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Why the Pharma Industry Needs Agile Leaders

Posted by Darleen DeRosa January 7, 2019

pharma industry pills

The pharmaceutical industry represents a huge portion of the global economy. Estimates placed its value at $934 billion in 2017 and experts expect that total to grow at nearly six percent annually over the next few years. In addition, it’s also facing significant issues that require pharma company leaders to adapt quickly to deliver results. It’s hardly a surprise, then, that agile leaders are particularly well-suited for these positions.

In an environment where clinging doggedly to the status quo can compromise a company’s ability to succeed in the future, pharma companies need agile leaders who can balance three key components of organizational effectiveness: connect - which is the ability to to inspire, influence, foster a collaborative environment, and exhibit behavior that sets the tone for organizational alignment and employee/stakeholder buy-in; adapt - the ability to recognize changing dynamics and adjust rapidly to overcome challenges, reimagine strategic direction, and propel transformation and innovation throughout an organization; and deliver - the ability to drive performance and generate consistent and reliable results by investing in the right accelerators, and cultivating high performing teams committed to customer and shareholder value creation.

These leaders must be flexible enough to balance existing needs against changing circumstances that force them to reallocate resources quickly, maintain normal operations, engage people, and gain commitment without losing sight of the company’s overriding mission.

Here are a few reasons why the pharma industry needs agile leaders:


The globalization of the pharmaceuticals market has presented the industry with an array of opportunities and challenges. Drug manufacturers must comply with a wide array of national and international regulations, not to mention deal with different payer models. Developing a strategy to effectively market services around the world within an ever-shifting set of parameters is a tremendous challenge for even the most resourceful companies.

As emerging global markets gain strength, established pharma companies also have to account for new competition. For example, while patent laws and national regulations still protect the global market shares of US and European-based companies, India’s pharmaceutical industry is growing quickly and is beginning to compete for both customers and employees. Much of this growth is due to India’s strong generics production.

Identifying ways to effectively navigate unpredictability within foreign markets and fending off competition from emerging countries will be one of the most important challenges facing pharma leadership in the coming years. The industry will need agile leaders with the vision and flexibility to navigate rapid changes and adapt in the global market while also establishing a firm strategy for sustainable success.

Patent Cliffs

Patents play a unique role in the pharma industry. Historically, companies have invested in research and development to secure patents on exclusive innovations that could deliver reliable profits over the life of the patent.

But the modern pharma industry hasn’t been investing in that innovation consistently. One study of 30 major companies found that just 11 percent of their 2017 revenue came from drugs developed within the last five years, and removing two leading innovators from the analysis drove the number down to about 8 percent. Given this excessive reliance upon older products, it’s no surprise that patent expirations alone accounted for more than $26 billion in industry losses in 2017.

The cost of developing new drugs remains high, and is compounded by the problem of stratification. As research has become more micro-targeted on specific health issues in smaller portions of the population, the potential return on investment has diminished. Agile leaders must find ways to make research and development a positive return on investment to keep companies profitable and relevant in a highly competitive industry. They could do this by targeting development on the most commercial-ready products or by finding ways to enhance the efficiency and effectiveness of their development and manufacturing operations with agile principles. Any strategy that helps improve a drug’s speed to market could mean the difference between a company’s success and failure.


Despite being on the cutting edge of scientific development, the pharma industry has been slow to embrace new developments in technology, from leveraging big data analytics to implementing machine learning artificial intelligence (AI) solutions. With the increased customer-centric focus many companies have taken, data transparency on drug treatment effectiveness could become a major differentiator in competitive markets. Today’s customers are becoming smarter, more informed consumers of healthcare, making it more important than ever for pharma companies to have the datasets available to demonstrate the efficacy of their products.

But technology is ultimately a tool and it falls to leadership to implement it effectively. Agile leaders in the pharma sector must assess the technological resources at their disposal and leverage them to drive both efficiency and innovation without trading one off for the other. They cannot afford to let technological developments go underutilized in such a competitive industry, but they must also be cautious about embracing solutions that don’t add clear value to the company’s day-to-day operations.

Mergers and Acquisitions

2018 proved to be a major year for mergers and acquisitions in the pharma industry. According to a Credit Suisse analysis, these deals amounted to a staggering $114 billion. Many of these mergers were driven by the desire of bigger companies to acquire patents developed by innovative biotech startups. Given the high costs of developing new drugs, many large firms have opted in recent years to lean on existing, profitable assets and simply buy up the most successful innovators, allowing these venture capital driven startups to assume most of the risks associated with research and development.

Identifying the ideal targets for acquisition and incorporating their talent and assets into existing operations calls for agile leaders who can successfully manage change while simultaneously maintaining reliable and efficient operations and high levels of employee engagement. For many pharma companies, these mergers represent the clearest path to sustained profitability and success, making it more important than ever for their leadership teams to understand how to facilitate organizational restructuring quickly and effectively without alienating key stakeholders in the process.

The pharmaceutical industry faces many challenges that will force its leaders to take a new approach. By leaning on flexible leaders with the ability to connect, adapt, and deliver, companies can put themselves in a position to adapt to a disruptive market and find a path to achieve sustainable success.

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Topics: managing change, Developing Agile Leaders

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