By Richard Soll, SVP of Research Service Division at WuXi AppTec (@richsollwx)
Robert G. Urban, Global Head of Johnson & Johnson Innovation (JJI), professes on his blog, What’s “In” Innovation, “Ideas and inventions often spring forth unannounced or unexpected, on the couch, in the shower, on a run or during our commute. But innovation is a laborious thing. An iterative, convoluted reduction to practice that requires a delicate balance between insight and ingenuity.”
It’s a reflective testament to J&J’s legacy and to Urban’s leadership style in powering healthcare innovation. For the past five years, Urban and his team at J&J Innovation have been working to accelerate breakthrough solutions for patients by driving robust innovation ecosystems around the world, empowering scientists and entrepreneurs with expertise in biopharma, medical device, consumer, and healthtech to move their science forward. These teams are based on a collaborative and open innovation model where connections between researchers, investors, entrepreneurs and other stakeholders are facilitated as part of a global innovation network.
The global team is composed of veteran R&D and product development leaders, experienced investors, transaction and legal advisers, and professionals from finance, business development and communications. So far, J&J has opened four Innovation Centers around the globe, including in Boston, California, London, and Asia Pacific, as well as eight JLABS, with two more (@NYC and @Shanghai) under construction.
Before joining J&J, Urban – listed by Scientific American among its “Top 100 Most Visionary Leaders” in biotechnology – worked at Massachusetts Institute of Technology, where he was the co-founding executive director of the Koch Institute for Integrative Cancer Research. In this role, Urban worked to build the Koch Institute into a new standard for interdisciplinary disease-focused research via an expanding, highly-effective, relationship network with other academic oncology centers, industrial partners, cancer-focused philanthropists and investors. During his tenure, the Koch Institute launched over a dozen start-up companies; and its technology was the source of numerous out-licensing transactions.
Urban has played a variety of roles in the biopharm and investment community, as a serial entrepreneur, co-founder and investor. His specific technical training is in structural biology, immunology, and infectious disease.
I recently talked to Urban, who shared J&J’s successful innovation strategy and why collaboration is key to creating the optimal environment for entrepreneurs to succeed in a difficult industry.
Rich Soll: You have a very strong entrepreneurial component to what you’re doing and what you were doing before you arrived at J&J. Were you worried about coming into a large company from an entrepreneurial setting?
Robert Urban: Absolutely. I had been across the table from them for about four years by the time I joined, and experienced first-hand what it meant to be on the other side of J&J. And just as anyone would image it to be, they walked and talked like a big company. A large company culture is derived from its success, namely success begets obligations and most of their time and attention must be directed toward these responsibilities. But J&J’s Innovation Initiative was explicitly designed to address that. We were built on purpose to be entrepreneurial and to be able to operate at the pace of the entrepreneurial system. A large number of the people who were recruited on to these teams have been entrepreneurs themselves, so that helps a lot in doing the kinds of things we’re doing. We’ve made over 400 investments in the last five years, which would be utterly impossible if you showed up every day as a large company and thought that way.
Rich Soll: Getting entrepreneurial groups off the ground is no small feat. What has been your strategy?
Robert Urban: We’re here as an extension of R&D; we’re not a business development function. Our efforts are there as an extension of R&D, but doing R&D on the outside of J&J in a collaborative way. That allows us to have a much larger portfolio than we could ever imagine to have. We have a large number of investments, and everything we invest in has others co-invested alongside us. We have the ability to leverage the remarkable talent that otherwise wouldn’t be willing to go into a large company, as well leverage and share risk with a broad range of other internal stakeholders – as well as venture capitalists, government bodies. We are focused on how quickly can we get the evidence needed and select only those projects that really have a chance to transform clinical outcomes.
Rich Soll: You’re not just funding early stage, in terms of phase, but you’re also taking companies that have clinical programs as well?
Robert Urban: That’s right. In our portfolio, we have things that are very early, but not all. We do the sorts of things that we can do together and keep them on the outside of J&J. Although we may help in a lot of different ways and do a lot of the work – like work with the manufacturer or do some animal model work – it’s highly collaborative. At the end of the day, it’s not entirely controlled and done by us. Many of these programs are in the clinic. For us, it just has to be highly innovative and our partners have to also be interested in a highly collaborative relationship.
Rich Soll: How are the innovation centers different than JLABS?
Robert Urban: For JJI, we only invest strategically. We consider ourselves to be a strategic investor. Although JLABS is one of JJI’s tools, you don’t have to be working on something that we consider to be strategically aligned with us in order to be eligible to apply. It’s hard to get in because you have to be working on something that we consider to be a transformative contribution to medicine. You have to be a team that has extraordinary competency to pull that off. Knowing how hard this stuff is, we need to know that you have access to individuals who are going to give you what is needed to make this a possibility, but at the same time, humble enough to realize that you’re never going to pull it off by yourself; you have to be a good networker and also be able to pay rent. But you don’t have to have a large budget for equipment. So it’s highly capital efficient.
Rich Soll: What have been some of the successes and failures so far for the innovation centers?
Robert Urban: First, our business is about acknowledging how difficult it is and how uncertain all of us are about the fundamental biology that we’re trying to unravel as we think about making medicines possible. For the foreseeable future, there’s going to be a tremendous failure rate in these types of endeavors. Most of the projects aren’t going to turn out. So you have to have a very large portfolio and be very focused on the evidence and key observations that tell you early that something is likely going in the right direction.
The portfolio is right-sized to ensure a steady stream of successes. Five years in, many of them that have come into the pipeline that are moving closer to approval type trials to get them hopefully into the market – a large portfolio that has hit many milestones and onboarding events.
On the consumer side, we’ve had several things that have already been commercialized. One is a LED mask that people can wear that helps treat their face for acne and wrinkles. It’s a Neutrogena branded product that came from one of our early investments on the consumer side. On the medical device side, we have some really exciting things too – custom 3D printing for orthopedic implants that help people heal bone that would have otherwise not been fusible and would have resulted in amputations.
We have a really exciting company that we built called Verb, which is building a next generation robot that will go head-to-head with any of the existing infrastructure on robotics in minimally invasive surgery. On the pharma side, there’s a long list of interesting next generation immuno-oncology programs, things that use the microbiome, things that get us into gene and cell therapy, and a whole range of things that we otherwise would have had a hard time doing if we had to rely on originating them internally. We will be able to quickly take them forward by using an entrepreneurial team, which has been quite an advantage.
Rich Soll: Are you seeing lower attrition rates as you bring companies in?
Robert Urban: We haven’t assumed that we will necessarily change the attrition rate, but by being as effective as we can be as a collaborator, we can at least reduce the avoidable hiccups. We don’t want our involvement to simply be about money; we invest our time, we invest our reputation, and we invest our own personal credibility in these partnerships we have working alongside these innovators. We take it very personally. We also hope that it may help to mitigate what otherwise could have been mistakes that might have made if we had not been able to be there earlier and help our partners anticipate what we, as a customer, are going to expect from a program. There’s a significant amount of rigor and expense that is going to be required, and the question is, when is the best time to focus on that – is it critical to do that in parallel or is this something that could wait? At least having a line of site to these types of choices and having people in the conversation in the early part of a program can, in many ways, make a huge difference.
Rich Soll: When you bring something in house from the innovation center, do you feel it’s in a much stronger position than, let’s say, when you bring in programs that aren’t from the innovation center?
Robert Urban: Yes. I think there is a real art and advantage to the entrepreneurial way of getting enough evidence to support something exciting before you spend a massive amount of money and then realize it doesn’t work. There’s a real tight wire act that has to be carefully appreciated in order to be capital efficient. We try to be as helpful as we can with whatever might be a knowledge gap in the complexity for what’s coming next.
Rich Soll: Have there been any pleasant surprises that have come out of the innovation centers or even JLABS?
Robert Urban: So many of our relationships have turned out to be truly impactful for us. At a minimum, they help us think differently. We have a whole range of technologies that we’ve gotten into that we wouldn’t have ever gotten into had we not been working in this collaborative and creative, risk-sharing kind of way. Our recent Innovation Impact Report shows that those companies have raised nearly $10 billion since we opened JLABS – of this group, we’ve done over 70 deals. We’re here to help build our pipeline, but we’re also here to help build the whole ecosystem. We’re really interested in doing things differently. We’ve done a lot of spin-outs; we take assets that we have, put them on the outside and finance them that way, and build a team around them. If they hit key milestones, then we buy-them back.
Rich Soll: Have you seen evidence how these innovation centers are affecting the ecosystems and are they making a profound impact across the globe?
Robert Urban: Yes, that is correct. We have seen broad impact. Actually, there’s one you didn’t touch on, which could very well be the most important — that is the ‘inside the building’ ecosystem. As you think of remarkable places, you think of Bell Labs or the Koch Institute. It’s about density, being interdisciplinary and purpose-driven. So, having that energy where you can build and curate in just one place, it makes a huge difference because they have a different energy than they would have trying to accomplish this in their garage. They end up being highly interactive with each other and they change the nature of what they end up doing; they often create partnerships amongst themselves, working to share talent and things like that. We’re there as a big company to bump into them at the coffee machine and give them access to a ‘customer,’ which they would rarely have simple access to. We bring people there every week; we bring all of our competitors.
Rich Soll: What have been your biggest accomplishments so far at the innovation centers and JLABS?
Robert Urban: For me, it’s been a very interesting thing to watch –the agility and willingness of the largest healthcare company in the world to open up that type of infrastructure is, in my view, an important accomplishment; and it speaks to the vision and passion of the company’s most senior leaders. It also helps people understand how J&J became J&J – one of only two companies in the world with a AAA bond rating. This, along with now over 50 consecutive years of annual dividend increases, are made possible because they’ve had this extraordinary culture of humility and commitment to finding innovation anywhere.
Even before our teams existed J&J was operating that way, and our pipeline is a testament to that. JJI simply industrializes what J&J has been doing in the past, and it’s been quite rewarding to help make that possible at scale and to help bring a truly global cross-sector investment platform to fruition. There’s a tremendous number of products that are in this offering that will change people’s lives. The only thing we care about is, “are these products going to change the nature of care?” We have fantastic programs that are underway that in some cases may cure diseases. Once we get these innovators through the gauntlet of drug development, there’s going to be an incredible number of new solutions that will be in the market. And that’s why we come to work every day.
Rich Soll: J&J is sort of breaking the mold of a large company not being entrepreneurial. What are you trying to achieve for your next phase of milestones?
Robert Urban: We have a very large portfolio, so managing that portfolio is our number one job each and every day. And then continuing to selectively add to it, continuing to be the innovative company we need to be in order to deliver new solutions to people all over the world. You’ll certainly be hearing about other places we’ll be operating in. Certainly, we know there’s a part of the world we need to do a better job at covering and connecting with. There are a lot of things that are emerging on how health care is delivered. How do the types of data get aggregated, how do the business models work? There’s a whole range of things that will be explorable through an investor-oriented approach as well – such as supply chain innovation–so you’ll see us continue to evolve in helping the organization and the industry get as much out of this as it can. It’s a never-ending set of aspirations that will allow us to get better and better at delivering more and more remarkable outcomes, like new kinds of diagnostics, early interventions, and a whole range of things that will be explored this way.
Rich Soll: What personally inspires you the most about this innovative process?
Robert Urban: I’m always really inspired by the fundamental problem – the inherent complexity and high-risk of medical product development. It requires new approaches – approaches focused on portfolio theory, risk mitigation, and syndication/collaboration. It is a big problem, but also a fun one to seek and to solve. As a rule, I suggest that one should never work on a problem that a person could accomplish solely by him/herself. Instead, focus on problems that are big enough or diverse enough that they will require collaborative approaches. Necessity then drives a collaborative culture and mindset. When you operate this way, your efforts are never capitated; the sky’s the limit and it’s time to fly.
Rich Soll: Is there anything you would like to say to folks who want to get involved in the health care industry?
Robert Urban: We need you – come do it. No other use of our time could possibly be more rewarding than helping to find life-changing solutions for patients. And there’s a remarkable number of ways in which people from very different backgrounds can make huge contributions in bringing new models of health and wellness to the world. You will love it.