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Can the true value of innovation investment be tracked?

“We need to train more scientists better everywhere.” That’s what Nina Dudnik said at PopTech 2010 in Camden, Maine. Despite talking on a stage in a New England location that Forbes once labeled as one of “America’s Prettiest Towns,” Dudnik’s thinking started a decade earlier at the Africa Rice Centre in Côte d’Ivoire in West Africa. As a Fulbright scholar, she worked there for a year with local scientists who were developing new strains of rice to feed their people. Biotechnology research, however, depends on equipment, which can be hard to come by in developing countries. “We might have had the only working PCR machine in the whole country,” Dudnik recalls.

After her agritech toils on rice, Dudnik started her doctoral work in molecular biology at Harvard University. In comparing the labs at Harvard to those in Africa, she says, “I was struck by the disparity in resources.” Collaborating with other graduate students, she started making unused instruments available to researchers around the world. After completing her PhD in 2008, Dudnik created Seeding Labs, a Boston-based nonprofit organization where she serves as the CEO. Distilling Seeding Labs’s core mission, Dudnik says, “We help scientists in the developing world do life-changing research by providing access to tools, training and networks to do that.” She adds, “We make sure that research around the world can get done, and we also help to train the next generation of scientists.” Dudnik can now do even more, because Seeding Labs recently received a US$3 million grant from the United States Agency for International Development (USAID).

Dudnik’s work underscores the international character of biotechnology. It can add value in every corner of the world, but to do so scientists need the tools to get the work done. Nonetheless, the value of the results far outweighs the costs of getting there. As Dudnik notes, “We are facing enormous problems: a wide range of diseases, food shortages, access to clean air and water and energy.” She adds, “We need to make sure that the greatest number of people around the world have an opportunity to tackle these problems.”

Quantifying the Outcomes
While the subject of biotechnology’s—or, for that matter, any area of the sciences’—short and long-term value is a perennial topic among policymakers, would-be investors and the public at large, a more elusive subject is how one truly quantifies such value. Nonetheless, two recent studies from healthcare economist Frank Lichtenberg of the Columbia Business School in New York attempt to do just that, at least in the areas of medicines and therapeutics.

In these studies, Lichtenberg and his colleagues measured the impact of the availability of new medications on overall health in two countries. In “The effects of pharmaceutical innovation on mortality, hospitalization and medical expenditures in Turkey, 1999-2010,” the researchers report that the average lifespan increased by 3.6 years and new pharmaceuticals accounted for 3 of those years.

In addition, Lichtenberg calculated that the cost of adding one year of life in Turkey through new medicines was US$2,813. Even if their modeling is off and the new medicines only provide about half as much of an increase to a person’s life, the researchers say that buying an extra year of life with new medicine couldn’t cost more than US$5,000. As they write, “Even the latter figure is a very small fraction of the leading economists’ estimates of the value of (or consumers’ willingness to pay for) a one-year increase in life expectancy.” For comparison, many sources value an extra year of life at US$100,000–150,000, and many people would pay much more for it if they could.

In “The potential contribution of increased new drug use to Russian longevity and health,” Lichtenberg reveals that Russia could easily extend the average lifespan by providing advanced drugs to its citizens. In the period 2000–2010, for example, Lichtenberg points out that Russia only provided its citizens with half of the new drugs that came on the global market during that time. If it had provided as many of these drugs as other counties did, according to Lichtenberg’s modeling, the average lifespan for the average Russian would have increased by 2.1 years.

Although new medicines can increase lifespans, they sometimes are not fully deployed. For example, Jeffrey P. Kemprecos, executive director of public policy and corporate responsibility for MSD Eastern Europe, Middle East and Africa, notes, “Following the global financial crisis and economic slow down in Turkey, the government concluded that it was compelled to impose cost containment, starting in January 2010. The measure inevitably covered pharmaceuticals, so the introduction of new molecules plummeted from 2010 till today.”

To add 3.6 years to the average Turkish lifespan, the government approved dozens of new drugs in the first decade of the 21st century. “In the past four years,” says Kemprecos, “only two new molecules have been approved.” He adds, “As research-driven organizations, we are today questioning the impact of cost containment measures in terms of human life: Would the Turks be living healthier lives and a full year longer had the cost containment been more balanced and allowed new medicines to come to the market?”

Answers to such questions lie in studies like Lichtenberg’s. With them as guides, governments might make more informed decisions relating to gleaning biotechnology’s benefits. “We have always been there to support research to have an informed policy discussion,” declares Kemprecos. “If we believe in the value of our products and investments we’ve made in innovation, we need credible data and policy research to support our value proposition.”

Success from Sequencing
“One thousand years from now, people will look back at the year 2000 as a defining moment in our history,” says G. Steven Burrill, CEO at Burrill & Company in San Francisco. “Sequencing the genome and understanding life at the base level will have changed everything with respect to healthcare, what we grow and where we grow it, and energy production.”

Much of the value of sequencing, though, lies ahead. “You can’t underestimate the power of understanding the molecular basis of life, but we are very early on in applying that,” says Burrill. “Maybe 90 percent of the developments have been in healthcare, but there will also be transformation in energy and agriculture.”

While the public might not see that coming, so far, in the eyes of many, they’ve only seen the big spending on the science. As Burrill points out, “Lots of people have said, ‘We sequenced the genome, but what have we done since then? Where is the designer medicine?’” At this stage, the science is running ahead of the applications, but the ever more affordable cost of sequencing—soon to be only US$100—will allow nearly everyone to have their genome sequenced. “Improved diagnostics are already an early manifestation of the benefits of sequencing,” Burrill says.

Rewarding the Risk-Takers
To make that leap from scientific discovery to commercial application, someone—or some entity—must take a risk. In biotechnology, says Joseph Damond, senior vice president of international affairs at the Biotechnology Industry Organization in Washington, DC, “The cost and the risks are largely borne by the people who are developing the products, not by society.” He adds, “We have to admire the people out there who are taking these risks.”

The risks certainly do involve a wide range of costs. Innovators face challenges in developing a product and, if it proves viable in the laboratories and after clinical trials, getting it approved. In the medical, or “red” areas of biotechnology, the clinical trials process is a huge component of the price. But that’s not the end of the financial risk. As Damond says, “It’s expensive to manufacture products and maintain the quality.”

And while governments do take on a portion of that risk, the bulk of it, particularly on the product development side, is left to other parties. As an example, Damond says, “The US National Institutes of Health funds can be used to do research on a disease target, but companies develop the drugs.” He adds, “That basic work is very important research, but the NIH is not in the business of developing new medicines.”

Surprisingly perhaps, big companies do not make up most of the biotechnology industry. Damond says, “There are about 1,000 companies in biotechnology R&D in the US, and the vast majority are small companies.” He adds, “Increasingly the drugs are being developed by the small guys. They are the ones taking the risks.” That risk looms even larger when you realize that most of those companies are still working in the red—hoping to make a profit once they get a biotechnology-based product to market.

In some situations, those risks can be reduced. Public-private partnerships, for instance, can spread out some of it. The European Union developed the Innovative Medicines Initiative (IMI), which is the largest public-private partnership in Europe. The IMI aims at improving drug development, and it can benefit even small companies. In many cases, the IMI looks for ways to optimize existing technology in creating tomorrow’s medicines, and that could be the most effective way to make the process faster and more economical.

For the moment, public-private partnerships appear on the rise, especially in Europe. According to SciBX: Science-Business eXchange, “[a]t least 314 companies and institutions based in Europe were involved in forming new partnerships [in 2013] versus 182 in the U.S.” This could be particularly important as the number of public biotechnology companies decreases in many countries (see “Signs of Resurgence.”).

Data Dependencies
Clearly, biotechnology is a data-driven and data-dependent enterprise—quantifying the impacts of new medications on lifespans, analyzing sequences to create diagnostics, and balancing the risk in developing a new product. Despite those powerful outcomes of numbers, the most important and life-changing data surely lie ahead.

“Advancements at the intersection of information technology and biotechnology could enable us, for the first time, to measure biological phenomena in more detail,” says Narges Bani Asadi, CEO of Bina Technologies in Redwood City, California. As examples of these advancements, she points out innovations that are enabling measuring the activities of proteins and microbes in our bodies, analyzing the interactions of medications and lifestyles, and other real time biological phenomena. Intrinsically noting the value these developments will have toward future health solutions, Asadi notes, “We are starting to be able to measure all of this in an economical fashion, and this is very empowering.”

Even today, much of medical research remains trial and error. Instead of randomly searching for a compound that works for a specific disease, today’s tools allow a data-driven approach. As Asadi explains: “If you have measurements from a person throughout their life and integrate it with other individuals, that is a huge transformation.” Those data could reveal more successful pathways to developing new medications.

Pushing data to this level of application, though, demands integrated teams around the world, including high-performance computers and experts to build and operate the systems. Equally sophisticated systems must be developed to acquire and upload the data, although smart devices will certainly make that far easier.

Despite the complexity and cost of building such a system, the value could be nearly priceless. As Asadi says, “I hope that this type of advancement in the industry will create more data sets that can be aggregated, and then biotechnology will become more efficient and economical.” She adds, “Then, the value of biotechnology will really increase for society.”

It’s Personal
If there were to be a corollary to the phrase “all politics is local,” it might be: “All innovation is personal.” To someone walking on the street in a developed country, the value of biotechnology might seem remote, perhaps relevant only to a farmer in some distant developing country looking for a miraculous way to grow corn where it never grew before. Indeed, biotechnology can help those farmers (see “Growing Optimism,” page 22), but when an oncologist diagnoses you or one of your loved ones with cancer, the benefits of scientific investment turn instantly personal (See “A Team Attack,” page 32). Likewise, close encounters with cancer spurred financial economist Andrew Lo of MIT to find a new way of funding research (See “Funding on the Frontier”).

Nonetheless, there’s more work for this science to do. According to the American Cancer Society, nearly 1,600 Americans die from cancer every day. The United Nations’s World Food Programme reports that “842 million people in the world do not have enough to eat.” Our planet also faces deepening energy concerns. The International Energy Agency reports that “the world’s energy needs could be 50% higher in 2030.” All of these issues can turn personal for any of us.

“There is no magic bullet for solving the world’s problems,” remarks Dudnik, “but biotechnology is an important tool—not the only tool, but a valuable one.” To use that “tool” in the most effective way, people and companies and countries around the world must invest. “The cost of the tools is far outweighed by the potential long-term benefits,” says Dudnik. A growing database already shows the value of biotechnology, but the data must continue to be collected. The benefits must be explained more carefully, more often and more widely. Only then can people from all corners of the world participate in and benefit from this resource-intensive, and ultimately highly valuable field of exploration.

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