The Impact of Failure and Success Experience on Drug Development

The Impact of Failure and Success Experience on Drug Development

The Impact of Failure and Success Experience on Drug Development

Antonio Garzón‐Vico, Jan Rosier, Patrick Gibbons and Peter McNamara

Originally published: October 12, 2019 (PDMA JPIM • Vol 37, Issue 1 • January 2020)
Read time: 1 hour, 10 minutes

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It is unclear whether the common belief that experience benefits new product development is driven by decision‐makers allocating more attention to success experience or more attention to failure experience. This article differentiates between the two aforementioned types of experience in order to explore their separate effects on new product development. We find that only late‐stage failure experience improves new product development, that success experience is more beneficial than late‐stage failure experience and that, while others’ related failure experience increases the likelihood of failure, others’ related success experience decreases it. We conducted our research in the context of drug development in the biotech industry and obtained our data from Pharma Projects. We employ logistic regression analysis to model the likelihood that a drug development project results in failure.

Practitioner Points

  • Our findings suggest that firms do not pay enough attention to less salient failures. Therefore, we believe that managers should increase their efforts to study less costly failures, since doing so might help their organizations from incurring a more expensive backlash further down the line.
  • Our findings suggest that firms put more effort into extracting value from failure than success and that they do not extract as much value from their own successes as their competitors do. Consequently, organizations experiencing success need to put in place processes to make sure they extract more value from their successes.
  • Our results show organizations’ efforts to extract value from competitor salient failures are not sufficient enough to improve firms’ outlooks. Therefore, we suggest that managers dedicate greater time to understanding the implications of others’ salient failures.

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