To decide what treatments to build and how to build them most efficiently, leaders of life-science ventures must have expertise in science, management, innovation, and regulatory science. But the true challenge lies in understanding differences in the language, goals, and timelines across disciplines. Leading an Enduring Science-Based Business helps leaders reconcile the differing demands of science and business to accomplish unified objectives. We spoke with Amitabh Chandra, program chair, health care economist, and professor at both Harvard Business School (HBS) and Harvard Kennedy School (HKS) about the importance of this program in today's world.
What inspired you to develop this program?
To make better decisions in life-sciences companies, managers need to think differently about science and know what questions to ask of their scientists. Scientific insights like CRISPR, base-editing, and regenerative medicine are arriving are an incredible speed, and managers aren't always equipped to understand how these insights are different from each other and how business strategy should change in response to their arrival. Scientists need to understand what the finance and management sides of their company are thinking about, because their decisions affect what science is done and how it is done. Scientists also need to understand the long arc from insight to actual therapeutics and the challenges of managing a company that can sustain enduring research programs.
One major challenge that we see is that the norms and durations of discovery in life science are different than discovery in other industries. This creates unique challenges for life-sciences businesses and their managers. For example, R&D in science works on a very long cycle: It takes about 25 years to develop an idea from a petri dish into a drug that a physician can administer to a patient. There is nothing in tech world that works on that cycle—25 years ago, tech companies were releasing first-generation cell phones, and they've made many iterations since then. But drug development in biopharmaceuticals requires much more patience and a certain comfort level with failure. This is easier said than done, because life-sciences companies still answer to the harsh discipline of financial markets. The business side of a company may also see failure as a bad thing, but in the science world, there is still knowledge in failure, for failure may still reveal patient segments, pathways, side effects, and targets that can be promising for subsequent development programs.
Finally, it's well known that science-based businesses are more difficult to lead because we don't just have commercial uncertainty with your competitors, we also have science, policy, and regulatory uncertainty.
Could you share some of the discussion points from the cases?
Eli Lily and Company recently bought Loxo Oncology for $8 billion. Loxo is a publicly traded company, and Eli Lily paid a 70-percent premium on its shares to purchase it. If you read The Wall Street Journal or The New York Times, you probably know about this, and it's one of the cases written specifically for this program.
The acquisition raises some interesting questions: Why did Eli Lily, which is a premier diabetes company, buy an oncology company? Why did they buy Loxo, when there are so many others? Put differently, why did Lily decide that they needed to actually buy Loxo? What did they see in Loxo that other people did not? What can Lily do with Loxo that these other companies can't, including Loxo itself? And finally, was $8 billion the right price?
Eli Lily essentially decided to become an oncology company by acquiring another oncology company, but they could have done it very differently. They could have hired a team of oncologists and scientists and developed their own portfolio of oncology drugs internally. This tension between doing that internally or externally is not very well understood by managers or by scientists. If you're a publicly traded company, you have to consider not only the social value of the cures being brought to market, but also the fact that the stock is owned by investors who might not always understand the strategy behind buying Loxo or another company. How does a leader of a large for-profit company explain the narrative behind their R&D strategy to investors who're expecting returns and say to them, "You know what? There may be no returns today, tomorrow, or the day after, but 30 years from now, we will give the world a cure for all time. And that cure—say, for Alzheimer's—could make us a trillion-dollar company." How do you manage that narrative between companies and investors?
The program is structured so that we spend the morning on the latest, greatest, and most promising advances, and then we spend the afternoon thinking through the business strategy that revolves around scientific discovery and scientific insights into the market.
What other topics will you cover in the program?
We'll examine how a science-based business thinks about the creation of value versus the capture of value. If I create a cure for malaria, it has huge social value, but it's very hard for me to capture that because the people who die of malaria have little or no ability to pay for that cure. The odds are that the WHO or maybe a government will buy my drug, but they will pay me a lot less than the full value for what I have accomplished. So how does a company grapple with the tension between value creation and value capture? How do we navigate this evolving commercial and regulatory environment?
We also want our participants to think about novel payment methods. We're talking about curative technologies that could retail in the millions of dollars. Societies, governments, and patients will struggle to afford that, so we need to equip our participants to think about innovative ways to expand patient access while still being commercially sustainable.
Any other important takeaways?
We'll also touch on ethics in science and in pricing. Ethical questions often crop up in relation to gene drives and what it means to edit DNA. Defective CRISPR DNA might be edited to cure cystic fibrosis, but then the germline could also be edited to give an athlete bigger lungs so that he wins the 100-meter dash. The scientific consensus is that we won't do that, but consensus is not a proven strategy that we want to bet on. And then there are ethical challenges to the pricing model as well. High prices bring the money that helps life-science companies endure and invest in the next generation of cures, but—as in the malaria example—some patient somewhere will not be able to afford that higher price. This is the central dilemma in pharmaceutical pricing, and we'll study two cases that explore this issue.
Can you tell us a little about the teaching team?
Well, of course, I'll be co-teaching with a number of my HBS colleagues. I'm a professor here at HBS and at HKS, where I'm also the director of Health Policy Research. We also have Professors Doug Melton and Mark Fishman. Doug is a co-director of Harvard's Stem Cell Institute, and he was one of the founders of Gilead Sciences. Mark was president of the Novartis Institutes for Biomedical Research for fourteen years, during which time Novartis discovered 90 new medicines and brought them through successful clinical trials. He's also chief of the Pathways Clinical Service at Massachusetts General Hospital and the former chief of cardiology there. These are scientists immersed in the world of life sciences who really understand the long arc of taking an idea from the lab all the way to a therapeutic available to patients.
Who will benefit most from the program?
Senior executives who might not know the science but are curious about it and just don't know what questions to ask of their scientists will greatly benefit from the program. And, of course, scientists interested in learning how to speak the language of business to their chief financial officers. The program would add a lot of value for board members, many of whom don't come from a science background but sit on the boards of science-based companies. Heads of business units would also benefit, especially as they are thinking about the question of whether to build and develop internally or externally. And the program has implications for insurance, institutes, regulators, and nonprofits, all of which are active in bringing new drugs and therapies to market. We definitely see this as applicable to a global audience—science doesn't recognize borders.
Program material will continue to change because we are in a period of extraordinary discovery in life science. We are working with the world's leading scientists who are involved in industry, as well as with case protagonists—they provide a rich narrative on changes from one year to the next. For this reason, we encourage teams to attend—especially those composed of multiple functions within an organization.