Learn why pharmaceutical companies are moving away from their traditional operation models towards Agile Pharma structures and how this is impacting their performance.
Pharmaceuticals is known as a heavily regulated and specialized industry. The strict quality requirements and processes, combined with long and cost-intensive drug development processes, might sound utterly incompatible with the Agile methodologies and principles. Nevertheless, Agile in Pharma is on the rise.
Many pharmaceuticals, health services, and medical device companies have recognized that the new dynamic market conditions call for a change in their operations models. Challenges like increased complexity in the customer landscape and micro-targeted research with lower ROI potential are forcing companies to search for new ways to increase speed to market, lower development costs, and increase overall operational efficiency.
Further on, the lack of a direct relationship with their patients has left pharmaceuticals with one blind eye, relying on clinical data and staying unaware of the customers` expectations and needs. To successfully overcome this and other constraints, the Pharma players are turning to Agile practices. The goal is to support an operational evolution favoring experimentation, customer focus, and collaboration.
Many pharmaceutical companies seek to transform their R&D departments into a source of competitive advantage. To accelerate their development times, some introduce daily progress discussions. Others transfer a big part of the decision making to the team meetings to shorten approval chains and eliminate progress blockers. Combining these approaches and extending Agile working to more than a dozen departments, in one year, a pharmaceutical company was able to double its R&D capacity without adding new resources.
New R&D models, like "Virtualized R&D," are also on the rise. With virtualized R&D, Pharma companies can access specific expertise while also minimizing the buildup of infrastructure through collaboration with external partners. In the extreme case, the complete lab or clinical work is executed externally.
Diversifying their portfolios through more external collaborations and accelerating the drug-development process makes rapid decision-making a critical success factor. Another agile approach supporting pharma companies to keep up with the industry's new pace is the cross-functional team structure. Breaking the rigid silos and forming cross-functional working groups increases organizational agility, transparency, and employee engagement. Further on, the smaller groups are more flexible to iterate faster and accelerate their overall operational efficiency.
By remodeling the distribution of brand responsibilities, one global Pharma company (reported by Boston consulting group) managed to reduce the time it takes to create and implement a brand strategy from more than two years to 90 days. Before introducing the changes, three teams with over 40 members for each brand were responsible for the brand strategy. The cross-functional set-up reduced the team size to 8-12 members. To further accelerate the process and get to the results mentioned above, the cross-functional squads started working with MVPs and initiated business planning and budgeting changes.
To cover the blind spot on the customer side, some pharmaceutical companies are launching customer-collaboration initiatives with patients and physicians. Working with those stakeholder groups, they create prototypes for “beyond the pill” solutions and more customer-centric launch strategies. Through the collaboration, the companies gather new insights and launch continuous improvement initiatives for their products, going beyond R&D.
Implementing Agile practices in pharmaceutical companies comes with many challenges. Being a research-intensive industry, many of the staff tend to be highly specialized and used to sequential and rigid ways of working. The overall company culture also focuses on stability, pre-defined work, and strong process orientation.
This can lead to resistance or disorientation when Ðgile is first implemented in the company. Creating dedicated initiatives that stimulating a cultural shift towards experimentation and cross-divisional collaboration can help minimize the risk of resistance. For example, Pfizer has managed to develop a culture of experimentation through a “Dare to Try” program - a mix between tools, training, and a network of supporters. This comes to show that Agile in Pharma goes beyond merely introducing daily stand-up meetings and MVPs. It requires a general mind-shift, more openness to change, and flexibility in the way of working.
Defining a cross-functional team may tend to sound like an easy task. However, for the team to deliver up to the expectations, it must be "fit for purpose." Who must be on the team and who does not have to be included is a strategic decision that will define the newly formed group's overall effectiveness.
Further on, implementing the different Agile practices requires a redesign of processes from beginning to end. Which processes should be redesigned may vary from company to company. However, the focus should be on minimizing hand-offs to ensure a smooth flow of work, incorporating input from internal and external stakeholders, and creating MVPs to collect feedback early in the process.
A best practice that can help create a stable workflow and enhance communication during the Agile implementation is to visualize the work and the company's different workflows. In Agile, a widespread toll for work visualization is the Kanban board. Having a visual overview of the processes helps better understand your operations and quickly identify weak spots.
Initiating an Agile transformation needs more than knowing and implementing the Agile practices that have worked in other industries. McKinsey has identified several critical factors for a successful Agile transformation in pharmaceutical companies:
Photo credits: McKinsey
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Agility is defined as an organization's ability to effectively satisfy its target market through rapid experimentation and timely course adjustment. In the pharmaceutical industry, this would translate into shorter development cycles, more external collaboration with partners and key stakeholders, and faster reallocation of resources to reduce time to market.
To accelerate innovation, shorten time-to-market and increase operational efficiency, pharmaceutical companies are adopting Agile practices, leading to significant changes in the way they operate:
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