Pharma Reform

Unless it supports a strategic corporate “vision”, building  “critical mass” is costly, leads to organizational, and operational inefficiencies, and in most cases, satisfies relatively short lived objectives.  The dramatic ramp up of R & D infrastructures and the now infamous “sales arms race” of the pharmaceutical industry are good examples of how critical mass thinking can lead to implied superiority by virtue of size but in reality masks misdirected strategic imperative, diminished productivity, and marginal operational performance.

So why is critical mass rationale so frequently used to support increased investment (think marketing or R & D budgets), organizational growth (think sales force), and operational expansion (think facilities and information systems)?

Because it is easy to execute (you write a check) and seems logical in the context of large and complex business environments.  It is also a costly, but easy way to try and create a competitive advantage.  More importantly, it makes executives and managers feel like they are doing something…growing the organization.  Over the past several decades, with the healthy cash troves of pharmaceutical companies, the seemingly logical way to grow revenues was to throw more money at whatever problem you had or opportunity you might have thought you could exploit.  This was the case whether it was in marketing,  sales,  or R & D.  More would always be better and often was proposed as “necessary”.

And don’t forget the ego- boosting “bragging rights” to the “biggest sales force”, “largest R & D team” , most R & D projects in the pipeline”, “biggest facility in the world”, “most employees”, etc.

Unfortunately, more, bigger, and larger are not always better.  In the next post we’ll discuss the foundation for making good “critical mass” decisions.

mike@pharmareform.com