Complexity of Project Management in the Pharmaceutical Industry
Evonik Corporation Birmingham Laboratories
Driving a product to the market safely, quickly, and cheaply is the best way for a pharmaceutical (pharma) firm to be successful. Pharmaceutical companies encounter enormous challenges during the long product-development process. Today's fast-paced competition requires efficiency in all aspects of business. The identification of risks at the right stage and an effective mitigation plan are key factors for success, both financially and technically. The complex drug-development process from lab to launch includes management of several business processes, such as technical development using quality by design, regulatory strategy, clinical studies, and supply chain. These processes are affected not only by many circumstantial factors but also by each other. The inherent uncertainties during the evolution of any of these processes require constant change in plans. If the risks associated with the uncertainties are not managed in a timely and effective manner, the complexity of the situation increases dramatically and it subsequently becomes cost prohibitive for the developing industries to move forward. Although project management has been known to drive industrial success through effective risk management in other industries, it has only been introduced to the pharma industry in the last decade and is continuously evolving. This article identifies challenges in project management in the pharma industry. The analysis of critical factors, such as the roles of project managers and stakeholders, team communication, and key business processes, helps to identify strategies for addressing these challenges. This process can help put pharma companies on the road to success in launching a quality product that can improve quality of life.
The cost of global healthcare is increasing exponentially irrespective of growth in the consumer price index. It is projected that the estimated healthcare cost of seven trillion US dollars in 2011 will be doubled in the next decade. Currently, the cost of developing a single drug is over one billion US dollars compared to 138 million US dollars in 1975 (International Federation of Pharmaceutical Manufacturers & Associations, 2012). The increase in aging populations with chronic conditions, the monopoly by healthcare providers, and the development of newer innovative and complex therapeutics are major contributors to the higher healthcare costs.
It is well established that a research-based pharmaceutical industry is the main source of all modern pharmaceutical products. Innovative medicines can help in controlling healthcare costs. For every 24 US dollars spent on new medicines for cardiovascular diseases, 89 US dollars were saved in hospitalization and other healthcare costs (Lichtenberg, 2008). In one example, the cost of surgeries associated with peptic ulcers has been reduced from approximately 17,000 US dollars to less than 1,000 US dollars because of innovative treatment using antibiotics (US Department of Health and Human Services, 1998). This is not only less costly but also improves patients’ quality of life with a non-invasive treatment pathway. Global healthcare demands that the pharma industry develop medicines that save and improve the lives of millions of people at a lower cost.
The pharmaceutical industry also has its own obstacles to profitability. Higher “first to market” competition in developing generic drugs, more stringent regulatory requirements, and increasing research and development (R&D) costs for innovative new drugs force the industry to restructure the strategies to reduce the internal costs. In general, it takes 10 to 15 years and researching approximately 10,000 molecules to launch one new product to the market. The activities during this period need coordination between many internal functional groups, such as R&D, regulatory, legal, finance, supply chain, sales, and marketing, as well as external partners. The efficiency in coordination between different functional groups is crucial.
The regulatory policies and compliances in developing a new drug are changing and becoming tighter, impacting product development, manufacturing, and registration strategies. The wait time to obtain authorization for a product launch has increased, affecting the economics of drug development. The pharma industry is under pressure to accelerate the drug-development stage to compensate for the longer wait for regulatory approval. With access to many innovative ideas, companies often try to develop many products in parallel. In this case, management often encounters hurdles in focusing on any single product. As the pharma industry learns the importance of focusing on a single product while developing multiple products in parallel, the use of project management strategies is becoming more and more popular. Inherent risks in every stage of the science of developing a new product need to be managed effectively. The integration of risk management into product development is the key to reducing time and cost. As the level of information increases with multiple possible scenarios during the life cycle of product development, the decision-making process becomes more complex. In other industries, project management takes greater responsibility in managing risks and implementing the risk-mitigation plan. The pharma industry began taking advantage of this approach in the last two decades. The concepts of project management and best practices in project management continue to evolve in the pharma industry.
Uncertainty in the Pharmaceutical Industry
Quickly translating basic research findings into meaningful therapeutics is a multifaceted process. It requires a continuously evolving, knowledge-based ecosystem utilizing user feedback to improve. Use of human factors, measurement by instruments, and statistical analysis contribute to obtaining new information in scientific discovery. However, inaccuracy lies within each of these components. Scientists design experiments based on assumptions to obtain data that verify models and theories. Often, these assumptions are based on limited historical knowledge. As new information becomes available, the assumption changes, and this impacts the original hypothesis. Although instruments are used in quantitative analysis, the functionality of the instruments is uncertain, contributing to inconclusive results.
The Complexity of Project Management
Project management becomes more complex due to known risks (known-unknown) and unknown risks (unknown-unknown). Lack of effective risk management can result in turbulence (chaos) in the project that can be incontrollable. The use of available techniques, such as Program Evaluation and Review Technique (PERT) and Gantt charts, helps in identifying risks and developing a mitigation and contingency plan, which is beneficial in managing the known or foreseeable risks.
Project management encounters greater challenges at the occurrence of unknown-unknown or unforeseeable risks. Managing the newfound risks adds agility and branches to the decision tree during the project execution. These risks make contingency planning more difficult with lack of known decision tree branches at the planning stage. The management of these risks requires an approach developed specifically for the project. For example, team flexibility, developing a new technical plan, and greater communication for buy-in by the key stakeholders need to be considered.
Challenges in Project Management in the Pharmaceutical Industry
In the pharma industry, with added uncertainties from the process of scientific research, project management becomes more challenging. Project management in the pharmaceutical industry involves:
- Scope management
- Project planning, execution, and monitoring
- Timeline and budget planning and management
- Stakeholder management
- Management of regulatory and compliance strategies
- Environmental safety
- Risk management
- Team management
Challenges underlie each of these aspects of project management. The interdependencies between these elements make it even more complex. While the developed product may be effective for the intended use, it may require hazardous chemicals and ingredients in the production process. Any deviation from safety plans can create long delays in the project timeline.
While changes are inevitable, it is natural that the stakeholders may internally or externally resist implementing a change. Creating an environment that embraces change is key in managing the stakeholders. The project manager should continually evolve his or her style of approach in managing the stakeholders. Improving soft skills for effective communication is as important as improving listening skills. A policy of “no surprises” and open communication is beneficial in preventing the delivery of erroneous information.
Recently, more industries are moving toward matrix organization. In a matrix organization, there are four key players of project management: project manager, functional managers, upper management, and project team members.
Exhibit 1: Components of Project Management in Matrix Organization
While each of these components has its own role and responsibilities, interdependencies become inevitable. The project managers are challenged in keeping this interrelationship viable to benefit the project. In addition, project managers in the pharmaceutical industry encounter challenges in:
- Resource limitation
- Cross-functional team management
- Institution processes
- Cultural differences
- Customer management
With pressures to cut costs, resource limitation is a major concern in project execution. A limited pool of resources with desired technical expertise makes it even more difficult to execute the work plan and meet the timeline. At the product-development stage, engaging the cross-functional teams becomes a challenging task for the project manager. Often the team members also work on multiple projects. The team members’ skills in prioritizing, realizing the importance of the tasks, and effective communication become crucial to the productivity of the matrix organization. Lack of communication between team members, and between team members and their functional managers, can create a chaotic situation within a project.
As businesses face continuous changes in customer needs and in regulatory, quality, and safety requirements, updating the business processes becomes an exhausting task to accomplish. Often, project managers fall in a challenging situation working with outdated processes. Upper management's support in establishing clear business processes will help the project manager and project team in accomplishing the project goal.
Managing cultural differences within the team, within the host businesses, and on the customer side is a challenge that the project manager encounters regularly. Customer management adds another layer of challenges in managing projects that involve intercompany collaboration and contract manufacturing organizations (CMOs). Ineffective management of the customer needs can yield scope creeps, increasing the project budget and causing delays. Establishing the customer expectation in alignment with the scope early in the process helps in satisfying the customers. Project management acts as the face for the host company to the customer and vice versa. This puts project management in a difficult situation when the customer expectation does not match the promises the host company offered as per the agreement. Working with the customer to develop of a clear scope definition in the early stages of the project is the desired approach to prevent any confusion.
Critical Success Factors
How does one measure project success? While it is clear that a project is successful if it delivers on time and within the budget, projects that do not meet these criteria do not automatically fall into the unsuccessful category. The lessons learned through a discontinued project can create larger opportunities for the businesses and make a greater impact on business profitability in the long term. Therefore, two components of project success, technical and business, should be evaluated while developing metrics of project success.
Now the question is: what are the critical factors that impact project success? As discussed previously, the roles of the project manager and stakeholders, team communication, and business processes have a great impact on making the project successful:
Exhibit 2: Key Components of Project Success
Role of Project Manager:
While project managers are focused on making the project successful, they also need to be aware of the organization's strategic goals to understand where their projects fit into the company's portfolio. With a higher degree of uncertainty, often projects become more complex and require certain resources with short notice. Having a plan to manage such instances is critical. Project managers need to work closely with other project managers in the business to understand the interdependencies within the project, understand resource conflicts, and take action accordingly. The project manager needs to monitor and manage the impact of the changes on the risks. In today's environment, to keep up with market need, the changes become a norm in businesses. While it is one of the major responsibilities of a project manager to minimize the changes, especially in the project scope, a project manager must embrace and take advantage of changes in other steps in order to make the project successful. Project managers play a major role in facilitating several lines of communication in managing projects successfully. Continuously educating the team as well as the functional managers can become a daunting task for the project manager. In addition, making team members aware of their roles and responsibilities, and creating a RACI (responsible, accountable, consulted, and informed) during the planning stage, will prevent the confusion in the later stages. Keeping the team more enthusiastic and making them feel the importance of their contribution is another strategy that the project manager may want to consider.
Role of Stakeholders:
In addition to the project manager, other key stakeholders, such as team members, sponsors, functional managers, and customers, are pivotal and play significant roles in making a project successful. In contract research organizations, any changes in business decisions at the customer side may result in discontinuation of the projects. It is just as important that the technical team remain accountable for the technical success of the project as it is that the sponsors uphold their commitment to provide financial support and other resources.
Cross-functional team communication and collaboration are two of the most important factors in minimizing risks in projects where the information from one functional group impacts the progress of another functional group. Proactive communication should be encouraged at every level to prevent any confusion and unnecessary rework.
The integration of business processes into the execution of projects is inevitable. In the pharma industry, the business process is impacted not only by internal organizational changes but also by many external factors, such as changes in regulatory, quality, and safety requirements. Failure to update the business processes in a timely fashion will impact project success. A change in regulatory requirements at a late stage of the product development may prompt rework or additional steps. Similarly, a change in environmental safety requirements may require additional time and funding to take appropriate measures to prevent unwanted exposures. Internal organizational changes are frequently instituted to make businesses more productive, efficient, and cost-effective. The cascading effects of internal organizational changes have a great impact on the project success. Keeping up with internal organizational changes and updating the business processes accordingly takes time. Transition time and lack of appropriate communication by the upper management may create confusion at the project level. Open communication and strong support by the upper management are greatly desirable in moving a project forward.
The team members, project managers, and upper management share responsibilities in creating an environment conducive to project success. Support from senior leaders in providing the resources and desired talents in a timely fashion is crucial in executing a project successfully. A program-management practice that clearly defines the objective, roles and responsibilities, and accountability, as well as embraces open communication, contributes a great deal to the project. Adding flexibility and incorporating branches to the decision tree at key stages of project execution result in a competitive advantage. Proactive measures by the project manager to mitigate risks and create a culture of effective communication among stakeholders and team members are valuable factors in achieving project success.
International Federation of Pharmaceutical Manufacturers & Associations (IFPMA). (2012). The Pharmaceutical Industry and Global Health: Facts and Figures 2012 Retrieved on 01 March 2014 from http://ifpma.org
Lichtenberg, Frank R. (2008). Have Newer Cardiovascular Drugs Reduced Hospitalization? Evidence From Longitudinal Country-Level Data on 20 OECD Countries, 1995-2003. Retrieved on 01 March 2014 from http://www.nber.org/papers/w14008
US Department of Health and Human Services (HHS), Centers for Disease Control and Prevention (CDC), Division of Bacterial Diseases (DBD). (1998). Heliobacter pylori and Peptic Ulcer Disease. Retrieved on 01 March 2014 from http://www.cdc.gov/ulcer
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© 2014, Asima Pattanaik, PhD, PMP
Originally published as a part of the 2014 PMI Global Congress Proceedings – Dubai, UAE