In the pharmaceutical industry, larger pharmaceutical companies that have a tactical mindset and no longer value the experience of long-term industry personnel are on the verge of being supplanted by strategically operated, small and medium-sized firms that do.
Complex Industry
The pharmaceutical industry is highly complex, and it is only becoming more so with each passing year. For pharmaceutical companies to be successful in this challenging environment, people in leadership positions must be competent in all aspects of the business: pharmaceutical, regulatory, healthcare, legal and financial.
Inexperienced Leadership Creates Risk
Placing inexperienced people in management and executive roles creates significant risk for the company and the pharmaceutical industry overall.
While it may seem like an exaggeration, the human brain is not fully developed until approximately age 30. Partially because of this, those most likely to have strong decision-making abilities and more advanced skills tend to be older. After receiving a university degree, it takes most people at least 10–15 years of experience in the pharmaceutical industry to truly be in a position to accept a managerial role.
Recent graduates may be able to speak the current business language, but they lack an implicit knowledge of the industry. Individuals that come from other sectors may have work experience, but that will not necessarily translate into an understanding of the complex workings of pharma. Younger managers are also more likely to seek to implement seemingly “new” ideas that have already been explored in the past, leading to cyclicity that can hinder long-term business success.
Small and medium-sized pharma companies, many of which are privately owned, have become the innovation engine of the pharmaceutical industry.
Experienced Leadership Brings Value
People that have worked in the pharmaceutical industry for many years learn the five disciplines important for effective leadership naturally, through their involvement in various projects and roles. They understand the potential impact of medical intervention on the human body, the expected manufacturing and regulatory compliance hurdles, patent and reimbursement challenges and the financial incentives behind each new drug under development.
Experienced leaders recognize that management roles are teaching roles just as much as they are decision-making positions. They have extensive knowledge about what occurs at each level of the company and how the diverse operations work together and are able to pass that information on to the people that report to them, as they move from one level to the next.
These experienced people are ideally suited to serve as department heads and site heads and in executive management positions. They recognize the importance of bringing young talent and new perspectives into the organization and are committed to helping those that want to learn become steadily more experienced.
Tactical Thinking Hurts in the Long Run
Public companies have a responsibility to their shareholders, who generally expect to see immediate returns. They are incentivized to achieve short-term gains, and company thinking is fundamentally tactical. This mindset trickles down to all aspects of company operations, including the placement of inexperienced, younger people with lower salaries in leadership positions. Goals are established on a 5-year timeframe, but even when they are achieved, it is done at the cost of the future; many of these firms find themselves struggling just 5–10 years later.
Privately owned companies do not have to operate in this type of environment. Strategic thinking is, in fact, often encouraged. In the pharmaceutical industry, where it takes 10–15 years to get a molecule from discovery to market, long-term thinking is essential. These companies recognize the value of experienced management and seek out industry experts to ensure ongoing success.
Bright Future for Small and Medium-Sized Private Pharma Companies
Currently, many of the largest pharmaceutical firms are struggling with regulatory compliance and legal and finance issues, in part because they no longer have the necessary level of experience in leadership positions. While not all big pharma firms have gone this route, it has definitely presented itself as a trend.
Meanwhile, small and medium-sized pharma companies, many of which are privately owned, have become the innovation engine of the pharmaceutical industry. They recognize the value of experienced leadership and have attracted top experts in the industry, in some cases enticing them away from big companies that no longer seem to value experience.