Exploring the Characteristics of Pharmaceutical Product Development: A Cross-industry Perspective

IntroductionPharmaceutical product development is considered to be unique. However, the uniqueness of drug development in comparison with other industries has never been clearly explained, either academically or practically. Numerous studies have focused on product development management in the fields of technology and innovation management from the 1960s to today.1 Previous studies adopted the approach of identifying universal success factors common to all products and industries. However, beginning in the 1990s, more emphasis began to be placed on the product development process, and a more detailed analyses resulted in the discovery that effective product development patterns differed depending on product and industry (e.g., Eisenhardt & Tabrizi, 1995; Iansiti, 1998; Kuwashima, 2003; Pisano, 1997; Tomita, 2009; Wi, 2008; Yasumoto & Shiu, 2007; Yoshimoto, 2009). However, having hundred effective development patterns for hundred products and industries is too complex; a framework is required for cross-industry analysis that more simply organizes relationships between product and industry characteristics and development patterns.A cross-industry analysis requires a generic perspective that can be applied to product development in all types of industries. For example, clinical trials are one trait unique to drug development; however, using industry-specific ideas and vocabulary do not enable a comparative analysis across industries. Thus, this paper employs a framework based on a highly generic problem-solving model to organize the characteristics of drug development and effective management from the perspective of inter-industry comparisons.Characteristics of Pharmaceutical Product Development from a Problem-solving Perspective(1) What is a problem-solving model?Problem-solving models were not originally developed as an analytical framework for technology management or innovation management. Rather, they were used in the fields of organization and statistical decision theories, and were then applied to other fields including technology management and innovation management (Barnett & Clark, 1998; Lynn, 1982; Simon, 1969; Thomke, von Hippel, & Franke, 1998; Wheelwright & Clark, 1992).2 As can be seen from the fact that organization and statistical decision theories were the sources of this approach, problem-solving models are extraordinarily generic and can be applied to all types of products and industries, making them suitable for cross-industry analyses.In general, problem-solving models are formulated in the following five steps (Clark & Fujimoto, 1991; Gerstenfeld, 1970):1. Definition of the problem32. Generation of alternatives3. Testing of alternatives4. Evaluation of alternatives5. Selection of alternativesApplying this model to pharmaceutical product development provides the following steps:1. Determination of target therapeutic areas2. Synthesis of and/or search for chemical compounds3. Non-clinical and clinical trials of chemical compounds4. Evaluation of chemical compounds5. Selection of chemical compoundsIn general, the core activities of problem solving include the generation of alternatives and testing (Simon, 1969). Thus, the following two points can be derived by focusing on these two activities and organizing the characteristics of pharmaceutical development from the perspective of a cross-industry comparison.First is the necessity of generating an extremely high number of alternatives. In pharmaceutical development, it is very difficult to specify in advance the chemical compound structures that will achieve the goals. Accordingly, several thousand to more than ten thousand compounds must be generated or searched to find an effective compound.Second is the necessity of highly detailed tests. Pharmaceuticals affect humans, and thus companies must carefully confirm both the efficacy and safety of compounds. …


Introduction
Pharmaceutical product development is considered to be unique.
However, the uniqueness of drug development in comparison with other industries has never been clearly explained, either academically or practically. Numerous studies have focused on product development management in the fields of technology and innovation management from the 1960s to today. 1 Previous studies adopted the approach of identifying universal success factors common to all products and industries. However, beginning in the 1990s, more emphasis began to be placed on the product development process, and a more detailed analyses resulted in the discovery that effective product development patterns differed depending on product and industry (e.g., Eisenhardt & Tabrizi, 1995;Iansiti, 1998;Kuwashima, 2003;Pisano, 1997;Tomita, 2009;Wi, 2008;Yasumoto & Shiu, 2007;Yoshimoto, 2009). However, having hundred effective development patterns for hundred products and industries is too complex; a framework is required for cross-industry analysis that more simply organizes relationships between product and industry characteristics and development patterns.
A cross-industry analysis requires a generic perspective that can be applied to product development in all types of industries. For example, clinical trials are one trait unique to drug development; however, using industry-specific ideas and vocabulary do not enable a comparative analysis across industries. Thus, this paper employs a framework based on a highly generic problem-solving model to organize the characteristics of drug development and effective management from the perspective of inter-industry comparisons.

Characteristics of Pharmaceutical Product Development from a Problem-solving Perspective
(1) What is a problem-solving model?
Problem-solving models were not originally developed as an analytical framework for technology management or innovation management. Rather, they were used in the fields of organization and statistical decision theories, and were then applied to other fields including technology management and innovation management (Barnett & Clark, 1998;Lynn, 1982;Simon, 1969;Thomke, von Hippel, & Franke, 1998;Wheelwright & Clark, 1992). 2 As can be seen from the fact that organization and statistical decision theories were the sources of this approach, problem-solving models are extraordinarily generic and can be applied to all types of products and industries, making them suitable for cross-industry analyses.
In general, problem-solving models are formulated in the following 2 Viewing the product development process from the problem-solving perspective has been long used in the field of research into technology management (e.g., Allen, 1966;Frischmuth & Allen, 1969;Myers & Marquis, 1969). However, Clark and Fujimoto (1991) were the first to explicitly use problem-solving models as an analytical framework for product development processes.
five steps (Clark & Fujimoto, 1991;Gerstenfeld, 1970 In general, the core activities of problem solving include the generation of alternatives and testing (Simon, 1969). Thus, the following two points can be derived by focusing on these two activities and organizing the characteristics of pharmaceutical development from the perspective of a cross-industry comparison.
First is the necessity of generating an extremely high number of alternatives. In pharmaceutical development, it is very difficult to specify in advance the chemical compound structures that will achieve the goals. Accordingly, several thousand to more than ten thousand compounds must be generated or searched to find an effective compound. 3 The definition of the "problem" in problem solving differs by researcher, but generally, when a person has a goal, that person is said to have a "problem" (Johnson, 1955;Newell & Simon, 1972). More specifically, the gap between an existing situation and a desired state is a "problem" (Kaufmann, 1988;Pounds, 1969). The methods used to fill that gap, or achieve a goal are undetermined, thus the need for problem-solving activities (Kaufmann, 1984).
Second is the necessity of highly detailed tests. Pharmaceuticals affect humans, and thus companies must carefully confirm both the efficacy and safety of compounds. Therefore, highly detailed and complex tests called clinical trials are used, and these cost from tens of millions of dollars to hundreds of millions of dollars.
From the perspective of a problem-solving model, the requirement for both the "generation of many alternatives" and "complex testing" are marked characteristics of pharmaceutical development compared with other industries.
(2) Problem-solving framework However, in the case of beer, testing is very simple, and is conducted by a sensory inspector. On this point, beer differs from pharmaceuticals, which require complex, high-cost testing such as clinical trials.
On the other hand, automobile requires complex testing much like pharmaceuticals. Automobiles are complex products, having to meet various customer needs for safety, ride, fuel efficiency, and so forth.
Accordingly, automakers must conduct various tests in all conditions (driving tests, crash tests, and so on) to determine whether a 4 Figure 1 is based on the framework of Fujimoto and Yasumoto (2000). particular product design provides the expected functionality (ride, safety, fuel efficiency, etc.). As automobiles are assembled products and their technology is mature, automakers need few alternatives to generate a design that provides the desired functionality. Thus, automobiles differ from pharmaceuticals.

Management of Problem Solving in Pharmaceutical Product Development Process
Both characteristics of pharmaceutical development identified by an analysis based on the above problem-solving model closely relate to product development management. In other words, the Pharmaceutical manufacturers respond to this problem by switching between the generation of alternatives and testing in the upstream and downstream product development process. In other words, they balance the two characteristics by switching as follows: In the upstream phase, companies focus on the generation of alternatives, conducting simple tests using cell fragments.
As development moves into subsequent phases, alternatives are filtered, and the focus shifts to testing on animals.
Finally, the alternatives are used in humans as the process moves to clinical trials, which is the most detailed and complex form of testing.
Switching between the generation of alternatives and testing can be considered as a "narrowing down" pattern of alternative chemical compounds in the development process. Empirical studies in the technology management domain have shown that the management of narrowing down pattern of compounds affects the pharmaceutical product development performance.
For example, Kuwashima (2003) performed survival analysis using data from ten major Japanese pharmaceutical manufacturers to statistically analyze patterns for narrowing down chemical compounds from each company in the clinical development stage.
Based on the results of the analysis, it was found that Takeda Pharmaceutical Company, which had maintained a high level of competitiveness over a long period of time in Japan's pharmaceutical industry, exhibited a pattern of "casting a wide net and narrowing down candidates all at once and at the right time." This contributed to Takeda's efficiency in product development.