As swine flu slips down the news agenda, one group of people are starting to show a delayed response. Their headache and sweaty palms are not caused by the virus; on the contrary, it is the very absence of the virus that is to blame. These people are the shareholders of the world's biggest pharmaceutical companies, and they are feverishly wondering where their future dividends are going to come from.
They did pretty well out of the swine flu pandemic, despite the fact it was far less serious than many anticipated. So far it has infected around 1.6 million people, but has a mortality rate of barely one in 100. Even so, fear of a repeat of the Spanish flu pandemic of 1918, which left at least 50 million dead, was enough to trigger an earnings bonanza for drugs companies making flu vaccines and therapies. As governments raced to protect the public, they ordered vast quantities of the drugs. In the event, most were never used, triggering claims that "big pharma" helped talk up the threat from the virus. Last month the Council of Europe launched an investigation into whether the World Health Organisation had been overly influenced by drug companies when making its pronouncements about the pandemic.
Whatever the truth, there is little doubt that those who benefited from this disaster-that-never-was are now looking at a potential disaster of their own. For the fact is that big pharma is in big trouble. Despite spending ever vaster sums on research and development - an estimated US$50 billion (Dh184bn) last year alone - the number of new drugs approved each year is no higher now than it was over half a century ago. The industry is caught in a turbo-charged Malthusian trap, where costs are rising exponentially while the supply of revenue-generating drugs stays flat.
The situation is all the more paradoxical when one realises that 60 years ago, scientists had yet to discover the double helix of DNA, while today we have genetic blueprints for everything, from viruses and bacteria to mice and humans. So what has gone wrong? Why are all those supposedly huge leaps in our knowledge of how living organisms work not translating into "miracle cures"? The journal Nature Drug Discovery recently published an in-depth analysis of the industry's Malthusian trap by an industry insider, Dr Bernard Munos of the US-based pharma giant Eli Lilly. As a scientist, Dr Munos decided to do some statistical spadework on the raw data about his industry's performance over the past 60 years, with intriguing results.
Dr Munos finds, for example, that drug discovery by pharmaceutical companies is currently a so-called Poisson process, a statistical term meaning that the flow of new discoveries is pretty steady, but each is also unrelated to the next. This isn't how it is supposed to be. As science advances and companies acquire ever more expertise, discoveries should build on one another, boosting the overall rate.
As Dr Munos shows, the fact that this is not happening has very worrying consequences. If they are to keep their shareholders happy, most big pharma companies need to find at least two new potential drugs each year. Yet according to Dr Munos, on current trends the chances of this happening are less than one in 1,000. Clearly, action needs to be taken - but what? Again, Dr Munos uses statistical analysis to cast light on the issue. While the rate of new drug discovery by the industry as a whole may be flat, the rates among individual companies varies considerably. This suggests that some are better at fostering innovation than others.
So the answer to the current crisis seems obvious: pharma companies who are failing to get new compounds to the market must join forces with those that are. But according to Dr Munos, mergers and acquisitions (M&A) are unlikely to work: industry data show that those companies who have already tried M&A as a route to boosting discovery usually under-perform those who go it alone. As he wryly puts it: "One can summarise the impact of M&A in the pharmaceutical industry on research and development [R&D] as 1+1 = 1."
Indeed, according to his analysis, what the industry really needs is fragmentation: doubling the number of independent companies would probably more than double the number of new compounds being found each year. That, in turn, suggests a possible solution, says Dr Munos: split R&D departments off from their corporate centres, with their bureaucracy, short-termism and sales targets. What is needed, he argues, is more "disruptive innovation" - the kind of out-of-the-box thinking that management suits love to talk about, but do not know how to handle. And that can only happen by creating barriers to corporate interference, while breaking down barriers between sources of ideas, both inside the company and beyond.
There is an obvious problem with bringing about such change, however: implementing new strategies requires out-of-the-box thinking from the very people who are so often unable to foster it: management. Still, there are signs that the suits may have finally "got it". Last week, Andrew Witty, the chief executive of GlaxoSmithKline, talked of moving away from the current model of expecting armies of researchers to "think great thoughts" and towards smaller platoons of innovators.
Will it work? It had better: Mr Witty also revealed an astonishing statistic last week. Between 1998 and 2007, the company spent £3 billion (Dh ) on R&D each year, but failed to bring a single new compound to market. With the health of all of us increasingly dependent on new drugs, we should all hope big pharma finds a miracle cure for the pandemic of failure that threatens its survival. Robert Matthews is Visiting Reader in Science at Aston University, Birmingham, England.