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Unlocking the value in Big Pharma
In the pharmaceuticals industry, bigger doesn't always mean better. Indeed, the largest companies haven't necessarily produced the highest long-term returns; throughout the 1990s, success was more closely related to the development of blockbuster drugs and to a strong presence in the US market. But that hasn't stopped the largest players from creating a new class of heavyweight through a recent round of mergers and acquisitions. What do these companies know that the market doesn't? Although no guarantee of success, size is becoming more and more beneficial in several areas, including the costly process of discovering drugs.
The take-away: The biggest pharma companies can prepare to meet the challenge of size by reconsidering their organizational structure, their processes for making decisions and allocating resources, and their accountability and incentive systems.
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© 1992-2003 McKinsey & Company, Inc
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