Change in the Pharma Industry
One of the most interesting industries that I have been involved with is the pharmaceutical industry. It is constantly evolving in the face of internal and external challenges which are described below. If you were the head of a pharma firm, how would you deal with these problems?
Three major issues that confront the industry: the rise of generic products, the difficulty in finding new treatments, and the large amount of spending on sales and marketing.
The first challenge is that in most countries, a drug company has a 17 to 20 year period when its product is protected by patent. However, this period does not start when the drug comes on the market, because patents are filed during the research phase. On average, a patented drug is on the market for around 12 years before the patent expires and generic competition arrives. Once the drugs have come off patent, their market share and price premium are significantly reduced, because the generic alternative is less expensive.
Second, there is a general feeling that all the ‘low hanging fruit’ of disease have been picked. The industry relies on blockbusters, which are drugs that bring in annual revenues of $1 billion or more. Evidence suggests that it is getting increasingly difficult – and more expensive – for companies to find new treatments. This has led to a significant change in the basic approach to research. Companies are moving from chemistry-based therapies to biology-based therapies, but since the major pharmaceutical companies tend to lack expertise in this area, they are either buying or forming partnerships with either smaller, more specialised outfits or are forming partnerships with larger drug companies.
The third challenge for all major pharmaceutical companies is that they spend a great deal on sales and marketing. Pharmaceutical companies position themselves as research-oriented organizations. In fact, the actual amount that they spend on research and development is less than the amount they spend on sales and marketing.
Language and Organizational Change
In my work, I often comment on the importance of communication for organizational change management. This insight is based on both practical experience and research. Here is an extract from an article I wrote about language and organizational change.
Theorists started to study the relationship between language and organization in the 1980s, when language began to be understood not simply as a mechanism of communication, but rather as a fundamental aspect of organization and organising.
Language-in-use is often referred to as discourse. In its narrowest and most traditional definition, discourse refers only to spoken dialogue. A fuller understanding of discourse, however, includes both speech acts and written texts. The most radical view is that organization exists only through language, leading to views of organization as text, or as narrative, or as constituted in discourse.
It has been shown that there is great value in looking at discourse during change processes. Language, in the form of conversations, stories and rumours, is a significant factor in the way change is conceptualised. The way in which organizational members negotiate meaning in the change process is through discursive practices and textual objects. Indeed, coherent language use can play a significant role in the outcome of change initiatives. One study of the introduction of new technology on the London Insurance Market demonstrates that there are fragmented and competing discourses within an organization. Consequently, competition between groups takes place through discourse.
Conversation is one of the most common forms of communication in the workplace. Studies of managerial activities have shown that managers spend a large part of their time in carrying out oral communications. The act of conversation and the content of conversation produce action, which indicates why conversations can play an important part in a change process.
Stories play a significant role in the creation and maintenance of meaning in organizations and hence in the development and maintenance of organizational culture. The informal nature of storytelling does not mean that it is not important. It has been shown, for example, that the use of stories enables change to take place, as when an executive’s storytelling enabled him to convince colleagues to move in new direction.
Discourse – communication – is a mechanism through which change happens, and it should therefore be considered in an investigation of change processes.
Managers and consultants should also pay attention to language when leading and managing change processes.
Change management books
Just in time for Christmas – here are some books which I have found to be useful for change management in several ways.
Images of Organization by Gareth Morgan shows how the ways in which we view organizations and the metaphors we use affect how we manage. The other books contain a range of insights into the organization change process.
Caldwell’s work (Agency and Change) is more theoretical. It looks at how the tension between agency and structure to investigate how people as change agents can affect the way change initiatives in their organization progress.
Understanding Organizational Change by Dawson is aimed at MBA students. Nevertheless, it should be read by people in organizations because of the way it emphasises taking a view of change at all levels of the organiztion.
Finally, the Handbuch Change-Management has been written by some prominent German experts. It provides a comprehensive view of change and change management.
The Contexts of Organizational Change
Organizations do not exist in a vacuum. The model of organizational change that I developed specifically takes account of what I call the external context. This includes – but is not limited to – developments that directly affect the financial aspects of business.
As the outer context changes, my model suggests that this then has an affect on any change processes that are taking place in an organization. The Euro is now losingvalue against the dollar.
Let’s assume that your organization is going through some change initiatives that require money (and they all do). How are you going to manage that? Will you change the scope of the change? Carry on anyway? One thing is certain – the change you began with will not be the same change that you end with.
Copenhagen: The Real Organizational Change Environment
The Copenhagen Climate Change Conference is coming up.
Organizational change takes place within a change context, which includes what is happening in the broader economic, political and social context. This is the outer context, and is the environment in which the organization operates. This is what people usually think about when they talk about organizational change.
But part of the business environment is the real environment – the air we breathe, the water we drink.
Responsible organizations should already be undergoing organizational changes to improve their environmental record. One of their challenges is to go through these changes without weakening their competitive position. Careful change management is obviously essential.
Some organizations view EU and national government plans as being too radical and as a threat to competitiveness. These companies need to get their priorities straight, though. The concept of stakeholders should help these companies to understand that their organizational changes should include changes to help the environment: we are all stakeholders in the environment.
Corporate Blogging
An interesting article in manager-magazin (in German) about corporate blogging – Corporate Blogging: Kommunikation 2.0
During all kinds of change initiative it is important to keep staff members informed at all times. They should be told before the change starts why the change is happening at that particular time. Then while the change process is unfolding, they ought to be kept up to date with the progress of the change. Tell them what challenges are being encountered, and how these are being addressed.
Then when the change process is over, let them know how the goals of the change are being met. And if they are not being met, say what you’re going to do about it.
Unexpected or unplanned change?
Usually organizational change deals with planned change. But change management can also involve unexpected change. This article discusses what can happen when the owner of a Mittelstand company gets sick, is injured, or even dies: ‘Notfallplan – Wenn der Chef ausfällt’ :: Management Impulse
Organizations should have contingency plans in place, so that an unexpected change is not an unplanned change. It’s far easier to have successful change management with a planned change. All companies should plan for the unexpected, so that an unexpected change is actually a planned change.
Introduction
This is a blog where I will be posting thoughts, pieces of information, and whatever else might be of interest for people interested in organizational change.
I will be paying particular attention to things that are relevant to the fact that I work and live in Berlin. This means that some of the articles and links that I post will be in German.
I’ll be posting two or three times a week. You can have an RSS feed to learn of new posts – see the link on the right of the page.
-
Handelsblatt- Ölpreise konstant 9 September
- Poussin sorgt für Aufregung bei Museen und Sammlern 9 September
- Judo-Ass Bischof plant den zweiten Gold-Coup 9 September
- Favre und Co. starten Mission Super Bowl 9 September
- Financial Times UK
