Just Because The Pharmaceutical Industry is the most frequent user of competitive intelligence (CI), it doesn't mean it is
the most effective. In fact, a survey of senior executives at large US corporations, across industries, shows that despite
the millions of dollars pharma spends, only one company—Johnson & Johnson—ranks among the top-10 companies that make the best
use of CI.
In many ways, that has to do with the way pharma thinks about collecting intelligence. Most executives use CI to compile competitor
newsletters, profiles, and other static deliverables to understand what actions their competitors have recently taken. But
there's no strategic advantage in that. To succeed, pharma execs need to anticipate threats and opportunities before they
occur. At their very core, CI functions need to be designed to deliver predictive, actionable intelligence that minimizes
surprise—not just reports recent competitor actions. Indeed, when establishing Lilly's CI function, former Lilly CEO Randall
Tobias called it the "department of surprise avoidance."
In the past several years, a small number of pharma companies have taken steps to use CI more proactively. Rather than just
monitoring competitor actions, these companies' CI units work to anticipate new threats and opportunities, to develop preemptive
strategies for launching or defending products, and to help build the overall competitive awareness of their organizations.
This article examines a few trailblazing companies, and offers some advice on how to use competitive intelligence more effectively.
Eli Lilly: External Awareness
Lilly established its CI team in 1998 to serve the highest levels of the organization and to advise top executives about longer-term
threats and opportunities. Company executives were very supportive of the unit because the need for better intelligence was
apparent: The industry was changing rapidly and the level of competition had increased dramatically. These executives—some
of whom had been intelligence users in the US government—understood the benefits that top decision-makers gain from knowing
about emerging threats as soon as possible. In fact, running a large pharmaceutical corporation without an effective CI capability,
says Lilly's head of competitive intelligence, Jerry Hoffmann, is tantamount to "making your key decisions with one eye closed."
As Lilly's intelligence effort developed, its focus broadened beyond the top executive suite. Today, the company's CI team
provides more support at the business-unit level, delivering intelligence to the leaders of those groups and others, while
acting as advisors and training referents to teams within the organization. This is a trend not only at Lilly, but also at
other companies with well-developed intelligence efforts, within and outside of the pharmaceutical industry.
According to Hoffmann, Lilly's CI effort has contributed significantly to a company-wide initiative to become more externally
aware. CI teams are often called upon to facilitate initiatives that require their unique perspective, from scenario-planning
projects to war-gaming exercises and competitor-response modeling.
The use of CI at Lilly not only leverages internal expertise and resources, it also helps build a competitive culture at the
company. The belief is that this culture will further reduce risk by encouraging the development of good CI prior to every
significant decision. To date, the company has seen pervasive growth in the use of CI. The corporate strategy group regularly
requests CI in support of long-term planning efforts, recognizing that competitors' actions can change the future business
environment just as other outside forces can. Marketing groups use CI to understand everything from how competing companies
will address big-picture issues like the Medicare prescription drug benefit to how a single competitor will evolve its product
positioning. On the other hand, R&D is increasingly reliant on CI to help reduce the risks, thereby lowering the costs of
discovery and development.
Strategy Game Planning
3M Pharmaceuticals: Incorporating Intelligence