Managing industrial pharmaceutical R&D. A comparative study of management control and innovative effectiveness in European and Anglo‐American companies

Abstract

AbstractDrug regulation and pricing have put strong pressure on the cost‐benefit ratio of the innovative pharmaceutical industry. Therefore a study has been conducted in fourteen large and medium sized companies to determine some important organisational and managerial factors influencing success in pharmaceutical innovation. The study consists of structured interviews with Research Directors and questionnaires, submitted to the heads of the different research departments. The following conclusions are tentatively drawn. Firstly, the data suggest that a threshold investment of approximately $150–200 million is needed to maintain the innovative potential. Above approximately $750 million, ‘economies of scale’ seem to appear in pharmaceutical innovation. Secondly, an incremental strategy aimed at reducing the duration of the development process seems to be more successful than a radical strategy which lays more emphasis on discovery. Thirdly, pure play pharmaceuticals seem to be more successful than the pharmaceutical divisions of conglomerates. Management control, especially the way in which reorganisations are performed, is assessed more positively in pure play pharmaceuticals. Fourthly, the greater emphasis on human resources management in Anglo‐American companies, in comparison to continental European companies, seems to be an important explanatory factor for their greater success on the pharmaceutical market.