How Prior Success or Failure Impacts New Product Development in Biopharma
New research shows that companies with a greater amount of both success and failure experiences tend to discontinue less promising New Product Development (NPD) projects sooner than other firms.
The findings are contained in the paper, “Inseparable two: Impact of prior success and failure on NPD project discontinuation”, which has been accepted for publication in the Journal of Operations Management. The paper is co-authored by Moren Lévesque,
Professor of Operations Management and Information Systems at Schulich and the CPA Ontario Chair in International Entrepreneurship, together with Annapoornima M. Subramanian (National University of Singapore’s Faculty of Engineering) and Vareska Van De Vrande (Rotterdam School of Management).
Their study analyzed new drug development projects at 2,938 biopharma firms worldwide. The researchers looked at how characteristics of a firm’s prior success and failure experiences, such as the number of launched and discontinued past projects, their attributes (e.g., patent counts) and their similarities to current projects, influence the risks of continuing or discontinuing NPD projects, thus impacting their future discontinuation decisions.
“New product development is a risky and expensive endeavour,” said Lévesque. “Many companies face challenges when deciding whether and when to discontinue projects.” She added; “What was striking is that biopharmas with more patent counts tended to discontinue unpromising projects sooner, but only if the larger number of patents came from successful experiences. But when considering failure experiences, sooner discontinuations tended to happen when the focal drug was closely related to these failure experiences in terms of, for instance, the technologies underlying that focal drug.”