Crisis, the opportunity

The current economic crisis is on everyone’s mind, even though the healthcare sector seems to be weathering the storm relatively well. After all, our individual and collective health concerns are neither better nor worse because the financial systems of the world are falling apart. Yet It would be delusional indeed to believe that the economic crisis is the most prominent force driving the restructuring of manufacturers of pharmaceuticals, biologics and medical devices. Likewise, it would be shortsighted to believe that any restructuring can succeed if it is limited to a change in the organizational chart.

Historically, major restructuring occurs for corporate financial reasons, and is geared toward improving company productivity. Yet restructuring results in major stress to the company as a whole and to each employee. When faced with stress, it is normal human behavior to seek reassurance by adhering to well-known, seemingly “proven processes”. But these “proven processes” were developed based on an existing structure of personnel and organization that restructuring destroys.  Holding fast to such “proven processes” is not the logical path to increased output, maintained quality, and a true increase in productivity, as the required resources are no longer in place.

“Holding fast” results inevitably in overwhelmed staff and structures, for the same processes must be performed with fewer internal resources. As long as the products under development are really worth the effort, cutting down the pipeline is not an option. On the other hand, developing new processes takes time, which is generally not in abundance during restructuring efforts.

One common solution is an increased reliance on outsourcing. In this context, outsourcing has many faces. Former employees who were just “let go” are re-hired as independent consultants to perform their previous tasks. Established experts are engaged to assume the duties defined in the pre-established standard operating procedures, supplementing the remaining workforce. Also, entire functions (such as data management) are farmed out to companies that replicate established standard workflows. However, none of these approaches fosters true change.

This type of restructuring, which is aimed at reducing headcount and related personnel costs is not conducive to challenging existing processes and procedures. Nor does it help drive the productivity of the functional teams (which include in-house and outsourced personnel), even though the company’s in-house productivity may seem improved. Furthermore, the reliance on an outsourced work force while still using traditional (and therefore emotionally comfortable) processes increases the complexity of project management, and decreases the effectiveness of the company’s core employees.

Outsourcing can be critical, however, as it actually buys the time that is needed to free the in-house personnel and the organization and give them a fighting chance at truly evolving. Yet, once outsourcing has taken place, the opportunity is seldom provided to actually re-think or re-engineer the processes that are critical to the rapid development of successful products.
The opportunity is clear, however. Processes should be challenged and refined concepts, systems and procedures developed. True restructuring is necessary for many reasons, and none are critically related to the current economic crisis. “True restructuring” means assessing with an open mind what advanced work processes and supporting technologies offer, and determining how these can be integrated into a seamless workflow. The profile and contributions of key personnel should be analyzed, with the ultimate goal of improving the performance of new functional teams while reducing time to product release.

Because our work is performed by humans and for humans, a solid grasp of the underlying intent and purpose of pharmaceutical development, and the mindset necessary to succeed at it, is critical to focusing teams around the proper processes. Furthermore, the acknowledgement and proper placement of each team member’s strengths and attitude within the team is critical to success, as is the unconditional leadership that company management should provide regarding the true purpose of internal structural change, and the expected performance standards that are required to fill in the gaps created by lay-offs.

Under these conditions, restructuring should be an ongoing process, aimed at continuously improving the company’s quality, speed and cost-effectiveness. Critical elements should include:

• A core philosophy that is clearly supported by the company leadership and embedded in the corporate culture;
• Product-focused teams empowered to enact process changes;
• An “open-to-the-world” attitude, which should lead to hiring outside experts to help shape and optimize change;
• Support functions (such as IT, finance and HR) clearly assigned to facilitate the implementation of the required changes;
• Open and flexible information systems that truly empower users and give them the freedom to succeed.

Each of these elements is critical, starting with “quality” as a guiding principle. Quality Systems and Standard Operating Procedures (SOPs) should translate, in operational terms, a core corporate philosophy that clearly defines what “quality” means for the company, to give the term “quality” a less technical yet more powerful dimension. As a company focuses on the development of new products for the medical community, a few key indicators must come to mind. Is the product relevant to its intended market? Within this context, is its labeling properly focused? Is there strong, convincing data in support of the labeling, in particular for safety and effectiveness? Is there a compelling health economic case in support of reimbursement? Are there clear plans to expanding the labeling over the life of the product? Do these plans translate into meaningful business objectives? Are these objectives clinically relevant? Is the development plan streamlined and seamless? Are key milestones properly defined? Each question points to the “quality” aspect of various issues which have immediate practical relevance to the business. Quality Systems and SOPs are far down the line from such high level thought processes.

To enact this kind of approach, the clear, unconditional support of corporate management is essential, and this applies regardless of the company’s size. Yet top management tends to be distracted by business issues and the return to shareholders.  The core business is left to operational units, which are well rated as long as they deliver according to plan. Where is the incentive to challenge existing processes? Based on observation made over many years in this business, it seems that company culture directly depends on the leadership of very few top executives. If these executives only care for the execution of plans designed to minimize immediate business risk, there is very little chance that anything really new will be conceived of and developed. Indeed, there is no visibility for heroes at the staff level, no incentive for personnel, and too much risk for would-be heroes who attempt to initiate new processes to end up as martyrs.

One way to support change is for top management to clearly empower product development teams. Effective teams need to have the confidence that they can actually enact their decisions. In parallel, effective teams must also be accountable. Mistakes will be made. Effective teams stick together in front of adversity, analyze the issues, see the opportunity, develop a solution, ensure that it is a lesson really learned, implement changes and move on. Development teams that are truly enabled to develop and enact solutions will also have the means to implement the solutions without a serious impact on the project time line, which is far more critical than short term budgets.

Team empowerment is only one key ingredient. Faced with the challenge of a new corporate paradigm, product development teams must look to the outside world for reference. Thinking “outside the box” works to a degree, if it goes beyond re-inventing wheels and re-enacting someone else’s experience. Rather than start from scratch, it is much more efficacious to bring in experience from the outside and review, integrate and build on this new material. Too often teams evolve slowly through experiments that others have already tried. This is an area where consulting experts can bring great value. Indeed, by trade such experts work with multiple companies and across multiple product lines and geographic boundaries. Therefore they are well placed to bring in fresh ideas that have been fine-tuned through real-life experiences across a wide-range of products and scenarios. This broad experience provides a sound basis for design processes and systems that are optimized for the specific environments of companies, and which have a forward-looking approach to global development processes.

As important as unrestricted corporate endorsement and outside knowledge are, development teams also need support that is dedicated to enhancing performance. Legal and finance departments should execute key documents promptly, without any need for oversight to keep a time line. IT and related groups (e.g., data management, data standards) likewise should realize that their purpose is to enable product development teams and foster excellence and seamless processes, not to force fit cumbersome standards and processes at the expense of true performance and ultimately, quality. The same idea applies to Human Resources, which can be of great help in training, developing and retaining genuine talents as well as building solid integrated teams.

Along these lines, information systems that are also truly integrated and allow for the seamless collaboration of all contributors to the development of the product, from study-specific research sites to global safety groups and regulatory, are much needed. There is no obvious reason for duplicate data to be entered multiple times for as many needs, when technology allows for integration and automatic management of many issues across departments and teams. Examples of this include adverse event management and reporting, document management, finance management, and any project and study management tasks. Such integrated systems exist at least to a degree and are thankfully evolving rapidly.

Following these points, corporate restructuring will be viewed as an opportunity to streamline processes and optimize growth, reflecting the restructuring of the global economy itself. It is through this type of positive forward thinking that individual companies and our industry as a whole will emerge from the current financial crisis stronger and more effective at combating the world’s diseases.

For further discussion, please contact us at info@anabase.com.