Radical innovation occurs when pharma looks outside its own world

Pharma executives are committed to bringing drugs to market to improve the lives of patients but is the industry too introspective to be truly innovative?

boardroom with huge table surrounded by a diverse group of people

Pharma executives contribute in a meaningful way to the industry by researching, developing and marketing new drugs. However, when the pharma industry lacks diversity within, there is a chance that it underserves patients outside. This is not simply a moral problem; it is a practical one. A lack of diversity in decision-making can lead to a lack of insight that could otherwise contribute to improving and saving lives.

We are living in a time of forced innovation

Innovation is about new ideas, or creative and different applications of existing knowledge and methods. It usually happens incrementally, using or redeploying existing technology, science and systems in pre-existing market conditions, for example, changing the packaging for a particular drug. With the increasing pace of technological change, we have witnessed disruptive innovation such as the iPhone – which was largely planned in secrecy for years before its launch and completely changed the market. When the market changes, architectural innovation can occur, for example, NASA pivoted from aircraft cushion safety and redeployed its technology to a very different market – memory foam mattresses.

Incremental, disruptive and architectural innovation are probably already of interest to pharma CEOs. However, COVID-19 has accelerated a new possibility – radical innovation. This is where the market and technology change fundamentally at the same time. There are many more variables to compute, and the risks and opportunities are beyond the capability of any one leader, or company, to address. This is where inclusion comes in.

Inclusion enables innovation

Recently, AstraZeneca announced its partnership with Oxford University to combat COVID-19 infection from SARS-CoV-2. The idea is to divert from the usual linear process of bringing drugs to market and have various workstreams and pathways running alongside each other in parallel, enabled by the radical innovation circumstances we now find ourselves in. The university brings the vaccine while the pharma company facilitates the development, manufacturing and distribution. The result is a creative and different application of academia, science and business partnering together. The potential vaccine entered Phase I clinical trials in late April and  data could potentially become available in June, with advancement to late-stage trials occurring by the end of the summer.

hands holding cogs together - idea of collaboration

This did not just happen. Two months prior, during China’s COVID-19 peak, AstraZeneca established a different approach in its China operations; breaking down the usual hierarchy, the company hosted over 20 online town halls, where participants were encouraged to speak up on three areas: protecting employees, finding new ways to drive the business and supporting customers. This flat hierarchy and inclusive crowdsourcing of ideas contributed to a fast and agile response, highlighting how inclusion enables innovation. Over 220,000 masks and 40,000 vitamin C tablets were delivered to employees, online opportunities were captured through digital channels and there were no stock-outs.

In 2011, an AstraZeneca cancer drug programme was set to close after results from a Phase II trial. Susan Galbraith, Senior Vice President of Early Tumor‐Derived Exosomes (TDE) in Oncology R&D, argued for further analysis of a particular genetic status. She had noted the multiple stories where patients had seen positive results from the cancer drug. Further analysis demonstrated the cancer drug substantially improved progression-free survival (PFS) in a subset of patients with this mutation. The data subsequently led to approval, ensuring the cancer drug reached patients. Had Susan not spoken up, and had she not been heard, this opportunity to benefit patient lives would have been lost.

There is a correlation between inclusive cultures and innovative outputs; we know that inclusive teams gain new perspectives and can be significantly more productive. When Pascal Soriot spearheaded an inclusive leadership culture change, he was aiming to improve psychological safety and encourage people to challenge the status quo. This had direct results in terms of innovation. For example, staff working on Calquence, a leukaemia drug, challenged norms and implemented a novel supply change design which resulted in a 70 percent reduction in batch cycle time and a 90 percent > 0 percent batch failure rate. In August 2017, Calquence was granted breakthrough therapy designation (BTD) and priority review for chronic myeloid leukaemia (CML) by the US Food and Drug Administration (FDA) and the overall development time was reduced from five years to 15 months.

Pharma is diverse in terms of nationality but less in terms of perspective

The pharmaceutical industry is certainly diverse, in terms of nationality and culture, but this masks two problems that need addressing: a lack of other types of diversity and proactively including different perspectives. When Reshma Kewalramani was appointed Chief Executive of Vertex Pharmaceuticals she become one of just two female CEOs in the top 25 pharma companies worldwide. Of the top 35 we have worked with, Emma Walmsley at GSK, Marie France Tschudin at Novartis and Heather Bresch at Mylan stand out, joining Reshma as the only four female leaders. Compared with any other major industry this level of gender diversity is low. Kenneth Frazier, CEO of Merck, is the only African American CEO in the top 35.

There is a correlation between inclusive cultures and innovative outputs; …inclusive teams gain new perspectives and can be significantly more productive”

Cynthia Challener pointed out that the pharma industry features less gender and ethnic diversity than other industries in the Fortune 500, with one third of the top 50 pharma companies having no women on their boards and only eight percent of board seats held by ethnically diverse directors, compared with 14 percent for the Fortune 500 overall. The board diversity that exists often relies on non-executive positions.

The problem is the pipeline; although graduate programmes and lower management levels display more diversity, from middle management onwards it becomes a male game. If the industry still lacks diversity in its decision-making positions, can it truly claim to be inclusive?

Diversity is only valuable if you include it

Every major pharma company undertakes some form of diversity and inclusion work. However, that does not mean it is reaching the decision makers. The CEO of a top 25 pharma company told me that he “didn’t want to be inclusive”. In his mind, being inclusive was a charitable activity not directly related to the success of his business; business success and being inclusive were perceived as mutually exclusive. To his credit, he has significantly evolved his view, but I know many more who have not.

Inclusion can be measured by analysing those behaviours that contribute to or detract from inclusion. The majority of pharma companies are still reliant on ‘pulse surveys’ that are a poor indicator of inclusion. Instead, we have used an inclusion diagnostic in several organisations to do this.

light bulb hovering - idea of innovationTake, for example, the Bank of England; decision-making is core to the central bank’s mission of mitigating risk in its decisions and the economy overall. Similarly, decision-making is core to pharma’s ability to bring drugs to market to improve the lives of patients. However, the Bank of England instituted a policy of “Author in the Room’ in order to increase inclusion. The policy challenged the hierarchy by mandating that the most qualified person, of whatever level, should be in the senior meetings to inform the discussion, rather than the members relying on ‘papers’ that had passed up through the ranks. Many pharma companies may not be aware of this because they have not measured inclusion and rarely look outside pharma for good practice.For example, if we measure psychological safety by asking questions about the ability to speak up and challenge your boss without fear of retribution, we get an insight into whether pharma is cultivating an inclusive culture or not. Asking questions such as ‘Are you proud to work for the company?’ offers us very little actionable insight. When we have conducted an inclusion diagnostic, we have found poorer levels of psychological safety among those groups that are still under-represented in pharma. To increase inclusion, we need to improve their psychological safety and perceptions of fairness over a range of indicators. This is not only a moral question; it is directly related to the effectiveness of decision-making.

Inclusion can be hard, insularity is more convenient

In the last month, I spoke to 14 colleagues in diversity and inclusion roles in six European-based pharma companies. When they were asked, “How much would you say the pharma industry is insular in its hiring practices?” 13 said ‘somewhat’ to ‘very’. We could take outside industry churn as a measure of openness to new people and ideas; when compared to almost any other sector, pharma does not recruit from outside.

The future of medication is increasing individualisation – without realising the “diversity” of people/patients, pharma companies will not be able to provide future medication”

Perhaps more worrying than just the internal work, many pharma companies are not properly considering inclusion in their consumer work. Seven of our colleagues said their organisation considered the diversity of its customer base when discussing how best to meet consumer needs; however, six said the opposite. When a new pharma CEO was appointed, he privately acknowledged he wanted to use inclusion and diversity to provoke the executive team, because in his view they were too comfortable, too insular and too resistant to change.

In my years working alongside executives in the industry I have personally witnessed brilliant innovation, excellent people management and the highest ethical standards. However, is its success part of the problem? When you have such an abundance of resources within, might you be less inclined to look elsewhere?

With an obvious scientific bias, there is less credence given to people’s ‘lived experience’ because they are harder to quantify. This can result in an empathy deficit. When the diversity business case only offers correlation, not causation, executives may dismiss its contribution to business and scientific outcomes. When executives are working hard on complex briefs, there may be limited additional cognitive capacity available for empathy. When their companies are doing well, they may rely on their own view, rather than inviting challenge from the outside.

We could analyse the industry from the talent supply side and find that, in many cases, the talent pool was restricted to specialists. However, the same could be said of engineering, or technology specialisms. We could also look at the situation from the demand side and we might find many professionals simply unwilling to consider people from outside pharma.

Change is often driven by underperformance. Many cash-rich, high margin pharma businesses simply lack the external pressures many other sectors experience. This might go some way to explaining a reluctance to really address insularity and make the necessary changes.

Actions pharma executives can take to improve their decision-making

Of the aforementioned diversity and inclusion professionals we surveyed, all of them said their work had been at least somewhat effective in changing culture. Examples included employee resource groups and internal communications, participation in external benchmarks, celebrating dates, for example raising the Pride flag on International Day Against Homophobia Organization (IDAHO) day and training, specifically unconscious bias training. Others went further, to have diversity strands in the core business (eg, research policy) and work closely with patient advocacy groups and have diversity focused clinical trials. However, all admitted there was more that could be done, especially going beyond gender, including disabled people and more customer segmentation.

When the industry does not include diversity, of all kinds, it misses out on insight that would help it save lives”

The good news is that diversity is now high on the agenda, but we need to progress to more inclusion. The future of medication is increasing individualisation – without realising the “diversity” of people/patients, pharma companies will not be able to provide future medication. Without being inclusive, pharma would only provide medication of the “standard male person”. According to one D&I professional, there are still “glaring examples of people preferring to hire or promote those similar to their background”.

It is not an exaggeration to conclude that tackling insularity in pharma would lead to fewer COVID-19 deaths, better drugs and better lives for patients. COVID-19 has been an amazing influence on pharma; opening labs for rapid resting, co-operation between firms and release of staff for medical duties. Diversity is now featuring in clinical trials. Next, we need to move from diversity to inclusion, start measuring it and start embedding it throughout. Inclusion offers us insight, which leads to innovation and has multiple benefits.

When the industry does not include diversity, of all kinds, it misses out on insight that would help it save lives.

About the author

Stephen Frost is the Chief Executive Officer and founder of diversity and inclusion consultancy Frost Included. He has acted as an advisor to both the UK government and the White House, as well as organisations like KPMG, the BBC and Barclays. Stephen was the head of diversity and inclusion at the Olympic and Paralympic Games, he also established and led the workplace team at Stonewall and is also the co-author of a new book, called Building An Inclusive Organisation.