Out of the overall cost involved in new drug discovery and development, $1.1 billion is the “time cost”, which is the loss of investment while a drug is in development. Senior executives in the biopharma industry believe that a significant portion of the “time cost” can be attributed to the mismanagement of R&D projects. Alarmed by this trend and inspired by the slogan “fail faster”, we three female scholars from three different continents (A. M. Subramanian at NUS, Moren Levesque at York University, and Vareska Van De Vrande at Rotterdam School of Management) embarked on studying failed new drug development projects. The purpose of the research was to understand the means through which firms can fail early, rather than wasting valuable resources that could otherwise be spent on more promising avenues. Specifically, we adopted a multimethod approach (optimal time allocation modeling and empirical analysis of 1274 discontinued drug discovery and development projects) and studied the time allocation decisions of biopharma firms. The research helped gain a deeper understanding of what could constitute more strategic time allocation decisions between early-stage drug discovery projects doomed to be discontinued, and late-stage drug development projects needing attention. The research findings were published in “Pulling the Plug:” Time Allocation between Drug Discovery and Development Projects, Production and Operations Management (POM) 29(12), 2851–2876, and chosen as the POM nominee and runner-up for the Ralph Gomory Best Industry Studies Paper Award from the Industry Studies Association, 2021. The article also caught the attention of practitioners, wherein the head of Global Insecticide Research at BASF Chemicals India was interested in replicating the study for the agrochemical context. The award and attention signal that the insights from the research could help address the industry’s notorious challenges regarding R&D efficiency.

A key takeaway from this article is that biopharma firms may not be “pulling the plug” fast enough on early-stage drug discovery projects. An important feature of drug discovery projects is whether the drug belongs to a category that is highly congested (i.e., when a large number of firms are involved in the discovery of similar drugs) because those in highly congested categories face less risk during their development owing to learning from predecessors. For instance, the FEDOSINE launch by BioCryst Pharmaceuticals in 2017 did not belong to a congested category, whereas Pfizer’s LIPITOR did as it had four predecessors prior to its launch in 1997. We uncovered that when the underlying drugs did not belong to congested categories, highly risk-averse firms postponed the discontinuation of drug discovery projects destined to be discontinued. We also found that firms with big scientific teams engaged in early-stage drug discovery and big portfolios of late-stage drug development projects could reap maximum gain by reallocating more teams to late-stage projects than early-stage ones. Taken together, our findings provide decision-makers within biopharma with important clues regarding the timely discontinuation of drug discovery projects.

The key contribution of our research lies in providing contingencies to balancing exploration and exploitation activities within firms. Moreover, developing and testing a more objective view to allocating time for early-stage discovery activities, while considering a biopharma firm’s risk-aversion level, brings new ways of thinking about the drug development process that may also prove relevant for the repositioning of existing drugs for a different disease or the development of drugs for orphan diseases.