Creativity and vision you need critical thinking included

What is innovation in the consumer healthcare sector (CHC)?

What is innovation? Nobel Prize winner Albert Szent-Györgyi famously said: "Discovery is seeing what everybody else has seen, and thinking what nobody else has thought". Innovation is taking that discovery and acting upon it. Thus, innovation requires two actions: vision and execution. Execution is a process; vision is an event. Companies should be well organized to do the former; but their ability to do the latter is often compromised by risk intolerance and ironically their necessary focus on process and execution. So can the two truly co-exist without mutual interference?

When it comes to CHC product innovation the bread & butter of the industry has been incrementalism centered on line extension of established brands. Rarely is a new brand launched — it's just too risky. Not only is this behavior due to secular limitations such as set piece government regulation (monographs), financial reporting cycles, planogram resets, but also because brand management seeks to refresh and extend its shelf space, keep the trade and customers happy — or be destocked. It must create frequent news and the aura of product superiority. It's important to be changing and visible to maintain shelf presence something I have called "Red Queen marketing". While consumer led product development has its place it is only as good as the vision and creativity of its managers to satisfy those unmet needs in ways that better the competition. Consumer led innovation is best employed to refine mature products in mature markets.

Dislocating, or game changing, technology has arisen sporadically in CHC mostly constrained by risk aversion driven by short time horizons, a wobbly commitment to innovation, lack of imagination, and a process driven organization. Dislocating technology arises from what I call "saltatory innovation". This is innovation as Szent-Györgyi would define it; innovation that roils a market as Schumpeter would have liked. The best transformative saltatory innovations most often come from individuals who see over the horizon, not committees, or consumers, or the trade. To name a random few inventive giants just to make the point: Steve Jobs [Apple], Fred Smith [FedEx], Alexander Fleming [penicillin], Thomas Edison [many], Louis Pasteur [pasteurization], Elon Musk [Tesla], and Tesla himself… the list is long and impressive. Saltation, though often revolutionary, need not be. Nonetheless, once executed it grows a business by leaps and often unexpected ones.

Although ideally innovation stokes growth, growth and innovation are not synonymous. Growth in CHC comes from a combination of continual incrementalism and occasional saltatory innovation. Importantly, saltatory innovation is of two types: "acquisitive" and "inventive":

"Acquisitive" innovation is the act of acquiring assets that are partially, or wholly, developed outside of the acquirer such that the timing to market and business risk is diminished while boosting growth above organic rates.
"Inventive" innovation emanates from insights internal to an organization such that the rate of organic growth is substantially exceeded; often through invention of a new category, segment, or benefit.

One might think of incremental and saltatory innovation as a barbell with incremental changes to a brand on one end and saltatory innovation on the other. Yet this bimodal pattern is less about the length of time horizons since acquisitive actions can happen rapidly, and more about the size of change and how risk is managed. Much of saltatory innovation within the CHC sector derives from acquisition of companies, or brands, and less commonly through licensing technology. Acquisition typically diminishes, or at least defines, business risk. That risk can be priced through well-known valuation metrics. All industries have an escalating array of risk-adjusted assets starting from venture backed start-ups to multinational vertically integrated corporations. At its heart acquisition is a process, a process that can soon be accretive to sales and earnings. So if saltatory innovation is more often acquisitive and less frequently "inventive" the challenge to industry is whether internal inventive innovation can be accelerated to be more than sporadic. The industry needs a functional Dionysian presence — one not populated by Apollonians.

Next time: "The Riker Hourglass Model of Innovation"

Dr. Riker's Record

  • Wrote technical recommendation to acquire and switch naproxen OTC as the second NSAID to market (Richardson-Vicks soon acquires from Syntex; later branded Aleve, then sold to Bayer).
  • Oversaw the installation of the first in-house colds virology and clinical sedation testing facility installed within any OTC drug division (Richardson-Vicks/P&G); managed all common cold and allergy key opinion leaders and clinical trials. Proprietary data used to guide technology development and acquisition decisions.
  • Oversaw a 4-year in-house study of common cold symptoms leading to the publication of data supporting the rational use of multisymptom relief products in colds (Richardson-Vicks/P&G).
  • As Associate Director at Richardson-Vicks/P&G, prior to any category switch, managed all clinical evaluation of NSAIDS, non-sedating antihistamines, intranasal steroids and interferon as potential Rx switch opportunities in allergy and the common cold.
  • In a landmark New England Journal of Medicine article demonstrated that average common colds result in significant objective sinus involvement allowing support of multisymptom relief product claims.
  • At P&G wrote and presented technical recommendation for first-in-category OTC switch of an Rx PPI, omeprazole, to senior corporate management (P&G then acquires from Astra; soon branded as Prilosec; first PPI to launch in the mass market).
  • As Chattem's VP R&D & CSO rebuilt R&D and product development organizations to allow line extensions, acquisition of J&J brands, inherent Rx switch capability, and invention/extension of the Gold Bond Ultimate line.
  • The seminal visionary behind the emergence of TENS devices as an incremental segment within the OTC analgesic category.
    • Urged Chattem senior management to develop a TENS device for the OTC market [2004]. Chattem develops Icy Hot Smart Relief as the first branded TENS device to enter the mass analgesic market.
    • Co-founder, co-inventor and investor in Modular Therapeutx, LLC, a 2009 self-funded start-up devoted to bringing to the mass market an integrated, wireless and patented TENS unit to relieve low back pain (global rights licensed to Hollywog, LLC; Hollywog later sublicenses US retail channel rights to a major OTC analgesic brand; launched in mid-2016).
    • Co-inventor of US patent 9,764,133 [granted 9/19/17] claiming the configuration of integrated portable TENS devices controlled remotely by means of a wireless signal in order to allow for wireless activation and control of the device.

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