A critical makeover for pharmaceutical companies - how pharma can become fit for purpose
10 January 2017
Times are challenging for the pharmaceutical sector. Whether it be payers tightening up on costs, the pressure to adapt to and adopt new technologies, challenges to traditional pricing arrangements or the ever increasing regulatory maze, companies need to find new ways to organise themselves to ensure greater effectiveness.
In a new report by Strategy& we look at the silos that have operated within the industry and identify how these have adversely impacted patient outcomes and bred inefficiency and waste.
Organisations have traditionally separated R&D from commercial, production and the supply chain which, in turn, have been disconnected from the externally facing parts of the business where relationships with stakeholders are managed. To fix this we believe pharmaceutical companies should look at the shortcomings in their operating models and make changes in structure.
Our view is that an optimum operating model should have a ‘Critical Team’ composed of four sub-teams. These would gather knowledge, monitor issues and be core to strategy development. They focus on regulatory affairs, market access, government affairs and medical affairs. These teams would provide the cross-organisational threads which link together pivotal pharmaceutical functions that focus on evidence generation and management (R&D and pharmacovigilance); customer management (sales, marketing and key account management) and connected delivery (supply chain).
Most pharmaceutical companies have the ability to make this happen but few have taken these teams as far as they can go where they properly act as a bridge between all of the company’s key functions and are even represented at Board level.
Where this has been done, so far only in part, the impact is very real. One company we reviewed, which has taken up a version of this organisational transformation, now has a close-knit partnership with regulators and government agencies ensuring it is helping to directly craft healthcare policy. Another has ensured that the external landscape is better reflected in its discussions and decisions ultimately offering much better protection for a cornerstone brand.
To help organisations think about this proposal and even to develop this business model we have designed an online diagnostic assessment tool. This tool can be used to gauge an organisation’s current embrace of critical teams and their effectiveness. It provides an immediate snapshot of the company’s critical team capabilities and how they compare to the industry average as well as to industry top performers.
There are many difficult issues the industry is facing. Organising the business to best face up to these will be a key success factor in how well organisations handle the turmoil.
Critical teams can serve as a catalyst and oversight engine for better informed business decisions within R&D, commercial and supply chain. We think this will help steer a successful passage through the tricky times ahead.