Innovation and Change in Pharmaceutical Industry

Author: Olivia Hunt

Author: Mandy Chagger

Author: Olivia Hunt

Pharmaceutical Industry

Author: Sharon White

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 The onset of technologically advanced software and hardware platforms for the biotechnology and pharmaceutical industries has resulted in more than a few drug manufacturers enlisting the talents of information technology professionals.

 

Systems management issues between various protocols as well as the operating system functionality of cutting edge software have created an atmosphere where laboratory technicians spend a large portion of their time managing biotechnology infrastructures. While many larger firms already have information technology personnel that work exclusively on corporate related networks, few if any were called upon to bridge the gap between scientific software and traditional hardware.

 

Most software manufacturers who offer genetic modeling or chemical composition software rarely consider the cross platform restrictions of their products, hence the need for well trained information technology professionals.

Throwing another wrench into the works is the development and widespread use of open source software. Open source software protocols are expansive and easily altered by nature. Many open source software developments carry no licensing restrictions. While the software itself can be extremely beneficial to biotechnology and pharmaceutical firms, the havoc it can wreak on hardware systems leaves much to be desired.

 

While information technology professionals aren't likely to write or alter code for unilateral workability, they can be called upon to structure data transfers between open sources programs that will allow the information garnered from one to be placed into another without damage to the overall system.

 
Many educational providers are starting to offer IT degree programs dedicated to information technology development for the biotechnology and pharmaceutical industries. These programs train information technology personnel for the industry specific needs that often arise when dealing with cross platform data evaluation systems.

 

 

Achilladelis and Antonakis conducted a historical study of the dynamics and tendencies of technological innovation in the pharmaceutical industry. From this standpoint, pursuing increase in market share, major pharma companies undertake mergers and acquisitions.

 

As the majority of specialists points out, particularly mergers and acquisitions are considered to be essential ways to obtain innovation capabilities and assuming control levers of any major technological changes within biotech industry. For instance, in the beginning of 90s, Swiss pharmaceutical giant Hoffmann-La Roche after creating a complex network of licensing and research agreements, embraced a new strategy that quickly moved the firm more deeply into the biotech field.

 

In effect, Roche decided to transplant a generalized biotech capability through acquisition. It began by buying equity stakes in the biotechs with which it was collaborating, a relatively common element in the large firm/small firm alliances in this industry. But next, it broke the mold by purchasing a controlling (60%) share of the most successful of the biotech startups, Genentech. Meanwhile, the Swiss firm was spending between $130 and $140 million a year on its in-house capabilities in the new field.

By the mid-1990s, it was becoming apparent that various kinds of collaborative arrangements between biotechs and pharmaceutical companies would continue to be an important feature of the current long cycle of innovation in this industry.

 

As Glaxo’s director of corporate development explained, “No emerging or established pharmaceutical company is large enough, or smart enough to meet all of its knowledge needs in isolation.” The front across which change was taking place in the biomedical sciences was so broad that even the largest pharmaceutical firms could no longer bring in-house all of the research capabilities they needed. Indeed, the "knowledge needs" were so pressing that they had given rise to a new subdiscipline, "bioinformatics," that combined genomic information with computer technology in order to make data more widely available to scientists.

One of the peculiar trends regarding innovation in pharmaceutical industry is that R&D represents a major determinant of company’s competitiveness. Simultaneously, large pharmaceutical firms transfer their R&D activities to so-called dedicated biotechnology firms, because they usually have higher innovative capabilities. 

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 Pharmaceutical events such as meetings and conferences have a primarily educational function. While there is a need to incorporate hospitality into such events, especially those that extend over several hours or even days, the code of practice of the Association of the British Pharmaceutical Industry (ABPI) requires that the level of hospitality provided must be in proportion to the occasion.

 

This means that all hospitality associated with pharmaceutical events should be secondary to their main educational purpose. Pharmaceutical companies that breach the code in this respect could face heavy sanctions. It is necessary, therefore, for organizers of pharmaceutical events to achieve the right balance in relation to education and hospitality.

Achieving this balance requires thorough knowledge of the code to ensure compliance. All aspects of pharmaceutical events must be taken into consideration. These aspects include the venue and its location, the accommodations, the meals provided, activities offered, and the materials used.

 

Timing is also important, with the length of the meeting needing to justify the type of hospitality available. Provision of three-course meals, for instance, at pharmaceutical events that last only an hour or two would not be acceptable to the code. Such hospitality may, however, be appropriate for pharmaceutical events that extend over one or two days.

While this is a fairly straightforward example, there are many other situations where organizers find it less easy to make a decision about whether the quality and cost of the hospitality achieves the right balance in relation to the educational content of pharmaceutical events.

 

Venues need to be sourced to fit in with the content of the meetings, and should be professional and private, while activities should be offered only if they relate to the main educational purpose of the occasion. The advertising emphasis of pharmaceutical events must also focus on their educational content rather than the hospitality that accompanies them.

Combining these requirements with the many factors already involved in the organization of pharmaceutical events results in a difficult and complex task. For this reason, some companies are electing to use the expertise of venue finding agencies when arranging pharmaceutical events.

 

 While this does not remove the responsibility of the pharmaceutical company to present an event that achieves the right balance between education and hospitality, the agency's skills and knowledge provide an invaluable support in organizing pharmaceutical events that comply with the requirements of the ABPI code of practice.

In addition to locating places for pharmaceutical events, venue finding agencies are able to advise as to whether those venues, and all other aspects of the events, are acceptable under the code.

 

Certified by an industry consultant, a venue finding agency specializing in pharmaceutical events can ensure that everything from the location to the materials used at the event achieves the correct balance between educational content and hospitality as required by the ABPI code of practice. Because they are funded by hotels and conference venues, such agencies are able to provide their services free to organizers of pharmaceutical events.

A venue finding agency can provide savings in other ways for organizers of pharmaceutical events. Once the agency has located a suitable venue, it is able to negotiate the best price for the function and look after other associated tasks for the organizer. These tasks could range from setting up site visits and appointments with staff to arranging contracts between the venue and the organising company.

 

The agency can also save you time in advance of pharmaceutical event by liaising with the venue on the numerous issues that need attention, and can provide on-site support to deal with any last minute problems. With its in-depth knowledge of venues, a venue finding agency can also ensure that the location of pharmaceutical events is acceptable to the requirements of the ABPI code of practice.

When you enlist the help of a venue finding agency for pharmaceutical events, you can also rest assured that the accommodations provided for guests, when overnight stays are necessary, will suit the code as well as the budget of the organizing company.

 

The agency can, if required, take over other matters connected with accommodation, including negotiating rates, taking bookings, and sending out confirmations. With a venue finding agency helping with such details, you can be sure the venues and accommodations chosen for your pharmaceutical events will be secured at the best rates, as well as being compliant with the ABPI code. You can also rest assured that all matters associated with the pharmaceutical events you organize will be acceptable to the code's requirements.

 

The specialist knowledge of the venue finding agency you select will ensure that everything from the venue itself to the materials and activities achieve the right balance between educational content and hospitality. With this expert help, you will be free of worry when organizing pharmaceutical events, and confident that they comply with the ABPI code of practice.

Many of the strongest European pharmaceutical firms adopted this strategy, seeking to develop their own capabilities across a relatively narrow front while working with biotech startups.

 

The small, university-linked biotechs were at first almost entirely an American phenomenon and this gave the large U.S. pharmaceutical companies an initial advantage, as did the federal government's support for basic research in molecular genetics. But soon, European governments were attempting to close the widening biotech gap, hoping that government support would make up for the venture capital that was not available to their potential innovators.

One of the interesting international hybrids was Biogen, a startup that was built on American science and that quickly expanded through licensing arrangements with several leading pharmaceutical firms.

 

Biogen soon had operations in Germany, Switzerland, and Belgium. Schering-Plough, an American pharmaceutical company, collaborated with Biogen in the race to capture the anticipated global markets for interferon. To enhance and protect its access to Biogen's products and processes, Schering-Plough in the end bought a substantial equity position in Biogen, a practice that became increasingly popular in pharmaceuticals.

 

 The situation with Biogen and Schering-Plough illustrates the finding of study conducted by Lerner and Merger (1998), which identified 25 critical control rights in biotechnology innovation alliances, in particular those regarding alliance management (manufacturing, clinical trials), the control of intellectual property, determination of alliance scope, equity in R&D companies, seats in companies’ boards.

From standpoint of human resource management, innovation in pharmaceutical industry in the light of all accompanied trends inevitably leads to outsourcing of labor (not associated with acquisitions or mergers). During 1999-2004, pharmaceutical firms increased the extent to which they outsourced R&D significantly.

 

Developing economies of India, China and Singapore now play active roles in the industry, creating not only lower-cost sources of assistance but also potential future rivals for the large pharmaceutical companies. From the strategic point of view, any company’s planning effort must answer the question of how this trend toward outsourcing will impact the industry in future.

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 The pharmaceutical industry is different from most of the industries as the products are usually not chosen and paid by the consumers.

The consumer has almost no role in purchase decision making. Further, there is an unusual level of control to the industry either by regulations or self imposed practices. The political analysis of this industry has shown increasing political links of Russia with the west support the adaptation of western business methods that neutralizes the access to Baltic States.

 

China is approaching the deadlines of World Trade organization to open up its economy sector by sector after joining the organization. The war against terrorism is developing a new world order. Democracy is yet to come for some states where pharmaceutical industry has major role to play. Therefore pharmaceutical industry has grown its need for customers.

Economic analysis recently provided has demonstrated China is expected to become the fifth largest drug market in the world by 2010. Indian Pharmaceutical Industry is growing at about 8 to 9 percent annually. Recent increase in oil prices has certain effects on corporate share prices where it make difficult to pharmaceutical companies to in vest in R&D.

One of the main demand industry is seeking is to shorten the time taken to get full approval to market products since the invention of formulas. This is because in some cases where manufactures experience the risks of patents getting expired even before the product is launched to the market.

 

It can be expected in tighter regulatory pressure for developing countries for pirated production particularly with their increasing commitment to WTO. Price regulation schemes are well imposed in many countries to protect the consumer from high bargaining power of patented products.

 
The debate will continue between animal right campaigners and pharmaceutical companies for using animals in drug testing.