Importance of Innovation in Pharmaceutical Industry
Discuss about the Innovation and Creativity in Organisations.
The highly competitive market in present time force the organizations to move towards innovation if they want to gain competitive benefits. Innovation is considered as the driving force that can help in shaping most of the successful companies. It is noted that organizations that construct the innovation culture will explore itself as offensive and the same will help the company in its continuous growth (Mackenzie-Lawrie, 2003). Innovation is mainly considered as the innovation concerning process as well as the innovation-focused product. Most of the organizations in the healthcare industry are trying to bring creativity and innovation in their parameters. Huge companies are also trying to endeavour towards developing the spirit of entrepreneurial as explored by the small firms, sole proprietorship as well as start-ups. This offers the high flexibility as well as high creativity, by permitting them to create a market for the new items or services quickly.
Organizations that can attain this is rewarded through various benefits like first mover advantage. By entering in market firstly, and offering a new product in the market or gradually enhancing the previous product of the firm can support in gaining benefits from a market earlier or either the potential market (Mackenzie-Lawrie, 2003). In contrast to the famous company, Apple, that had not invent the smartphone. But they slowly enhanced the innovative features of their product. Therefore, continuous innovation supports the company in becoming a market leader. This report will discuss Boehringer Ingelheim Group creative and innovation process and how this help in enhancing the performance of the firm. It will also analyse the strength and weakness of the innovative and creative process of the company.
The Boehringer Ingelheim Group is one of the most popular as well as come under 20 leading pharmaceutical firm. Its headquarters are located in Ingelheim, Germany. Boehringer Ingelheim Group operates its international business with around 143 affiliates along with a total of approximately 45600 staff in the year 2016. The primary emphasis of family-owned firm, that was launched in the year 1885 is over developing, researching, marketing and manufacturing of new therapeutic medications value for both veterinary and human medicine (Mackenzie-Lawrie, 2003).
The main strength of the firm is placed over the innovation and creative capacity. This is referred as the key to gain competitive benefits. Sometimes, innovation is the outcome through the few critical steps, but most often it’s derived from the value chain. The diverse cultural viewpoint can support in inspiring the creativity and also assist in driving innovation. If one has the similar people, having familiar background look towards specific issues, which are most likely to occur with similar solutions that might not be required as the ideal solution (Schmid and Smith, 2005). That’s why the more one can attain the various viewpoints relies on multiple experiences and insights; the more one can come up with innovative solutions.
Strengths of Boehringer Ingelheim Group’s Innovation
Innovation protection with the help of trademark, patent rights, and brand holds specific significance in Boehringer Ingelheim Group, which is also a research firm. All these commercial rights are enhancing the targets of both breaches and attacks. The company has also taken the required precautions that permit them in exploring the threats at the starting stage and through commencing relevant countermeasures, defend, as well as a legal place by applying every available legal way so that that risk can be focused and mitigated (Schmid and Smith, 2005).
The consistent emphasis over the business is over innovation oriented areas, and the same is attested through the strategic exchange of the animal health business as well as Boehringer Ingelheim Group consumer healthcare business. The exchange contract was signed in the year 2016, and its transaction ended in the year 2017. This transaction has enhanced the competitiveness of the company’s animal health business in the significant growth markets of the industry (Schmid and Smith, 2005).
Most of the healthcare R&D is still undertaken traditionally, slow and costly. The United Genomes Project (UGP) was set up for solving the issue. The project makes use of innovation for developing the medical innovation by the open source database. Attaining knowledge of various genomes is crucial, relying on DNA, different healthcare mainly work differently in the body. The UGP develops the possibility for both the aspiring professionals and medical professionals for making use of open information for promoting innovation (Schmid and Smith, 2005). The UGP idea spur through the fact that UGP founder creates breakthrough medical exploration with the assistance of internet data. This type of discovery would have never been possible without the support of online information and resources, as there is no way to gain the knowledge by costly research methods.
Developing the unique and new medications might lead to spending billions, and the same might get challenging. In the current years, the research and development rate of success has come under the pressure. In the year 2013, the American FDA had permitted to have around 32 new medicines; it’s a figure that had remained hugely flat in the last few years. Boehringer Ingelheim Group is required to ramp up their innovation and creative process to maintain the reliable outcomes that expect the shareholders (Schmid and Smith, 2005). The participant in the survey had mentioned that 14% of the total revenue comes from the new items and services that were launched last year, in comparison to the 25% of the high innovators. This had got reduced in various other industries (Schmid and Smith, 2005).
Innovation Protection at Boehringer Ingelheim Group
Around half of the executives working in Pharma companies had mentioned that right metrics is required for examining the progress of innovation and for tracking the ROI, as the same is quite challenging for the company (Hültenschmidt and Behnke, 2010). It is quite easy to explain the metrics for analysing the perspiration of innovation equation as compared to piece of inspiration, but it is noted that breakthrough innovation is usually considered as the result of latter. Executives working at Boehringer Ingelheim Group had analysed various factors that are crucial (Hültenschmidt and Behnke, 2010). There are more than two-thirds of it that view to developing the environment, which is failure-friendly and help in setting up tone through top with the help of senior executives in the innovation and creative projects and for setting the internal interest of the groups.
Due to the lack of the research and development productivity, the industries are emphasizing over shutting down innovation gap for around more than two decades by the help of business and operating model shifts as well as through restructuring initiatives. Organization is looking around to look towards silver bullet technologies like omics, six sigma, process re-engineering, along with adaptive trails (Hültenschmidt and Behnke, 2010). At one point, where all these approaches hold the positive effect, spot examination, incremental changes, and focused initiatives don’t lead towards the important or either sustained research and development improvements in productivity.
It is analysed that no solution can assist in bridging the productivity gap between research and development. The pharmaceutical innovation future relies on the holistic approach that helps in examining the dimensions of R&D, such as process, strategy, funding, and organization (Hültenschmidt and Behnke, 2010). Mainly, in this process, high performance are those companies that move against the grain and try to take the comprehensive cations for enhancing the research and development returns of pharmaceutical, including both urgent and the one that make time for gaining the competitive edge in the changing and competitive market (Hültenschmidt and Behnke, 2010).
Pharmaceutical innovation is also going across the trouble and unpredictable future. The critical performance metrics also highlight the challenges such as blockbusters, these are quite rare, and most of the companies are coming across patent expirations. Next is new molecular entities (Hültenschmidt and Behnke, 2010). The quantity of non-molecular entities are declining in the last 15 years, and there is no change in the reduced trend. Next is cost, in which it is analysed that industry data had shown that approximate cost is around $800 million for developing the non-molecular entities. Currently, it’s calculated to approximately $1.5 billion to approximately $3 billion. Next challenge is related with the attrition of drug, which had remained flat to around 85% around the phase, despite its various technologies and initiatives that are designed for its improvement. Next challenge is externalization. It is noted that in past decades, around 60% of the innovator’s molecules and 82% of the innovative biologics had made its roots outside the considerable pharma firms (Hültenschmidt and Behnke, 2010).
Boehringer Ingelheim Group’s Emphasis on Innovation
Since the research and development productivity of pharma companies had become the challenging strategy for the industry, there are still many companies that are tried to implement the initiatives to accelerate the change. For instance, Boehringer Ingelheim Group had applied a model, in which biotech partners had its rapidly increased share for conducting research. Boehringer Ingelheim Group is also aggressively externalizing the research and development activities and try to make massive acquisitions in biotech firms.
Usually, most of these programs are getting useful in isolation, but at the same time, they don’t have the sustained effect due to its swiftly accommodated changes, which create the external effect. Reinventing pharma innovation implies making the critical changes in every part of the holistic framework, which also includes the intellectual property and strategy and funding sources, and organization (Hültenschmidt and Behnke, 2010).
There has been a critical advancement in the biological area in the last 20 years. In the year 1980, it is noted that molecular biology came into practiced in pharmaceutical research and development, though it took around the year 1990 for the application of first molecular biology that relied on the small molecules to get permitted (Schmid and Smith, 2005). Most of the pharma companies like Boehringer Ingelheim Group had invested in high throughput screening (HTS) through the mid of 1990. Though individual success that is attained through subset screening might get attributed towards investment, most of the drugs might not get developed from this technology. Currently, Boehringer Ingelheim Group has UK-427,857, which is a novel of CCR5 receptor antagonist that treat the HIV/AIDs and is highly developed (Schmid and Smith, 2005).
Judged through the population of phase III in the database like IDDB, it looks that various organizations are working in this process for selling the medicines in the market that are explored through HTS screening, or either they are attained through the present understanding of pathway biology (Schmid and Smith, 2005). Therefore, reductionist paradigm, which is also known as the molecular target-based discovery of drug is highly slated in current time and is compared with the past one, and the other one, holistic paradigm, which is known as animal-based and tissue-based discovery of drug; these are helpful in producing medicines.
One of the vital driver related to creative and innovative process might have the high fiscal emphasis on crucial pharma firms (Schmid and Smith, 2005). The expiration of a patent is the critical blockbuster drugs, like Zantac as well as Prozac that exemplify the complete dilemma of pharma companies for every expiry of the critical blockbuster drug. This is mainly for more than one among new medicines, which came in the market for not only replacing the revenue but also for its growth and expansion (Saari and Abbas, 2011).
Challenges in Pharmaceutical Innovation
This has resulted in most of the pharma companies to strict the internal procedures of management that set the benchmark for research and development performance in the sector, and look around for the best practices along with various ways for creativity and innovation and also minimize the cost (Saari and Abbas, 2011). Along with this, new performance, as well as goal-based management of research and development, might contribute towards the enhanced approval of drugs.
The industry of biotechnology has also able to manage the exploit that promises the new advancement in biology earlier than the pharma industry, by the help of undue emphasis over the new technology of biology, and the same had steadily expanded the innovation of product between the years 1985 to 2004 (Saari and Abbas, 2011). Therefore, in the present decade, one can quickly look around for more research and development process, that is driven by technology. All these investments made in research and development lead towards the introduction of the drug in the previous decade.
Boehringer Ingelheim Group had come across paradigm shift that emphasizes reinventing creatively, along with reinvention of organization and corresponding tactics. Pharmaceutical firms are required to urgently rethink about the creativity in their business model, to come across the paradigm shift, which is happening like, health authorities are increasing challenges in the context of marketing conditions and registration of drugs (Saari and Abbas, 2011). Payers are left with no choice, but to place the pressure on the cost of the drug, which also covers innovation, and healthcare professionals had also minimized the interactions and had become less sensitive towards giving promotion.
To enhance the creativity and innovation at Boehringer Ingelheim Group, it is essential to figure out how one can quickly leverage the creativity, to improve the performance of the firm. It is critical that Boehringer Ingelheim Group should try to answer few questions like, why creativity is crucial for the company. How one can easily craft the strategy of creativity? How can they construct the creativity based company? To meet the deteriorating environment of competition, Boehringer Ingelheim Group should try to build the creative model of business for minimizing the cost and provide better customer value (Riahi-Belkaoui, 2003). The new business model that Boehringer Ingelheim Group will craft will minimize the cost by mitigating the less costly services and features. It will also enhance the value of customers by providing them with new advantages and services. It will also make Boehringer Ingelheim Group rethink so that both the operational and functional activities get entirely align with the assistance of related strategy (Khalique, Jamal, Abu and Adel, 2011).
Boehringer Ingelheim Group’s Strategies for Innovation
To craft the creative strategy successfully, Boehringer Ingelheim Group should explore the business options, where they can attain high competitive benefits. For exploiting the new opportunities in business, organizations should try to develop the new strategies that include various things that hold high customer value (Morikawa and Morikawa, 2016). In this action plan; blue ocean strategy can be applied.
Functional and emotional focus- it is examined that Viagra was not easily placed through Pfizer as the erectile dysfunction treatment, but rather its placed as the solution for improving the lifestyle of patients, by putting focus towards the emotional appeal (Baines, 2010).
Pill services- in the year 2014, Merck had come up with the device that can easily insert the Rebif in patients that are facing the MS4 issue. It also gathers as well as store the information, which can be later on a pass to secure server. The system can also help in promoting the patients towards better adhere to the provided treatment (Baines, 2010).
It is analysed that most of the creative firms often foresee the requirements of customers, which are not realized and then try to seize the options that competitors had either seen or either overlooked. Boehringer Ingelheim Group is required to initiate creativity in the company, by encouraging individual creativity and reward it (Baines, 2010). Group creativity should also be started by introducing the process of formal creative thinking.
The companies that try to aspire to become competitive and successful require to demand and explore the better ways of enhancing the performance of the business through using the human capital (Andersson, 2011). Creativity and innovation are examined at every place in the company, where staff comes up with different and new ideas, which provides the company with competitive benefits over others; therefore, it enhances the performance of the business.
As per resource-based view, companies might achieve competition and attain higher performance by acquisition, subsequent application and hold the implementation of strategic assets. Both the tangible as well as intangible assets are expected to maintain the potential strategic assets (Andersson, 2011). Between the intangible assets, it is noted that human capital is primarily referred as an essential strategic asset. The study applies the descriptive design research for exploring, analysing and describing the relationship among the business performance and human capital of pharma companies (Andersson, 2011).
This design offers the relevant features of a specific individual event or either group of actual life situation. The target population is the Boehringer Ingelheim Group, which is listed under the pharmaceutical companies. The target sample population is 80 according to the manufacturer directory. The sample frame was around 31 domestic manufacturing pharma executives. Petkantchin (2012) had argued that leveraging assets of knowledge is referred as the central prosperity. A company that holds the high performing capital is expected to include top profitability rate as well as it also experiences the high productivity. This is examined through the staff productivity and process transaction, and the rate of success in the product launch is counted (Boehringeringelhim Annual Report 2016, 2016).
Reinventing Pharmaceutical Innovation
The questionnaire target the managers of human resource as well as deputy managers, which are asked to join from pharma manufacturing population. The results depict that human capital creates influence over the pharma company’s business performance. The outcome shows that education and learning, expertise and experience, creativity positively and innovation, and education and knowledge importantly create influence over the performance of the business. Nevertheless, the performance of the business is the outcome of the combined experience and expertise of products, as well as education and learning (Arlington and Davies, 2013). The aim of this survey is tested, and result depicts the three independent variables, such as experience and expertise, education and knowledge, and creation and innovation that have a right influence over the performance of the business in pharma companies.
Conclusion
This research shows about the Boehringer Ingelheim Group creativity and innovation process that help the firm in improving its business performance. This research also shows the benefits and challenges faced by the company in implementing innovation.
References
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Arlington, S. and Davies, N. (2013). Managing innovation in pharma. [Online]. Available at: https://www.pwc.com/gx/en/pharma-life-sciences/assets/pwc-managing-innovation-pharma.pdf [Accessed 10 May 2018].
Baines, D. A. (2010). Problems Facing the Pharmaceutical Industry and Approaches to Ensure Long Term Viability. [Online]. Available at: https://repository.upenn.edu/cgi/viewcontent.cgi?referer=https://www.google.co.in/&httpsredir=1&article=1032&context=od_theses_msod [Accessed 10 May 2018].
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Riahi-Belkaoui, A. (2003). “Intellectual capital and firm performance of US multinational firms” Journal of Intellectual capital, 4(2), pp.215-26
Saari, B. and Abbas, M. (2011). The Relationship between Intellectual Capital and Business Performance: An empirical study in Iraqi industry. International Conference on Management and Artificial Intelligence
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Schmid, E. F. and Smith, D. A. (2005). Managing innovation in the pharmaceutical industry. [Online]. Available at: https://link.springer.com/content/pdf/10.1057%2Fpalgrave.jcb.3040148.pdf [Accessed 10 May 2018].
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