The Globalization of Wyeth

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Executive Summary

From 1997 to 2004, Wyeth went from being a multinational company to becoming a globalized company. The biggest shift? Their Information Technology department. They went from 22 people spread over the world to more than 1,800 people and half a billion dollars of the Wyeth budget. For many years Wyeth was a Laissez-Faire holding company with many locations throughout the world that did not interact or communication with each other. Over the next 8 years, with the help of the Information Technology department, Wyeth became a globalized pharmaceutical company with centralized information that created new efficiency in an increasingly competitive market. The end result was a positive one but it was not an easy road to get there. Wyeth had great pre-planning for the Information Technology shift, but the original strategic design needed to be revamped when the implementation started. Employee resistance was a result of the fear of the unknown as well as confusion with the processes. Also, budgetary concerns played a role in the rate at which the Information Technology division could grow.

With headaches like this, you can believe that the leaders at Wyeth were reaching for an Advil.

Background

In 1860, John and Frank Wyeth started a drugstore in Philadelphia. In the small research lab they had attached to the pharmacy, they started to manufacture large quantities of commonly needed medications. They found success in “mass” production of pharmaceuticals. This “mass production” was defined by 1929 standards and happened in the storage area next to the pharmacy. John’s son, Stuart, incorporated Wyeth as a holding company in 1929. Until the 1990’s, Wyeth was a holding company for a diverse offering of products. Some of their most popular were a toothpaste called Kolynos and a headache medicine called Anacin. Wyeth’s reputation was that of a laissez-faire holding company that was primarily focused on bottom-line profits and not in meddling in the individual companies’ business. In the early 1990’s this style was not allowing Wyeth to be as successful as they knew they could be and they looked for a change. Wyeth had many locations throughout the world and they would be considered a multinational company. Though they had many locations, these locations did not interact with each other or report much information back to Wyeth other than bottom line financials. Management decided they needed to become a global corporation that had set business practices and continuity throughout their companies. They needed centralized information and strong interaction between locations. They believed that information technology was the key to their future growth.

Stages of change

Wyeth’s first step toward change was to divest as all the non-health care divisions that they owned. This was an important step for Wyeth to reorganize themselves as a more focused pharmaceutical company as opposed to a holding company. While redefining themselves as a pharmaceutical company, they also made significant investments into research and development so that Wyeth would start producing original scientific discoveries. Creating and owning the rights to the products would obviously help the margins of the future product offerings for Wyeth. Adding this important division was also another reason that they needed to upgrade their internal efficiencies.

Because of the disjointed nature of the current Wyeth company design, there was a lot of redundancy. The next step to change was consolidating those redundancies. Many of the individual locations had excess manufacturing space and duplicated staff functions. In a few cases they even had managers that would hoard products because they suspected a future shortage. If Wyeth was going to keep the investors happy, they would have to become leaner.

Communication beyond the bottom line numbers was not something that often occurred between the local firms...
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