The Innovation Pipeline and Pfizer
Almost everybody schedules projects and initiatives with gate reviews and sequencing in place. But making an impact in innovation means going far beyond coming up with new product news for the next catalogue. It’s really about creating sustainable growth and staying ahead of the game. In the realm of innovation, leaders and winners explore a very fertile world of possibility. Instead of thinking about specific projects, they focus on to pipelines to create a continuous stream of innovations to drive sustainable growth over multiple horizons that can capture real value.
How do innovation leaders think and act differently? First, they clearly think beyond projects and programs. Most of us are doing things on time and on budget with project schedules to keep us on track. But leaders think beyond schedules to their entire growth and innovation pipeline. It’s not just the product development or technology development pipeline and it’s not just the launch schedule. It’s really the growth and innovation pipeline for the entire company. It cuts across R&D, manufacturing, and marketing and includes mergers, partnerships, acquisitions, and new business models. Leaders act beyond doing things on time and on budget and move towards developing options. Their innovation pipeline resembles a Venturi tube where many ideas enter, are vetted and prioritized, developed into multiple products and services and initiatives, and finally delivered only when the time is right. And that timing is often determined by figuring out the risk adjusted net present value of initiatives in the pipeline, both individually and collectively.
The pharmaceutical leader Pfizer is in an industry that has always been driven by pipelines. The public may closely associate the company with blockbuster drugs like Viagra or Lipitor, but their innovation pipeline does not center on that. Pfizer uses that pipeline to help manage everything they do: for proprietary drugs as well as generics and new ventures they get into. They use it to determine how to best manage their acquisitions, like Wyeth in recent months, and manage their partnerships. They’re constantly making tradeoffs and decisions about slowing or speeding things up for now and the future.
A pipeline allows you the flexibility speed something up or change direction when the opportunity arises. In the example of Viagra, the drug was first developed to treat heart disease. In most drug companies, side-effects would be a red flag: if some unexpected side effects developed during trials of a drug, the instinct would be to stop developing the drug because the people focused on dealing with heart disease. Erectile dysfunction could seem much too far afield for those not practiced in maximizing value through innovation. But Pfizer over the last twenty five years has been constantly looking to see how drugs can serve different needs of its customer base.
Again, the pipeline is a critical success factor for all pharmaceuticals, but Pfizer has shown how it can use the pipeline also in developing all the ancillary drug delivery systems, business models, and lead customers – everything that goes with
Pfizer being successful in its industry. Its recent acquisition of Wyeth, for instance, helps its short term bottom line (through efficiencies culled through the M&A process), as well as the medium term (by acquiring a large pipeline of drugs at various stages of development from Wyeth). They can use these gains to help to deal with the long-term challenge facing all players in the pharmaceutical industry – the decline of blockbuster drugs. One way Pfizer is doing this is by expanding its pipeline to include generics, biotech and other aspects of health care.
With Pfizer’s history in mind, you can ask yourself these questions about your approach to developing an innovation pipeline:
- Do we really have this broad definition of concept to customer of the pipeline?
- Are we tracking all our different investments?
- Are we guiding are decisions by determining the risk-adjusted net present value of the pipeline?
- Are we getting the strongest return and leverage on our investments in the pipeline?
- Is there clear accountability and measures for the pipeline?