A Revolutionary Paradigm Shift in Big Pharma's Organisational Development

A paradigm is the conceptual framework upon which we build our world; it is built upon past experiences; if we are not willing to make shifts in our paradigms, we will remain stagnate in our growth; a paradigm shift is a change from one way of thinking to another; it is something that does not happen like self generation it is driven by change.

Culture change is not simply about how we see others and ourselves. It is about how the system works, i.e. how we do the work together, rather than how we work together. The paradigm shift is to understand how to act on the organisation as a system.

The most critical thing to understand about a paradigm is that, in a paradigm shift, everything goes back to zero. What does that mean? It means that whatever made us successful in the old paradigm may not even be necessary in the new paradigm.

We have seen pharma industries changing their business models to collaborative networks (http://www.pharma-iq.com/logistics/articles/where-have-all-the-experts-gone-long-time-passing/); we have seen the catch 22 of  M&A and downsizing (http://www.pharma-iq.com/logistics/columns/when-change-management-is-about-big-pharma-disrupt/), and we have seen outsourcing as general panacea for pharma cost cutting (http://www.pharma-iq.com/regulatory-legal/articles/pharmaceutical-outsourcing-where-do-you-draw-the-l/).

What Has Changed? Everything – 2012 Portrays Big Pharma’s Future Scenario

Governments around the world are grappling to arrive at solutions for health account deficits. Political pressures have increased during the economic crisis.

Personalised medicine means changing drug portfolios from primary care driven blockbusters towards specialties, where the medical need is so high that regulators are more ready to accept the prices. Evidence of the value that medicines bring to healthcare systems will be required to achieve access and funding in both developed and emerging markets. 

However, changing portfolios to address the changing pharma landscape is not enough; the pipelines are dry and R&D costs continue to skyrocket - the new paradigm is not about portfolios. Broadly, to raise innovation returns back to the level that prevailed in the era of blockbusters, pharma companies need transformational change.

Index:The Hidden Cost of M&A; R&D Models; Commercial Approach; “The Core of the Paradigm Shift -The Virtual Model and Continuous Manufacturing”; Regulations

The Hidden Cost of M&A

Overcoming post-merger integration issues is a non-trivial task. There is a hidden potential cost of billions of dollars that is not seen on any P&L statement – M&A slow down the ability of organisations to execute because it takes years for companies to fully develop a combined culture, and sometimes it  does not even happen at all.

Furthermore, the growth of organisations will end up in more complex structures and processes that, over time, become a drag on the quality and speed of decision-making.

R&D Models

Some companies are moving to downsize their R&D operations and diversify into market sectors that are less R&D intensive. 

Not only has the pharmaceutical industry gone through an acute phase of cost cuttingand downsizing but many pharmaceutical companies are now aggressively working to change their company's behavioral culture and R&D operations. Companies need to make strategically important commitments to new R&D models, which may be experimental models right now but have the potential to be new growth engines.

Commercial Approach

Go-to-market capabilities are very necessary for a new commercial approach.

Pharmaceutical companies relied (over the past two decades) on a sales/marketing approach that was aimed at prescribers in the world’ largest markets— Europe, U.S. and Japan.

However, going forward implies  not just more significant cuts in traditional resources, but a focus on building distinctive new capabilities because  the Emerging markets are forecast to make up 30% of the global pharmaceutical market by 2015, and they have very different healthcare models for marketing authorisation, pricing, reimbursement and distribution.

The core of the paradigm shift in Pharma’s organisational development: the virtual Model and Continuous Manufacturing

The virtual model- The popular phrase for outsourcing drug discovery nowadays is “virtual.”

Virtual pharmaceutical/biotech companies are knowledge-based organisations with a core management team, contracting out nearly all of the services they need for drug discovery, development, manufacturing, and marketing. In this way, a virtual company can reduce its fixed costs to around 25% compared to the 75% of a standard company.

The virtual R&D drug development model allows for a high degree of flexibility in being able to respond rapidly to threats and opportunities. In addition, it allows for a small group of individuals to work on a larger number of projects simultaneously.

Dismantling the functional staffing model and replace it with a more flexible human resource model is a viable answer allowing managing costs by limiting full-time employees, reducing fixed assets and clamping down on overheads.

Continuous Manufacturing

Continuous manufacturing has been the norm in almost all manufacturing industriesbut in pharma, the profits coming from the established blockbuster discovery model have covered manufacturing inefficiency. However, the pressure on all parts of the pharmaceutical value chain has increased and, like any other department, manufacturing has to improve its outcome, reducing time, waste, and cost.

As manufacturing models embrace process analytical technology, big pharma has to reassess the way it produces drugs.

Only then big pharma can shake off the outdated model of batch processing and enter a new era of drug production. The switchover to continuous is without question more cost-effective than batch manufacturing.

The big challenge is the organisation of a new type of facility, which goes hand in hand with the investment in the complete new form of production equipment.

Novartis is currently finalising a lab-scale pilot facility, called 'Technikum', where only a few months ago MIT scientists produced one of the company's drugs in a continuous way for the first time ever.

Regulations on Continuous Manufacturing:

EMEA has issued a new guideline on process validation “Continuous Process Verification (CPV) is an alternative approach to traditional process validation in which manufacturing process performance is continuously monitored and evaluated (ICH Q8).(http://www.ema.europa.eu/docs/en_GB/document_library/Scientific_guideline/2012/04/WC500125399.pdf)

FDA

“The regulatory definitions of “batch” and “lot” do not present hurdles for implementing continuous manufacturing, FDA is stressing in highlighting the potential the new processing approaches offer to advance the objectives of its 21st Century quality initiative. The adaptability of the batch/lot concerns in the GMPs to continuous manufacturing (CM) has been addressed in key presentations given at recent public forums by Center for Drug Evaluation and Research (CDER) officials Christine Moore and Francis Godwin.” (http://www.ipqpubs.com/news/continuous-manufacturing-does-not-present-regulatory-hurdles-fda-experts-say/)

http://www.pharma-iq.com/logistics/articles/a-revolutionary-paradigm-shift-in-big-pharma-s-or/

 

The Paradox of Paradigm

The Paradox of Paradigm

Paradox is a statement that seems self-contradictory but expresses possible truth. Also it can be something that is contrary to popular opinion.

 Paradigm is something that serves as a model or a pattern.  It can be a set of assumptions, concepts, values, and practices that constitutes a way of viewing reality for the community that shares them, especially in an intellectual discipline.

Thomas Kuhn (1922-1996),wrote a ground breaking book, “The Structure of Scientific Revolutions”, in which he describes a paradigm as a box in which normal science places all its beliefs, commitments,  until a better paradigm emerges. A paradigm shift is when a new breed of extraordinary scientists choose to jump into that newer, better box.

Later, Stephen Covey (1990) wrote about the paradigm shift in the business context.

A paradigm is the conceptual framework upon which we build our world; it is built upon past experiences; if we are not willing to make shifts in our paradigms, we will remain stagnate in our growth; a paradigm shift is a change from one way of thinking to another; it is something that does not happen like self generation it is driven by change.

We could say it is another name for Change, but a paradigm shift goes much deeper, it is about combining change with the challenging of existing assumptions and innovation.

Leaders of cultures recognize that their traditional paradigm is out of date, and perhaps this leads them to assume that a 'paradigm-shift' program will provide the remedy. Culture change is not simply about how you see yourself and others. It is about how the system works, i.e. how we do the work together, rather than how we work together. The paradigm shift is to understand how to act on the organization as a system.

 However, initiatives which threaten the current operating culture are typically resisted to extinction, and many initiatives simply bear no relation to the economic performance of the organization.

The most critical thing to understand about a paradigm is that, in a paradigm shift, everything goes back to zero. What does that mean? It means that whatever made you successful in the old paradigm may not even be necessary in the new paradigm.

And here comes the paradox: The paradox is that changing a culture starts with different thinking about the work.

There are two interesting paradoxes: the decision theory paradox and an Economics paradox:

Abilene paradox: People can make decisions based not on what they actually want to do, but on what they think that other people want to do, with the result that everybody decides to do something that nobody really want to do, but only what they thought that everybody else wanted to do.

Allais paradox: A change in a possible outcome, which is shared by different alternatives, affects people's choices among those alternatives; in contradiction with expected utility theory (utility is a measure of relative satisfaction).

Before shifting paradigms we should see that business in general is filled with instances of paradox.

If it would improve performance to do the work differently, how does it mean we should behave? Focusing on behavior without embedding it in a work context creates an entirely new pathology - people try to play a new game.

By contrast, focusing on how we work, anchors improvement in things that are real, and opens the door to working on culture, in a way which has relevance and, more importantly, is palpably relevant.

This new global world surrounds us with paradox. In order for companies to master paradox they must first identify the opportunity it contains.

Some major businesses are developing an e-commerce in order to sell direct, cut costs and eliminate the small businesses. Yet, small businesses represent a very lucrative, high profit margin market for those businesses.

Another paradox is the question “Should you hire the best people?” Sometimes hiring the best people could be your downfall (another paradox).

 It all depends on the situation and how you define "best." Should you focus or diversify?” Both, actually (another paradox), diversification can lead to situations where managers ignore the other business lines and pursue their own goals at the expense of company growth as a whole.

 Is paradox the new paradigm?

 Will future business success depend on the ability of managers and leaders to embrace paradox? Will they succeed holding in their minds two contradictory ideas, each of which can be applied when necessary?

By embracing paradox, managers will lose the half-truth thinking that ignores the context so pertinent to business decisions. These seeming paradoxes often exist, in the first place, only because we try to apply business rules across all contexts.

 It is natural that business bears the same tension that pervades everything else in our lives. Economies and ecosystems are filled with examples of competing goals and conflicting ideas that somehow work themselves out to create balance and, in many cases, an optimal situation.

Only when we have understood the paradoxes of business, can we propose a paradigm shift: changing focus could be the key to getting exactly what we were so focused on to begin with.

Cristina Falcão