In the recent Toyota quality disaster, touched on in this issue’s cover story, the company dug its way out of a $5-billion public relations crisis by, simply, stating the truth: that it had strayed from its mission of product quality and customer focus. Its CEO pledged to return to those priorities, and company sales soon rebounded.
The drug industry is now dealing with expensive public relations disasters of its own: a consent decree, recalls and disturbing allegations that one manufacturer with a sterling reputation knew of quality problems but hired a consultant to buy up contaminated products rather than recall them. These were products intended for children.
If pharma’s C-level were directly connected with quality, operations, and the patient, could these problems exist?
Let’s consider the baseline of performance: regulatory compliance. At most pharma companies today, there’s no holistic approach to compliance, says consultant John Avellanet, who discusses this in his book, “Get to Market Now!” If a company has a chief compliance officer, and that’s a minority of pharma companies, that CCO is not connecting directly to regulatory affairs and quality. This disconnect leaves any company vulnerable to huge risks.
Then there’s quality, which depends on satisfying internal and external customers. Pharma’s customers are many, from corporate shareholders, distributors, and physicians, to regulators, contract partners, and employees and patients. Pleasing the customer is a delicate, and difficult, balancing act, and some stakeholders—notably the end user and the employee—may be left out.
Yet, in other industries, it’s focus on just these two groups that has allowed companies to improve, and enabled better results to shareholders and other stakeholders. A few decades ago, Toyota wasn’t known for great quality. It got to where it did by putting the driver and its employees first, consistently.
How long can pharma employees feel driven to become agents of positive change within their organizations, when senior managers don’t support their efforts, results aren’t sustained, and their reward often seems to be losing their jobs?
In pharma mergers, the teams that have made the greatest progress in driving Toyota Production System principles forward are often the first to be eliminated.
Thomas Friedli of the University of St. Gallen has been studying OpEx and culture change in the pharmaceutical industry for years, and will release a new book on this subject in September, coauthored with Prabir Basu, director of NIPTE, and other colleagues. He attributes the problem to the fact that aggregated KPIs, the type that senior management and top management consultants tend to care about, do not tell the whole story. In a global network with a lot of underutilized assets, any appearance of overcapacity will trump advances in performance, establishment of a new culture and passion for continuous improvement.
Today, it is safe to say that few drug company executives emulate the Japanese managers who go out, each day, into the “gemba,” to discover day-to-day realities in their labs and factory floors. For many of them, too, manufacturing—which, in any other industry, is closely connected to product development and a critical part of the value chain—appears to be an “add on,” at the very end of that chain—something that can easily be lopped off, sent overseas or outsourced, regardless of the regulatory and compliance risks.
Connection to the end user, the patient, is critical to ensuring product quality and continuous improvement. Perhaps pharma should “get back to the basics,” as Toyota is trying to do, and find ways to incorporate patient needs and desires much earlier in product development, and at more regular intervals throughout development, commercialization and marketing. Can any industry afford to ignore its end users?
