Why Pharma companies need a fresh perspective?

The Balance Between Structure and Innovation in Pharma

I spent 16 years working at one of the top five pharmaceutical companies in the world. Life in big pharma is fascinating—the caliber of people and the learning opportunities are unparalleled. However, I observed that as the departments in these large organizations grow, they tend to become rigid, limiting their ability to innovate and create new models effectively. As teams grow, the need to better distribute work and resources leads to more rigid structures, with governance bodies and committees demanding extensive validation before projects proceed. These processes, while necessary for managing complexity, often slow decision-making and stifle agility.

This experience taught me that finding the right balance between structure and flexibility is key to driving innovation. Growth should never come at the expense of creativity and agility—a challenge I’m passionate about addressing in my work.

Stay tuned as I dive into the challenges pharmaceutical companies encounter in fostering creativity and innovation. In this article, I’ll explore the potential of adopting new business models, embracing incremental innovation, and cultivating a safe space culture within the industry.

Inorganic Growth vs Internal Innovation

The pharmaceutical industry is often considered as a source of innovation, particularly in Research & Development (R&D). However, is this really the case? In a highly regulated sector, where launching a product requires navigating rigid processes, companies increasingly seek growth beyond their own walls. Inorganic growth, through mergers and acquisitions (M&A), has been a core strategy for decades. In 2023, despite not being at historic highs, global M&A and venture capital transactions in pharma reached $173 billion ($210 billion when including MedTech and diagnostics) (Life Sciences M&A Trends | Deloitte US ). These deals often focus on operational synergies, portfolio diversification, and, most importantly, access to new technologies that internal R&D departments struggle to develop.

In recent years, inorganic growth in pharma has surged. Yet those within large organizations know that bureaucratic structures can make innovation slow and difficult. But innovation goes beyond R&D and there are two key areas that, if unlocked, could significantly elevate the industry:

• New business models: Shifting away from traditional approaches and drawing insights from developing countries
• Incremental innovations: Not all innovation needs to be disruptive; companies must embrace incremental improvements to drive continuous innovation.

Example 1 - New Business Models: Challenging Traditional Approaches in Pharma

Pharma’s traditional business models are focused primarily on developed markets like the U.S., Europe, and Japan, where most sales occur. Traditionally companies invest heavily in R&D and clinical trials, followed by large-scale marketing and sales efforts to promote their products. After approval, the strategy usually involves negotiating with insurers and governments to secure coverage and reimbursement focused on the top markets.

However, this model often leaves out low- and middle-income countries (LMICs), where access to life-saving therapies remains limited. The barriers go beyond affordability; a lack of healthcare infrastructure, awareness, and local protocols also play significant roles (see Figure).

Let me suggest two models that prove it is possible to have sustainable business models (including financially) and innovative approaches to address access to healthcare:

1.???? Healthy Family Programs by Novartis: These initiatives provide access to education, awareness, infrastructure and local partnerships to LMICs.? Since 2007, it has delivered health education to over 80 million people, ensuring long-term impact through local implementation partners. Novartis collaborates with governments, local people, and NGOs to strengthen healthcare systems and tailor solutions beyond drug delivery, while sustainably supporting its business growth. Learn more here .

2.???? Aravind Eye Care System: This Indian organization strives to "eliminate needless blindness" by offering a sustainable model that combines low-cost services with high-quality treatment. Aravind’s approach focuses on building local capacity, improving infrastructure, and creating scalable protocols that are replicable globally. By leveraging a high patient volume, Aravind is self-sustainable, having performed over 7.8 million surgeries and handled over 65 million outpatient visits since its inception. discover more here .

These examples demonstrate that holistic approaches, integrating system-wide improvements and local collaborations, are essential for impactful healthcare innovation in LMICs, proving it’s possible to think beyond traditional markets like the US, Europe, and Japan.

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Example 2 - Incremental Innovations: The Challenge of Overly Complex Models

A common trend is the push to develop large, comprehensive solutions from the start, often driven by complex governance structures. Multiple boards and committees demand extensive validation, causing teams to spend long hours perfecting financial models and presentations. This process often delays progress and leads to over-engineered solutions that never see the light of day, due to their complexity. A more effective approach might involve simplified, iterative methods from the beginning that allow for quicker adaptation in dynamic environments, while keeping agile governance and controls in place. There are some key elements that need to be taken into consideration to come up with a creative idea.

The image illustrates the process of generating creative ideas through four key activities: networking, observing, questioning and experimenting. These inputs converge through the act of associating—connecting diverse concepts—leading to innovation. This approach highlights that creativity stems not just from isolated thinking but from actively engaging with different perspectives and experiences. Therefore, it is important to create channels for new ideas, especially in highly regulated industries like that of big pharma. Here are some guides on how to promote incremental innovation:

• Embrace Experimentation: Run experiments, engage with people, and stay flexible. This is key to uncovering new insights.
• Test Assumptions Quickly: Rapidly identify and validate the assumptions that could make or break your idea.
• Identify the Real Job to be Done: Understand the actual problem you’re solving; it’s not always obvious.
• Engage Customers Early On: Let them know it’s a prototype and seek their feedback.
• Focus on Learning, Not Failure: Every experiment offers an opportunity to learn and improve.
• Minimum Viable Experiment (MVE): Instead of large-scale tests, start with small, focused experiments to validate concepts quickly and efficiently.

In pharma, the fear of failure is a major barrier to quick decision-making. Complex hierarchies and governance structures demand multiple layers of approval and excessive information, discouraging rapid experimentation. To overcome this, organizations need to shift from a "know it all" mindset to a "learn it all" culture. Encouraging continuous learning and small-scale experiments empowers companies to quickly adapt in a fast-changing environment.

Creating a Real Safe Space Culture

Many organizations encourage employees to "speak up" to foster a culture of innovation, but this can backfire if leaders aren’t equipped to handle feedback constructively. When leaders perceive feedback as a threat, it stifles openness and innovation. I’ve experienced this—being encouraged to share my thoughts, only to face defensiveness. For a truly safe space, leaders need tools to accept input without feeling their authority is challenged.

To foster openness, leaders require more than intentions—they need a trusted advisor. This person, experienced and senior, offers honest feedback and challenges decisions when necessary. The advisor must earn the organization's trust—a process that can occur in as little as three months if the right mandate is in place

With trust established, continuous feedback and idea exchange become possible, enabling the company to thrive. This culture of open dialogue and consistent feedback fosters innovation and ensures every voice is valued: pharma needs more of that for the patient's greater benefit.

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Stay tuned as we continue to explore these and other important topics in healthcare, with a focus on the pharmaceutical industry.

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