"The single message that must resonate with our biopharma clients is that their world is changing, in three fundamental ways. First, the center of economic gravity is slowly shifting toward emerging markets, and away from the US; second, a revolution in technology applications is carving a new competitive landscape in health, where information is no longer a source of power because everyone has it, and where consumers across borders have many new and very accessible options in how they use the media; third, government and the public sector are increasingly prominent as a 'client' of the industry, accentuating the importance of reputation and integrity in preserving the industry's license to operate."
The current fiscal/debt crisis is replacing the complacency with awareness of the need to change. WPP finds that biopharma companies are under significant pressure to be more efficient, by better managing their cost exposures, while accommodating payers with proof points around effectiveness and value. According to Sorrell, the warning signs for ignoring these forces are evident. "If you look at sales for the top 10 biopharma companies for the first half of 2011, only those with a strong focus on generic drugs were able to generate real growth over the previous year; the traditional innovation-based companies actually posted a decline."WPP has adjusted its own business platform to address this need, offering a more integrated set of services that, when appropriate, can be leveraged globally; and by counseling its biopharma clients on the emergence of the "self-preservation society," founded on the idea that in an era where resources are constrained, quality and sustainability trump quantity and price in communicating the value of a brand to providers and consumers.
Sorrell notes that delivering value depends on successfully navigating what appears to be a contradiction: building scale and reach while preventing silos and the bureaucracy that are a byproduct of size. "This is a critical issue for me as CEO, because when we started WPP 26 years ago it was just me and one other person, in one room. Today, our network of colleagues extends to more than 153,000 people (including associates) in 107 countries," says Sorrell. "I don't agree that bigness is always bad—in fact, done right it's a source of competitive advantage. Hence my single most important task as CEO is to get all these people at WPP to face in the same direction."
"To do that, the ingredient that counts most is trust, and cultivating trust begins with me. This is something I can handle, as what I have observed over the years is that the biggest obstacle to trust comes from the most senior people who report to me. A negative attitude from them—which I summarize as ego, turf, and territoriality—really filters down in the organization, so I concentrate on managing this cohort, rather than further down in the reporting chain."
Externally, biopharma has no choice but to hone the value message so that the public has a firmer understanding of what industry stands for. "The industry just isn't there yet in getting a good set of points across in a way that the average person will understand. The proof is in the balance—the incredible record of innovation that has created hundreds of new therapies that save or extend lives. By and large, industry gets no compensating credit for this. What the industry really stands for is the question on nearly everyone's mind these days," Sorrell tells Pharm Exec. "It needs to be answered."
Looking ahead, Sorrell sees external cost pressures on industry continuing to grow. Europe and Japan will slow considerably over the next five years, while prospects in the big emerging markets cannot be assumed to be golden. "Underestimate the resiliency of the US market at your peril, even though the easy pickups in that market are gone and growth looks to be slowing again." In this climate of austerity, Sorrell says it is vital for every organization to operate as a seamless team. His greatest priority at WPP is to ensure there is cooperation everywhere, from the Pacific Rim to Latin America. "The power of good organization is liberating, effective, and efficient—it delivers results." – William Looney