from the EU.

But is it just political issues that should give pause for thought about future innovation? Is R&D getting harder or are we just getting worse at it? This is a question posed in a recent article in the Harvard Business Review. In studying this possibility, Anne Marie Knott, a professor of strategy at Washington University’s Olin Business School in St Louis, US, has discovered that returns on companies’ R&D spending, what she describes as their research quotient,  have declined by 65% over the past three decades; this decline also mirrors the decline in US GDP growth over the same period.

One possible explanation, Knott suggests, is that R&D has become harder - a view advanced by Chad Jones, the Stanco professor of economics at Stanford Graduate School of Business. Jones has proposed two possible mechanisms for this theory: firstly, that the most obvious ideas are discovered first, so the quality of remaining ideas degrades over time; and secondly, the diminishing returns to research as adding more researchers decreases the number of innovations per worker, possibly due to duplication of effort.

If R&D has become harder, then it should have become harder for everyone. However, Knott has examined and compared those companies with the best outputs for their innovation inputs on an annual basis and has shown this not the case manufacturing industry as a whole.
Knott believes that companies may have in fact become worse at R&D, and while this does not sound more optimistic than R&D getting harder, it does offer the possibility for improvement.

While R&D opportunities do in fact decline within industries over time, successful companies respond by creating new product areas with greater technological opportunities - often with broader markets than before. In a way they become more innovative about their innovation.

So Einstein really was right all along with his definition of insanity: ‘Doing the same things over and over again and expecting different results’. Although we are not guilty of insanity, disruption would appear to be the name of the game. Rather than looking at things the same way as before, from funding through to R&D, we need to step outside the box and look for new ways of thinking, sources of funding and new directions for our activities.

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