The Future Lies in the Genome
As a Pure Life Science Company Bayer Steps up Investments into Health Care and Crop Science Businesses
Kemal Malik, board member for innovation at the German Bayer Group, sees many similarities in the genetic system of humans, animals and plants. This opens the door for synergies in R&D between the subgroups HealthCare and CropScience. It also facilitates new treatments for diseases. In an interview with Thorsten Schüller of CHEManager International Malik talks about the latest innovation activities of Bayer.
K. Malik: We found a lot of similarities between CropScience and the HealthCare business. If you look at Bayer, we had a very successful life science business over the last five years. We are one of the fastest growing large pharma companies in the industry. Also our crop science business has been growing very significantly over the last years. Both businesses have been driven by innovation in renewing products and bringing them to the markets. But innovations in pharma, crop science and consumer care require investments. As a consequence of this we need to invest further.
MaterialScience is different from this from the Life Sciences. But as our life science business needs strategic investments, we had to make decisions. We realized that we couldn´t make the level of investment in our material science business that it needs. So the best for both, Bayer and MaterialScience is to bring the material science activities to the capital market itself where it can raise the money it needs to have a successful future.
Looking on the weight of your health care and crop science businesses – what will be the split between them in the future?
K. Malik: From a sales point of view health care will stand for about 70%, crop science for about 30%. That split will be more or less the same for R&D as well where we plan to spend about €3.8bn this year.
The aim of Bayer is to grow mainly organically. Is this sufficient in order to be innovative and to compete in the global environment?
K. Malik: In terms of major M&A we made some pretty significant deals in the last two, three years. For our future growth we don´t see the need for another big merger or acquisition. We will continue to source innovation from a base we have. But we are always open to licensing agreements.
You are currently in the process of integrating the consumer care businesses of Merck & Co and Dihon Pharmaceuticals. How do these businesses fit into your strategy of a life science company with strong focus on innovation?
K. Malik: These are different levels of innovation. Innovation in our understanding is anything that is new and that has value for the customer. It can be a new scientific principal outcome of research in oncology. But it also can be a new formulation or new packing in consumer care. Both innovations may have much meaning for the end user, for the patients or consumers. In that context consumer care is a very important part of our Bayer family. We don´t want to be a pure pharma company. We don´t want to be a pure crop company. It is important to us to have a diversified portfolio within the life sciences.
You say that a kind of revolution that took place in life sciences during the last 10 to 15 years. Can you explain what kind of revolution this has been?
K. Malik: It means our understanding how genetics determine life. Many activities in the past 10 to 15 years laid the foundation to understand the genome of living species. Back in the early 1990, the Drosophila Genome Project was launched and it took ten years to complete. At that time it took five years and $70 million to sequence the genome of a plant called Arabidopsis. Today you can sequence the human genome for less than $1,000. So there has been an extraordinary explosion in terms of our technical capabilities of sequencing a complete genome. But now we also see new techniques on the markets coming from research in the area of analyzing and editing such information.
Will this revolution continue? Do you have an idea where we will be after the next 10 years?
K. Malik: The costs of the sequencing of the genome will come down further. This technique developed from an experimental endeavor to what is now a research tool and will becoming much more practice when you go to your doctor. In future he will be able to further determine your illness by analyzing your genome. Apart of this our capabilities of looking at the genome with new technologies and targeting and insertion and removal of genome sections will become more elaborated. I think this will open up a lot of new possibilities for new therapies principles.
In Oncology you see a high potential in immuno oncology. How can you realize this potential?
K. Malik: In oncology we brought over the last years significant innovation to the market, for example Nexavar for kidney and liver cancer. Stivarga is for treatment of colorectal cancer, and Xofigo which is for prostate cancer. Today we have a very healthy pipeline with innovative compounds and products. Currently there is a lot of noise in oncology how we can utilize the own immune system of bodies to fight cancer. A couple of agents are coming to the markets to unveil the tumor so that the body’s immune system can fight against it. We are also active in this area. We have some important internal projects, but also a very significant partnership with the German Cancer Research Center. We are still very much in the early days of immune oncology. But I think there will be further ways to innovation.
Will immuno oncology become an important field in the fight against cancer?
K. Malik: The immuno agents that are coming to the markets will be used in combination with other products, more traditional compounds such as small molecules. Cancer will be a more chronic disease and patients will take a cocktail of drugs as we have seen in HIV.
You mentioned the synergies between health care and crop science. How does this affect your R&D activities in these areas?
K. Malik: We always look for synergies across our businesses. As a consequence our technology platforms apply to all our activities. Our researchers look for similarities in our businesses and thus we realized that there is a lot of commonality between all our life sciences businesses and a lot of information to share. Our understanding of the genome helped us a lot to see the commonality of the genetic system between humans, animals and plants.
Can you give an example?
K. Malik: One example is the respiratory chain in cells. As Mitochondria are the cells’ “powerhouse”, new products from CropScience were able to treat fungi or nematode infections in plants by cutting this energy supply. So it can prevent them from destroying the harvest. This principle works also for dangerous lung or heart worms in animals. And the respiratory chain is also a target in oncology research as cancer cells are using a lot of energy. This is an example of how Bayer understands common pathways across species. Finally, this allows us to use our R&D money in a more efficient manner.
In one of your activities you promote the so called open innovation approach. Here you have projects as Grants4Apps or Grants4Targets. What is it and why are you doing this?
K. Malik: “Grants4Apps” is a new model of Bayer’s open innovation approach in the area of digital health. We are looking for novel software, hardware, technologies, or processes that could improve health outcomes or pharmaceutical processes. We provide grants to health IT startup companies under our crowdsourcing program, offer office space for digital startups in our Grants4Apps Accelerator at our premises of Bayer HealthCare in Berlin. The startups in the Accelerator have 100 days to evolve their app-projects in the area of health. Our financial support is about €50.000. In addition, we provide senior manager support for the startups. We started this project last year in Germany, Denmark, Portugal, Belgium and the UK. We aim to further expand this in the world.
You have another project called CoLaborator. What is this about?
K. Malik: We launched this project in 2012. We give startup companies in the life science area access to space on our campus. There they have access to our research environment and senior researchers. Currently we do this on two sites, in San Francisco and in Berlin. Our aim is to give these companies access to Bayer, but also to give Bayer access to the knowledge of these companies. This also has an effect on our culture. The entrepreneurship partnering brings a different atmosphere and changes the culture in our organization - it makes us a little bit more entrepreneurial.
This gives the impression that Bayer puts its strategy of generating knowledge on a new basis. Is this correct?
K. Malik: We have multiple ways of sourcing innovation. We have partnerships with biotech companies, startups and research institutions. Projects like Grants4Apps are another and a new source. We like to have this mix of sourcing. This doesn´t mean that we replace traditional licensing or mergers and acquisitions. These new sources are just another string to our bow.
As the responsible person for innovation at Bayer – how do you manage innovation? How do you bring all ideas and projects together?
K. Malik: If you look at the scope of innovation across Bayer we have three distinct parts. About a third what we do is quite routine, just stepwise in incremental innovation. Then you have about 50% or 60% of your activities that require more significant innovation. And finally we have 20% which is really breakthrough. We can´t just do breakthrough activities, that would be quite risky. So we have a mix of how we approach innovation. And we have a very systematic way of managing that. We have governance in place to ensure that we retain the capability for innovation.
Is it today more difficult to be innovative than some decades before?
K. Malik: Actually it is easier now than 20 or 30 years ago. Our understanding of disease biology and the information sharing is much greater now. Secondly, the focus around innovation is not limited to our company, but it´s the whole world. In many ways I have the best and easiest job in the company because everyone is interested in innovation. Everybody knows that this is the sustainable way for the company to grow.
Which are the most important innovation challenges you and we all are facing in life sciences, health care or crop sciences?
K. Malik: We have external pressure in terms how to feed the world and in medicines. We as a life science company have the responsibility to contribute to solving these challenges. The general question in health care is how we can utilize new technologies and platforms to move forward in innovation. There were two revolutions in the past. One was the advent of small molecules. The next were large molecules. The third one which is coming, are cell-based therapies. For the understanding of that area we need a key technology platform in the next years.