Creallaborations: Pharma Starts Thinking Outside the Pill Box
However, there are a few truly pioneering companies who are thinking outside of the (pill) bottle by initiating creative competitive collaborations, or what I term "creallaborations." Creallaborations can be defined as potential game-changing partnerships with non-pharmaceutical organizations that complement, enhance, or help a pharmaceutical company reshape its competitive landscape or achieve breakthrough results. These alliances confer unique competitive capabilities or advantages that the company could not obtain internally, through unique expertise in efficiencies, processes, relationships, or technologies.
The GlaxoSmithKline (GSK) partnership with the McLaren Group and the Teva-Proctor & Gamble joint venture are two recent examples which highlight the benefits of such creallaborations. With dramatically increasing competition and payer pressures, GSK realized that it could no longer depend solely on its traditional marketing prowess to gain competitive advantage. The company identified three new "winning market factors" essential to competing in the future: speed to market, market adaptability, and cost efficiencies. GSK then identified a potential partner which excelled in all three areas: the McLaren Group, a leading global Formula One racing car company. In September 2011, GSK CEO Andrew Witty announced a five-year partnership with McLaren to help GSK "innovate and rapidly respond to change and competitor activity...This partnership is another example of GSK looking outside its sector for inspiration and fresh perspectives on how we can achieve our strategic goals."
GSK plans to apply this powerful technology to significantly improve its global efficiency, productivity, and adaptability in supply chain management and clinical research. To help facilitate this knowledge and technology transfer, the two companies will jointly build and leverage the "McLaren GSK Centre for Applied Performance." The facility will train GSK employees to deliver world-class results across its 2,000 production lines in 80 global factories. In addition, the GSK nutritionals division will construct an all-new mission control facility at its London headquarters modeled after McLaren Racing's own Formula 1 race-strategy mission control center. The facility will help expedite management and decision-making for wholesaler stocking, inventory management, pricing, customer responses, and competitor activity. GSK will also evaluate how McLaren's system of in-car driver communications can be applied to modify and expedite clinical trials.
McLaren Group's Executive Chairman Rod Dennis summarized this approach by stating that "this all-new collaboration between McLaren Group and GSK—McLaren's first ever such association with a major pharmaceutical corporation—represents a strategic partnership that engages two great British companies at a variety of levels across a number of disciplines in a multi-faceted and ground-breaking way. Specifically, our intention is that GSK will harness McLaren's world-beating Formula-1 bred technology processes and operational dynamism, in order to enhance its performance across a wide variety of its divisions in a way that none of its competitors can match."
Teva taps the consumer world's biggest brander
To that end, Teva formed a global joint venture in November 2011, called PGT Healthcare with Proctor & Gamble (P&G), the world's recognized leader in product branding. The two companies will combine their two global over-the-counter (OTC) businesses with plans to build a $4 billion business leveraging P&G's strengths in consumer research and marketing, with Teva's experience and relationships with regulators and pharmacies. The joint venture will pool Teva's active pharmaceutical ingredients with P&G's recognized brands to create novel OTC products, such as new Vick's allergy relief combination products and line extensions.
Leaders of the two companies have publically emphasized PGT's competitive advantages, stating that their combined capabilities are "unmatched in the industry" with "one of the broadest and deepest OTC product portfolios and geographic footprints." However, Teva's primary underlying motive is to learn and apply P&G's best branding practices globally to its growing portfolio of branded generics and OTC products and, ultimately, its innovative products. "P&G has demonstrated it may be better than anyone...when it comes to branding, [which] increases the efficiency and the success," said Eli Shani, PGT's chief operational officer.
The five steps to creallaborations
These are only two high-profile examples of creallaborations being developed in the pharmaceutical industry. Pharmaceutical
companies seeking to enhance their competitive models and positions should adopt a five-step "Creallaboration Framework" for
creating innovative collaborations:
Pharmaceutical companies and professionals that recognize the importance of identifying and leveraging unique, first-in-class capabilities from other industries and partners will gain significant first-mover advantages, resulting in a much more competitive and timely business model.
Stan Bernard, MD, MBA, is President of Bernard Associates, LLC, a global pharmaceutical industry competition consulting firm. He can be
reached at SBernardMD@BernardAssociatesLLC.com
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