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March 01, 2009 (Vol. 29, No. 5)

Pharma’s Ongoing Quest for R&D Innovation

Vision and Boldness Are Needed to Execute a Winning Strategy in the Near Future

  • Restructuring R&D

    For many years, the monolithic structure of most large pharmaceutical companies has been seen as the cause of the industry’s pipeline drought. To mirror the business models and underlying culture of their biotech counterparts, more and more pharmaceutical companies are restructuring R&D units as a means of fostering increased autonomy among research teams and to drive internal competition.

    These experiments have resulted in new R&D units as small as 60–80 people in some organizations. Additionally, early returns have shown a positive impact on collaboration between and energy among team members.

    In 2008, there was a growing recognition within the industry that the long-standing, fully integrated pharmaceutical company model (FIPCO), which covers the entire life-cycle of value creation from drug discovery to development and distribution, may no longer fit with the complex disease states being studied.

    With an increased emphasis on speed and efficiency, companies have embarked on partner-driven models, built on an intricate web of advisors, service firms, academic centers, and other third parties. These new models can shorten the development time for promising candidates and enable the importation of new creativity while allowing for shared risk and reduced costs.

  • Targeting Therapies

    Current economic realities have also led companies to abandon researching across multiple disease fronts. Instead companies are betting on select therapies considered to have high growth potential and pricing flexibility. To further align R&D efforts to patient needs and payor demands, some organizations are bringing their market-facing teams into the development process at the earliest stage to assess market need before investing additional time and resources in candidates.

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