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Episode 129: “Decision Making in Pharma – How Big Decisions are Made”

Decision making in pharma is the topic of this episode and our guest is John Faulks.

John is co-founder of PPMLD, a project management consultancy firm, which he helped establish 20 years ago. Previous to setting up his consultancy business, John worked as a pharma scientist with a number of global pharmaceutical companies and has particular insight and expertise in leadership and mentoring in the industry. He is also a committee member of PIPMG, the UK’s prestigious PPM pharma network association.

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Highlights from Episode 129: “How Pharma Makes Big Decisions” with John Faulks

Tell us a little bit about your background in the project management industry and how you came to work in the pharma world, and indeed how you set up your own consultancy organization when project management was still relatively new as a science.

Decision Making in PharmaYes, indeed. Well, I want to start with the project management industry. I started in the pharmaceutical industry and I was initially a scientist working on medical diagnostics actually, in a subsidiary of what eventually became the GSK pharmaceutical company. So, I was in science for a fair while, and then, realizing I liked dealing with the people side of things more than the hard science side, I moved into the human resources learning and development role. So, I was an internal business partner for a while.

So, working for one of the big divisions in the science area in the pharma company. And then, companies like that gradually began to outsource a lot more training work and things, so I took a package and I became a consultant and then worked for back for GSK for a while and lots of other companies and started to specialize, specifically, in the project structure of pharma, which is quite complex and quite difficult to make work. And I’m old enough to remember when it was also being built when the project structure was actually being created for the first time and project teams were being put together.

And I was helping to do team building and getting project teams working well, helping project managers address the rather peculiar leadership role that they had and helping them to build that. And I’ve been doing that ever since. I’ve branched out a bit more to also add the partnership working. So, with companies working with other companies and having forged alliances, things like that. But I’m still working today in the project management sphere, and helping to make it work. And it still doesn’t work perfectly.

Well, that is a very good segue into from your previous very scientific and, dare I say, black and white roll into the very grey area of people management and project management and new science. What are the differences between the goals of our project manager and a functional specialist in the pharma sector?

Well, like other organizations, pharmaceutical companies are a whole host of various specialist functions. There’s a lot of specialist high-tech jobs that have to be done and it actually makes a lot of sense to group those functions into the same facilities and organizations. For example, there’s chemistry work to be done, for instance, in how you put tablets together and things like that. It makes a lot of sense with all the chemistry tech that people need, to put them all in the same building and they end up all in the same organization, that departments as one and so on with the clinical trials area and the safety testing area, there are groups of specialists.

And what happens is that the pharma industry then mounts projects by each of those functions sending representatives to work on what’s called a cross-functional project that has all of these different disciplines in it. The project manager is really the one that owns the goals of the project. So, the actual commercial course for the overall scientific and medical aims of the project is owned by that project manager. The functional managers, the functional senior management, if you like, are there to make sure that that particular piece of functional work is done to an extremely high standard of quality and that function constantly updates itself with the latest tech and the latest developments in science – that it’s the leading edge. So, there are two areas working together. The function of the departments is continuous and the projects are temporary activities to get things out onto the market eventually.

The project manager’s role is to weave these functions together. How would a project manager manage this kind of collaboration within the pharma world?

In the beginning, it was a very difficult thing to manage in the functional representatives of a project, so for authoritative figures as the direct line managers in their own function and they were very doubtful and suspicious that a project manager looking across the whole thing could act with authority and things like that. There is this sort of unholy marriage, if you like, it’s not unique to the pharma industry, but the pharma industry does manage itself this way. In that, the project manager has to exercise leadership and authority without having that sort of direct command.

One of the peculiarities of the pharma world, in particular, is that the projects are enormously long. Drug development projects take 12 years before something comes onto the market from the initial idea in the research, at the research end of things. Now, what this means is, for long durations of time some of the functional experts at any one time, might not be doing very much for that particular project because other things are waiting to happen.

Okay, and so, this means that those representatives, those functional representatives tend to be placed on many projects rather than one. So, if you are the project manager, your, for instance, toxicology expert, your safety testing expert could be sitting on four different projects, with four different project managers, he or she is not exclusively yours to command as it were. You have to influence and get the time from that person, like the other PMs have to get their time from that person, as well. So, that makes the best use of the resource if you like. But it does introduce all sorts of complexities of prioritization and how people lock their time and give time to projects.

Now, additionally, it’s well-known that across the whole range of projects that are going on, typically called a portfolio of projects, some projects are more important than others because they are going to be bigger chunks than others. Let’s say. So, you also got to worry about that, that sort of priority passing up people’s time. It makes the situation quite complex and requires a lot of tolerance, sort of uncertainty, to actually take that role of the project manager in our sector.

Why is the approach on pharma so specialized, from the decision-making point of view?

From the decision-making point of view, let me talk about some similarities with other sectors and some big differences with other sectors. So, just like in construction, you are talking about companies having to commit and invest large amounts of money. There’s no difference there. You are having to talk about managing risks and very careful scrutinization of plans and schedules and all of that sort of thing. So, they’re very similar.

The big difference is that certainly in something like construction or IT then looking at a project going forward, you’re pretty clear that you can do it, technically. What you’re not clear of, in say construction, is whether you should do it and how much to invest in it, depending on the returns you might get, if you like, the profitability of it. Come to pharma, and you are with any drug project at an early stage, you are definitely not sure that you can do it. So, if you have say, any big company at an early stage of research would have, let’s say 250 initiatives running, early projects running at any one time. And it’s well-known that perhaps only one or two of them will end up coming out on the market and the rest will fall by the way because they just didn’t work.

At the time, in the early stage, you don’t know which ones will work and which ones won’t. You’ve got a clue. You’ve got some ideas. You got a bit of data. You can’t be sure. So, there’s a hell of a lot of uncertainty that doesn’t exist in other sectors. And this is then subject to all sorts of big scientists weighing in with lots of opinions about what they believe in and what they don’t, what they think should be pushed on and “Let’s have faith” and things like that. And it makes quite an argumentative environment if you don’t impose some sort of discipline on it.

Within that portfolio of projects over that duration of time and for some of those projects that do fall away for whatever reason, how do you manage that within the portfolio?

Well, there are a variety of tools and what you do is you would judge every asset that you have currently in your portfolio against the three criteria. At least, three criteria if you’re trying to get some sort of a systematic handle on it. One is the likely commercial return if you were to get it onto the market. So, there you have to press on your commercial people who do analysis and predictions based on World Health Organization data about disease processes and disease progression.

And also, you’ve got a little bit of a window into what the competition is got up and running, as well. The second thing is, what’s called the probability of technical success, how confident are your scientists that this is going to work or not in a human body and you’d want to go for the high probabilities, but you have to push on the scientists to give you a view on that. Now, if you’re in a completely new area of science, if you get a product out there, you going to make five billion dollars out of it. It is very similar to another market drug in that the success probability will be higher at an early stage, but the return will be low.

So, you have to take a bet on some things. And the third one is – what’s the estimate of how much it will cost you to get it there with these particular types of diseases, what are the sort of especially big clinical trials generally required to generate enough data so you can work how much it costs. And you plot, you do a plot of all of those and portfolio decision-makers in the industry, the senior management would look at these plots, get presentations from the scientists and review and cogitate and all of this data and then have to make decisions. Go or no-go decision, as they say, which ones go forward and which ones don’t. And risk that they might be making big mistakes. But it’s a big and expensive and tricky game to play.

Find Out More

If you’d like to learn more about decision making in Pharma, and how it has changed, Iain Graham, a Senior Business Consultant with Cora Systems recently published a free guide entitled Pharma Project Management in the New Normal

Learn more about John’s consultancy firm, PPMLD, at ppmld.com.

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