Summary: Rebuilding the R&D Engine in Big Pharma

SUBMITTED BY: JA’AFAR G

ENGINEERING STRATEGY

DATE: 29/10/10

SUMMARY: REBUILDING THE R&D ENGINE IN BIG PHARMA

Historically, the pharmaceutical industry has been a leader in financial performance and value creation. In recent years however, its stock- market record has raised doubts about the sustainability of that history along with fundamental questions about the industry’s health.

The way to solve the productivity problem is to return power to the scientist by reorganizing R&D into small, highly focused groups headed by people who are leaders in their scientific fields and guide and inspire their teams to achieve greatness.

THE CRUX OF THE PROBLEM

The business model of big pharma is straightforward. New products are discovered, developed, launched, and protected by various patents. Patents expire and lower-priced generics come wiping out the revenue of blockbuster drugs in a matter of weeks. R&D most continually replaces older products with new ones to stop the revenue base shrinking. The problem is of course, is that doing this has proved increasingly difficult.

How can big pharma’s R&D problems be solved? Here are some ideas.

REDESIGN THE ORGANISATION

Pharmaceutical companies have maintained an organizational setup of a pyramid with functional silos all joining at the top. Breaking the obsolete organizational pyramid brings constellations of highly focused centers of excellence designed to improve transparency, increase the speed of decision making, and restore freedom of action to the scientist actually conducting the research.

IMPROVE THE QUALITY OF LEADERSHIP

The R&D process is grueling and discouraging. In such a difficult environment, inspiring and nurturing leaders who are also accomplished scientists is indispensable.

LAUNCH A CULTURAL REVOLUTION

R&D leaders must restore a sense of purpose to every project team, while requiring engagement, accountability, and transparency. Success must be celebrated and generously rewarded....