Building Adaptability in the Pharmaceutical Industry

Gaurav Gupta

It’s no secret that the pharmaceutical industry is facing a myriad of challenges and disruption, such as complex, costly, and lengthy new drug development; global regulatory hurdles; more start-ups entering the market every day, increasing competition; new technology and data solutions; lingering supply chain disruption, and more. Pharma leaders need to think differently about how to run their businesses—and bring their people along with inevitable transformative change. As leaders look toward the future, the companies that will outpace and outperform their competitors will be those that can embrace and scale adaptability and agility in their operations.

In addition to a continued focus on growing drug pipelines, and the increasing use of artificial intelligence (AI) and data in research and development (R&D), pharmaceutical companies have a renewed focus on the supply chain. In 2024, major companies like Reckitt, AstraZeneca, and Novartis scoped out plans to expand their manufacturing footprint, and it’s likely that many others will follow suit in 2025. In a recent survey, 90% of pharma executives said they are investing in smart manufacturing to increase supply chain efficiency.¹

A common thread in all the top priorities is a high degree of uncertainty and a need to build flexible approaches to capture value and weather unpredictable market conditions. Having management strategies and systems that have adaptability at the core will be critical to success.

What we know about adaptable organizations

The highest performing organizations are, and will continue to be, those that create and nurture adaptability in a variety of ways. At the heart of it, this requires creating more leadership from more people—up, down, and across the business. There are three critical characteristics that adaptable organizations possess.

Change-friendly systems, structures, and processes

Adaptable organizations are those that have management systems in place that are open to and able to change, while being able to respond to emerging factors in the market, technology, and internal demands. They can establish formal systems and processes that balance efficiency and agility. For example, rather than adopting rigid three- to five-year strategic plans, they embrace principles-based decision making and ground their plans in assumptions about the future that are revisited frequently. They focus on outcomes over process. They target talent strategies with an emphasis on what will be needed for the future, rather than what worked in the past. When the formal management systems in place are more change-friendly, organizations can be more proactive in responding to new opportunities in the market, such as the use of AI to accelerate new drug development and smart devices along the manufacturing line.

Adaptable cultures

Organizational culture emerges from the behaviors and norms that are reinforced over time. A focus on culture is not a “nice to have” and it is not about “employee perks” or “employee satisfaction.” The highest performing companies establish and nurture adaptable cultures, those that allow them to appropriately respond to both threats and opportunities. The core characteristics of these cultures include: taking a multi-stakeholder view (employees, shareholders, customers, vendors, and the community), embracing appropriate risk-taking, balancing both a short- and long-term view, and biasing towards proactivity even without perfect information.

Vanessa Akhtar

Broad-based knowledge and skills for leading change

Often, talent development strategies focus on deepening technical skills. While these are important, they are not enough on their own, especially since the required technical skills are changing rapidly. Companies need to invest in helping their people build stronger change muscles, developing both the knowledge and the skills to apply that knowledge to their jobs. Skills such as the ability to articulate a compelling vision of the future, manage challenges to new ideas and ways of working, inspire and mobilize others even without direct authority, and implement strategies to overcome barriers to change are key to developing a workforce that creates a competitive advantage.

Three strategies to make it happen

Each of the characteristics outlined above can be cultivated through deliberate action. There are a set of key strategies that will help address change friendly systems, adaptable culture, and broad-based knowledge and skills.

Align and activate leadership

The first step toward addressing the disruptive factors facing the pharmaceutical industry is for senior leaders to get hyper-clear on the opportunities ahead, why you are positioned to seize those opportunities, and why you must act now. For example, it is undeniable that AI has the potential to dramatically accelerate new drug development by assessing large and disconnected data sets, analyzing relationships between these data sets, and prompting new hypotheses to be tested.² It can also be utilized to anticipate the effectiveness of various drugs, assess side effects, identify target populations, and explore alternative uses for drugs already on the market. But how AI is implemented, and what benefits it will unlock, need to be tailored to each organization—where it is today, the capabilities already in place, and where the business is looking to go in the future. Shaping this narrative around the opportunities it can unlock, rather than being reactive and focusing on the challenges it presents, is critical.

It's not enough to be aligned in theory; leaders need to be actively engaged in making the opportunity a reality. They need to communicate way more than leaders typically assume is necessary. Deliver the message in multiple forums, through multiple modalities, and continue to beat the drum. Then, find ways to demonstrate meaningful action, and remove barriers that could get in the way of others taking action. And, recognize that this “action” may actually mean stopping efforts that are not aligned or contributing to the desired future state.

When leaders are aligned and truly activated, you will enable much faster, and bolder, decision making.

Engage many more people

Responding to disruptive factors in the industry cannot stop at the executive level. Keeping up with the pace of change requires contribution from people at all levels and across all functions. Find opportunities for employees to not just execute ideas that come from the top, but rather, create space for them to identify opportunities, surface ideas, and then experiment with implementing these new ideas. When employees are empowered and engaged in this way, you can create a sense of passionate buy-in and ownership.

A global vaccine company did this exceptionally well. After facing numerous warning letters from the FDA, they recognized the need to shift their culture, imbuing a sense of ownership across the business around a “quality mindset.” Senior leaders articulated their opportunity, acknowledging that this mindset would allow them to save more lives, and then unleashed the power of the workforce to make it a reality. Employees from the manufacturing lines to R&D to corporate shared functions all came together to create a movement, enabling the surfacing of a host of ideas. Shop floor workers co-developed training, new standards around QDCI boards, and more, leading to zero operator errors at their site. Others experimented with new ways to label samples, retube machines, and engage their peers—all leading to significant reductions in defects, thousands of work hours saved, and more than 5,000 people actively engaged in the effort. At the end of the transformation, the FDA deemed the transformation one of the most successful turnarounds they had ever witnessed.

Engineer results

While many employees will get onboard with new ways of working, especially if the opportunity is framed in a compelling and inspirational way, there will always be skeptics. To build momentum, demonstrate progress and ensure efforts are driving meaningful results (not just “feel good” activities). It is imperative to not only track wins along the way but to intentionally engineer them. Start with the end in mind and then work backwards to determine critical milestones, leading indicators, and desired behaviors that will enable the ultimate goal. Once these are identified, use the power of the workforce to make these proof points a reality, and make a point of spotlighting them when they happen. Not only will this create a wave of momentum that helps bring skeptics along, but it will also help develop an unrelenting focus on value.

Navigating the choppy waters and disruption facing the pharma industry will require organizations to foster more adaptability. To keep up with customer demands, emerging technology, and shifting regulatory changes, pharmaceutical leaders need to evolve how work gets done. Investing time in aligning and activating leaders and then engaging the workforce to drive new ways of working and meaningful results is critical to unlock and maintain a competitive advantage. In today’s world, adaptable organizations are going to be leaps and bounds ahead.

About the Authors

Gaurav Gupta is managing director and head of R&D, while Vanessa Akhtar is managing director and head of consulting, both at Kotter.

References

1. Breakthroughs or bottlenecks? Pharma industry outlook, trends and strategies for 2025. ZS. January 21, 2025. https://www.zs.com/insights/pharmaceutical-trends-2025-outlook-ai-supplychain-and-beyond#:~:text=Pharma%20companies%20are%20investing%20heavily,AI%20in%20R%26D%20for%202025

2. Artificial intelligence is taking over drug development. The Economist. May 27, 2024. https://www.economist.com/technology-quarterly/2024/03/27/artificial-intelligence-is-taking-over-drug-development