Yes, “Too Big” Can be a Problem in Device & Diagnostics Companies, Too

August 30, 2011
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This morning, Luke Timmerman of Xconomy wrote about “The Fall of Pfizer: How Big is Too Big for Pharma Innovation?” Acknowledging that while big companies such as Apple and Google are known for innovation – in contrast to some of the large pharmaceutical companies, Luke asked, “Is there something about life sciences that requires it to stay small if it wants to innovate?” He goes

This morning, Luke Timmerman of Xconomy wrote about “The Fall of Pfizer: How Big is Too Big for Pharma Innovation?” Acknowledging that while big companies such as Apple and Google are known for innovation – in contrast to some of the large pharmaceutical companies, Luke asked, “Is there something about life sciences that requires it to stay small if it wants to innovate?” He goes on to write about a Fortune article that captured some of Pfizer’s recent woes, which appear to be based upon micro-management, indecisiveness, second-guessing, office politics, and more.

From our vantage points as life science consultants with operational experience in big and small device companies and who spend considerable time now working with life sciences start-ups as well as with large companies, it is clear that “too big” can also be a major issue for diagnostic and device organizations.

Following are a few thoughts for our friends and clients to bear in mind:

  1. Clearly, Pfizer’s tale reaffirms that – large or small – a life science company MUST have a clear strategy and MUST stick to it.
  2. The Pfizer story also shows that an organizational “federation” (i.e., a loose connection of groups) rather than a strong union is the goal post-acquisition if innovation is not to be stifled.
  3. Organizations like Pfizer face a tremendous amount of pressure from the public markets to deliver expected earnings and growth. At some point (which varies by company), the existing/historical growth trajectory becomes unsustainable. And then the best option may appear to be large-scale divestitures (as with Hewlett-Packard last week). This approach requires strong leadership (which doesn’t always exist).

What insights have your experiences within devices and diagnostics provided to you that can serve as lessons for others? Do you agree that becoming TOO BIG is a risk for the device and diagnostics sides of the life science industry as well? Are you struggling with strategic decisions that we can help address? Please share your thoughts here.

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