Considering value and how various stakeholders’ perceptions of value creation impacts on the success of the project: a product development case study
Managing projects for ‘value’ has been recognised as the most effective way to increase benefits in terms of a given investment (Thiry 2000). Bröring and Cloutier (2008) further extended this thought and proclaimed a buyer-seller relationship as the centre to value-creation.
Both of these to a certain extent occur in large pharmaceutical businesses where firms increasingly concentrate on core competences and end up outsourcing expensive ones. The lack of available literature on the problem, within the pharmaceutical industry context, does not indicate that the industry is not recognising the important role value- creation process has. Just opposite, the industry is the leader in structuring the value chains and its networks.
Therefore, this paper represents a contribution to the pharmaceutical product management literature due to its focus on the pharmaceutical product development projects and on the role the value creation has on that process.
The primary aim of the paper is to identify what stakeholders in the industry identify as ‘value’ and how these views affect value creation in the context of new product development. To better understand the background of the problem, the paper reviews an external and internal context represented in the current industry trends and how it affects the firm’s operations. Then, the focus goes to the specific case study of product development project chosen to exemplify the issue of value creation. It explains how value proposition was presented; make-or-buy decision made and what were missed value added opportunities.
The remainder of the paper is organised as follows. The next major section gives an overview of industry convergence and of its implications for value-creation in NPD and how stakeholders’ view value creation in this context. .
This is followed a brief literature overview on value-creation in NPD projects and on the role of collaborations in section three. Subsequently, section four provides an outline of the research design, and resulting empirical base for the qualitative multi-case research presented in the paper. Findings are discussed in section five.
Finally, in section six, results are presented, managerial implications are highlighted. Conclusions, research limitations, and suggestions for further research are given in section seven.
External Context (The Industry)
“The pharmaceutical industry undertakes the development, production and supply of pharmaceutical products needed to save lives, prevent disease and otherwise assist in maintaining quality of life (Medicines Australia 2010).” During the twentieth century, progressively increasing and detailed legislation to protect the public health from harm and chicanery and advances in chemistry, biology, and medicine have led to a great increase in the complexity of drug development and in the number and classes of new drugs and drug products (Altman 2000). It also led to a further understanding of medications used for decades and the more rapid and through highlighting of the benefits and risks of existing and proposed drugs. For dermatology, this increased legislation has meant expending options for prescribing or administering therapy; large amounts of evidence on the safety, efficacy, and proper uses of drugs; and reliable and proven formulation, manufacture, quality control, and stability of drugs. All this led to the ever rising cost of drug development coupled to the apparent dearth of new molecular entities entering the marketplace. It would appear that the industry is lagging in innovation and transformation is not occurring fast enough to meet the persistent decline in productivity (Smith and Roberson 2010).
On the contrary to the