Impact of COVID-19 on Innovation (J&J)

Expert Profile

Section 1: Immediate Impact

1.1. How would you describe the innovation process within J&J pre-COVID?

Pre-COVID we were doing both internal and external innovation. We are looking at lot of companies externally, what they do, what is the match and if they can demonstrate relevant data. I can’t stress enough that you get together with them on a Zoom, they show you the data and it may sound very exciting. After that the next step was to go visit the laboratory on site so assess the performance of the company. If successful, we would quickly either bring them to our labs and that’s a great filter to see how things work if we are looking at any external targets.

Usually those people have to ship the equipment, maybe do some more development and sometimes they are across different time zones and they come to our labs or we go to different labs if it’s in Europe. None of that is happening now, that is totally zero. We are assessing companies over Zoom, but you can imagine, it would be tough to execute that. This is the external piece.

For the internal piece, if we do have things that are under development, things that are in the pipeline, of course you go to work, and you develop the product and you go through the process. We have our development processes that are both GMP and FDA approved; we call it the quality by design. You don’t want to rely on luck to have quality at the end of the development process which can be three to five years. You want to have quality built in by design and you want to have success built in by design. At the end of the process, you want to have these gates that ensure success, ensure quality and compliance.

1.2. What has been the impact of COVID-19 on your innovation processes? How has it changed?

A lot of that is happening because of multifunctional teams. Success is, I’m sure you’ve heard that if you want to go fast, go alone, if you want to go far, go together. So, it’s always a multifunctional team who is developing this and its always R&D, which is what I lead. It is HEMA, which is medical health and clinical or preclinical. It is always multiple different functions that are adding to the success of innovation.

In normal times, this is moving slowly. It takes three to five years, and these people are working together, having meetings face to face. Now it’s going super slow because none of those touch points are possible, regardless of how much people go on the internet and say, that we’re making progress. We are making progress, but boy, it’s slow.

Another thing is that, I’m leading a couple of product developments that are in the pipeline. Any time you are at a certain inflection point of the development you have to prove that things work either ex vivo or in vivo, either excise piece of tissue, either animal or human, or going to cadaver lab or going to a small animal or mid-size animal or a large animal, you can’t avoid that. You simply can’t do that from home, you’ve got to go in the lab and for at least three months, we couldn’t go in the lab and this was a hard delay. Now we can go in the labs and it’s moving forward but like I said, the process is definitely slower. There’s a lot of touch points over Zoom and we do as much as we can. It was really like zero progress for two months, and then it’d be a good speed up in last two months. Maybe we’re now back to 70% where we used to be for internal development. For external development we are probably no higher than 10%.

As much as you can do over Zoom, seeing products in the lab is not happening, especially if they’re overseas. Nobody can go overseas, and we can’t see the products. We see pictures and demos over the internet, over Zoom, but that is never remotely enough to trigger action to either acquire or invest in the organization. Unless, I have to say, we have some engagements that are multi-year engagements and the products are coming to fruition and there’s a good level of trust in what we are seeing from people. But even then, it’s hard to make those progresses on the medical device side.

If you look at the pharma side, we are just acquiring Moderna who is developing a vaccine, but they are only two hours from a site that we have. So, we hop in a car, go see the data, review the data, review what the FDA gives them, and we made a decision to buy them for six and a half billion dollars.

1.3. What have been some of the challenges around altering innovation processes during COVID-19?

The most difficult thing is every business, like everything else, works on fact finding and on trust developing. While some of that is possible to do over the Zoom, it is absolutely impossible to finalize and bring new deals over Zoom. You have to have that face time you have to be able to verify or assess performance of whatever technology you’re looking at, either in the preclinical or clinical settings, which is quite a bit slowed down from before. Those are, both for internal and external, slowdowns that we are seeing today.

1.4. What have been some of the unexpected innovation success stories during this pandemic?

Where a lot of people go in the office and when we’re developing these medical products, we have small labs where we have equipment set up. People simply recreated those labs at home. Many of these people, sometimes actually live relatively close to each other, so sometimes garages or homes become our development labs. People will occasionally, with good measures in place, come and work in somebody else’s garage on developing products. It reminds me a bit of the Apple story and we have examples of that all over the place.

Section 2: Lasting Impact

2.1. Could some of the changes made to the process as a result of the pandemic last? Which changes will last? Why?

I think the lasting impact will be how much work we can do remotely. Before it was unimaginable that we could do this much work without that physical touch or connection. I think it’s still very hard when we onboard new persons who get hired. You see them on Zoom for the first time and they have to make friends and colleagues and become working part of the team over Zoom. It’s happening so I think the resilience has been proven to be amazing, and I think mandating that people have to go to office every day is also not overly productive. I think the lasting impact will be if we actually need all these large physical presences in all these cities and towns.

Of course, you can’t avoid going in the labs and meeting people face to face, but I think that with all this brick and mortar model, we have plenty of room like everybody else to rethink what is needed.

2.2. Will future innovation processes be increasingly based around a “fail-fast approach”? Could this be the case with yourself?

Whenever we go through this process, I’m always wondering, did we make a right decision? If you have to fail at something, did we make the right decision, or would they be more successful if you give them more time and money and maybe deploy different milestones or different objectives or did, we do this unnecessarily? Did we close the door where we could have been more collaborative? To me, in these days and before in normal times, I think everything always has to be based on sound scientific processes and methods. That is an unyielding proposition if you want to find success. I’ve seen companies, pitching to us and what was missing for me is a sound scientific, quantifiable and repeatable process.

2.3. Will the process be more externally or internally driven?

Actually, it’s a combination of four, that’s what we do in J&J. We have complete internal innovation where we will hire people to develop a product that we see a need or that we see a fit or that we see generational improvements. We have a full pipeline of these products. Then we will find external innovation, which is we find a company or product. We look at them, and if it makes sense, then we can do multiple things with these guys. Either we can buy them outright or we can invest in them, or we can take them along the way and advise them, give them certain milestones and increase the level of confidence that they can perform to the level that we need and then do something with them, either acquire them or partner with them. These are the four different approaches.

For all these four, we have arms who are people who are doing these things. For internal, we have R&D, which is what I lead. I also work on external innovation anytime there’s due diligence or anytime we need to make an acquisition that is directly for us. Two more arms, like I mentioned, is JJDC, which is a development company which is basically our investment arm. So if we find external target and they’re developing something that we can’t really use in the next five years but if you invest a little bit of the money, then maybe we can get a seat on the board and you can help them develop faster and maybe they will get to that place in three years.

The fourth arm is JLABS innovation labs. Basically, small companies come along with either a concept in mind or prototype, which is of interest to us. We say there’s a challenge and we give half a million dollars to whoever meets this need or has a product. We will review all these companies who are pitching in, and to the winner we will give this money. Not only that, but we will also give you support in terms of technical regulatory quality for free. You just have to repay that money once you are hopefully successful and that’s our way to innovate with the world. We know we’re not good in everything and we recognize that we cannot sometimes move as fast as small companies. So, we have these four work streams of how to get products on the market. For JJ Innovation Centers, the idea is they will admit these companies and they will assign people like myself to be mentors for these companies. On top of that, I would say the fifth piece is we will also go and proactively buy pieces of other companies. We would go to Medtronic and ask them to sell us their diabetes business for example.