The Pharma Bureaucracy Index: Who’s Nimble, and Who’s Sloooowww?
Bureaucracy is one of the dirty words in business. Nobody wants to publicly admit their company is bogged down with too many layers of management, or needs a dozen committees to sign off on every little decision. For a couple years now, I’ve been hearing entrepreneurs complain about suffocating bureaucracy in pharma.
So I started asking people to name names by answering this question:
Who are the slowest-moving (most bureaucratic) and fastest-moving (least bureaucratic) pharmaceutical companies, when it comes to partnerships to develop innovative new drugs?
Before I get to the results of a mini-survey I conducted over the past week, I should point out that pharmaceutical bureaucracy is hard to analyze in any quantitative way. Even so, plenty of people are pointing to it as a prime culprit for the industry’s R&D malaise. Merck’s new head of R&D, Roger Perlmutter, recently told Forbes’ Matthew Herper about his plans to revitalize the company’s drug discovery and development teams by stripping away some of the bureaucracy he sees. At a recent event for Sanofi in Cambridge, MA, venture capitalist Mark Levin was asked by a member of the audience what could be done to improve things. He said it often takes 18-24 months for a biotech startup to negotiate a partnership with a Big Pharma company, because of bureaucracy.
“We waste a lot of time,” Levin said.
Since drug discovery is by its nature a highly speculative venture that consumes lots of time and money, it makes sense that large organizations would be fearful that all this wild-eyed risk could sink a steady ship if not carefully managed. When I met with Sanofi CEO Chris Viehbacher after his company’s event in Cambridge, he tried to walk a careful line, saying that he’s tried to peel back some layers of bureaucracy, within reason. Empowering individuals to do their own thing sounds great, but he’d have chaos if one Sanofi vice president said one thing to, say, a collaborator at Massachusetts General Hospital, and then another Sanofi executive in a different building said something different.
“You want to have some sort of air traffic control,” Viehbacher said.
Sounds reasonable, but the reality is some companies do a better job at keeping the planes moving better than others. As every pharma CEO knows, every big organization has men and women at various levels who can find a million reasons to shoot down any new risky idea, or smother it in endless red tape. By their very nature, they are the enemies of risk-takers, of entrepreneurs, of progress. Various researchers have concluded over the years that this organizational atherosclerosis slows down the whole industry, as it discourages a thousand little startups or prevents their best products from reaching the market sooner. I can’t help but wonder how many months, or years, the industry could shave off the average drug development cycle simply by streamlining their internal processes.
“Our research reveals that biopharma organizations are especially vulnerable to bureaucracy and its negative impacts,” wrote Peter Tollman and colleagues at the Boston Consulting Group in a 2011 report.
So who exactly is doing the best job at keeping the bureaucracy to a minimum, and who’s doing the worst? I conducted a small, unscientific survey of the perceptions of 20 biotech executives and venture capitalists across North America and Europe over the past week. I selected these people because they all have experience negotiating with a wide cast of characters in pharma. I asked them all to rank the top 20 pharma companies, 1 through 20, with No. 1 being the fastest-moving/least bureaucratic and No. 20 being the slowest-moving/most bureaucratic. I promised … Next Page »