For nearly a decade, pharmaceutical and biotech companies have struggled with stagnant R&D productivity—and now more than ever, there is a real urgency to turn things around. Our analysis of the industry’s R&D ROI has shown flat productivity levels since 2012. As the pharmaceutical landscape grows increasingly competitive with fewer targets available and changing regulatory landscapes, the need for a transformation in how companies operate is critical.
One key area where pharmaceutical companies can improve efficiency and effectiveness is through the R&D operating model—encompassing governance, processes, and organizational structure. By revisiting and revamping this operating model, companies can enhance their R&D productivity and respond more effectively to market challenges.
At BioBoston Consulting, we offer strategic insights and solutions to help companies reimagine their operating model. Here’s how pharmaceutical companies can leverage five key elements to drive R&D productivity and streamline operations.
Streamlined Governance: Simplifying Decision-Making
Traditional governance structures in pharma often involve multiple committees that slow down critical decision-making. This complexity leads to delays in portfolio reviews, funding allocations, and scientific reviews, negatively affecting overall productivity.
To improve R&D decision-making, pharmaceutical companies could consolidate decision-making bodies and streamline governance by integrating advisory functions into asset teams. Instead of having decisions go through multiple layers of approval, companies can create a clear, centralized decision-making process. Pfizer’s rapid response during the COVID-19 pandemic, where critical decisions were made in focused, bi-weekly meetings, is a prime example of how simplified governance can accelerate progress.
Key Action: Consider centralizing decision-making around top committees and integrating scientific reviews into agile asset teams to speed up critical decisions.
Dynamic Resource Deployment: Flexibility and Agility in R&D
One of the biggest obstacles to R&D productivity is rigid resource allocation. Companies that rely on static models are often slow to adapt to shifting market conditions or emerging clinical data. By adopting a more dynamic, at-risk, and parallel resource deployment strategy, pharmaceutical companies can rapidly consolidate around promising assets and adjust focus as needed.
COVID-19 vaccine developers showed how a parallel approach, preparing clinical materials before completing preclinical tests, can accelerate timelines. Similarly, Flagship Pioneering uses a small, agile team structure with focused budgets, disbanding teams whenif proof of concept is not achieved quickly. This model helps eliminate inefficiencies and provides clear focus on high-potential assets.
Key Action: Embrace dynamic resource allocation to pivot quickly based on evolving clinical or market data, ensuring resources are focused where they can deliver the greatest impact.
Maximizing Value-Generating Activities
Many pharmaceutical companies struggle with inefficiencies because they lack a clear understanding of which activities generate the most value. Without a top-down strategy for distinguishing core competencies, companies often make inconsistent decisions on trial delivery, which leads to higher costs and complexity.
To drive R&D productivity, companies should identify and prioritize activities that offer disproportionate value such as proprietary AI-driven discovery platforms and align their operating model to these strengths. By focusing on what they do best and outsourcing less-critical functions, companies can create a more streamlined, cost-effective process.
For example, a leading pharmaceutical company facing internal silos and duplicative roles, chose to centralize capabilities like protocol design and investigator management, cutting down on operational complexity and driving more consistent, efficient delivery.
Key Action: Map out core competencies and align your operating model to ensure that your company owns and optimizes activities that generate the most value.
Rewiring R&D to be AI-Native
AI has tremendous potential to revolutionize drug discovery, clinical trials, and data analysis, yet many pharma companies struggle to fully integrate AI into their R&D processes. To overcome this challenge, companies could designate a specific therapeutic area or technology platform to operate as an AI-native domain, with deep integration across all aspects of R&D.
This AI-driven model enables a more efficient R&D engine by optimizing clinical trials, improving lead discovery, and maximizing asset impact through data-driven decision-making. The integration of AI in every phase—from target identification to clinical trial optimization creates a feedback loop that strengthens every step of the R&D process.
Key Action: Designate a therapeutic area or platform to operate as an AI-driven engine, creating seamless integration of AI tools and real-world data into the broader R&D structure.
Optimizing the Global Footprint: Strategic Geographical Decisions
Pharmaceutical companies are increasingly faced with the challenge of balancing a global presence with operational efficiency. Overextending resources across too many locations can create inefficiencies and increase costs. At the same time, consolidating operations too much can limit innovation and access to critical talent.
To optimize their global geographic footprint, companies could centralize strategic functions into a few key R&D hubs while offshoring more operational tasks to lower-cost regions. By leveraging time zone differences and growing the global workforce, companies can ensure that critical activities move forward efficiently while benefiting from local talent and innovation.
For example, some companies are expanding operations into new locations such as Poland, which offer strategic advantages over traditional hubs like Boston or offshore locations like India. These new hubs provide access to specialized capabilities while minimizing operational costs.
Key Action: Assess your global footprint and consider centralizing strategic R&D functions while offshoring non-core activities to optimize costs and maximize talent access.
Transforming Your R&D Operating Model with BioBoston Consulting
Revamping your R&D operating model requires a tailored approach that aligns with your specific goals and challenges. At BioBoston Consulting, we specialize in helping pharmaceutical companies optimize their R&D processes, from governance restructuring to global footprint optimization.
Our expert team can guide you through each step of the transformation process, ensuring that your company’s R&D model is agile, AI-enabled, and focused on maximizing productivity.
Contact BioBoston Consulting Today to learn how we can help your organization unlock the full potential of its R&D operating model. With a data-driven approach, strategic insights, and a focus on sustainable growth, we are here to help you navigate the complexities of modern drug development.
Key Takeaways:
- Streamlined Governance: Centralize decision-making and integrate advisory functions directly into asset teams to speed up decision-making.
- Dynamic Resource Deployment: Adopt a flexible, at-risk resource allocation model to maximize focus on high-potential assets.
- Value Generation Focus: Identify and prioritize core competencies to streamline operations and reduce inefficiencies.
- AI-Native R&D: Rewire specific therapeutic areas or technology platforms to operate as AI-driven engines for optimal performance.
- Global Footprint Optimization: Centralize strategic R&D functions and offload operational tasks to lower-cost geographies forto balancinge efficiency and innovation.
Contact BioBoston Consulting to begin your R&D transformation journey. Let us help you optimize your operating model for greater productivity and success in the evolving pharmaceutical landscape.