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Pharmaceutical headshift

The pharmaceutical landscape is changing. Large multinational organisations such as Pfizer, Novo Nordisk and AstraZeneca, have typically focused on aggresive sales strategies; making their way methodically around the Doctoral community of every hospital.  In light of recent economic and regulatory developments their approach is beginning to change. Over the coming years we are more likely to see more of a focus on outcomes rather than sales tactics. This is one of many developments shaking up this industry.

For these behemoth organisations to effectively implement an effective headshift within their business model, a fresh approach to strategy and operations is required. A number of large pharma’s such as AstraZeneca and Pfizer have a preference for acquisitions. AstraZeneca has taken over 15 smaller organisation between 2000 and today, and Pfizer 49. Whilst they have both been disbanding poor performing units, the majority are kept under the multinationals’ umbrella.

Souce: jostchemical.com

Souce: jostchemical.com

Through this acquisition strategy AstraZeneca has kept its earnings strong, and only recently has been seeing signs of a slow down, primarily fueled by concerns over the sustainability of the company’s drug pipeline. Despite this, commentators still support the acquisition strategy. Are they missing the point though? There are fundamental forces at work in the pharmaceutical industry that this approach does not appear to solve.

Pharmaceutical organisations are hindered by enormous investments in research and development. Does heavy R&D investment mean higher returns? Possibly not. It’s more likely to be about how you do it, rather than how much you do it. With the wrong environment, culture, and structure to facilitate rich innovation, pharmaceutical organisations will continue to drag their heels and make these risky investments. Yes they will still make money. And yes they may still produce the occasional wonder drug. But will they really add the value they need to continue improving health outcomes for us all and balance this with positive returns?


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