Glaskosmith & Kline Restructuring

Executive Summary

In hopes of streamlining and restructuring the areas of R&D at GSK the organization chose to focus on smaller therapeutic areas (ie. Cancer, cardiology, etc.). Tadatak Yamada, the new Chairman of R&D, called the new areas CEDDs (Centers of Excellence in Drug Discovery).

The development of CEDDs was based on the assumption that smaller and more focused areas would result in accountability along with efficient decision making. This created a biotech-like feel within the organization. It is recommended that GSK decentralize the early discovery (target identification and molecule discovery) and end stage development (Phase III clinical trials, registration with FDA, etc.) and award the CEDDs based on success of not just proof of concept successes advanced into the full development phase, but based on success of the end stage development as well.

Problem Statement

Summary of Facts

A single committee centralized from both companies were tasked with making decisions on whether to move projects through the discovery and development pipeline. The members chosen were not specialist in any therapeutic areas. They were chosen based on the analytical abilities in firm wide portfolio of projects. Reporting based on dual relationships held by scientists and needed to be made to the centralized department head and the head of the product development. Funding however was not structured the same. Funding authority rested with the centralized departments and not with the therapeutic areas. There was a huge disconnect between early development and end stage development. Bonuses were tied to the overall corporate performance.

Analysis of Facts

The traditional organizational model of GSK became the main reasons for the need to change. Lead optimization times were often prolonged due to the bureaucracy that is encountered when having a centralized decision making process. Also with funding authority resting with centralized departments, there was a lack of accountability with projects. There was no since of entrepreneurial spirit because project leaders had no budgetary control for their projects. The traditional model also needed to have incentives realigned more closely with productivity in R&D and not just on a corporate level.

With Yamata as the leader the goal was to slash costs and bolster drug pipelines by using an organizational structure that incorporates big pharmaceutical structure and small biotech companies. Almost 2,000 scientists were placed to focus on smaller sections such as 1-3 therapeutic areas, reporting, and decision rights of drug compounds through the early stages of development. Therapeutically aligned projects with common platforms would be more equipped at undertaking the discovery and development of new drugs. The CEDDs goal was to also empower a team environment and encourage teams to be more project oriented. These objectives of the CEDDs hopefully would increase overall productivity of R&D. Cutting bureaucratic ties and increasing the flow of information by disseminating silos will hopefully have a positive impact on lead-time to market.

Recommendation

Reorganization is key to increasing the productivity of R&D at GSK after the merger. The previous structure is draining both companies by being top heavy and not honing in on specific areas of therapeutic research. The pharmaceutical industry has gotten much more complex and competitive. The old organizational structure