by Adam Hartung | Jan 23, 2016 | Current Affairs, Ethics, Food and Drink, Web/Tech
Cheating in sports is now officially prevalent. The World Anti-Doping Agency (WADA) last week issued its report, and confirmed that across the International Association of Athletics Federation (IAAF) athletes were cheating. And very frequently doing so under the supervision of those leading major sports operations at a national, and international level.
Quite simply, those responsible for the future of various sports were responsible for organizing and enabling the illegal doping of athletes. This behavior is now so commonplace that corruption is embedded in the IAAF, making cheating by far the norm rather than the exception.
Wow, we all thought that after Lance Armstrong was found guilty of doping this had all passed. Sounds like, to the contrary, Lance was just the poor guy who got caught. Perhaps he was pilloried because he was an early doping innovator, at a time when few others lacked access. As a result of his very visible take-down for doping, today’s competitors, their coaches and sponsors have become a lot more sophisticated about implementation and cover-ups.
Accusations of steroid use for superior performance have been around a long time. Major league baseball held hearings, and accused several players of doping. The long list of MLB players accused of cheating includes several thought destined for the Hall of Fame including Barry Bonds, Jose Conseco, Roger Clemens, Mark McGwire, Manny Ramirez, Alex Rodriguez, and Sammy Sosa. Even golf has had its doping accusations, with at least one top player, Vijay Sing, locked in a multi-year legal battle due to admitting using deer antler spray to improve his performance.
The reason is, of course, obvious. The stakes are, absolutely, so incredibly high. If you are at the top the rewards are in the hundreds of millions of dollars (or euros.) Due to not only enormously high salaries, but also the incredible sums paid by manufacturers for product endorsements, being at the top of all sports is worth 10 to 100 times as much as being second.
For example – name any other modern golfer besides Tiger Woods. Bet you even know his primary sponsor – Nike. Yet, he didn’t even play much in 2015. Name any other Tour de France rider other than Lance Armstrong. And he made the U.S. Postal Service recognizable as a brand. I travel the world and people ask me, often in their native language or broken English, where I live. When I say “Chicago” the #1 response – by a HUGE margin is “Michael Jordan.” And everyone knows Air Nike.
We know today that some competitors are blessed with enormous genetic gifts. Regardless of what you may have heard about practicing, in reality it is chromosomes that separate the natural athletes from those who are merely extremely good. Practicing does not hurt, but as the good doctor described to Lance Armstrong, if he wanted to be great he had to overcome mother nature. And that’s where drugs come in. Regardless of the sport in which an athlete competes, greatness simply requires very good genes.
If the payoff is so huge why wouldn’t you cheat? If mother nature didn’t give you the perfect genes, why not alter them? It is not hard to imagine anyone realizing that they are very, very, very good – after years of competing from childhood through their early 20s – but not quite as good as the other guy. The lifetime payoff between the other guy and you could be $1Billion. A billion dollars! If someone told you that they could help, and it might take a few years off your life some time in the distant future, would you really hesitate? Would the daily pain of drugs be worse than the pain of constant training?
The real question is, should we call it cheating? If lots and lots of people are doing it, as the WADA report and multiple investigations tell us, is it really cheating?
After all, isn’t this a personal decision? Where should regulators draw the line?
We allow athletes to drink sports drinks. Once there was only Gatorade, and it was only available to Florida athletes. Because they didn’t dehydrate as quickly as other teams these athletes performed better. But obviously sports drinks were considered OK. How many cups of coffee should be allowed? How about taking vitamins?
Exactly who should make these decisions? And why? Why “outlaw” some products, and not others? How do you draw the line?
After watching “The Program” about Lance Armstrong’s doping routine it was clear to me I would never do it, and I would hope those I love would never do it. But I also hope they don’t smoke cigarettes, drink too much liquor or make a porno movie. Yet, those are all personal decisions we allow. And the first two can certainly lead to an early grave. As painful as doping was to biker Armstrong and his team, it was their decision to do it. As bad as it was, why isn’t it their decision? Why is someone put in a position to say it is cheating?
After all, we love winners. When Lance was winning the Tour de France he was very, very popular. Even as allegations swirled around him fans, and sponsors, pretty much ignored them. Even the reporter who chased the story was shunned by his colleagues, and degraded by his publisher, as he systematically built the undeniable case that Armstrong was cheating. Nobody wanted to hear that Lance was cheating – even if he was.
Fans and sponsors really don’t care how athletes win, just that they win. If athletes do something wrong fans pretty much just hope they don’t get caught. Just look at how fans overwhelming supported Armstrong for years. Or how football fans have overwhelming supported Patriots quarterback Tom Brady, and ridiculed the NFL’s commissioner Roger Goodall, over the Deflategate cheating charges and investigation. Fans support a winner, regardless how they win.
So, now we know performance enhancing drugs are endemic in professional sports. Why do we still make them against the rules? If they are common, should we be trying to change behavior, or change the rules?
Go back 150 years in sports and frequently the best were those born to upper middle class families. They had the luck to receive good, healthy food. They had time to actually practice. So when these athletes were able to be paid for their play, we called them professionals. As professionals we would not allow them to compete with the local amateurs. Nor could they compete in international competitions, such as the Olympics.
Jim Thorpe won 2 Olympic gold medals in 1912, received a ticker-tape Broadway parade for his performance and was considered “the greatest athlete of all time.” He was also stripped years later of his medals because it was determined he had been paid to play in a couple of professional baseball games. He was considered a cheater because he had the luxury of practicing, as a professional, while other Olympic athletes did not. Today we consider this preposterous, as professional athletes compete freely in the Olympics. But what really changed? Primarily the rules.
It is impossible to think that we will ever roll back the great rewards given to modern athletes. Too many people love their top athletes, and relish in seeing them earn superstar incomes. Too many people love to buy products these athletes endorse, and too many companies obtain brand advantage with those highly paid endorsements. In other words, the huge prize will never go away.
What is next? Genetic engineering, of course. The good geneticists will continue to figure out how to build stronger bodies, and their results will be out there for athletes to use. Splice a gorilla gene into a wrestler, or a gazelle gene into a long-distance runner. It’s not pure fantasy. This will likely be illegal. But, over time, won’t those gene-altering programs become as common to professional athletes as steroids and human growth hormone are today? Exactly when does anyone think performance enhancement will stop?
And if the drugs keep becoming better, and athletes have such a huge incentive to use them, how are we ever to think a line can be drawn — or ever enforced?
Thus, the effort to stop doping would appear, at best, Quixotic.
Instead, why not simply say that at the professional level, anything goes? No more testing. If you are a pro, you can do whatever you want to win. “It’s your life brother and sister,” the decision is up to you.
If you are an amateur then you will be subjected to intense testing, and you will be caught. Testing will go up dramatically, and you will be caught if you cross any line we draw. And banned from competition for life. If you want to go that extra mile, just go pro.
Of course, one could imagine that there could be 2 pro circuits. One that allows all performance enhancing drugs, and one that does not. But we all know that will fail. Like minor league competition, nobody really cares about the second stringers. Fans want to see real amateurs, often competing locally and reinforcing pride. And they like to see pros — the very best of the very best. And in this latter category, the fans consistently tell us via their support and dollars, they don’t really care how those folks made it to the top.
So a difficult ethical dilemma now confronts sports fans – and those who monitor athletics:
1 – Do we pretend doping doesn’t exist and keep lying about it, but realize what we’re doing is a sham and waste of time?
2 – Do we spend millions of dollars in an upgraded “war on drugs” that is surely going to fail (and who will pay for this increased vigilance, by the way?)
3 – Do we realize that with the incentives that exist today, we need to change the rules on doping? Allow it, educate about its use, but give up trying to stop it. Just like pros now compete in the Olympics, enhancement drugs would no longer be banned.
This one’s above my pay grade. What do you readers think?
by Adam Hartung | Oct 9, 2013 | Current Affairs, In the Rapids, Innovation, Lifecycle
In 1985 there was universal agreement that investors should
be heavily in pharmaceuticals.
Companies like Merck, Eli Lilly, Pfizer, Sanofi, Roche, Glaxo and Abbott
were touted as the surest route to high portfolio returns.
Today, not so much.
Merck, once a leader in antibiotics, is laying off 20% of
its staff. Half in R&D; the
lifeblood of future products and profits.
Lilly is undertaking
another round of 2013 cost cuts. Over
the last year about 100,000 jobs have been eliminated in big pharma companies,
which have implemented spin-outs and split-ups as well as RIFs.
What happened? In the old days pharma companies had to demonstrate
their drug worked; called product efficacy. It did not have to be better than existing drugs. If the drug worked, without big safety
issues, the company could launch it.
Then the business folks took over with ads, distribution,
salespeople and convention booths, convincing doctors to prescribe and us to
buy.
Big pharma companies grew into large, masterful consumer
products companies. Leadership’s view of the market changed, as it was
perceived safer to invest in Pepsi vs. Coke marketing tactics and sales warfare
to dominate a blockbuster category than product development. Think of the marketing cost in the
Celebrex vs. Vioxx war. Or Viagra
vs. Cialis.
But the market shifted when the FDA decided new drugs had to
be not only efficacious, they had to enhance the standard of care. New drugs actually had to prove better in clinical trials than existing
drugs. And often safer, too.
Hurrumph. Big pharma’s enormous scale advantages in
marketing and communication weren’t enough to assure new product success. It actually took new products. But that meant bigger R&D investments,
perceived as more risky, than the new consumer-oriented pharma companies could
tolerate. Shortly pipelines
thinned, generics emerged and much lower margins ensued.
In some disease areas, this evolution was disastrous for
patients. In antibiotics,
development of new drugs had halted.
Doctors repeatedly prescribed (some say overprescribed) the same antibiotics. As the bacteria evolved, infections
became more difficult to treat.
With no new antibiotics on the market the risk of death from
bacterial infections grew, leading to a national public health crisis. According to the Centers for Disease
Control (CDC) there are over 2 million cases of antibiotic resistant infections
annually. Today just one type of
resistant “staph infection,” known as MRSA, kills more people in the USA than
HIV/AIDs – killing more people every year than polio did at its peak. The most
difficult to treat pathogens (called ESKAPE) are the cause of 66% of hospital
infections.
And that led to an important market shift – via regulation
(Congress?!?!)
With help from the CDC and NIH, the Infectious Diseases
Society of America pushed through the GAIN (Generating Antibiotic Incentives
Now) Act (H.R. 2182.) This gave
creators of new antibiotics the opportunity for new, faster pathways through
clinical trials and review in order to expedite approvals and market launch.
Additionally new product market exclusivity was lengthened an additional 5
years (beyond the normal 5 years) to enhance investor returns.
Which allowed new game changers like Melinta Therapeutics
into the game.
Melinta (formerly Rib-X) was once considered a “biopharma science
company” with Nobel Prize-winning technology, but little hope of commercial
product launch. But now the large
unmet need is far clearer, the playing field has few to no large company
competitors, the commercialization process has been shortened and cheapened,
and the opportunity for extended returns is greater!
Venture firm Vatera Healthcare Partners, with a history of investing in game changers (especially transformational technology,) entered the picture as lead investor. Vatera's founder Michael Jaharis quickly hired Mary Szela, the former head of U.S.
Pharmaceuticals for Abbott (now Abbvie) as CEO. Her resume includes leading the growth of Humira, one of
the world’s largest pharma brands with multi-billion dollar annual sales.
Under her guidance Melinta has taken fast action to work
with the FDA on a much quicker clinical trials pathway of under 18 months for
commercializing delafloxacin. In layman’s
language, early trials of delafloxacin appeared to provide better performance
for a broad spectrum of resistant bacteria in skin infections. And as a one-dose oral (or IV)
application it could be a simpler, high quality solution for gonorrhea.
Melinta continues adding key management resources as it
seeks “breakthrough product” designation under GAIN from the FDA for its RX-04
product. RX-04 is an entirely
different scientific approach to infectious disease control, based on that previously
mentioned proprietary, Nobel-winning ribosome science. It’s a potential product category
game changer that could open the door for a pipeline of follow-on products.
Melinta is using GAIN to do something big pharma, with its
shrinking R&D and commercial staff, is unable to accomplish. Melinta is helping
redefine the rules for approving antibiotics, in order to push through new,
life-saving products.
The best news is that this game change is great for investors.
Those companies who understand the
trend (in this case, the urgent need for new antibiotics) and how the market
has shifted (GAIN,) are putting in place teams to leverage newly invented drugs
working with the FDA. Investment timelines and dollars are looking
far more manageable – and less risky.
Twenty-five years ago pharma looked like a big-company-only
market with little competition and huge returns for a handful of companies. But things changed. Now companies (like Melinta) with new
solutions have the opportunity to move much faster to prove efficacy and safety
– and save lives. They are the
game changers, and the ones more likely to provide not only solutions to the
market but high investor returns.
by Adam Hartung | Nov 5, 2012 | Defend & Extend, In the Swamp, Innovation, Lock-in, Science
Many people equate spending on R&D with investing in innovation. The logic goes that R&D spending is lab spending, and out of labs come innovations. Hence, those that spend a lot on R&D are innovative.
That is faulty logic.
This chart shows R&D spending from the top 20 companies in 2011:
Chart reproduced with permission of Business Insider
Think of your own list of companies that are providing innovations which change your work, or life. Would you include Apple? Amazon? Facebook? Google? Genentech? (Here's the link to Fast Company's 50 most innovative for 2012). Note that none of these companies appear on the list of top R&D spenders.
On the other hand, as you look at the big spender list some things might be apparent:
- Microsoft is #5, spending $9B and nearly 13% of revenue. Yet, for this money in 2012 the world received updates to their aging operating system and office automation software. Both of which failed to register favorable reviews by industry gurus, and are considered far from innovative. And Nokia, which is so floundering some consider it a likely bankruptcy candidate soon, is #7! Despite spending nearly $8B on R&D Nokia is now completely reliant on Microsoft if it is to even survive.
- Autos make up a big part of the group. Toyota, GM, Volkswagen, Honda and Daimler are all on the list, spending a whopping $36B. Yet, even though they give us improvements nobody considers them (especially GM) very innovative. That award would go to little Tesla Motors. Or maybe Tata Motors in India.
- Pharmaceuticals make up the dominant industry. Novartis, Roche, Pfizer, Merck, Johnson & Johnson, Sanofi, GlaxoSmithKline and AstraZeneca are all here – spending a cumulative $54B! Yet, they have all failed to give the world any incredible new drugs, all have profit struggles, and the industry is rife with discussions about weak product pipelines. The future of modern medicine increasingly is shifting to genetic solutions, biologics and more specific alternatives to the historical drug regimes from these aging pharma R&D programs.
Do you see the obvious pattern? Most big R&D spenders are not really seeking innovations. They are spending money on historical programs, following historical patterns and trying to defend and extend the historical business. In other words, they are spending vast sums attempting to sustain (or recapture) historical success. And, as the list shows, largely doing a pretty lousy job of it.
If you were given $10,000 to invest would you select these top 20 R&D spenders – or would you look for other, more innovative companies. From a profitability, rate of return and trend perspective, most of these companies look weak – or downright horrible.
Innovators don't focus on what they spend, but where they spend it.
The companies most known for innovation don't keep spending money year after year on their old business. Instead of digging deeper into what they already know, they invest laterally. They spend money putting the pieces together in new, unique ways. They try to find new solutions to old problems, using new – even fringe – technologies. They try to develop disruptive solutions that actually change the marketplace, rather than trying to make something that already exists better, faster or cheaper.
Lots of people like to think there is "scale" in research. Bigger is better. What's more important, for investors, is that there is "diminishing returns." The more you research an area the more you have to spend to find anything new. The costs keep escalating, as the gains shrink. After investing for a while, continuing to research an area is not a good investment (although it may be very intellectually interesting.)
Most of the companies on this list would be smarter to scrap their existing R&D programs, cut the budget in half (at least,) and then invest it somewhere very different. Instead of looking deeper, they need to look wider – broader. They need to investigate alternative solutions, rather than more of the same. They need to be putting more money on fringe opportunities, and a lot less into the core.
Until they do, few on this list are very good investment bets. You'll do better investing like, and in, the real innovators.
