Innovation Crescendo

Novartis recently announced an exclusive agreement with Google to in-license their “smart lens” technology for use in both accommodative contact lenses and intraocular lenses for presbyopic patients (think no more reading glasses), as well as using the technology to make glucose-sensing ‘smart’ contact lenses for diabetic patients [1]. At first, this might seem an unusual and unlikely collaboration but I see it as an exciting new model for future disruptive innovation: Innovative West Coast think-tank with break-through new ideas and technology collaborates with old school East Coast pharmaceutical company with proven know-how in conducting clinical trials and getting FDA product approvals.

Specifically, the partnership is between Google[x], a “skunk works” within Google dedicated to “big ideas” and Alcon, a division of Novartis [2]. This appears to be a perfect collaboration for true disruptive innovation. In fact, disruptive innovation will likely fail without input from an executional expert. I am reminded of an innovative health-related genetic report product by 23andMe which ended up being withdrawn from the market after a regulatory impasse with the FDA. Unlike Google[x], 23andMe did not partner with an established device/pharmaceutical expert company with experience in navigating the complicated processes involved in bringing a new healthcare product to market and ran onto rocky ground. Eventually, 23andMe took their health-related genetic reports off the market in November 2013.

Google[x] …Google[x] is a semi-secret “skunk works” of Google that is dedicated to developing “big ideas” such as the driverless car, Google glass, and several other “big” projects. Google[x] is overseen by Sergey Brin, one of Google’s co-founders. The “smart lens” technology was developed by Google[x]’s healthcare team, led by Andy Conrad, who previously co-founded the National Genetics Institute where he served as Chief Scientific Officer. The ‘smart lens’ technology involves non-invasive sensors, microchips, and other miniaturized electronics embedded within a contact lens.

Alcon …According to their website [3], Alcon develops and manufactures innovative medicines and devices to serve the full life-cycle of eye-care needs. It offers the broadest spectrum of surgical, pharmaceutical and vision care products to treat many eye diseases and conditions, including cataracts, glaucoma, age-related macular degeneration, retinal diseases, dry eye, eye infection and eye inflammation, ocular allergies, refractive errors, and other ocular health issues. Alcon is recognized as a global leader in the world of eye care with sales of approximately $10.5B in 2013.

23andMe …23andMe [4] is a company that developed a genetic testing kit to provide information about your genetic ancestry. However, the CEO and co-founder of 23andMe, Anne Wojcicki, wanted to be part of the much larger health-diagnostics market. The idea was that a 23andMe genetic test could be used to predict a person’s genetic predisposition to certain genetic diseases. 23andMe began to offer health-related genetic reports in 2007.

On November 22, 2013, 23andMe received a warning letter from the FDA asking it to immediately stop selling its health-related genetic reports. FDA officials cited 14 face-to-face meetings and teleconferences, hundreds of e-mail exchanges, and dozens of written communications about its concerns. Yet 23andMe inexplicably stopped responding to the FDA’s requests for more information in May of 2013 and began airing the company’s first national TV ads featuring attractive people of various races talking about their genetic results, seemingly in direct defiance of the FDA’s concerns. On Dec 5, 2013, 23andMe Inc. announced that it would comply immediately with the U.S. Food and Drug Administration’s directive to discontinue consumer access to its health-related genetic tests during the ongoing regulatory review process. It was also agreed that the company could continue to provide consumers with both ancestry-related information and raw genetic data without interpretation.

The FDA’s concern was that the company might be misleading consumers with false negative or false positive results that could encourage people to self-medicate or make lifestyle changes for conditions they don’t have. Health-related genetic reports apparently also provide risk factor percentages for various gene variants that are thought to be statistically predictive of future disease, as well as other genetic information. However the US regulatory landscape requires proof of health claims like these before products can be sold to consumers. For example, what does a 20% increase in risk factor for type 2 diabetes mean if your genetic report came back with this information? How accurate is this data? Should you act upon this data? Are consumers able to accurately process this information and choose to medicate or not medicate appropriately? Genetic counselors are available to discuss the context of the information but the accepted normal channel to discuss your health would be with your physician. The FDA had valid and appropriate concerns about the validity and accuracy of the information as well as how the information would be used by consumers in an environment without medical guidance.

In a recent Washington Post article [5], Anne Wojcicki said that “Clearly we weren’t clear on what they were objecting to.” However, anyone who has worked in the pharma industry for a reasonable period of time will tell you that 14 face-to-face meetings with the FDA for a single product is an ominously large number of meetings. Clearly the FDA was bending over backwards to communicate their concerns, and anyone with even a little FDA Regulatory experience would have known that a warning letter was imminent based on the tone, content and volume of communications with the FDA. It is unclear whether 23andMe was simply naïve in its dealings with the FDA or chose to ignore them. To me, either explanation is indicative they were in over their heads. It seems as though 23andMe may have regarded the FDA as an obstructive bureaucracy, and a barrier to innovation, when a more successful strategy would have been to partner with an expert who understood the complexity of making health claims and who could help the company navigate the regulatory process of bringing their product to market.

Creative and Adaptive Innovation Models …As I have previously discussed in my blog [6], innovators can be classified as either creative innovators or adaptive innovators. Creative innovators, like Leonardo da Vinci, are good with ideation but are not so good with execution. Adaptive innovators, like Thomas Edison, tinker with ideas, make prototypes until it they work perfectly and are strong on the execution side. Innovation teams require both types of innovators to be successful. If an innovation team has too many creative innovators, plenty of ideas will be generated but few of them will reach development or the market. By contrast, an innovation team with too many adaptive innovators will tend to execute a large number “me too” type projects. Google[x]’s partnership with Alcon is a predictive example of the creative innovator pairing up with the adaptive innovator to develop and commercialize a break-through innovative product.

The “Smart Lens” Innovation …Google[x] had the initial idea of a “smart lens”, and utilized new technologies to develop a prototype “smart lens,” but has little experience with the FDA and does not have the infrastructure or experience to develop and register a commercial product. Alcon plays the role of the adaptive innovator. Alcon’s experience is execution in the eye care space. They will be able to conduct the appropriate clinicals needed for approval and have a history of working with the FDA to get products approved. They also have Marketing and Sales divisions in place to rapidly expand the approved product into a global marketplace. Both companies seem to recognize their respective strengths and weaknesses. Alcon alone did not have access to the technologies involved in the “smart lens” and would have found it very difficult to prototype such a device. And Google[x] does not have experience conducting clinical studies or dealing with the FDA. However, together the two companies will play off each other’s strengths to hopefully develop a truly disruptive innovation.

An Alternate 23andMe Scenario …That brings me back to the 23andMe situation. My personal opinion is that if 23andMe had followed a similar model to Google[x] and had partnered with a device or diagnostic expert with experience in conducting clinical trials and communicating with the FDA, their innovative product would have progressed more easily. Partnership with a pharma/device/diagnostic expert would probably not have resulted in a FDA warning letter and FDA issues would have been understood and addressed more quickly and professionally, perhaps by using different nomenclature, claims, and distribution channels, such as health care professionals. In these healthcare examples, Silicon Valley was indeed a hotbed for “creative innovation” but not for “adaptive innovation” and the traditional pharma/device companies back East, in spite of the perception of plodding bureaucracy, are actually the efficient “adaptive innovators” and necessary partners for complex innovation.

Summary …Partnerships between Silicon Valley companies rich in creative innovation and traditional companies that specialize in adaptive innovation will likely be a successful model for disruptive innovation. I’m betting partnerships along these lines will result in many of the upcoming disruptive innovations to come in healthcare.

References…
1. http://www.alcon.com/news-center/news-item.aspx?id=307
2. A separate case study on the role of skunk works in innovation is at https://innovationcrescendo.com/2014/01/15/innovation-in-large-corporations-managing-skunk-projects-to-success/
3. http://www.alcon.com/about-alcon/
4. https://www.23andme.com/
5. http://www.washingtonpost.com/national/health-science/23andme-co-founder-anne-wojcickis-washington-charm-offensive/2014/06/27/b465b086-f240-11e3-9ebc-2ee6f81ed217_story.html
6. https://innovationcrescendo.com/2013/03/12/ideation/

© Dennis Nelson 2014