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Change Management

Fewer excuses, more courage

  • Thursday, 10. March 2022
Fewer excuses, more courage
© plainpicture/Lubitz + Dorner

The pharmaceutical industry must reorganize its market development. Yet the changes due are prevented by the same argument: Government regulation and compliance rules do not allow transformation. However, forward-thinking leaders across the industry need to know that even if formal structures seem inflexible, they can still change a lot.

Change is hard. Everyone who has ever started a diet or resolved to exercise more, learn a foreign language in their free time, spend more time with the family or read a lot more articles (like this one) on strategy and the future of their profession knows that.

Companies do not like change either, even if concepts such as transformation or even revolution are among the most popular words in management circles. But at the same time, executives at every level of a company find a lot of explanations why change might be theoretically desirable but not now, why there are just too many hurdles to overcome, or why it might be a clever idea to not do anything after all.

Thicket of external and internal life science regulations suffocating change initiatives

The customary lethargy of people and their organizations is not the only hurdle in the life science industry. There are also specific problems. The industry is heavily regulated, has tight and well-established compliance regulations, and a general culture of caution. For example, the question of which department may communicate and interact in what way with other stakeholders in the medical system is precisely prescribed. This thicket of external and internal regulations suffocates change initiatives in market development. And it is also quite often used as a pretext: We would like to change, but we are not allowed to.

Unfortunately, however, the sector needs to change dramatically. Everyone knows that. And everyone can recite the major challenges off by heart: increasing cost pressures on the entire healthcare system; ever keener competition; multiple evidence generation; collaboration with academia and the medical profession now center stage; and new treatment options like gene therapies requiring complex interactions between different healthcare stakeholders (e.g. laboratories, office-based practitioners, highly specialized medical centers, and many more). Precisely for this reason, such new therapies are increasingly difficult to implement and market. To make matters worse, pharmaceutical companies are having increasing problems reaching practitioners in hospitals and offices via physical field staffers.

How to put the customer at the center

All the parties involved actually agree on the solution. In the future, pharmaceutical companies will need to take a much more strategic approach to market development. They can no longer just throw a product and some shiny PowerPoints onto the market, but will need to put the customer at the center of their activities. Unfortunately, pharmaceutical companies have a variety of customers: the medical profession, of course, but also hospital managers, health insurers, and health authority employees. They need a much better understanding of all the economic, organizational, and micropolitical processes associated with exercising new therapeutic options. And they need to influence these processes, inspire new ones, and in certain cases, pre-imagine and design them themselves.

This is exactly where the trouble starts. To really put customers at the center, a pharmaceutical company would need to bring together the know-how from all its functions, use this information basis to craft an integrated strategy, and implement it with the help of its employees’ external networks. But unfortunately, pharmaceutical companies consist of countless silos with highly specialized expertise. To give just one example: Sales talks to many medical practitioners but is only allowed to comment on approved therapies. Medical, on the other hand, can comment on off-label use and will therefore engage in deeper conversations, but prefers to speak with key opinion leaders rather than ordinary doctors. Market Access, on the other hand, knows the perspective of health insurers, but not that of practitioners. There is far too little communication, shared thinking, and joint working between these functions. So why not grind down these silos to enable change?

Extreme division of labor not imposed by legislation

In a very simplified and exaggerated way, the answer put forward by the pharmaceutical sector sounds like this: To varying degrees in different jurisdictions, legislation prohibits advertising, bribery, and undue influence on practitioners. We have therefore had to give ourselves so many compliance rules, which now prevents cross-functional collaboration.

Of course, this explanation has some truth in it – just like every good excuse. But if you look more closely, you realize that the extreme division of labor in the pharmaceutical industry is not imposed by legislation but is actually the complex outcome of a whole series of historical processes. They include a company’s internal interpretation of legal requirements, which could also have been understood quite differently. Path dependencies and inherent dynamics also play their part and cause a company’s departments to drift further and further apart. Another crucial factor in recent years has been the increasing impact of compliance. People in the pharma market say that there was more room for creative and innovative solutions during the Covid-19 pandemic. Now it is largely over, compliance rules are being interpreted more strictly than ever.

Pharmaceutical companies could integrate their strategy work

The good news is that precisely because pharmaceutical companies have imposed many restrictions on themselves, they can also remove them. While remaining compliant with existing legislation, pharmaceutical companies could completely reorganize the division of labor between Medical, Sales and Market Access. Admittedly, that would be a big step. But even if the operational side is to be kept separate, strategy work could at least be integrated. An arena could be created where a pharmaceutical company’s entire market know-how is brought together and integrated, and where the various local market rationalities can be mapped. A place where productive tensions arise, and a common strategy can be developed and conducted.

Also, pharmaceutical companies could change the way they communicate with medical practitioners by simply placing more medical affairs staffers in the field. Since Medical is allowed to talk about more topics with physicians, this would lead to more precise information about how practitioners really feel about current and potential therapies, and would also strengthen the networks between industry and practitioners.

Generally speaking, leaders need to talk more to their own outward-facing employees. These are the people who are directly involved with market changes, the every-day experts in the minor changes. For these internal conversations to succeed, leaders need to create an open space for their employees to talk frankly about their problems, but also their workarounds. Then leaders can examine whether and how their company should support these solutions. In some cases, they can even become the starting point for fully scaled initiatives that will redefine the way pharma companies do business.

It is hard to change things. And even more reason to get to work now.

To join the discussion on change management in life science companies‚ go to:

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Re:organize for markets in Life Sciences