There is a spectrum of whether a company is 100% focused on discovering, developing, and marketing ethical pharmaceuticals, biotechnology biologicals, medical devices, or diagnostic products or whether it is extensively diversified into other related businesses (e.g., chemicals, pet products, nutritionals, agricultural products). The position of a research-oriented pharmaceutical company on this spectrum should be clearly defined, as well as any changes in its future direction. One often hears of research-based companies that decide to become more diversified, more focused on their core pharmaceutical business or to remain “on course.” This information should be communicated widely within the organization. During the 1970s, many pharmaceutical companies diversified into various other businesses. Some of these businesses were unrelated to pharmaceuticals. During the late 1980s, it was apparent that many companies were divesting some (or all) of these other nonpharmaceutical businesses and had decided to focus primarily or solely on discovering, developing, and marketing drugs.

The correct position for a specific company on this spectrum depends primarily on its history, financial status, pipeline of new products, and management philosophy. Despite these caveats, there are many reasons to believe that most pharmaceutical companies should become (or remain) more focused rather than more diversified in the future. It is apparent that when the genomics revolution truly comes to widespread fruition, there will be many major significant drug discovery opportunities.

Another spectrum along which companies vary is the amount of their risk-taking behavior. The degree of risk taking that senior managers are comfortable with will undoubtedly influence which specific businesses they enter.

When a company is presented with a new opportunity, which is a frequent occurrence, one of the essential questions to ask is whether or not the opportunity fits the business model at this time. Will this help focus our core direction and activities or not? Depending on the specific opportunity, there will be hundreds of other questions to ask. If the opportunity is a possible license, many of these questions are mentioned in Chapter 106; if the opportunity is a possible merger or acquisition, many of these questions are mentioned in Chapter 27.

If senior managers pull the company in different directions, they make it more difficult for the company to move forward. The staff receive different messages about important topics and find it difficult (or almost impossible) to work cooperatively with other company staff.

Senior managers should not micromanage their areas of responsibility but should delegate as much decision-making responsibility as is reasonable based on the competence and trustworthiness of their staff. A manager who delegates work and responsibilities appropriately and another manager who acts as a dictator not only will have problems working together, but also many of their staff will have the same problem.

The degree to which the company is centralized or decentralized and the ways in which decisions are made should be clear to the most senior managers and communicated to others in a variety of ways. Changes in the management style along the centralized-decentralized spectrum should be communicated clearly to all senior managers as early as possible. Of the various organizational models described in Chapter 18, the author believes that the centralized collaborative model is the best one to use in almost all multinational companies.

Many types of standards are used in drug discovery, development, manufacturing, and marketing. Even for a single standard (e.g., designing a clinical trial protocol), a company uses different types at different times (e.g., the standards used to design a pivotal trial of a major new drug differ from standards used in a Phase 2 dose-ranging trial or a Phase 4 marketing study). It is important for a company to know how and when to use each type of standard.

Just as with standards, there are many types of strategies. It is imperative to create and periodically review such strategies at all company levels (e.g., board of directors, overall function level, department level) if drugs are to be discovered, developed, and marketed successfully. Marketing strategies must focus on achieving effective communication with physicians who generate prescriptions for the company’s products, and not merely on conducting a broad promotional approach to all physicians. Research strategies must focus on achieving information that provides competitive advantages in a variety of different ways and allocates the company’s resources in numerous important areas.

Many fads and fashions in management are always being trumpeted by consultants and others as the best way to achieve one’s goals. Two examples include Theory Q and management by walking around. Most of these popular fashions should be avoided as corporate policies, unless they directly fit what the company is doing or is planning to do. Of course, some individual managers may use them effectively. There are also management fashions that are prevalent during most of one or more decades. For example, operations research was prevalent in the 1940s, systems analysis in the 1950s, strategic planning in the 1960s and 1970s, and Japanese management quality control in the 1980s.

The trend in recent years is to have as flat an organizational structure as possible. This approach eliminates unnecessary layers of management, improves access of staff to more senior managers, and speeds decision making. This approach also eliminates some or many peripheral service groups that are often not truly needed. Increasing the number of ancillary staff to facilitate drug development and the efficiency of professionals will help, but only up to a certain size. The author has seen companies in which
there were so many ancillary staff to assist professionals that it became inefficient. Productivity is not merely a question of providing help for professionals. In fact, many of the most productive companies have relatively few staff to help busy and focused professionals.

There is a balance for a company to seek between focusing on too few and too many projects. If termination of any single project would raise a major problem for the company, then there are probably too few projects in the portfolio. If there are insufficient resources to advance each project at a satisfactory rate, then there are probably too many projects in the portfolio.

In addition to the number of projects, portfolios must also be balanced in the number of therapeutic areas studied. The most critical factor, however, is to focus on projects of high medical value that also have moderate or high commercial value.

A focused (and balanced) portfolio means that:

Presentations about the company, its products, and its plans are made to stockholders, stock analysts, physicians, academic scientists, community civic leaders, politicians, business leaders, and lay medical groups. These presentations are necessary in order to maintain a positive relationship with all constituencies that interact with the company. These are generally valuable opportunities to promote the company. Before such presentations are made, the media experts within the company should discuss the specific presentations and messages to be delivered by all speakers representing the company. Even privately owned companies cannot ignore building strong relationships with these audiences.

Another type of approach to people and groups outside the company is the way in which business is conducted. Appropriate standard operating principles and business principles should be followed strictly (e.g., the active drug substance should not be shipped from one company to another for further formulation or testing until a formal contract is signed). Shipping drugs based on the anticipation that a contract will be signed may cause various complex and unnecessary problems to arise.

Companies must be clear about which markets they are in and which ones are outside their corporate comfort zone. Areas of strength and weakness should be identified. Within the group of strengths, the company must decide on the current and future importance of each market to the organization and the efforts that the company should exert to retain its current position or to establish a stronger one. Within the group of weak markets, the company must decide whether it wants to build it to an area of strength, maintain it at current level, or diminish its importance.

Create a one-, three-, and five-year plan to hopefully ensure appropriate company growth. Review the results of progress each year against the preceding year’s plans, and update these plans annually. A balance must be found between creating rigid plans and creating totally loose and flexible ones.

Although it is difficult and time consuming to build an image, it is easy to tear one down. A company’s image is important both internally and externally for the following reasons:

An external group of consultants or a market research firm could readily determine strengths and weaknesses of a company’s image by interviewing important thought leaders and policy makers across the nation. Based on the results, the company could create a plan to improve or retain those traits that it believes are of particular importance.

A company that wishes to assess its status on the numerous parameters discussed in this chapter could form one or more professional groups to conduct this exercise. The more experienced the in-house staff is in applying the methodologies and approaches to be used in the evaluation, the less need they have to enlist external help. If they need supplemental help, then one or two experienced consultants from a business school might be suitable to act as facilitators for the evaluation process.

Hiring a large outside organization to perform this entire evaluation is usually unnecessary because evaluating these areas requires an intimate and detailed knowledge of the company and it would require an inordinate amount of education by company staff to have outside consultants fully understand the issues, the
organization, and the people. Moreover, having company people run this exercise increases the likelihood of their acceptance of the results and increases the chance that others in the company will accept the results as well.

Ensure that the company does not evaluate opportunities and make decisions by only considering the extremes (e.g., a very lean or very fat development plan for a new drug). Using the metaphor of vehicles, one can get from point A to point B with an ox cart or a Ferrari, but there are many other possibilities as well. For example, a lean clinical plan may be accompanied by a fat manufacturing and controls plan.

Overall, for a company to focus its efforts means that it is prepared to work in selected therapeutic areas and on specific certain diseases to develop those drugs with high commercial and/or medical value. The company’s resources should be placed on developing the most appropriate opportunities, even though different managers in a company will interpret that directive differently.

Three examples are given of the methods and approaches used for completing milestones in developing drugs by three different R and D directors.