Tufts Study Finds Pharma/Biopharma Organization Structure Affects Performance

A recent study by the Tufts Center for the Study of Drug Development found that how drug developers organize their companies affects operational and financial performance. The research, developed by Tufts CSDD and PRTM, an operations management consulting firm, found that: globally positioned operations correlate with higher sales per product, annual number of approvals, and levels of operating efficiency; operations with diverse product portfolios correlate with higher levels of operating efficiency and commercial and innovation effectiveness; organizations with centralized decision-making structures correlate with higher levels of innovation efficiency; and organizations with more integrated business units correlate with higher levels of revenue growth.
   
“Moving forward, no company—big, medium, or small pharma, or biotech—will develop new drugs entirely alone,” said Tufts CSDD Director Kenneth I Kaitin, who co-chaired the panel. “Increasingly, R&D productivity gains will depend on developers focusing on what they contribute best to the drug development value chain and partnering with organizations that provide capabilities that are too expensive to develop or maintain internally, or are outside of the company’s core competencies.”
   
He added, “While traditional responses to boost R&D productivity, such as full or partial vertical integration strategies, still carry validity, they are not the wave of the future, since they tend to divert attention away from what a company does best.”
   
Panelists in the study agreed that to speed the pace of new drug development, pharma and biopharma companies will partner with each other and also form strong alliances with organizations outside the drug development industry, such as overnight shipping companies. The panel, part of the Tufts CSDD Management R&D Roundtable Series, was organized to identify operating models that can improve R&D productivity.