In The Mind Of The Strategist: Business Planning For Competitive Advantage, Ohmae describes ‘strategy’ as “…the way in which a corporation endeavors to differentiate itself positively from its competitors, using its relative corporate strengths to better satisfy customer needs”. In short, strategy is a means to achieve a vision. Given these definitions of strategy, how then would one define Strategic Planning? In his book Strategic Planning, Abraham defines Strategic Planning as “…a process followed by a company collectively trying to agree on where it is going (vision) and the way it will get there (strategy)”.

If the referenced definitions of strategy and Strategic Planning can be agreed to, why then do so many organizations begin and end both processes with an Excel workbook that articulates a financial gap analysis? Have both processes been usurped by financial planning which, though well intentioned, has inadvertently put the cart before the horse? With so few diseases having been cured, opportunity space for competitors in the Drug Development industry is unfathomable, except of course, if strategies are really not differentiable and the vision is uniquely shared by all. So, where have all the strategists gone?

In their seminal HBR article, ‘The Core Competence Of The Corporation’, Prahalad and Hamel define ‘core competence’ as “a bundle of skills and technologies that can be leveraged across the enterprise…that provide potential access to a wide variety of markets, makes a significant contribution to perceived customer benefits of the end products, and is difficult for a competitor to imitate”. If these capabilities underpin a corporation’s strategy, it is arguable that corporations with similar capabilities should have similar strategies. Is this the point to where large Drug Development companies have migrated and, if it is, should we be surprised that therapeutic advances across major disease states are ‘more or less’ similar?

If a corporation defined a desired state (no matter how broad) and internalized a roadmap – not necessarily a single route – to enable it to get there, one would anticipate that this organization would build or acquire the core competencies necessary to attain that state. Conceptually therefore, unless desired states were similar, strategies based on core competencies would be different. The reality of the Drug Development industry is that most of the major players are competing for the same opportunity space rendering it quite difficult to engineer truly differentiable strategies based on distinguishable and difficult-to-imitate core competencies. Does this imply that strategies for this sector of the industry are ‘more or less’ the same? If so, who stole the strategy from Strategic Planning?

Over the past decade or so, aggregate R&D investment within the Drug Development industry has headed north while Productivity - defined as the annual number of FDA approvals of new drugs often referred to as New Molecular Entities (NMEs) - has declined steadily from a high of 56 in 1996 to a mere 17 in 2007. In an era of unprecedented patent expirations and human resource contraction, much of the industry continues to march to the tune of ‘outsourcing’ to better manage its cost structure while many of the fundamental problems that beleaguer Drug Development remain in a seemingly unflagging state. These include (a) poorly predictive pre-clinical disease models leading to high attrition rates in late clinical development, (b) a dearth of genuine pipeline opportunities, (c) inefficient decision-making created by the fear of making too many Type II errors, (d) the unfulfilled promise of the ‘omics’ revolution, and (e) despite modest successes, a general failure to radically alter the course of disease progression.

What therefore is the prognosis for the Drug Development industry? How much longer can it support an inefficient and waning R&D Productivity Business model? Who is/are incentivised to, and will lead the charge to radically alter Drug Development or will good, old fashioned logical incrementalism continue to prevail? Who is/are responsible for Strategic Planning and Portfolio Management and how well are they connected? Whatever happened to the core competence of the corporation?

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