Managing the tension between patent expiry and the politics associated with government funding and reimbursement is creating a complex challenge for the pharmaceutical industry.
A clear advantage can be won by investing power in the Chief Information Officer (CIO). The right sort of IT leader will simplify time-consuming processes, encourage collaboration and help build and maintain competitive advantage, for the long term.
The big challenges facing big pharma include:
Changing product. Generating revenue on drugs ‘off patent’ has become increasingly difficult to achieve. Replacing revenues from previous blockbuster drugs, particularly with generics on the market at a 10th of the price, is also causing concern. The solution seems to lie in greater diversification, specifically around collaboration with bio-technology companies and the producers of the generics.
Efficacy. We see evidence of big pharmaceuticals striking early deals with government in an attempt to agree a price point for drugs whilst they are still in the development phase. By locking governments down they can then charge more on an ‘efficacy’ basis.
Cost versus innovation. The whole Life Sciences sector is becoming more cost conscious, yet progressive organizations are still willing to embrace more lateral thinking to increase market share. Nowhere is this in better evidence than at GlaxoSmithKline.
Their new CEO, Andrew Witty, is open-minded to different ways of doing business. He is committed to discarding organizational principals which fail to add value, replacing them with innovations and concepts that encourage greater external collaboration. As a result, the business feels progressive and well-equipped to tackle the prevailing challenges.
Why has it been so hard to innovate in the past? Attempted industrialization of the R&D process of what is essentially an academic approach based on focused and disciplined research.
Cultural mis-match – biotech environments provide the right cultural atmosphere to attract maverick talents. Large corporates often suppress these traits and reward conformity.
How can IT leaders make a difference?
Information is now traveling across organizations globally, breaking down silos and enabling IT leaders to assist the business make better-informed decisions.
More than anyone else in the organization, CIOs are aware of the interdependency of common data that each function needs to operate as a united enterprise. By providing a cohesive business process roadmap and data flow, CIOs can stimulate debate in both innovation and cost reduction. IT leaders can increase automation on the manufacturing and supply side with greater systems standardization and process uniformity, ultimately reducing the cost of sale and speed to market.
Can IT step up to the plate?
While process simplification and systems standardization remain high on the CIO’s to-do list, driving organizational and behavioral change must take priority. This means paying attention to:
- Reputation. IT can still be viewed as a reactive function, unresponsive to the pace of business change. It needs to show that its function is aligned to business priorities, and that it is responsive to business change.
- Language and leadership. One of the biggest complaints business leaders have of CIOs is that they still rely on a different communication set. They often choose to use technology as a linguistic tool rather than spread messages of innovation and business transformation. CIOs need to be hybrid leaders who are able to combine a deep-rooted understanding of business principles with exceptional leadership and process/technology understanding.
- Talent. IT functions may lack fresh talent as they seek comfort in the familiar and operate in the past. Home-grown IT talent in pharma seems to leave and move into sectors which offer better challenges and proximity to business leaders.
We believe that CIO functions in pharmaceutical companies would benefit from an injection of new leadership from sectors which focus on consumer markets and commercial activity. Such leaders are experienced in responding quickly to changes in the marketplace, and know how to work across the organization.