Here's A Global Pharmaceutical Trend You Won't Want To Miss
By Rob Wright, Chief Editor, Life Science Leader
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By Rob Wright
I recently had the opportunity to speak with a manufacturing executive involved in implementing single-use systems (SUS) at their company. This person shared that when they first saw a prototype SUS bioreactor, it clicked immediately as an application whereby a CMO could use flexibility as an actual money maker. This wasn’t always the case. For example, when Parrish Galliher first scratched out the idea for the company he founded, Xcellerex, on the back of an envelope in 2002, it took a decade of effort to build it to the point where the fourth largest public company in the world, GE (NYSE: GE), saw enough value to consider it an acquisition target. Along the way, Galliher learned a lot about building a business, including dealing with skeptics and laggards in an industry soon to see unprecedented growth of SUS adoption.
The Benefits Of Skepticism
Research has found the effects of skepticism to be far reaching across a number of disciplines. Michael Giarlo, a digital library developer at Penn State University, showed in an article that a rational form of skepticism is a health trait to cultivate among information-seekers. The benefit skepticism provides is it allows individuals or groups a buffer between acknowledging a claim, and believing one. The saying, “If it sounds too good to be true, it probably is” applies here. But when you are trying to get your business off the ground, you might thing dealing with skeptics to be frustrating. This was not the case for Galliher, who saw the process as a good thing. “It makes you think twice and reconsider your convictions and assumptions.” Having worked in sales for 20+ years, I, like Galliher, would prefer to deal with skeptics. At least with someone demonstrating skepticism, you know where they stand, what objection they have to purchasing a product or service and can provide the necessary information to help them in their decision making process. Ever experience someone telling you what a great idea you have, only to learn later that they were just humoring you. This person isn’t demonstrating any level of skepticism, or engagement. If you are in a conversation with a skeptic it can be very stimulating be the person is fully engaged, demonstrating active listening skills. You can tell they have heard what you’ve said because their questions build upon your information and questions. As a parent I know I would rather raise children who demonstrated a healthy dose of skepticism, as opposed to that of being considered gullible. When it comes to adopting new technology, skepticism is not a bad thing, but laggards are.
The Diffusion Of Innovation
The diffusion of innovation was first studied by French sociologist Gabriel Tarde in the 19th century. From this, Everett Rogers (1962) popularized the diffusion of innovation theory. If you have ever taken a marketing course, you may know it as the product or technology adoption curve. It looks like a bell shaped distribution curve and consists of the following categories listed left to right, along with the percent of the population general represented in each – Innovators (2.5%), Early Adopters (13.5%), Early Majority (35%), Late Majority (34%), and lastly, Laggards (16%). You have probably had the pleasure of interacting with a laggard at some point during your life. Individuals in this category show little or no opinion leadership, and typically have an aversion to change-agents. People in this category will only adopt new technology when forced to do so — kicking and screaming.
SUS On The Verge Of Adoption Tipping Point
The pharmaceutical industry seems to be skewed toward having a greater number of late adopters and laggards. This is why we still have plenty of clinical trials conducted on paper. When Galliher first began the Xcellerex business he encountered plenty of people who thought the SUS flexible factory idea was a good thing, but probably wouldn’t catch on for another 10 years or so. Perhaps this is because our industry has such a long product development and approval process that employees, in essence, have become institutionalized in their thinking. But this is all starting to change. Recent accelerated drug approval processes implemented by the FDA are being very disruptive to pharma. I recently had an executive tell me that getting an accelerated approval can be a bit of a curse because you have to dramatically accelerate the process by which you get ready to manufacture for commercialization. This will result in unprecedented adoption of single-use technology — pushing SUS over the tipping point in dramatic fashion. I am glad Parrish is around to play witness. Given the FDA’s recent drug approval binge in 2012, I anticipate this tipping point to occur sooner rather than later — perhaps within the next 18 months. Why else do you think GE bought Xcellerex?
If you want some other proof try taking a look at 3M (NYSE: MMM) and Pall Corporation (NYSE: PLL) whose stock price curves closely mirror each other — steadily up. Sixty three percent of 3M’s growth comes outside of the U.S. Can you say “Emerging Markets?” In addition, its two top growth categories are Healthcare & Industrial. Pall is much closer to being a SUS pure play. In 2012, nearly half of the company’s sales came from its Life Sciences division and EPS of $2.42 — the highest level in ten years and trending to finish even higher this year. Skeptics adopt when they have enough information, while laggards adopt when they have no choice. The FDA’s policies of accelerating drug discovery and approval will, as a consequence, accelerate adoption of SUS.