New Report Ranks World's Most Innovative Companies

New Report Ranks World's Most Innovative Companies

11.13.12 | By

Being on top of anyone's list of the 'World's Most Innovative Companies' is a mighty fine set of bragging rights, and Apple can put another feather in its hat thanks to a new report by Booz & Company. Booz surveyed trends in R&D spending and innovation strategies, looking at whether a company's fluctuating investments had any long term effects on their brand's innovation standards. The short answer is "not necessarily."

From the report:

"There is no long-term correlation between the amount of money a company spends on its innovation efforts and its overall financial performance. Instead, what matters is how companies use that money and other resources, as well as the quality of their talent, processes, and decision making."

You can see what they mean from a chart comparison within the report. On page 5, Exhibit B, in Booz's report, the list the top 20 spenders on innovation; eight of them are biopharmaceutical companies. Yet on page 11, Exhibit F, of that same report, the 700 executives they surveyed ranks the world's most innovative companies; biopharma is conspicuously absent. That pharmaceutical companies' investments represent some of the highest R&D spending but still aren't viewed as highly innovative by other industries was a curious fact: all investment and no love -- what gives?

Part of the discrepancy lies in a public perception problem. Industries that generate a constant stream of new products are hard to compare to pharmaceutical companies who make incremental progress researching a new medicine over the course of several years. A billion dollars invested into gadget technology can create multiple new products; the same amount spent on molecular biology means you might hopefully understand Alzheimer's disease only slightly better than you did before.

Consider it: only one of every 10,000 potential medicines makes it through the research and development pipeline and is approved for patient use by the FDA. If a speaker or car manufacturer had to go through that, we'd still be listening to quadraphonic speakers in a Jalopy.

Booz's survey isn't wrong - they have some great points about how an innovation strategy fits into an overall business model, and I don't dispute their findings or survey. But given the built-in challenges involved in medical innovation, biopharmaceutical discoveries and innovations are all the sweeter, when found.

Look through Booz's report - it's a worthwhile read - but remember that it's tough to compare Apples to medicines.

More On PhRMA — powered by PhRMApedia


Cost in Context