Case Report: Glaxosmithkline Reorganizing Drug Discovery (a)

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This case describes the reorganization of drug discovery at GlaxoSmithKline (GSK) following the formation of GSK from the merger of Glaxo Wellcome and SmithKline Beecham. This reorganization placed nearly 2,000 research scientists into six centers of excellence in drug discovery (CEDD). Each CEDD focused on a small set of therapeutic areas and possessed decision rights over the progression of pharmaceutical compounds through the early stages of development. It addresses issues about the benefits of focus vs. diversification in R&D, the role of decentralized vs. coordinated decision making, and the importance of alignment between the structural and infrastructural (e.g., performance incentives) aspects of an operating model. 4.…show more content…
Deliver more products of value 3. Simplify GSK’s operating model Yamada strategy focused on diversification with the introduction of centers of excellence, merging together the strengths of large pharmaceutical firms with those of smaller biotechnology companies. Merger leads to combined decision making for developments in pipeline, which leads to faster process of drug discovery. Alliances with smaller specialist companies, allowed GSK to be more “flexible and responsive” to discovery, avoiding bureaucracy and simplifying the operating model. The elimination of the dual reporting schema enhanced the communication and cross transfer of knowledge, which will result in enhancing productivity in R&D. Economies of Learning: Alliances with smaller specialized firms, allows large firms to learn about new drugs and new technologies. Bayer for example, started R&D collaboration with the American biotech firm Millennium to bring the “entrepreneurial spirit” and innovation in its development processes. Large firms have a lot to learn from small about new development processes, and move the focus away from research and publishing papers. Specialist teams can be formed to carry out specific complex tasks which are common across various areas of the process. In such way communication is improved across organizations. 5. Incentives to innovate with new drugs and new processes to create drugs Starting from the last century we have seen large firms

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