Next Steps in Globalization of Life Sciences

Life sciences companies have long started to globalize their business systems. Now is time to go all the way

The life sciences industry has experienced an impressive growth over the last decade, e.g., compound annual growth rates of 12% in pharma and 15% in medical devices. This growth is driven by an aging population still more reliant on pills and other medical aids, the appearance of a variety of new medical products that in many cases have replaced surgery and an increase in the disposable income in many parts of the world. These drivers have compelled companies to further develop themselves as global organizations. Many have focused on integration of production and logistics, e.g., by centralizing production, off-shoring their factories, and streamlining global supply chains. However, historically many have left sales units country-based and independent. Rationale have been that each subsidiary is best suited for approaching the individual market via local knowledge, language and unique understanding of the healthcare system.

This now presents two key challenges for many pharmaceutical companies. The first challenge deals with the lack of exploitation of cost synergies in sales. In other words the individual investments represent a higher total cost for the companies, e.g., improvement of different CRM systems, expenses for uncoordinated promotion materials . The second challenge deals with the lack of knowledge sharing. By not making the different subsidiaries collaborate across borders the companies fail to obtain growth synergies coming from sharing best commercial approaches. 

Four steps can be taken to meet these challenges. The first step should be to define areas of commercial synergies, e.g., KPIs, sales approaches and CRM systems. The second step should be to identify which subsidiaries currently excel in these areas, e.g., based on revenue and efficiency of sales reps. The third step should be to define corporate best practices, e.g., through a thorough assessment of current performance with a focus on optimal ways of selling. And the fourth step should be to define how to roll them out globally, e.g., by listing global requirements and start out with a pilot country.

About the authors: This article was written by a team of consultants from Oleto Associates, a strategy consulting firm based in Denmark. For more information please visit www.oleto.com.

October 2008