Last month, the industry kicked off 2015 with the 33rd Annual JP Morgan Life Sciences Conference in San Francisco.  In our opinion, there is no international calendar event that rivals it for attracting execs from leading companies, entrepreneurs, investors, bankers, VCs and PE firms alike.  We all assemble to renew industry relationships, refresh our industry perspective, share ideas, and learn new things. Who could have foreseen that Genentech’s IPO would herald a new age of biology, biotech innovation, advances significantly helping patients, and a population of biotech billionaires in less than a generation? Reconvening each year enables us to reflect on our impact as well as the fortunes gained (and lost) since last we met, learn which predictions came true (and which did not), and discover who the emerging leaders are as ever shortening cycles of innovation and new product development ambush market incumbents.

What became clear at this year’s gathering is that biopharma is polishing breakthroughs across many disciplines: neuroscience; immuno-oncology (CAR-T); cell and gene therapy; gene editing; and addressing disease with new found success, including orphan diseases, Alzheimer’s disease, and drug-resistant infectious diseases.  One source credited 2014 with more than 900 M&A and IPO events for private companies in life sciences with a value exceeding $109B, and 167 exits for VC-backed healthcare businesses. By any account that’s a big year.

And then there’s the topic of new venture funding. According to analysts at PWC, NVCA, and Thomson Reuters, new venture biotech funding reached $5.96B in 2014, the largest in 20 years — with $2B of that occurring in the fourth quarter. People are placing big bets in life sciences once again it seems. Our Apple iPhone 6s and Samsung Galaxy 4s chronicled our daily activity (Doug averages 15,000 steps) as we raced from meeting to meeting.

As usual, our confirmation bias was in full motion. We spent most of our time talking about our winners, burying our losers, celebrating the unique diversity of our community and its prospects for incredible net growth, and hoping our insights and hard work will lead us to be the winners everyone talks about at next year’s conference.

It was truly energizing to see many in our global network, attend interesting sessions, crystalize new ideas, and make plans to catch up in more detail in the near future—the great dividend earned for participating in a vibrant marketplace. Of course, as heady and valuable as all that industry interaction is, we’ve found that some of the greatest learnings and insights accrue from post-event reflection.

In other words, “Wait, not so fast.”

Our industry, like most, is intent on focusing on the one shiny side of the coin (success), but the other side (failure) plays a role every bit as important. As a sanity check, we recommend everyone review the November New York Times piece by Adam Davidson, “Welcome to the Failure Age!” In this engaging article chronicling innovation from the industrial revolution forward, Davidson acknowledges the uncomfortable reality that success and innovation are unavoidably tied with failure.  He cites the Silicon Valley used equipment consolidator, Weird Stuff, as an illustration of this truth; the company recycles and resells materials from both successful and failed startups.

The life sciences industry is not exempt from this phenomenon. When products do make it out of the lab, as chronicled in the record 40+ FDA pharmaceutical approvals in 2014, they often fail expectations at market introduction, or as soon as a better product comes along.  When products do win, they often create broad failure among the competition. New technologies, such as DNA sequencing, genomics, data analytics, 3Dprinting, robotics, and digital medical records, make it easier and faster to displace the latest product introduction, leading to even more failure. So, as paradoxical as it may sound, the faster we succeed, the more failure we are bound to create as well. Our innovation economy depends on it.

Traditional pharma industry market leaders have seen steep declines in product development productivity because speed in innovation matters more than ever. We’re finding that corporate core competencies in the innovation that underpins growth now primarily reside in external networks — the seedlings are growing quickly everywhere, and big companies find themselves in the role of buying what they missed.

All this to say that we think 2015 promises to be a very interesting year for those capable of resilience in facing the vicissitudes of the innovation economy.  But first, we’re going to celebrate the efforts of some of the failures out there by visiting Weird Stuff to do some discount shopping.