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Increasingly Risky Research

Wed, 09/05/2012 - 4:07pm
Tim Studt, Editorial Director

Every research manager knows that most research projects are fraught with risk. But, with today's high-performance computer modeling, simulation, analytical and technological proficiency capabilities, there are times when to fail in a research endeavor is now considered unacceptable. The oft-times massive investments now required for large-scale research endeavors can cause equally massive losses when those projects, products or processes fail to meet design goals. But in many cases, the easy to design and develop products, like new pharmaceuticals or state-of-the-art aerodynamic vehicles, were developed years ago, so the products being designed now are increasingly complex, sophisticated and more difficult to quantify. Currently designed products need to go faster, higher, be stronger and last longer, all the while having significantly fewer negative side effects on people, the environment and the pocketbook.

In the drug discovery and development arena, many pharmaceutical companies are taking a hard financial look at their development portfolios. Many high-risk (from a profit standpoint) drug development programs are being curtailed. Even development of orphan drugs—agents developed specifically for treating rare medical conditions, generally afflicting fewer than 200,000 people in the U.S.—with their enhanced patent protection, relaxed clinical testing requirements and tax incentives are still not attractive enough to get commercial support.

In the aerospace arena, a recent developmental test failure of the U.S. Air Force's X-51A unmanned hypersonic Waverider demonstrator vehicle had some critics calling for a cessation of activities for additional testing. The X-51A is testing the ability to develop a Mach 6 vehicle. Two of the three tests to date have been deemed failures. The fourth and final vehicle in question has already been built by airframe contractor Boeing and ramjet engine developer Pratt & Whitney Rocketdyne.

There are numerous high-risk questionable aerospace programs that always seem to push the envelope for performance and economic profitability. Analysts continue to question when the development of the Airbus's A380 jumbo jet will reach a point where sales will balance off the original development costs. The return on investment (ROI) is now expected to be well in excess of the originally expected 10 years, possibly even 20 years or more.

ROI on R&D efforts is increasingly becoming an accepted policy by industrial organizations, with more than 50% of U.S. firms now using some form of ROI in their review of R&D priorities, compared to just 15% of companies less than 10 years ago, according to annual surveys performed by the editors of Advantage Business Media.There are also additional risks that are now assessed against the development of new products and processes, ever since the 9/11 terrorist attacks on the New York City World Trade Centers and the U.S. Pentagon headquarters in Washington, D.C. The construction of new chemical plants, for example, now need to incorporate the risks of terrorist attacks along with the risk of industrial accidents and environmental emissions and their potential effects on the safety of the surrounding communities. One expensive industrial accident or terrorist attack could forever wipe out any chance of a positive ROI on the development and construction of a new chemical plant. Additionally, increasing regulations on emissions, waste creation and water increase the costs, risks and chances of making a profit in these ventures.

It's not like these situations have never occurred. The accidental release of toxic gases in the Bhopal disaster of 1984 left thousands dead. And the EPA estimates that there are currently about 500 chemical facilities within the U.S. that each put 100,000 or more people at risk due to an industrial accident in the communities surrounding the sites. There are also several significantly sized explosions or other industrial accidents at petrochemical refineries every year in the U.S.

It would be naïve for lab managers to consider that risks have been eliminated due to the more sophisticated design capabilities that are now available. Risks are still there, they've just changed in both concept and in their configurations. But, just because there are new, more expensive risks, scientists, engineers and lab managers should not stop pursuing their development plans. “Safe” development programs rarely make a profit.

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