Independent Commercial, R&D Functions Could Pioneer New Pharmaceutical Operating Model, Says Accenture Research

Cultural, Strategic Challenges Currently Limit Optimal Collaboration

NEW YORK; April 18, 2002 – More autonomous Commercial and Research & Development organizations may be the cornerstone of an alternative operating model for pharmaceutical companies, according to new Accenture research.

The vast majority of sales, marketing, business development and licensing executives interviewed (79 percent) believe that R&D and Commercial strategies are currently not well aligned, and nearly one-half (46 percent) say that in-house R&D organizations could not deliver the products necessary to meet the strategic goals of the Commercial operations.

“The marriage between Commercial and R&D may be nearing an end,” said Ann Baker, partner, Accenture Pharmaceuticals & Medical Products industry group. “But our research suggests that Commercial and R&D can still form meaningful and healthier business relationships that focus on their strengths, ultimately, creating a more productive alignment.”

Irreconcilable Differences?
According to the research:

• Almost half (43 percent) of all commercial executives interviewed believe cultural differences make it hard for R&D and Commercial to collaborate
• More than three-quarters (81 percent) state that R&D and Commercial have very different cultures and organizations
• The vast majority (79 percent) believe that the source of products is not important

“The contrast between Commercial and R&D organizations range from varying skill sets and objectives to performance metrics, project timelines and culture,” commented Baker. “Additionally, its well-known that R&D is a process with high risk and attrition rates that have left many companies with gaps in their portfolios. Given these challenges – coupled with the fact that technology has reduced barriers to external collaboration – the industry is primed to re-examine long-held practices.”

Toward More Autonomy
Specifically, the research identifies a new operating model with a more autonomous Commercial function. Here, Commercial would develop a “portfolio” of products focusing on therapeutic franchises, such as diabetes and hyper-tension. Clearly defined “business relationships” with external R&D partners would provide a means of overcoming long-standing collaboration challenges. In turn, this arrangement would free “in-house” R&D to discover and develop innovations beyond Commercial’s portfolio strategy.

In this new model, the Commercial organization would focus on three priorities for success:

• Executing a winning portfolio strategy – with strong products in support of therapeutic franchises and rapid adaptation to marketplace changes
• Achieving excellence in sales and marketing – through managing customer relationships, products and services, customer information and performance
• Ensuring astute product investments – by combing stringent due diligence and scientific insight

For companies who believe this radical re-evaluation of their model would be challenging, the research also identifies a semi-autonomous, networked model as a significant option, or an intermediate step. This semi-autonomous Commercial group would continue as part of the company but would be freer to drive its own productivity.

“Although not all companies would consider adopting the new model today, 35 percent of our respondents believed that it has the potential to succeed,” said Baker. “Surprisingly, a high proportion of respondents – 12 percent – would already consider adopting it.”

Methodology
The Accenture research Commercial and R&D: Reinventing the Relationship is based on interviews with more than 50 Commercial pharmaceutical executives from leading companies. The research covered all major markets, and 45 percent of respondents were from the UK, 30 percent were from Europe and 25 percent were in the U.S. Commercial disciplines were equally split between Sales & Marketing and Business Development/Licensing.

About Accenture
Accenture is the world’s leading management consulting and technology services organization. Through its network of businesses approach – in which the company enhances its consulting and outsourcing expertise through alliances, affiliated companies and other capabilities – Accenture delivers innovations that help clients across all industries quickly realize their visions. With more than 75,000 people in 47 countries, the company generated net revenues of $11.44 billion for the fiscal year ended August 31, 2001. Its home page is www.accenture.com.

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