Lisa Conte (United States of America)
Founder and Chief Executive Officer - Napo Pharmaceuticals, Inc.
Social Change in the Pharmaceutical Industry
It has been well recognized during the past year that the pharmaceutical industry must not only evolve its business model, but also that the industry may be operating under a broken model of the past. Innovation to address current problems can be achieved coincident with bringing social responsibility and change to the pharmaceutical industry.
The pharma industry spent $70 billion on global R&D in 2007 and got 17 new drugs approved, compared with $17 billion in 1996 with 53 new drug approvals. Twice that is spent on sales and marketing. The message is: we need high prices in order to fuel a risk-based research engine. In fact, the highest return on investment for pharmaceutical companies comes from their litigation departments, a result of fighting patent challenges and extending exclusivity. Hence, we in the industry are often not recognized for our innovation; rather we are chided for denying novel and affordable medicines to the world’s impoverished, elderly and uninsured, and for the unconscionable act of suing Nelson Mandela.
Fixing the pharmaceutical industry’s broken business model can be achieved in concert with bringing social change to it. First and foremost, we must provide global populations access to novel pharmaceuticals in a sustainable manner, through collaborations and relationships with local businesses and industry participants. The high value/high profitability business model used primarily by Western, and other privately insured, populations can be complemented by the higher volume business model of emerging and developing economies. Economies of scale benefit everybody due to reduced cost of goods sold, while bringing affordability to resource-constrained areas. This true sustainability: an inclusive, global-health business model that does not require aid, philanthropy or annual solicitations to flourish, and which also enhances the return on investment for those who invest is risk-based research.
Now to the triple bottom line: In Napo’s case, the basic discovery of novel pharmaceuticals comes from an understanding of how plants are traditionally used as medicines in rain-forest areas of the world. The knowledge of a traditional healer, or shaman, is utilized through benefit-sharing via a non-profit established by Napo called the Healing Forest Conservancy. Napo’s lead drug is being developed world-wide, targeting both lethal diseases like childhood diarrhea in the developing world, and chronic diseases like HIV-related diarrhea in the developed world. Furthermore, the raw plant material from which the pure, proprietary pharmaceutical agent is derived is harvested sustainably in the rain forest by local workers. This agroforestry provides environmental benefits, while fair-trade practices ensure social and economic welfare to the local farmers.
Why hasn’t this occurred before in the pharmaceutical industry? I believe that the tremendous risk-based capital necessary for product innovation has hampered the opportunity to usher in groundbreaking financial forces of social change. However, the emergence of “rest-of-the-world” populations as significant market forces provides the seeds of change for innovation in drug discovery and development practices.