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Setting the Right Organizational Structure for Commercialization

With a slow, long, and regulated road to successful drug development, along with standard approval gates required for progression, the approach to organizational structure for commercialization management is unique related to other industries. As a clinical-stage company progresses through the drug development cycle, the success rate of milestone achievement decreases while costs continue to increase, placing greater emphasis in efficient execution which is enabled by right-sized organizational structures.  A drug product’s approval is the lifeblood of an organization’s existence so it’s imperative that a company has the proper organizational structure to enable success.

The organizational design, organizational structure for commercialization, and network at each phase of drug development is a reflection of how a company is organized to achieve the specific goals set forth at each drug phase. It can be a critical differentiator to enable speed and efficiency through the drug development cycle. As a company progresses through the drug development lifecycle, subject matter expertise will be incrementally scaled and organized accordingly, achieving a desired state that can support drug commercialization and patient support. Early in the drug development lifecycle (i.e. drug discovery, pre-clinical studies) organizational design is predominately streamlined around scientific and technical knowledge bases. As progression occurs to First-In Human (FIH) drug trials, organizational expansion in critical operational areas such as Quality, Supply Chain, Manufacturing, and other support functions is essential to achieve respective milestones.

Things that make you great can become your biggest weakness as you progress through the commercialization roadmap and it’s important that life sciences companies recognize that core competencies such as resources, processes, and technologies in the early stages of your company may not be the same ones in later stages. This paradigm shift is difficult for companies to achieve. Companies get caught in the “Bermuda Triangle of Growth”, where they are unable to put the organizational resources, processes, and technologies in place to scale beyond established networks.

Organizational scaling is a transformational event that is resource intensive and culturally impactful. Pro-active reflection on operational strategy, design, and execution for pre-commercial companies is paramount to thoroughly evaluate the myriad options to prepare for, support, and exploit all advantages of drug commercialization. But how do these companies begin the journey of organizational design? How can they determine the best organizational design and structure to meet their goals and gain a competitive advantage?

Organizational Structure for Commercialization Design Methodologies: 

Step 1: Organizational Network Analysis (ONA)
An ONA exercise is a structured approach to visualize how information flows through an organization, specifically data, information, and decisions. This analysis sets the foundation for how information is flowing, can flow, and should flow. It will help one understand the critical nodes (people) within the organization, uncover hidden talent potential, and arm your organization with the right structure to be more agile and adaptable. Once the analysis is completed, continuous improvement initiatives can be kicked off, targeting areas where investments in technology and resources can be made to achieve the best return on investment (ROI). The analysis will aid in organizational transformation as it will provide the necessary insight to determine where an organization needs to adapt before entering the next drug phase.

To explain how impactful this analysis can be, consider a pharmaceutical company entering Phase 3 of drug development. The clinical trial protocol calls for 2,000 patients to be enrolled over 10 clinical trial sites within the United States. Phase 2 had a total of 300 patients that were enrolled only over 2 sites. The Organizational Network Analysis (ONA) illustrated that during Phase 2, the majority of the operational work started, stalled, or stopped with two roles in Supply Chain and Quality respectively, even though both functions had a total of 10 roles. As the company advances to Phase 3, the workload will exponentially increase for these two roles if the current organizational structure for commercialization remains static, placing high risk on the organization to deliver effectively to meet Phase 3 goals and causing severe burnout for the employees. The ONA offered valuable insights that the organizational design is not sufficient to support Phase 3 and will need to be modified to increase operational effectiveness and use talent efficiently.

Step 2: Enterprise Destination Mapping (EDM)
The most effective and successful way for a pre-commercial company to bridge the gap between strategy and execution is to build a clear vision that cascades as a tangible operational plan throughout their organization. Clarkston Consulting’s methodology brings the “future to the present” via Enterprise Destination Mapping. By making the future our new present, we are better suited to create roadmaps and plans that get us closer to our aspirations and ultimate ambitions as an organization. Ambiguity breeds mediocrity and for life science companies that are in the mid-to-late stages of drug development, they cannot afford to focus on areas that are not critical to the goals.

Deploying EDM will allow a company to construct a tailored organization design and structure that will be best suited for the future. Its attributes will enable employee engagement around a common and articulated vision, emphasize goals and objectives of each stage and measure their progress, and continuously measure the company’s capabilities against goals by performing respective gap analyses whether through people, processes, or technology.

As an example, a biotechnology company that had successful results in Phase 2 was considering expanding its manufacturing network from 1 Contract Manufacturer Organization (CMO) to 3, anticipating a higher demand profile at launch. Organizational leaders assumed this would be the optimal approach to growing their capacity. But after bringing the “future to the present”, and looking at all the enormous amount of technical, quality, and regulatory work required to stand up and partner with another CMO, they realized, under the new realities, the net present value of a capacity investment would be greater with the purchase of new equipment assets installed at the established CMO.

Step 3:  A Structural Evolution
Taking guidance from Organizational Network Analysis (ONA) and Enterprise Destination Mapping (EDM) results, the next step is to launch the organization into a movement of structural advancement, filling in talent gaps through acquisition, outsourcing, partnering, development or a hybrid of all. The organizational evolution will be tailored depending on the drug development phase a company is in.

One of the biggest challenges and constraints when executing on the structural evolution to commercialization is scaling an organization that aligns with the existing culture of the company. Based on our experience, the challenge with pre-commercial company’s culture is that it needs to mature. For a company to grow, activities that were done a certain way by certain people may not be the best use of resources anymore. Incremental investments in people, processes, and technologies may be the better approach to exploit value, become more efficient, and focus resources on continuous improvement initiatives.

The exponential growth in the pre-commercial company’s external stakeholder network, a byproduct when a company evolves, can also prove challenging. Through an operational lens, for example, partnerships with contract laboratories, manufacturers,  service providers (e.g. pharmacovigilance, order management) expand, requiring an organization’s structure to be foundationally sound but agile to manage differentiating aspects of each one. The goal is ensuring that outsourced partners capabilities and best interests are adapting to the dynamic requirements of the organization as it continues its journey of structural advancement.

In summary, managing and operating the current organizational structure for commercialization while evolving it throughout the drug development cycle isn’t an easy task; those who are able to straddle both, and plan ahead successfully are much more likely to build the organization for success, scalability and sustainability.

Following the three simple steps above have proven to be a successful framework to implement for evolving a pre-commercial organization to a successful commercial one.

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Tags: Organizational Effectiveness, Precommercial