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Erooms Law is a metaphor that compares other business processes to the virtuous circle of Moore’s Law. It is literally Moore’s Law in reverse. Industries have developed processes that are getting ever more expensive. Once could consider that is inversely proportional to the way semiconductor manufacture reduced the relative cost of computing power over time.
Some see this as a potential opportunity for the use of computing in a sector to reduce costs. As with most circumstances, what seems like a great idea inside an Excel spreadsheet doesn’t work out in the real world. But that doesn’t stop the management consultants, investment bankers or venture capitalists from trying.
Eroom’s Law and the pharmaceutical industry
The poster child for Erooms Law cited would be the biotechnology and pharmaceutical industry developing new drugs.
Here’s how Nature Reviews Drug Discovery put it:
Eroom’s Law indicates that powerful forces have outweighed scientific, technical and managerial improvements over the past 60 years, and/or that some of the improvements have been less ‘improving’ than commonly thought. The more positive anyone is about the past several decades of progress, the more negative they should be about the strength of countervailing forces. If someone is optimistic about the prospects for R&D today, they presumably believe the countervailing forces — whatever they are — are starting to abate, or that there has been a sudden and unprecedented acceleration in scientific, technological or managerial progress that will soon become visible in new drug approvals.
You could argue that the defence industry would also fall into this, despite the benefits of technology. (The origins of the semiconductor industry lie in the development of missiles during the cold war. Integrated circuit technology is more robust and lighter than discrete transistors or vacuum tube based systems).
Other areas were Erooms Law is prevalent include fintech or financial technology and the automotive sector, where massive assumptions are made about the rate of innovation in battery technology based on Moore’s Law rather than the rather prosaic improvements in materials science that underpin existing battery chemistry.
Diagnosing the decline in pharmaceutical R&D efficiency | Nature Reviews Drug Discovery (paywall)
Eroom’s Law | In the Pipeline | Science magazine
EROOM’s Law of Pharma R & D | buildingpharmabrands
More posts on the pharmaceutical industry on this blog.