the increasing emphasis on Big Data. Collaborations are getting larger and drug companies are trying hard to capture as much data as possible, whether it’s clinical, metabolic, transcriptional, genomic, proteomic or any other flavor that becomes possible. However, the key will be figuring out which statistics, which measurements, are really relevant to the main questions drug companies want to answer: why do people get sick and how can we figure out what a drug will actually do once it gets into the human body? Are drug companies figuring this out? And for the moment I’m leaving out biotech startups, since the current bar to taking advantage of Big Data is still beyond the reach of most small companies, at least right now.
In my view the answer is maybe. The move towards biomarkers throughout the drug development pipeline is reassuring as it shows a realization that we need to measure outcomes more clearly and quickly. There is also a greater recognition that bioinformatics is a key element of a drug development pipeline. More importantly, there needs to be a recognition that specific outcomes (the game-winning RBI, the successful Phase III trial) aren’t necessarily justifications for the decision-making that came before.
Giving Richie Sexson a multiyear contract to join the Mariners in 2005 was a bad decision. Advanced metrics had pegged his skillset as a poor fit for the Mariners’ home stadium, and his likelihood of sustaining his performance at that point in his career was low. As it happened, he did fade away after a couple of years, but the key point is that even if he had performed reasonably throughout his contract, it would still have been a bad decision based on what we knew given our best tools at the time. Pharma needs to develop those tools to not just gather more data, but figure out how to ask the right questions and trust what the data is saying. However, it’s not clear that Pharma has reached its Moneyball moment.
Undervalued Assets
Which leads to another lesson from baseball: the under-appreciated asset. Contrary to what some commentators have suggested, Moneyball wasn’t ultimately about Oakland A’s general manager Billy Beane deciding to draft only fat slow guys who could take a walk and get on base. The real story was the concept of finding the market inefficiencies in Major League Baseball to get an edge. Oakland plays in a lousy stadium with a putrid revenue stream and a snooty neighbor across the Bay who refuses to let Oakland move to San Jose. In order to compete, their front office recognized it was necessary to find players and skill sets that were less valued by their competitor even though those skillsets were just as important to winning baseball games as more conventional talents.
During the year chronicled in Moneyball, on base percentage (OBP) was batting average’s country mouse cousin. Oakland’s insight was that batting average is just a proxy for not making outs, and in that respect OBP is a lot more important. A player with a batting average of .300 who never walks makes an out 70 percent of the time. But a player with a batting average of .250 and who walks 15 percent of the time only makes an out in 60% of his plate appearances. In baseball the single most important commodity is outs, of which you have but 27. Oakland exploited this market inefficiency to get inexpensive guys who may not have always hit the ball, but still got on base. Here’s the thing: as market inefficiencies have shifted, so has Oakland’s strategy in player acquisition.
In drug development we can see some pharma searching for that kind of edge. GSK and others are making a push into orphan diseases, turning an under-appreciated approach into what may become a glutted market to the latecomers. How else might drug development search for an edge? The logical answer is: every way it can. As Jonah Keri described in his excellent book The Extra 2%, Tampa Bay, another small market team in a lousy stadium deal has nevertheless managed to create a thriving, successful baseball club by taking advantage of every possible way it can compete, whether by taking on undervalued and risky assets or employing probably the most experimental and forward thinking manager in baseball. If there is an advantage to be gained, Tampa Bay is exploring it.
Just recently, it’s been reported that Tampa Bay will face a reduction to their draft pool budget in 2013 because they spent too much money on International Free Agents. This might seem like a problem for a team that needs to build via their farm system because of limited revenue. But it may actually be a calculated risk that they can get more for their money by overstepping MLB rules rather than committing too heavily into what’s thought to be an overall poor U.S. draft cohort this year.
Drug development companies would be well advised to take this kind of approach and encourage a broad exploration of every way in which an efficiency might be gained, whether it’s in discovery, manufacturing, patient recruitment, therapeutic areas or technology. And most importantly, companies need
