ABSTRACT
I was talking recently with the CIO of a pharmaceutical company, who told me that one drug can cost more than $4 billion to produce. I found that number to be a tad bit staggering, so I asked him to explain. He told me that the R&D group puts a large number of drugs into production at one time because the team knows that most of the drugs will fail at some point in the R&D process. The one drug that does survive will more than compensate for the R&D costs, so the overall budget allows for all of that failure. In order to innovate, pharmaceutical executives figure, they need to build waste and failure into their process.
