No organisation is ever going to try out EBHR if they cannot see the $ value in it so it is about time I put my money where my mouth is, so to speak. There cannot be a better example than the pharmaceutical industry. All large pharma companies have large HR and learning departments who are supposed to be adding some value, and they may well be, but only a tiny fraction of what they could. They do not focus on the highest value aspects of pharma, which are unsustainably high development costs combined with low success rates. Figures quoted in a Sunday Times article “Glaxo enters the dragons’ den” on 21st August 2011 (attributed to Evaluate Pharma) showed that –
“… spending by pharmaceutical groups on R&D was $88 billion in 2004. It has risen every year, bar one, since… and this year is forecast to reach $133 billion. Yet the companies investing these vast sums are getting fewer and fewer results. …. For every 5,000 new compounds that enter pre-clinical trials only 5 will end up being tested on humans. Of those 5 only 1 will make it to the market.”
Pharma has become one huge sink hole with fewer and fewer blockbuster drugs to compensate.
None of this is news to anyone observing the industry and I have been tracking it from an evidence-based, human capital perspective for many years now. I have worked with a wide range of pharma companies over the years and only once did I see an HR team trying to do anything about it, about 15 years ago, and that was GSK. They failed though because they did not adopt the simplest tenets of evidence-based management; even though pharma is inherently an evidence-based industry. When I asked them what they were trying to achieve they said they needed to improve the success rate of their ‘drug discovery’ process but nowhere in their efforts did they produce any evidence or measure who were the most and least successful researchers in discovering the drugs that got to market. EBHR is not complex, it is simple and even a small improvement is worth billions to these corporations and the societies that have to pay for them.
So has GSK learned any lessons? Here is a quote from the article by Moncef Slaoui, GSK’s Chairman of research and development and “a 23 year Glaxo veteran” about their latest ‘dragon’s den’ attempts -
“Three years is long enough to know whether we are failing but too short to know whether we are succeeding. I don’t think this system has failed; we are moving in the right direction. How successful we are, we’ll see. … I would like to see another (funding) round in three years – that’s the time it takes.”
I’m sorry Moncef, you have had a lot longer than 3 years to start getting this right. You are not being evidence-based and neither are you managing your human capital well. If you do not know whether you are succeeding or not then neither do your researchers. GSK’s ‘plan B’ , using external development labs, is not the best solution though because it will seriously limit GSK’s capability for creating value, impacting on their share price and market capitalisation.
The whole of the pharma industry, more than any other industry I know, needs EBHR. We should all hope they discover it soon because we cannot afford $133 billion a year to provide so few drugs.