New OHE Consulting Report Explores the Many Faces of Innovation

Now available from the OHE website, this report provides a clear explanation of the complex nature of innovation in medicines. A fully revised and expanded version of the 2005 edition of The Many Faces of Innovation, it updates the review of the literature on the economics of innovation, traces important innovation that has occurred since the earlier report, adds new case studies, and updates the discussion of competition in pharmaceutical R&D.

In the context of increasing pressure on health care payers in Europe, the definition of what constitutes “innovation” has become both muddled and dichotomised. The report summarises the wide variety of attributes that characterise innovation, including not only health gains, but also patients’ and carers’ convenience, and other societal gains and cost savings.

Potential attributes of an innovative pharmaceutical Potential attributes of an innovative pharmaceutical


Innovation, the report explains, is both an unpredictable and a cumulative process, characterised by small steps and incremental learning. Upsetting that progression by skewing incentives, it warns, can have a negative impact on improvements in therapy over time and also affect other areas of society, outside health.

Also discussed in the report is the importance of encouraging dynamic competition among companies researching in overlapping areas. Distinct from any products eventually produced, these include price competition encouraged by alternative treatments; enough research on similar compounds to identify those with the greatest value; and R&D “spillovers”, whereby various types of knowledge gained benefit other research and other sectors.

Download Mestre-Ferrandiz, J., Mordoh, A. and Sussex, J. (2012) The many faces of innovation. Report for the ABPI. London: Association of the British Pharmaceutical Industry.  

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