Photo by Sangharsh Lohakare on Unsplash
5.05 | 03.12.22
When you hear people use the phrase "It's a hits-driven business," they're usually talking about venture capital, TV production, videogames, or pop music—all industries where you don't make much money unless you come up with at least one (and preferably a string of) massively popular products. But you know what else is a hits-driven business? Drug development.
This week, we present the fourth and final episode in the Persistent Innovators miniseries, originally produced for InnoLead's Innovation Answered podcast and republished here for Soonish listeners. It's all about the giant Swiss pharmaceutical company Novartis, maker of more than a dozen blockbuster drugs like Cosentyx for psoriasis, Entresto for heart failure, and Gilenya for multiple sclerosis.
Because companies lose patent protection on their old drugs after 17 years, they must constantly refill their pipeline of new drugs—and Novartis has done that by placing a huge bet on the Novartis Institutes for BioMedical Research (NIBR), its 2,000-person R&D lab based here in Soonish's hometown of Cambridge, MA.
In this episode you'll meet Tom Hughes, a biotech entrepreneur and former Novartis executive who helped to set up NIBR in the early 2000s, as well as NIBR's current president, Jay Bradner. They explain why the decision to build NIBR was initially controversial even inside Novartis, and how the labs are structured today to take big but manageable risks and ensure that the company can capitalize on biology's growing understanding of the molecular and genetic underpinnings of disease.
"I find from the top down, our chairman to our CEO, to every commercial leader, there is a tolerance and an appetite for bravery in drug discovery that is really refreshing and honestly very empowering," Bradner says of Novartis. "If you looked at the type of programs in our portfolio, they’re not for the faint of heart. And this is for a very specific reason. We worry that if we don’t try to [do it] well, then who will?"
"What Makes Novartis a Persistent Innovator?" was first published by Innovation Answered on February 28, 2022. You can hear the entire miniseries at innovationleader.com or in your podcast player of choice.
Resources Related to This Episode
Amy C. Edmondson, Ranjay Gulati, Patrick J. Healy, and Kerry Herman, The Genesis Labs at Novartis, Harvard Business Review Case Study, November 26, 2019
Robert Langreth, Reviving Novartis, Forbes, February 5, 2001
As Sun Sets on Gleevec, Novartis Looks to New Horizons in Oncology, Practice Update Pink Sheet, November 19, 2012
Novartis Institutes for BioMedical Research
Notes
The Soonish opening theme is by Graham Gordon Ramsay.
All additional music in this episode by Lee Rosevere and Tim Beek.
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Full Transcript
Wade Roush: You’re listening to Soonish. I’m Wade Roush.
This week it’s time to share the final episode in the four-episode series I made early this year under the running title The Persistent Innovators.
As you may remember from the previous three episodes, I got commissioned by a company here in Boston called InnoLead to make this miniseries for their podcast, Innovation Answered, and with their permission I’m re-presenting the whole project here for Soonish listeners.
On a high level this project amounted to a hunt for innovation inside big companies.
We wanted to find a few large, established companies that have managed to stay innovative despite all the inertia that comes along with bigness and longevity.
And then we wanted to get under the hood of each company to find out how they do it.
The first three episodes were about Apple, Disney, and LEGO.
And even though these companies are in three very different industries, that is, technology, entertainment, and toys, I found a lot of themes in common.
Like, for example, the way all three of those companies went through periods when they lost touch with their core customers or had to figure out how to use new technologies in ways that still fit with their core mission or identity.
And I was really curious to see whether any of these themes would hold up if we switched our lens to a very different industry, namely pharmaceuticals.
I’ve never talked about it much here on Soonish, but there’s a whole side of my life as a freelance journalist where I’m focused on biotech, life sciences, and healthcare.
And I’m convinced that the changes happening in those fields thanks to progress in areas lke genomics and gene editing are gonna shape the future just as much computing and space exploration and the other areas we cover more often here on the show.
I did touch on what’s happening in the life sciences just briefly in season 4 in my episode about new hope for treating ultra-rare genetic diseases.
But this final Persistent Innovators episode about the giant Swiss drug maker Novartis gave me a chance to dive even deeper.
Because Novartis is one of many drug developers that are rethinking everything they do to take advantage of our growing understanding of the genetic and molecular basis of disease.
And when it comes to the question of how big drug developers stay innovative, I definitely did come across some of the same themes and strategies we saw in the earlier episodes.
Maybe the one that jumps out the most in this episode is how Novartis decided early in the company’s history to make a huge investment in a new lab here in the Boston area where they could create a protected space for innovation.
But I won’t say more here. I’ll let the episode speak for itself.
This is the full version of Innovation Answered, Season 6, Episode 5, “What Makes Novartis a Persistent Innovator?”, including, at the end, an interview with a spokesman from a company called Patsnap that sponsored the whole series.
Okay, here we go.
Kristen Krasinskas: Hi, I’m Kristen Krasinskas from InnoLead.
If you work inside a large organization in any kind of innovation related job — whether you’re in R&D, design, emerging technology, or new product development — I’d love to invite you to learn about the resources we provide.
We can connect you to a network of peers and make sure you have the data, templates, and case studies you need to succeed.
You can find out more — and sign up for our email newsletter — at innolead.com.
Now, on with the show.
Wade Roush: Hello and welcome to The Persistent Innovators, a special miniseries from Innovation Answered, InnoLead’s podcast for corporate change makers.
I’m Wade Roush. I’m your guest host for the miniseries.
If you work in the world of entertainment or innovation, here’s a phrase I bet you’ve heard before.
TV news clips: “It’s a hits-driven business.” “It’s a hits-driven business.” “It’s a hits-driven business.” “It’s a hits-driven business.”
Wade Roush: When people say “It’s a hits-driven business,” they’re usually talking about industries like venture capital, or TV, or games, where you don’t make much money unless you come up with at least one massively popular product.
Sometimes they’re even talking about the original hits-driven business: pop music.
But whatever the industry, the point they’re usually trying to make is that creating a hit is incredibly hard.
To make a great song, you need the talent of a songwriter like a John Lennon or a Bono, plus a great band behind you, plus the skill of a producer like George Martin or Brian Eno, plus a bunch of pure luck.
Just think how it would have changed the history of music if the Beatles’ first producer, Brian Epstein, hadn’t wandered into the Cavern Club in Liverpool to hear them play one night in 1961.
Or if U2 hadn’t gotten noticed by winning a talent contest in Limerick, Ireland in 1978.
In other words, investing any single creator or creation is a little bit of a crap shoot.
And I’ll tell you what’s another hits-driven business: drug development.
That’s obviously true at the startup level, where lots of venture-backed biotech startups go out of business or get acquired for a fire-sale price because their original idea never panned out.
But it’s maybe even more true for the world’s biggest pharmaceutical companies.
All through this miniseries we’ve been talking about persistent innovators, and we’ve covered companies that figure out how to stay on top decade after decade in highly competitive industries like computing, entertainment, and toys.
But the drug business is more competitive than any of those.
Part of the challenge is that even if you do come up with a hit drug that generates billions in revenue, your patent on that drug will only protect you for so long.
After 17 years, give or take, you lose patent protection.
Then a maker of generic drugs can come along behind you and steal your whole market.
That means that if you’re a big drug company and you want to stay big, you kind of have to be a persistent innovator.
You have to keep your pipeline filled with new drug candidates.
'Then you need to prove those drugs work in humans, and get regulators to approve as many of those medicines as possible.
And then you need to hope that your drugs are a big enough improvement over existing treatments that doctors around the world will start prescribing them.
That’s a hard job, with a shockingly high failure rate.
Historically, you have to put 5,000 drug candidates into preclinical testing to get just one drug that’s approved for use on humans.
That’s why one drug industry executive made the argument to me that life inside Big Pharma companies is actually more stressful than life at a biotech startup.
Jay Bradner: It’s quite harder to grow a $200 billion company to a $300 billion company… because it requires dozens of White Albums, dozens of Achtung Babys.
Wade Roush: That’s Jay Bradner.
Since 2016 he’s been the president of the Novartis Institutes for Biomedical Research, which is headquartered here in my home city of Cambridge, Massachusetts.
The Institutes are also known by their initials, N-I-B-R, which is usually just pronounced “nibber.”
And they’re basically Novartis’s R&D hub—the place where all of its new drug candidates are born.
Novartis itself is based in Basel, Switzerland, and it’s the world’s third largest drug maker, with almost $50 billion in revenue in 2020.
But even at that scale, it can be a real body blow when a company doesn’t have new hits ready to replace its old hits.
That happened to Novartis a few years back, when the patents expired on two of its blockbuster drugs, namely Diovan for high blood pressure and Gleevec for myeloid leukemia.
After a generic version of Diovan came out in 2015, Novartis’s revenue from that drug dropped from $3.5 billion per year to $1.3 billion per year.
Sales of Gleevec fell off a cliff the next year, dropping from $4.6 billion to about $2 billion.
That meant some belt-tightening across the whole organization.
NIBR escaped the worst of it, but Novartis ended up cutting hundreds of jobs in Switzerland and shutting down a unit focused on cell and gene therapy.
Jay Bradner: After the Gleevec patent expiry, we had to get very pragmatic and creative about how we would contract acutely, in order to then ultimately grow as we are now.
Wade Roush: Bradner points out that a small biotech company can make a big splash with a single science breakthrough.
But he says part of being pragmatic and creative is figuring out how not to be a one-hit wonder.
Jay Bradner: [59:20] When we in biomedicine think of innovation and invention, what often comes to mind is the small biotech company that makes good on an idea. And this this can be breathtaking innovation. When innovation takes you by surprise, leads you to think about innovation in a brand-new way. And it’s rightly celebrated. That’s the world that I come from, in academic chemical biology and in small biotech. What I now experience here in my, you know, six years as I reflect on this subject is it’s so much harder to deliver innovation with societal impact, with consistency and at scale.
Wade Roush: “Delivering innovation with societal impact, with consistency and at scale.”
That’s basically the definition of persistent innovation.
The thing is, in the world of drug discovery and drug development, innovation has a very specific shape.
And that’s why we wanted to close out this miniseries with a story about a pharmaceutical company.
Previously, we talked about Apple, a company that’s in the business of getting computer and smartphone buyers to pay a little more for great design and usability.
We talked about Disney, which is all about using art and technology to tell stories that dazzle film audiences and theme park guests.
And we talked about LEGO, which has learned that by being disciplined about its system interlocking construction bricks, it can unlock endless play and creativity for kids.
All three of those companies succeed in part by giving people reasons to identify with their brands and become loyal customers.
But things are completely different for Novartis and the world’s other pharmaceutical giants, like Roche, or Merck, or Johnson & Johnson, or GlaxoSmithKline, or Bristol Myers Squibb, or Pfizer.
I mean, let’s be honest.
You buy a computer from Apple because it’s from Apple.
But nobody takes a Novartis drug because it’s from Novartis.
You take it because your doctor tells you to, and because you hope it will save your life, or shorten your illness.
So, it’s a business where, generally speaking, whoever’s selling the best medicines at the moment makes the most money.
Which means the problem of persistent innovation gets distilled down to its purest form.
It’s all about finding the smartest drug hunters, and creating an organization where those people have the freedom and the resources they need to do great science.
That’s what NIBR tries to do.
Later, we’ll hear Bradner explain how he’s structured NIBR so that the labs can take on the hard challenges, and reach for what he calls the “high-hanging fruit.”
That’s what makes NIBR so interesting to me.
Well, that plus the fact that it’s right in my backyard.
The City of Cambridge is shaped kind of like a pair of goggles, with Harvard on the left side and MIT on the right side.
If you live on the MIT end, like I do, you’re confronted every day by evidence of the life sciences gold rush that Novartis sparked in 2002 by opening NIBR.
The biotech buildup has utterly transformed the Kendall Square neighborhood around MIT and made it into what’s often called the most innovative square mile on the planet.
You can’t understand how that happened without understanding the story of Novartis and NIBR.
So in this episode we’re going to hear more from Jay Bradner about how NIBR works and what he does to make sure that the 2,000 researchers there stay productive.
But before that, we’re going to jump all the way back to the beginning, and hear from a scientist-entrepreneur who was present at the creation of NIBR.
His name is Tom Hughes, and he’ll explain why the decision to build NIBR was actually seen as risky and controversial, even inside Novartis.
But before that….a word about our sponsor.
[musical interval]
Wade Roush: The Persistent Innovators is sponsored by PatSnap and their online courseware site Innovation Academy.
I want to introduce you to Sam Wiley, PatSnap’s head of thought leadership and customer advocacy.
Sam Wiley: Pat Snap is a connected innovation intelligence company. What does that mean? It means that we take all the different data types and use AI to curate it, to understand it better, and all the different data types that can be interesting to an innovator. So everything from clinical trials to our kind of historic strength has always been patent data, but we’ve expanded way beyond that to other types of data that are interesting innovators. So clinical trials, research reports, research papers, market reports, all of the above to help innovators innovate better.
Wade Roush: Later in the show I’ll speak more with Sam. And I’ll ask him to talk about some of the company he sees as persistent innovators.
But for now I just want to say thank you to Patsnap for their support throughout the miniseries. You can learn more at www.patsnap.com and academy.patsnap.com.
[musical interval]
Wade Roush: Novartis is a pretty young company. It hasn’t even turned 30.
But it’s also a very old company. Way older than Apple, Disney, or LEGO.
It’s a combination of three separate Swiss companies, all of which were founded in Basel in the second half of the nineteenth century, a time when chemists in Switzerland and Germany were first figuring out how to make synthetic dyes that used cheap petrochemicals instead of plants like indigo.
J.R. Geigy was formed in 1857.
Chemical Industry Basel, or CIBA, came two years later in 1859.
After spending more than a century as competitors, CIBA and Geigy merged in 1970 to form CIBA-Geigy.
Then there was Sandoz, founded in 1886.
One of that company’s claims to fame came in 1943, when its scientists discovered LSD.
But by the 1980s, Sandoz was a widely diversified pharmaceutical company with labs around the world, researching a wide range of diseases, including cardiovascular disease.
And in 1987, that was the department of Sandoz that Tom Hughes joined, right after he’d completed his PhD in nutritional biochemistry.
Tom Hughes: [In fact, it was the first postdoc that they ever hired at Sandoz, at least in New Jersey. And so I decided to do that much to the chagrin of my thesis advisor who really thought that I would be discarding my career, you know, immediately upon going into industry. But … I always had this sort of interest in in working in a field where I would be with people who are trying to make real changes and to make things happen that could improve people’s lives. And I felt this would be a good way to do that. Of course, I knew nothing about it, I had no appreciation at all for how hard it would be or just how, how, how incredibly complicated drug discovery still is. But I went into it nonetheless.
Wade Roush: After his postdoc, Hughes got promoted to a permanent position at Sandoz, and was assigned to study new treatments for diabetes.
He spent the early 90s as part of a team developing a drug called vildagliptin.
The drug indirectly stimulates beta cells in the pancreas to secrete more insulin, which helps people with Type 2 diabetes prevent their blood sugar levels from spiking.
Vildagliptin made it all the way to market, and Novartis still sells it today under the brand name Galvus.
And then came a day in 1996 when Hughes learned of some surprising news.
Tom Hughes: I remember vividly driving up Route 287 one day on the way to work, and I was listening to NPR and they announced that Sandoz and CIBA-Geigy were merging to form this new company. And I literally drove my car off the road into the ditch. And I recovered quickly. But it was like, okay.
Wade Roush: So that was the birth of Novartis.
It was a surprise partly because the merger had been negotiated in complete secrecy.
It was the biggest marriage of two companies in history, up to that time.
But it had come out of necessity more than mutual attraction.
The truth is that neither Sandoz nor CIBA-Geigy were performing all that well at the time.
Their drug pipelines were close to empty.
One biotech industry reporter at Forbes Magazine wrote that both Sandoz and CIBA- were, quote, “plodding, risk-averse and assiduously Swiss firms that often got trounced by faster, fiercer U.S. rivals,” unquote.
The merger was a chance to change all that.
And Hughes had a feeling that it might also be his big chance to make a difference.
Tom Hughes: I had been listening to a lot of books on tape about management techniques. And I had just heard this one book that sort of, basically, the premise was whenever there’s turmoil, that means there’s opportunity within organizations. And so you should seize that. And so by the time I got to work, I was like, OK, I’m on this. Let’s do something real with this.
Wade Roush: Hughes spent the next few years helping to integrate his group at Sandoz with the cardiovascular group at CIBA-Geigy.
Then, around 2000, his new group came up for a review by Novartis’s science board.
Tom Hughes: That particular review, let’s just say, didn’t go so well. And so there was a clear change of focus, change of direction. And one day I was in a call with my boss at the time, and we were talking with the head of research, and he sort of slipped and said like, “Well, of course, after you move to Cambridge, you know, you’ll be able to do this all differently.” And we were like, “Well, what do you mean, move to Cambridge? And, Which Cambridge?”
Wade Roush: It turned out that Hughes’s boss meant Cambridge, Massachusetts.
After the Sandoz-CIBA-Geigy merger, the company had brought in an aggressive new CEO named Dan Vasella.
He’d been educated as a physician in Switzerland but studied business at Harvard, and he was taking a distinctly American approach to management.
He’d replaced 15 of the top 21 managers and cut more than 12,000 positions from the combined companies.
And he was on a mission to change the whole orientation of Novartis’s drug discovery effort.
The tradition at Novartis and almost every other drug company had been to start from the chemistry and then move to the biology.
That is, you’d screen thousands or millions of chemical compounds in the lab and see if any of them had interesting effects on human biology.
You’d focus on the ones that showed some activity, then test them in the lab, then try to take the good ones all the way to market.
But Vasella wanted to start with the biology and then move toward the chemistry.
Meaning, he wanted to build up a better understanding inside Novartis about the networks of gene and protein expression that underlie human disease.
Then the company could use that understanding to design new drugs that would influence those networks.
And by 2001, thanks to the success of some new Novartis drugs like vildagliptin and Gleevec.
Vasella had the maneuvering room he needed to make some big changes.
That year Tom Hughes had a chance to grab a drink with Vasella at a leadership team meeting in Interlochen, Switzerland.
Tom Hughes: So he began to share with me his vision for the organization, which I have to say was incredibly compelling. The way that sort of Dan articulated it, it was like, you know, this is a new era of biology the genome project will yield. We have, you know, new insights into human genetics that will be able to leverage the underlying pathway biology. The basically functional genomics was a was a term for understanding how cellular systems functioned. And so there’s this this expectation that that things are really going to change within the industry. At the same time because of the successes like drugs like Gleevec and Diovan, Femara, and Lamisil, you know, the company was in a very, very solid financial position. Dan, with the leadership of the company, corked closely with members of the board and it was clear that he had gotten consent to do something big and take a big step that would really alter the course of discovery within the company.
Wade Roush: Vasella’s big step was to open a brand-new R&D lab in Kendall Square, a stone’s throw from MIT and Biogen and Genzyme and the Whitehead Institute and all the other fixtures of the Cambridge biotech scene.
Neither Sandoz nor CIBA-Geigy had had much of a presence in Cambridge, so it would be new territory for the company.
This new facility was going to be named the Novartis Institutes for Biomedical Research.
And Vasella sent Hughes to Cambridge to help build it.
The company started with some space inside an existing complex at 100 Technology Square.
But within a few years they expanded into a much larger space inside the old Necco candy factory on Massachusetts Avenue.
Wade Roush: Tom, I wonder if in some ways, the decision to set up a new site that was the innovation center for the company, so to speak, was maybe the only way that would have worked, given that it would have been, it would have felt unfair to, you know, either the former Sandoz people or the former former CIBA-Geigy people, if one or the other of them had wound up owning the R&D function. And so you start something new so that everybody feels like they have some stake in it from the beginning?
Tom Hughes: Yeah. Or you could say that you were building something new that would annoy everybody who’s in the organization. A funny little story. So years later, I was sited in Basel and I met with a couple of people. I was talking with one guy and I said, So are you former Sandoz or former Ciba-Geigy? And he says, like, I am Geigy. That’s what he said. Right. So there still there is still this like CIBA versus Geigy thing going on.
Wade Roush: He wasn’t even CIBA-Geigy. He was just Geigy.
Tom Hughes: Yeah. So, let’s say there’s memory to a lot of these things there. But you’re right, and I think that was that was an important consideration. Let’s do something that is neither Sandoz nor CIBA-Geigy. T here’s no going back to where you were. There’s no there’s no point in having one side pretend that they’re going to be, you know, taking over and dominating over the other. And I think that was clearly the case after we brought in Mark, who was a complete outsider.
Wade Roush: The Mark that Tom Hughes just mentioned was Mark Fishman.
He was a respected cardiologist from Massachusetts General Hospital.
Vasella persuaded him to join the company as NIBR’s first president.
And right away, it became clear that Fishman wasn’t going to run NIBR the old-fashioned way.
Tom Hughes: In the past, drug companies, particularly Sandoz, which is the one I knew, would sort of figure out what are the markets that wants to be involved in, how much money it needs to make, and you’d sort of back-calculate from there to figure out what your programs should look like and how many of them there should be. And there is this thing called the attrition model that told you how many projects in each stage you needed. So it was kind of like loading a wood chipper, basically, to generate things out the other end that would become projects. And so that led to sort of siloing, if you will, and competition for resources in the organization. We were focused on disease areas and markets, essentially franchises. And so what Mark did was say, like, you know, we need to get rid of all that. And what we’ll do instead is we’re just going to recognize that diseases come in many, many different flavors, shapes and forms. And so we’re going to focus instead on the pathways that that lead to pathophysiology. And sure, we’ll have disease areas because we need that expertise. But frankly, if we can find a drug that that affects a pathway that we know is involved in pathology, there’s a disease for it and we’ll figure out how to develop that. And so there’s a major a pivot of the whole organization away from making your numbers to proving that new mechanisms could be of use in impacting human pathophysiology. And this then led to the realization, well, you know what, we need clinical people to be involved in that too, because the idea set has to reflect what’s known about human pathophysiology and in order to study it, you need to get access to the right patients, so that NIBR would contain everything through first proof of concept in humans, rather than stopping at the time that first clinical trial would be done. And so, so we became a clinical organization, which is something we’d never been before. And, you know, brought in these amazing clinician scientists to work with us, and it became just a fascinating place to work. And I think that’s one of the major draws to talent at NIBR at the time, which is critical to success, was that you could come in and if you had the right idea and you could champion that idea and you could marshal resources to get there, you know, you could see this through to impact in humans. And that was, you know, a radical concept within the field.
Wade Roush: The really radical part was the idea that the same scientists involved in fundamentals of drug discovery would get to interact with actual patients.
And that NIBR wouldn’t hand off a drug candidate to the Novartis’s larger drug development operation until they’d seen some evidence that it was going to work in real people.
But Hughes says there wasn’t universal agreement inside Novartis that the gamble Vasella and Fishman were taking was going to pay off.
Tom Hughes: First of all, the research center of gravity for Novartis had always been in Basel. Even after the merger with Sandoz and Ciba-Geigy, together right across the river from one another. The Rhine runs right through it. It’s beautiful, but you know, every drug, basically, or almost every drug that was paying for all of the investment in NIBR had been discovered or invented in Basel. And the people in Basel were completely 100 percent aware of that. So there was this, let’s say, reluctance. And I would argue as well that it’s cultural matter, that that is very important to develop trust and a track record of performance and reliability, you know, particularly for the Swiss people in the company who are just astoundingly good scientists, incredible drug hunters. But the idea that you would change the rules in the middle without, you know, without proving that those changes would be useful was a hard thing for people to digest, and I’m putting that nicely.
Wade Roush: Hughes points to a long list of strategies that Novartis developed to raise the odds of success and get broad buy-in for the changes.
They loaded up the new team at NIBR with the company’s most respected scientists.
They set up drug discovery training programs to help all the new hires avoid rookie mistakes.
They sent people form NIBR, including Hughes, back to the company’s labs in Switzerland and Japan to help instill the pathway-driven philosophy of drug discovery.
They arranged mini-sabbaticals that allowed researchers to spend eight to 12 weeks visiting Novartis labs in other countries, so they could see how the pathway model was succeeding.
Wade Roush: How long did it take before all of this work started to pay off in tangible, measurable ways?
Tom Hughes: The most simple way I can put it is that we every time that there was a proof of concept in humans for a new therapy, we held a celebration. And so what I can say is that those celebrations were sort of few and far between when we first started. I think we wanted to get to 10 initially per year and eventually more. But it took a while to get to that. What I can say is that it certainly got to be different. It was much more enjoyable. I mean, the pressures inside were intense. Particularly if you were leading one of the groups. But it was a major pivot that did, I think at the end of the day, leverage this evolution of biology. And you know, I think if you just look across the spectrum of the whole industry, almost every company that’s out there has followed in the path of NIBR, first of all, relocating to Cambridge, which, you know, at some point is going to be untenable.
Wade Roush: There’s going to be biotechs and pharmas on top of biotechs and pharmas all the way to the sky.
Tom Hughes: Yeah, there are only so many people to go around, you know, and it seems like there’s endless amounts of money, but there’s only so much people and space. But you know, I think I think if that’s one proof, people follow success. I think this is clearly viewed as a formula for improved innovation.
Wade Roush: Today Hughes is the CEO of his own company.
It’s a biotech startup called Navitor.
It’s based in Cambridge, of course.
And Hughes says it’s following the NIBR model by focusing on the biology first, namely a pathway called mTORC1 that’s important in the regulation of protein synthesis.
The company hopes that by finding drugs that can either boost or dampen the mTORC1 pathway, they’ll be able to treat conditions like kidney disease, epilepsy, or even depression.
Meanwhile, back at NIBR, Mark Fishman stepped down in 2016 after 13 years in the president’s chair.
That’s when Jay Bradner came into the picture.
He’d been leading a lab at the Dana Farber Cancer Institute, across the river in Boston.
He’d become known for his commitment to greater openness in science, like sharing ideas and materials between labs.
Novartis invited him to take over as Fishman’s successor.
And even as Bradner was coming on board, NIBR was already expanding into a giant new building at 181 Massachusetts Avenue, right across the street from the old Necco factory.
Jay Bradner: Novartis’s first building for NIBR at 100 Tech Square was intended to house four hundred people. This expanded to nine hundred over a 10-year period. And fast forward to the current day, we have over two thousand people in Cambridge and 181 Mass Ave alone is five hundred and fifty thousand square feet. It’s an aggressive, bold investment considering especially the indirect costs of a square foot of lab space in Cambridge. But as I drive up to the labs every morning, I get really excited. I get a visceral feeling of what an exciting and brave way to approach science and I think an era-appropriate investment given the innovation potential today.
Wade Roush: Today Novartis spends about $9 billion per year on R&D, which puts it near the top of the pharmaceutical industry, which puts it near the top of its peers in the pharmaceutical industry.
About $2.6 billion out of that $9 billion goes into hunting for new drugs.
And when you talk to Bradner, you get a sense that NIBR hasn’t lost any of that commitment to patients that Fishman brought to Novartis.
In fact, if anything’s changed, it’s that Bradner has doubled down on the idea that drug discovery should start with understanding the biology of disease.
But at the same time he’s found a way to marry that with the drug industry’s traditional expertise in chemistry, through a discipline called chemical biology.
Wade Roush: Can you explain, what’s chemical biology in a nutshell, and why you think of it as so important to the future of drug development and Novartis’s future?
Jay Bradner: Chemical biology, as the name suggests, it really sits at the interface of two very mature fields. Synthetic organic chemistry—the discovery, the synthesis or preparation of small organic molecules—and biology, human biology, disease biology, organismal biology. Of course, you know, biological systems like us, humans, have innumerable chemicals in our body, small molecules that trigger the brain to think or have memories. And so the field of chemical biology really grew up taking a chemistry mindset to use molecules to help understand biological processes. Well, now fast forward about 15 years. This field has really come of age. Now I trained in the discipline with Stuart Schreiber, who’s one of the founders of the field, so maybe I’m biased. But in arriving to NIBR six years ago, we decided that we would make a big and brave bet, that we would consider chemical biology an organizing principle for drug hunting. We built the largest chemical biology organization in the world. More than 800 scientists called CBT, Chemical Biology and Therapeutics. We built a platform called Covalent Chemoproteomics. I know that’s a mouthful for some listening here today, but you know, most drug discovery begins with a protein as the starting point, and then the search begins to how to drug it. What if we just reverse the thinking with a chemical biology mindset? Let’s build a library of molecules that each of them have little atomic drop of superglue on them, something we call an electrophile. And so this diverse library of supergluers are then introduced to human cells, and we ask the question What did they bind to? And every recorded new binding event is like a foothold that could prompt drug discovery for a new target of interest. So chemical biology are new sorts of molecules working in new sorts of ways. It’s a mature and vibrant field and and I can say now, fast forward six years into our strategic plan, this CBT organization is fighting well above its weight, called upon for collaboration by every disease area already with molecules in human clinical investigation.
Wade Roush: How did you make the case inside Novartis that this kind of investment was going to be worth the risk? Because you don’t start a brand new 900-person division like CBT without having a pretty good case.
Jay Bradner: That’s a great question. Indeed, when I was contacted for the role, I was curious to know why they reached out to an associate professor at a cancer center for this type of drug discovery leadership role and their interest was a more open and collaborative and networked brand of science to be a little bit less internally focused. But I did pitch three of the five themes of our strategic plan, one of which was to really go big on chemical biology. So it wasn’t a surprise to the leadership when, you know, firmly established at Novartis and working with a leadership team, we could flesh out together a vision for chemical biology as one of our five paradigmatic drug discovery platforms. I think that the reason that the leadership, the board of directors and the CEO got behind it is that Novartis already had a strong track record in chemical biology, just spread throughout the portfolio. At the site in San Diego that we call GNF, we had discovered molecules that grow blood stem cells. This could be good for bone marrow transplantation. We use those medicines now in the context of genome engineering and CRISPR towards a curative approach to sickle cell disease. We had discovered in our laboratories in Cambridge and in Singapore molecules of unknown function, but that had the behavior of killing malaria cells, and these molecules are now in phase three clinical trials. They’re some of the most important anti-malarials in the world. And so by building on these discrete strengths, I think it really is a credible argument to double down or as we did logarithmically go big in chemical biology. It’s too early to declare victory because many of the fruits of this activity are just entering human clinical investigation. But we really like what we see.
Wade Roush: Mm hmm. Was there also an element of risk friendliness? I guess the opposite of risk aversion. You must have had colleagues and peers and bosses, you know, in Switzerland who were like, “We’re willing…to follow your lead and place this kind of bet.” You can imagine a leadership that wasn’t as open to that kind of bet, right?
Jay Bradner: Hmm. You know, it’s interesting. Before I arrived at Novartis, I had heard many times Novartis is a Swiss bank that makes miracles. And wow, nothing could be further from the truth. I find from the top down our chairman to our CEO, you know, to every commercial leader, there is a tolerance and an appetite for bravery in drug discovery that is really refreshing and honestly very empowering. If you looked at the type of programs in our portfolio, they’re not for the faint of heart. And this is for a very specific reason. We worry that if we don’t try to drug the c-myc undruggable oncogene, well, then who will?
Wade Roush: C-myc is a gene involved in cell proliferation, and finding a way to treat cancer by controlling c-myc has been a holy grail for drug hunters for decades.
Novartis’s appetite for these kinds of quests seems to be paying off.
The threshold for a blockbuster drug is generally considered to be $1 billion in global annual sales.
By that standard, Novartis has 14 blockbusters on the market today, for everything from leukemia to macular degeneration.
And it’s no longer overly dependent on any of them.
Today its revenues are more spread out than those of any other top-10 pharmaceutical company.
The company doesn’t have a vaccines division, so it hasn’t been all over the headlines during the Covid-19 pandemic, the way Pfizer, Moderna, and Johnson & Johnson have.
But Bradner says he’s been deploying NIBR’s chemical biology labs to work on a protease inhibitor pill that would potentially be effective against all coronaviruses.
When I interviewed Bradner back in January, he used a phrase that really struck me. He said this:
Jay Bradner: You must invest internally proportionately to reach the highest hanging fruit and drug discovery.
Wade Roush: Everybody talks about reaching for the low-hanging fruit.
But you never hear anyone in the business world say they’re trying to reach for the high-hanging fruit.
But the truth is that in the pharmaceutical business, that’s all that’s left.
All the easily discovered medicines have already been discovered.
The most interesting part of my talk with Bradner was about what he’s doing to make sure that NIBR has all the tools it needs to reach for the high-hanging fruit.
Part of that is about new programs like Chemical Biology and Therapeutics.
But a lot of that is about continually reinventing how NIBR is organized internally, to make sure that the lab stays focused on the actual needs of patients and holds on to its most talented scientists.
And to do that, Bradner has been experimenting with a series of different templates for innovation.
One of them is called Genesis Labs.
It’s an internal competition that encourages people Novartis to form small cross-disciplinary teams and pitch blue-sky projects.
The winning teams get the resources to step away from their current teams and spend up to 18 months testing and develop their ideas.
Jay Bradner: The Genesis Labs was this initially this insurance policy against all of us in leadership. What if there’s a great idea out there, but we might be suppressing it? And so we put out a call like Shark Tank to all of our innovators and said, Hey, listen, you know, maybe you don’t run a lab, but maybe you should. Maybe you have the killer idea and we should be throwing additional resources at it but we don’t know. We are now in our fourth Genesis Labs RFA, requests for our ideas, and the ideas that came back, Wade, were extraordinary. And through this Genesis Labs, they’ve become these notable focus points, bringing our top innovators to light, letting them choose their collaborators, ring-fencing them with budget like the fastest internal biotech ever built. The learnings are so strong, the experience of these scientists is so incredible. Very few of them leave the organization even in this frothy talent market, and what they share with us is that they really appreciated this idea to be a champion, to choose who they work with, to have the time needed to do their work. And through this Genesis Labs, it’s sort of, I think, opened up for all this idea that we’re a company full of people and ideas, and the best that we can do is to curate the best ideas and then just let people self-associate and then in leadership, you know, resource and proportion to their importance.
Wade Roush: Bradner told me that one way he knows NIBR is succeeding is that he sees other organizations like venture capital firms copying some of NIBR’s structural innovations.
And that let us into an interesting conversation that kind of circled all the way back to one of my original questions when I started working on this miniseries, which was whether big organizations can ever be as innovative as startups.
Jay Bradner: Curiously, Wade, I see just starting now in the venture world, the large venture capital firms with their massive funds that they can access, starting to build little NIBRs. Flagship Pioneering. The Atlas Venture Labs. This new, theoretically disruptive model coming out of Silicon Valley, these start to look and feel like a NIBR.
Wade Roush: Mm hmm. It’s funny to me—funny in a wow way, not a ha-ha way—to hear you say that like Flagship Pioneering and its labs are like mini-NIBRs. Because most people would say it’s the other way around. I think that NIBR is trying to kind of evoke and emulate some of the innovation going on inside smaller organizations. I mean that Novartis is trying to be more innovative by creating a protected space like NIBR.
Jay Bradner: I’m not putting this on you, Wade, but so many in our industry suffer from a distraction of biotech versus pharma. They feel the need to exist in this binary space with this thin, mono-synaptic understanding of these environments. There are really innovative big companies like a Novartis, like an Apple, and there are really un-innovative large companies. There are really innovative biotech companies, like Beam, and there are really derivative, uninteresting companies serving the appetite for thinly differentiated, fast-follower science and everything in between. We hear all the time, “Can pharma be more like a biotech?” That is not my ambition at all. I’ve started five of them. What we have here is very special. But can a pharma be like an Amazon? Can we scale innovation, be an aggregator of ideas, be a magnet, a flypaper for the best scientists, because they know, culturally, experientially, and scientifically, that their best chance at being a part of the kind of impact that they went into science to maybe experience is just most likely in this environment?
Wade Roush: I think Bradner is right.
Just being a small startup doesn’t automatically make you innovative.
And becoming a very large or very old company doesn’t mean you automatically stop innovating.
We’ve seen how Apple, Disney, LEGO, and Novartis keep reinventing themselves and beating out younger competitors well into their fifth, tenth, or even seventeenth decade .
They do it by making sure that strong leadership gets translated into a strong culture of innovation.
They figure out how to absorb new technologies from outside and find distinctive ways to put those technologies to use.
They make sure that no matter what new things they try, they’re staying true to their core beliefs.
And they break down silos and create systems to support and protect the employees working on the riskiest experiments.
So if there’s anything other companies can learn from our four case studies, it’s that persistent innovation doesn’t take some superhuman level of genius.
It just takes a commitment to your ideals and the bravery to try new ways to put those ideals into action.
And if you’re ever tempted to slack off, well, ask yourself this:
If your company don’t build the next hit product in your industry—who will?
The answer, of, course, is that eventually one of your competitors will. But you can do it better, right? You know you can.
So why not get out there and become a persistent innovator?
[musical interval]
Wade Roush: Now in the final segment of the show, I want to introduce you to Sam Wiley.
He’s the head of thought leadership and customer advocacy at PatSnap, which has been our sponsor throughout all four episodes of The Persistent Innovators.
PatSnap helps companies involved in R&D learn more about the existing landscape of patents and intellectual property in their fields.
And under its Innovation Academy banner, it offers a serious of online training videos that teaches innovators how to apply all that data in their work.
I called up Sam to ask him to tell us more about PatSnap’s business, and to ask which companies he’d single out as persistent innovators.
Sam Wiley: Our goal is to take or help organizations and people do a better job innovating by providing a platform that gives them the analytics to understand what their competitors are doing, how other folks have solved these problems in the past…to really sort of empower creators, right?
Wade Roush: I guess the premise being that innovation just never happens in a vacuum, right? There’s always some sort of history, some surround, some environment, some history, some literature that you have to know in order to build on top of the shoulders of giants, right?
Sam Wiley: Exactly. And I think you made a really good point there. One of our most important things we do as a company is help a person trying to solve a problem connect either literally reach out to that person and talk to them or look at the patent application they filed, the research papers they’ve written and learn from that person, and it may be someone you could never imagine talking to. It could be someone on the other side of the world. It could be someone in an industry that that know on paper doesn’t seem to have much to do with your industry or the problem you’re trying to solve. That’s a really important part of what we do is making those connections that are otherwise not very obvious.
Wade Roush: And what are you guys trying to do with Innovation Academy?
Sam Wiley: So Innovation Academy is a really important thing for us right now. What we are trying to do with Innovation Academy is we identified a gap in the market. It is easy to find online video courses that will teach you what a patent is, how to file a patent. And there’s some fantastic resources at the big patent offices, at big law firms that can teach you how to do that. If I want to be a better programmer, I can go to MasterClass. There are some great resources for coding. What we found is that there’s a huge gap around how do I use the information in the world to be a better innovator? We know, I know there’s tons of publicly available. We call it external data. You know, all the papers being filed, all the clinical trials going on, all the market research that’s happening, all the patents being filed. I know that that information is out there. How do I use that to be a better innovator in my specific field? And what’s super interesting, Wade, is that, you know, that could be anyone from a material scientist or a chemist who is literally trying to create a new chemical, it could be a chef trying to identify a new flavor profile. That information could be out in the world that maybe someone else is who solved this problem. I want this, you know, thing I’m trying to create and add to my menu, and I’m a very sort of progressive, forward thinking, you know, chef and I and I want to create something completely new. That’s also an innovator. And, you know, that may not be our core audience, but we want to cover all of those different types of innovators over time who could benefit from connected innovation intelligence but may not know it exists, may not know how to use it if they do know it exists.
Wade Roush: So, Sam, I, as a technology journalist, and InnoLead as a company, are interested in many different questions related to innovation. Sort of like your customers, we want to know what makes innovative organizations tick. And part of the point of this miniseries we’re working on is to get inside persistently innovative companies and look at their cultures, look at their histories, look at their product lineups, look at their innovation lab practices and figure out what is it about these companies that makes them so great year after year, decade after decade at innovation. I was curious if you have any favorite examples from your travels of companies that are persistent innovators.
Sam Wiley: Yeah, I do. And it’s almost like, you know, who’s your favorite kid? These are these are tough questions to answer. But there’s two that I like to tell their story because I think on paper, maybe, maybe it seems like a very different strategy, you know, and they’re both companies, you know, I’ve had a lot of respect for. And in fact, one of them I’ve spent a lot of time with. But you might argue they’re on two ends of the of the spectrum when it comes to innovation strategies. So X—The Moonshot Factory, is an Alphabet subsidiary. I’m sure everyone probably has heard of them at some point.
Wade Roush: It used to be Google X and now they’re just X.
Sam Wiley: Yes, that’s correct, that’s absolutely right. The former Google X is now X—The Moonshot Factory. It is, I think, one of the most fascinating innovators in the world because the strategy is to let’s try, let’s think of outlandish solutions to the world’s biggest problems, and let’s try them if it’s floating balloons over, you know, parts of the world that are very difficult to provide internet to. Let’s give it a shot. You know, and some really amazing things have come out of it. But the idea there is to let’s try the most cutting edge out-there solution possible and let’s see if it works. And let’s pick the ones that seem to be most successful. You know, I’ve had the good fortune to be able to visit that, that building many times, and I always feel like I’m going to Willy Wonka’s chocolate factory. They can’t show you everything, of course, but you’ll be walking down a hallway to go to your meeting room and you’ll just see sort of out of the corner of your eye, a robot doing something absolutely amazing. And I always feel it’s just such an amazing energy there, and I deeply respect that innovation strategy.
Sam Wiley: But I mentioned there’s another company. I think again, maybe, maybe on paper looks very different. But Nintendo is famous for a philosophy, and I think there’s some very beautiful Japanese words to describe this, and I’m not capable of saying them. But I think even that the translation comes out very beautiful. But I believe they call it weathered technology. The idea is something like a, you know, a trusty pair of boots you’ve had for 20 years that is very soft and very comfortable. Their philosophy is to take that weathered technology and reuse it in extremely novel and creative ways. And you see this with a lot of their products. They often don’t necessarily want to have the most powerful, the most flashy, the biggest and best. They will do something creative that no one else has ever thought of. But it’s often with a technology that may have been around for a while. You know, liquid crystal displays that are black and white in some of their products in the 80s. More recently, looking at motion sensors. These are not necessarily cutting-edge technology. It doesn’t require, you know, inventing reinventing the wheel by any stretch of imagination. But the products and services they create using that weathered technology are always extremely creative, always win lots of awards, always delight their customers. And I think it’s just a really fascinating strategy for innovation. We refer to it as at PatSnap is lateral thinking, and it’s something you can use a platform like PatSnap to do very well because I might be going, “Hey, I want to create this product. I think there’s actually some older technology out there.” And using that that historic corpus of something like old patent applications might be a way to get to that data.
Wade Roush: Sam, I have to say, I’ve got my skeptical eyebrow raised here when you bring up an example like X—The Moonshot Factory, because it feels to me like X is explicitly designed to be a place where there are almost no boundaries and very few resource limitations. And there certainly is no bottom line. I mean, they don’t have to show a profit at the end of the year. Their responsibility to shareholders is extremely sort of arm’s length and diffused through, you know, the other layers of Alphabet. And it’s by virtue of Alphabet’s sheer size that they can afford to have a kind of blue sky division like X.
Sam Wiley: Sure, it’s sort of a luxury good, if you will, right?
Wade Roush: Totally, right. Whereas Nintendo is a smaller company with longer legacy and a more well-defined kind of base of customers and people who have expectations, and they can’t just go off and try every blue sky idea they have. They really have to figure out what’s true to the Nintendo brand and also stay close to what gamers want, right? So I’m not sure it’s fair to put X and Nintendo in the same category because X has so much freedom.
Sam Wiley: Yeah. No, no, no. So you’re bringing up a really good point. So, every industry, every company, every person is going to have a different economic reality they’re working inside when they’re an innovator, right? That’s a fair statement. And I should clarify, I’m really talking about the philosophies, the different ways you might go about being an innovator. I feel like those are two very extreme examples that I think show the spectrum. Almost everybody is going to fall somewhere along the spectrum. And I actually don’t think Nintendo necessarily represents the most resource constrained. More, most resource constrained is going to be a very legacy business that is trying to reinvent itself or a startup that may be operating on mom and dad’s credit card. Those are the most restrained types of businesses. But I still think in those environments, I think you can learn a lot from from X—The Moonshot Factory and from Nintendo. I think a startup could go, “Hey, we’ve got a brainstorm session. Let’s talk about every possible solution on the table, no matter how crazy. And you know what, if we need a DeepMind AI expert, maybe we can find one at a university that’d be willing to partner with us for some shares. Maybe there’s a way to solve that problem, even though it is a moonshot and we don’t have that much money.” Likewise, I you know, I mentioned this earlier, I do think that the actual moonshot-oriented businesses that do have a lot of resource and a lot of free reign. I still think they probably do use a lot of lateral thinking. And if they’re not, you know, I’m sure they’re being encouraged to do so.
Wade Roush: Well, we covered a lot of ground, Sam. I think this has been really fun and I want to thank you for your time. And we want to let people know they can learn more about the company at PatSnap.com, right? Where else can people go?
Sam Wiley: One hundred percent. I mean, feel free to reach out to me personally. I love to talk about this stuff and in fact, we don’t even have to bring up PatSnap if you just want to talk innovation and how to create innovative environments. It’s one of my favorite topics, but certainly check us out on www.patsnap.com. Also, we’re on LinkedIn and on Instagram. And check out the Innovation Academy. If you’re an innovator, again, you don’t have to be a patent analytics expert. You don’t even have to care about patent analytics. You can learn a lot about how to be a better innovator from PatSnap’s Innovation Academy.
Wade Roush: All right Sam, thank you so much.
[musical interval]
Wade Roush: The Persistent Innovators is a miniseries from Innovation Answered, InnoLead’s podcast for corporate change makers.
It was written and produced by me, Wade Roush, and edited by Scott Kirsner.
Music in this episode by Lee Rosevere.
I’d like to thank everyone who helped bring this miniseries together, including Scott Kirsner, Kristen Krasinskas, and Collin Robisheaux at InnoLead, as well Sam Wiley and his colleagues over at PatSnap.
I’d also like to thank all of the guests who’ve shared their insights with us throughout the miniseries, including Ellen Leanse, Nilofer Merchant, Tim Bajarin, Jeff Zias, Ed Leonard, Bran Ferren, Joey Hasty, Bill Breen, David Gram, Robert Rasmussen, Tom Hughes and Jay Bradner.
Thanks as well to Ivan Amato, Jay Peters, David Rose, Maia Weinstock, and Marty Yudkovitz.
If you enjoyed this miniseries, I’d love to invite you to check out my podcast Soonish. Loosely speaking, it’s about the future, and how the choices we make today about the technologies we bring into our lives will shape that future. But I also use it the show to look at big or small questions about culture or technology that I think are interesting or meaningful, like why monorails never really caught on in the US, or why we should think about abolishing time zones, or why the venture capital industry should be taking bigger risks. You can go down those rabbit holes with me over at soonishpodcast.org.
Two weeks from now, watch out for a special bonus episode of Innovation Answered hosted by Collin Robisheaux of InnoLead. He’s interviewing best-selling authors, academics, and big thinkers from the business world to highlight other persistently innovative companies—and how they stay that way. So stay tuned for that episode, coming in March.
Until then, stay safe, and thanks for listening.
