Down, but not out
For Life Sciences companies facing a major regulatory action such as a warning letter, or full Consent Decree, business as
usual is about to change significantly. The most visible impact of a CD can be seen on a company's bottom line, and the financial
costs span the entire value chain. Adding together the most common financial costs such as surrender of profits, independent
oversight fees, recalled/destroyed product, facility and labor overhead due to suspended operations, and lost sales, the price
of a CD can easily exceed $1B for larger companies.
In addition to direct financial impact, other areas of the business may be affected just as significantly, but in less immediate
ways. The black cloud of a CD hangs heavily, and can push decision-making toward conservatism, risk avoidance, bureaucracy
and micromanagement. Company morale, retention and recruitment can suffer as a result of a CD, leaching talent to competitors.
It's always challenging to manage a company during a time of extraordinary change and upheaval. But companies that create
and follow a strategic plan that anticipates a day when the storm clouds lift have a better chance of getting there. In summary,
and in our experience, companies are most successful when they:
» Create a "Consent Decree First" culture and environment
» Are thoughtful and deliberate, because the Consent Decree is a marathon, not a sprint; the company is in the Consent Decree
business for the long haul and should be managed with that reality in mind
» Manage regulatory bodies effectively with realistic project plans that can be exceeded without major additional effort;
project plans should not be reviewed and approved solely by business owners and compliance experts, but by the most senior
leaders in the company ( i.e., they should not be developed in a vacuum by regulatory or quality executives)
» Select effective leadership and organizational structure and align with the "Consent Decree First" culture
» Develop planning capabilities, processes and tools tailored towards the new reality
» Evaluate the impact to the core business, including the repercussions for customers and patients, and develop a clear strategy
to mitigate negative outcomes through realistic timelines and ramp-up production schedules
By addressing these needs your company can mitigate the near-term disruptions caused by a CD and eventually emerge as a stronger,
more compliant and quality conscious company well positioned for long-term success. The key is to develop realistic plans
and commitments, accept the situation for what it is and make the best of a very challenging environment.
Joe Slota, Director, firstname.lastname@example.org
, Marcos Buelvas, Senior manager, email@example.com
; Sanjay Behl, Principal, firstname.lastname@example.org
; Greg Page, Specialist leader, email@example.com
; Chris Larsen, Senior manager, firstname.lastname@example.org
, all of Deloitte Consulting LLP.
This publication contains general information only and Deloitte is not, by means of this publication, rendering accounting,
business, financial, investment, legal, tax, or other professional advice or services.