Article: https://www.lifescienceleader.com/doc/the-story-of-pfizer-s-r-d-turnaround-0001
Pfizer faced many challenges in 2009. Critics blamed Pfizer for its focus on acquisition instead of R&D to foster growth and the follower mentality. Fast forwards to 2021, we can all applaud Pfizer for its innovation on mRNA and its role in Covid vaccination. Without a successful turnaround, not only Pfizer would fail with the loom of a new startup like Moderna, but we might all suffer the consequences.
To turn around, Pfizer had done several things right.
One, they refocused the company on few domains, steering resources to become an ambidextrous organization. On one hand, they focused on areas that they were the top three leaders and double-downed — their mainstream business. Within those areas, they recruited top biomedical thinkers and innovators and came up with new approaches, building strong competency in generic therapy. Although the article didn’t mention the separation of resources and allocation, it briefly talked about how the company countered the mindset of “just doing more of the same”. This hinted towards a decision-making process that allowed independent units to invest and explore new innovation while being integrated at the leadership level.
Two, their strong focus and dedicated resources clearly landed them into the ‘The Producer’ quadrant. They can update investors within two slides, showing commitment and focus on getting it right. All innovation units have the dedicated resources. M&A is no longer considered the main growth engine, which allows the company to channel even more resources into internal growth as ‘The Producer’ innovation power.
Pfizer’s success to turn around is remarkable. What I liked about their approach is how they make use of Values and Processes to put their Resources in the right place. The right Values (focus vs doing many similar things, focus on where they are at top three market leaders) and Processes (fix the culture and decision-making process) helped them make the correct strategic bets on oncology, inflammation and immunology, pneumococcal vaccines, and hemophilia and growth hormones business. They also correctly divested away from neuroscience via a spin-out and setting of a new VC fund.
What I could have done more is to focus on smaller M&A to build up the capabilities, instead of wasting efforts on big mergers that would be blocked by the U.S. government anyway. The current political climate doesn’t allow big M&A to happen. However, they should continue to monitor smaller startups that could bring great synergy and capabilities into their R&D pipeline, such as Moderna.
