The Science of Second Chances: Turning Setbacks into Medical Discoveries

This research explores how pharmaceutical companies turn failed drug development projects into successful treatments. While failure is common in innovation, not all persistence leads to breakthroughs—some efforts waste time and resources. Drawing on cognitive theories of scientific reasoning, the study introduces a framework that differentiates between persisting in gathering additional evidence and reformulating new hypotheses. Empirical analysis of pharmaceutical firms’ drug-development projects reveals that merely accumulating more evidence after a failure often reinforces existing misconceptions, leading to premature abandonment of promising technologies.  Instead, companies succeed when they constantly reformulate their portfolio of alternative hypotheses.