Redesigning operating models to drive life sciences excellence

Continually revisiting both internal and external processes to drive agility is essential in today’s environment.

In brief

• Amid a rapidly evolving operating environment across life sciences, industry leaders are focused on driving agility and resiliency.
• To enable success, they must evaluate and redesign these models on an ongoing basis.
• The benefits of this approach include increased speed to market, improved customer engagement and the ability to identify growth opportunities more quickly.

Amid ongoing transformation across the life sciences industry, commercial leaders remain focused on outperforming the market and establishing themselves as leaders in their prioritized therapeutic areas (TAs). The COVID-19 pandemic drastically changed how customers interact with pharma, requiring agility in operating models to drive various omnichannel approaches for customer engagement. A growth mindset that looks beyond launch excellence and continuously assesses operating model effectiveness is especially critical for organizations that are entering new TAs where they may have a limited market footprint. To enable success in today’s environment, commercial leaders need to constantly evaluate customer engagement trends, competitive pressures, internal ways of working, portfolio performance and other key areas to ensure the organization’s operating model is fit-for-purpose.

Modern operating model redesigns go far beyond cost-cutting, instead focusing on new ways of internally organizing to enable better collaboration and process efficiencies that accelerate go-to-market activities. Organizations that do not take this holistic approach may experience operational inefficiencies, reduced speed to market or market impact, and less customer centricity. Below, we explore leading practices on transforming operating models to drive agility and keep pace with shifting customer and patient expectations.

Catalysts for life sciences operating model evaluation

Our recent analysis of customer engagement trends from the perspective of payers, providers and pharmacists has found that macro shifts in the industry (e.g., health care digitalization, proliferation of health care data, regulatory and policy shifts, vertical integration) have significantly influenced stakeholder preferences on engaging with pharmaceutical organizations. Additionally, new ways of working, hybrid engagement, and the growing desire for tailored medical content and literature all signal shifts in stakeholder engagement.

These changes highlight the need for pharma organizations to tailor their go-to-market functions (e.g., marketing, sales) and provide a more streamlined structure to deploy specialized engagement capabilities to their customers and patients. To do so, industry leaders need to rethink and redesign their operating models to reflect these evolving customer engagement trends and enable their organization to best serve their customers’ needs. This process involves an ongoing, iterative evaluation of the operating model (e.g., internal structure, guiding principles for collaboration) to determine if it leverages the right mix of capabilities and resources to drive organizational excellence across therapeutic areas. Depending on future business goals and the degree of change required to achieve them, organizations can dynamically adjust their operating models to remain competitive in the market and create long-term value.

The criticality of the operating model for life sciences companies

Operating models outline how a business structures its processes, resources and customer interactions to deliver its products and services to the market. This approach guides how an organization’s functions, business processes and ways of working are set up to enable the execution of strategy and operations for an organization. Most commercial operating models fall within a spectrum of three designations or archetypes:

Note: Commercial entities are defined as the company functions organized together to support the delivery of products and services to customers for profit. They are similar to business units, but may or may not own profit and loss (P&L) accountability.

While most organizations prefer a hybrid model, which enables flexibility in leveraging key shared functions, there may be trade-offs to consider across the different types of operating models. Organizations need to weigh the benefits of establishing strong commercial entities vs. strong support functions based on their unique portfolio characteristics and strategic objectives.

Key steps for life sciences leaders to establish an effective operating model redesign 

Reimagining and developing an agile operating model will require an eight-pillar approach, with key questions to consider for each pillar. For example, is your operating model intelligent enough to respond to customer and patient needs?

Summary 

These eight steps will arm commercial leaders with the tools necessary to evaluate their operating model in the context of their broader business ecosystem. Organizations that regularly conduct ongoing competitive assessments are better suited to identify major catalysts requiring operating model redesigns. If executed well, these assessments will foster an agile growth mindset across the organization and empower commercial leaders to evolve their operating model within today’s dynamic health care environment.