If I Ran Pfizer - Pharmaceutical Executive


If I Ran Pfizer
The industry is at a crossroads, and all eyes are on the world's largest drug maker. When Pfizer leads, others follow. So we asked: If you had that sort of influence, how would you steer Big Pharma?

Pharmaceutical Executive

Kevin Hrusovsky, CEO, Caliper
Companies also won't have as much scale per experimental set. Since the size of the patient population for today's therapeutics is getting smaller, there needs to be new ways to efficiently run these trials. We also need to get much better at creating tests that are much more predictive of the human. There's been a lot of excitement over in vitro testing because the costs are so low and throughput is so high. We need to do in vitro better, and we need to bring throughput to the in vivo model. Iink Pfizer's plan takes reasonable steps to deal with some of these industry issues. Particularly, the firm's intention to continue to invest significantly in R&D, reduce internal manufacturing, and improve the focus and efficiency of its marketing efforts should help realign the firm to better address current industry challenges."

Impact Output

To reduce costs, large organizations can do two things. First, they can rationalize the scope of the disease areas that they go after. That certainly helps to cut costs because you stop activities in those areas that you choose not to be in. The second thing you need to do is to rationalize your operating model, and really figure out what is core to R&D and what's not core. For the things that are not core, you need to find someone else to do it better, faster, cheaper. We think there's an opportunity for removing five-to-eight percent of the overall R&D costs.

Arjun Bedi, partner, Accenture
On the output side, companies should look externally more aggressively, broadening that external funnel almost two-or-three-fold. You have to change your organizational model to accommodate the fact that a lot of your innovation is coming from the outside versus the present model, where 90 percent or more is sourced internally. Companies can also focus their efforts on shifting the attrition curve. Finally, pharma must inject operational discipline into the R&D process.

Resist Shareholder Pressure

One of the things I've seen pretty consistently over the last 10-15 years is that pipelines seem to be driven by short-term vision. That view leads to things like mergers and acquisitions in the hopes that the combined pipeline will be stronger than the individual pipelines. The problem is that the combined R&D capabilities aren't any better. On top of that, once these mergers occur, it takes between one and two years to integrate the early-stage discovery functions.

If I were running Pfizer—or a top-five pharmaceutical company—I'd resist the shareholder pressure to try to address my near-term pipeline issues and instead try to create a more realistic strategy for a 10-year plan to generate medium-stage pipeline products by emphasizing internal R&D.

Ken Carter, CEO Avalon Pharmaceuticals
Large companies also have trouble being innovative because it takes longer to communicate internally. So one of my beliefs is that the more efficiently large companies can interface with small entrepreneurial companies, the better it is for the long-term prospects of the pipeline.

Rethink, Resize

It's always hard to tell whether a cutback is just a cutback or a deep, rational rethinking of the right model. And I think the industry needs to move more in the direction of rethinking the model.

Gary Pisano, professor, Harvard Business School
Certainly on the R&D side, there's a lot that has to change. I think innovation matters at the end of the day. I think the model that doesn't work is when companies say, we're not terribly innovative but we can win this game through brute sales and marketing. Ultimately the winners in this business long-term are the ones who can be really effective at research and development. Unfortunately, it's certainly not a thing that you can do overnight. So in the meantime, you have to resize yourself. And I think that's part of what you're seeing at Pfizer.

The traditional approach is having armies of detail people calling on doctors and trying to convince them to prescribe. That's an expensive way to sell. Sales points are also changing; it's more about getting the managed care organization to accept the drug—the payer is the customer. That requires fewer sales people.


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