Cracking the Whip at Wyeth
Wyeth is one of the world’s largest research-driven pharmaceutical and health care product companies. It is a leader in the discovery, development, manufacturing and marketing of pharmaceuticals, vaccines, biotechnology products and non-prescription medicines. Case synopsis When Robert Ruffolo was appointed executive Vice President for R&D at Wyeth, he was given the mandate of shaking up the drug maker’s mediocre performance in that division. His controversial changes included establishing quotas for how many compounds must be churned out by company scientists.
Bonuses were held hostage to managers’ meeting of their quota. Wyeth’s problems are reflective of those plaguing its industry. New drug development is down 47% from its peak during the late 1990’s. Ruffolo wants to bring greater efficiency to the innovation process by instilling tougher discipline as a means of increasing productivity. Although his approach has critics, analysts say that Wyeth’s pipeline has shown major improvement. Robert R. Ruffolo Jr. Shake up the drug maker’s mediocre research and development operation. $2.7 billion research operation Established quotas Bonuses were held hostage to managers’ meeting of their quota.
New drug development was down 47% Greater efficiency to the innovation process by instilling tougher discipline. Wyeth’s pipeline has shown major improvement. SWOT Analysis Internal Strengths Weaknesses Scientists were encouraged to focus on projects that were the safest This system forced scientists to end troubled projects earlier in the transformation process, which in return saved time and money. Brought increased anxiety in scientists
Encouraged scientists to overlook problems with some compounds in order to make their numbers. External Opportunities Threats Wyeth’s pipeline has improved, with a number of potentially hot selling products likely to hit the market within the next few years. FDA approval Competitors Control Systems Formal target-setting, monitoring, evaluation and feedback systems that provide managers with information about how well the organization’s strategy and structure are working. Three types 1. Feed forward control (anticipate problems before they occur) 2.
Concurrent control (manage problems as they occur) 3. Feedback control (manage problems after they have arisen) The control process Step 1: Establish the standards of performance, goals, or targets against which performance is to be evaluated. Step 2: Measure actual performance. Step 3: Compare actual performance against chosen standards of performance. Step 4: Evaluate the result and initiate corrective action if the standard is not being achieved. Types of Control Output control Behavior control Organizational culture control Change
Assess the need for change Decide on the change to make Implement the change Evaluate the change Results 4years since the case was written Ruffolo is doing the same job making almost 9mil a year. 20% of their income is coming from new products. They were sold to Pfizer for 68bil. Kinds of control systems tend to be used to measure the performance of R&D scientist It seems that in the past, behavior controls were used to measure their performance. A scientist was considered a good performer as long as he or she engaged in appropriate scientific inquiry.
Engagement in such activities was more important than quantity of output from it. Kind of control system Ruffolo institute and the various parts or measures of the control system he instituted The review process he initiated is an example of concurrent control. Under this review process, a value is determined for every project in the pipeline, based on a host of factors. During an annual review, these ratings are used to decide which projects are given high priority, low priority, or are discontinued.
Establishing a quota for number of new compounds developed is an example of output control. The pros and cons of his system and does it seems to be working? The criticisms of Ruffolo’s use of output control are: 1) Increased anxiety level among scientists, 2) encouraging scientists to overlook problems with some compounds in order to make their numbers, and 3) encouraging scientists to focus on those projects that are the safest gambles. However, it appears that the use of such controls has resulted is helping the organization to achieve its objectives.
Wyeth’s pipeline has improved, with a number of potentially hot-selling products likely to hit the market within the next few years. Prior to the introduction of Ruffolo’s review system, which is an example of a concurrent control system, drugs with the least chance of paying often ended up with the most resources. The new rigor imposed by this system forced scientists to terminate troubled projects earlier in the transformation process, thus saving time and money.