Case Report: Glaxosmithkline Reorganizing Drug Discovery (a)

Powerful Essays
This case describes the reorganization of drug discovery at GlaxoSmithKline (GSK) following the formation of GSK from the merger of Glaxo Wellcome and SmithKline Beecham. This reorganization placed nearly 2,000 research scientists into six centers of excellence in drug discovery (CEDD). Each CEDD focused on a small set of therapeutic areas and possessed decision rights over the progression of pharmaceutical compounds through the early stages of development. It addresses issues about the benefits of focus vs. diversification in R&D, the role of decentralized vs. coordinated decision making, and the importance of alignment between the structural and infrastructural (e.g., performance incentives) aspects of an operating model.

4. Economies in drug R&D process
In this session we have analyzed the economies of scale, scope and learning in the drug R&D process.
The drug discovery process can be divided into several steps: Research activities (including Target biology, Chemical design & synthesis and Lead optimization), preclinical development and clinical development. As shown in the figure below, this process takes several years and encompasses a wide range of expertise and skills.
Economies of Scale:
Among the factors we have identified to increase scale and reduce R&D average costs, the use of new technologies is at the top of the list. By investing in capital intensive technological advances screening rates are increased and unit costs lowered.
All the R&D processes are today carried via personal computers and software developer skills are a key requirement for scientists. The improved efficiency is due to the use of computer based programming for target diseases that have speeds up use of existing “keys & locks” in database to find match.
The increased scale of production is associated with innovative changes in the R&D. Large firms are using their capital to acquire small companies which have innovative ideas and interesting portfolios. Moreover



Bibliography: Besanko et al (2007). Chapter 13. The Origins of Competitive Advantage: Innovation, Evolution and the Environment Besanko et al (2007). Chapter 12. Sustaining Competitive Advantage (in particular pages 406 to 422) Grant (2008) Chapter 11 Technology Base-Industries and the Management of Innovation Pisano, G. (1997). The Development Factory: Unlocking the Potential of Process Innovation. Harvard Business School Press. Werth, B. (1994). The Billion-Dollar Molecule. New York: Touchstone Book, Simon & Schuster.

You May Also Find These Documents Helpful

  • Best Essays

    The pharmaceutical company is made up of a number of different functions and departments. Each of these functions is given a responsibility in one area of the company’s activity. These departments are closely related and the success of the company is based on the ability of these functions to work together. The pharmaceutical companies rely on research and development to find new and innovation new drugs. In order for a drug to enter the market it must undergo a series of tests and clinical trials. There are phases the drug must go through and complete in order to meet the requirements of the FDA. The development of a drug is an ongoing journey, and it can take up to 12 years to develop a drug (Pharmaceutical Patents 2006). The pharmaceutical company uses…

    • 4398 Words
    • 18 Pages
    Best Essays
  • Better Essays

    4. If you were the director of R&D at a large pharmaceutical company, how might you apply the concept of “the innovation funnel?”…

    • 1240 Words
    • 5 Pages
    Better Essays
  • Powerful Essays

    Because introducing new products on a consistent basis is important to the future success of many organizations, marketers in charge of product decisions often follow set procedures for bringing products to market. In the scientific area that may mean the establishment of ongoing laboratory research programs for discovering new products (e.g., medicines) while less scientific companies may pull together resources for product development on a less structured timetable.…

    • 9775 Words
    • 40 Pages
    Powerful Essays
  • Better Essays

    References: Barney, J. B. (2007). Gaining and sustaining competitive advantage (3rd ed.). Upper Saddle River, NJ: Pearson Prentice Hall.…

    • 3190 Words
    • 13 Pages
    Better Essays
  • Powerful Essays

    In a highly competitive and dynamically changing market it has become imperative for the leading pharmaceutical companies to recuperate their development costs and generate returns for stockholders as well as funding for R&D of new drugs as soon as possible. With the profitable lifetime for drugs, in United States, being significantly shortened since the 1980’s, Lilly Research Laboratories (LRL) under the leadership of Gus Wantabe was able to develop Evista in shorter duration by adopting a Matrix-Based product development approach and utilizing heavyweight teams instead of their traditional function-based product development approach. In the face of internal resistance to the heavyweight teams and shortage of resources, Wantabe now has to make a decision about adopting this new successful heavyweight team approach for commercialization of Evista as well.…

    • 1583 Words
    • 7 Pages
    Powerful Essays
  • Good Essays

    Pharmaceutical companies spend a lot of time in developing and manufacturing drugs. One type of drug could take ten to twenty years after testing the drug, being approved by the FDA, and distribution. Makes one wonder just how much money they put into the discovery of…

    • 627 Words
    • 3 Pages
    Good Essays
  • Powerful Essays

    References: Barney, J. B. (2007). Gaining and Sustaining Competitive Advantage (3rd ed.). Upper Saddle River, NJ: Pearson Prentice Hall.…

    • 1432 Words
    • 6 Pages
    Powerful Essays
  • Good Essays

    Costco Strategy

    • 1024 Words
    • 5 Pages

    References: Porter, M. (1985). “Competitive Advantage – Creating and Sustaining Superior Performance” The Free Press, p. 557…

    • 1024 Words
    • 5 Pages
    Good Essays
  • Powerful Essays

    Sanofi-Aventis Acquisition

    • 5913 Words
    • 19 Pages

    Bibliography: Cleaves, K., Thayer A., (August 2004). Warning, merge with care: Sanofi-Aventis. Modern Drug Discovery. Retreived on June 6, 2014 from http://pubs.acs.org/subscribe/archive/mdd/v07/i08/pdf/804business2.pdf…

    • 5913 Words
    • 19 Pages
    Powerful Essays
  • Powerful Essays

    Porter, Michael E., "Competitive Advantage". 1985, Ch. 1, pp 11-15. The Free Press. New York.…

    • 4186 Words
    • 17 Pages
    Powerful Essays
  • Powerful Essays

    Rogers Chocolate

    • 2731 Words
    • 11 Pages

    ▪ Thompson, Strckland, Gamble 2010, Crafting and Executing Strategy: The Quest for Competitive Advantage. Concepts and Cases, 17th edn, McGraw-Hill Irwin, United States…

    • 2731 Words
    • 11 Pages
    Powerful Essays
  • Best Essays

    Pfizer Industry Review

    • 4325 Words
    • 18 Pages

    Since the 1950s, the global pharmaceutical industry has evolved from “…a collection of several hundred, small, barely profitable firms to as small group of large, highly profitable firms” (Younkin, 2008, para. 1). This evolution has resulted in an oligopoly market structure with a few large firms, and significant barriers to market entry. In the last 20 years, pharmaceutical consolidation has continued with both vertical and horizontal mergers that have further shrunk the market. Since 1995, Pfizer has merged with five pharmaceutical firms (Industry Brief, 2003) in an attempt to increase its research and development divisions and to offset declines in new product development; increases in generic competition; and the emergence of bio-pharmaceutical firms (BCC Research, 2004). Although pharmaceutical firms no longer view mega mergers as “…a cure-all for [their] innovation drought” (Simons, 2007, para. 1), this trend towards consolidation is expected to continue, with firms focusing “…on targeted acquisitions and alliances with smaller…more innovative drug makers and biotechs” (Simons, 2007, para. 10).…

    • 4325 Words
    • 18 Pages
    Best Essays
  • Powerful Essays

    Understanding sources of sustained competitive advantage has become a major area of research in strategic management.…

    • 2972 Words
    • 12 Pages
    Powerful Essays
  • Best Essays

    [ 1 ]. Porter, Michael E. (1985) Competitive Advantage: Creating and Sustaining Superior Performance. The Free Press: New York City, USA.…

    • 2381 Words
    • 10 Pages
    Best Essays
  • Powerful Essays

    Understanding sources of sustained competitive advantage has become a major area of research in strategic management, Building on…

    • 2507 Words
    • 11 Pages
    Powerful Essays