The segment of the chemical industry focusing on pharmaceutical companies is indeed a service industry. Customer orientation is a must. Only when a customer’s
Project Management in Exclusive Synthesis 107 project is successful can the supplier be successful as well. The interdependence of customer and supplier in this project business is enormous, but both have the same ultimate interest—to make the project happen.
The reasons to choose an external partner for intermediates or the active pharmaceutical ingredient (API) are often simple. Not every company in the world can offer all types of equipment or every form of chemistry. Therefore, some companies are specialized in particular classes of chemistry or in the handling of special classes of substances. Looking at the market place, there are only a limited number of companies on a global scale offering more or less all types of reactions ranging from small to commercial scale. Only these companies have a chance to supply total “solutions to customers” using a broad portfolio of chemical skills and equipment. Other companies have more of a niche player character, adding value at a special step in the synthesis or in a certain phase of the project.
Pharmaceutical industry projects are complex. At the customer and at the supplier level, various functions have to be combined to form a powerful project team.
From a project’s perspective, Figure 1 shows a network in interaction with a customer. There are different functions on both sides, often mirrored in the two cooperating companies. The small black arrows show the intracompany inter- actions, while the broader, gray-filled arrows show typical external interactions between companies. For the chemical supplier, the customer is often represented by a person in procurement, in other cases directly by the project leader or some- body else working in R&D. Depending on the size of the company and the project, the coordination of the different functions may be done by just one person (or per- haps by a team) at the pharmaceutical company, and the same is usually true at the supplier company. This person has the role to coordinate all internal func- tions with respect to the external supplier. This person may have several functions simultaneously, such as those of project manager and chemist or project manager and marketing manager. Different companies have developed different strategies to coordinate the externally driven activities, but there is a general trend visible: In most big pharma companies, the procurement function is also responsible for the first external contact. This person will also arrange technical meetings involving all the other necessary functions. In smaller companies, this role might be taken by somebody in project management, but this person must also handle the internal coordination.
In the chemical company, the first and main face to the customer will usually be the responsible person in marketing. This person will interact with the customer and coordinate all internal functions and communications to ensure the project’s success. The coordination of all relevant functions and the project management often belongs to that person in marketing simply because this person has the most up-to-date and best knowledge of the customer’s status of the project. There are also organizations where the project management function belongs to the responsible person in R&D, following the logic that only this person can coordinate all internal functions effectively because he/she knows best the status
108 von Hippel R&D R&D ... ... Project Manager Analytics Analytics Production Production Procurement Marketing Quality Assurance Quality Assurance Pharmaceutical Company Chemical Supplier Project Manager Figure 1
of the internal development work. Whichever structure is chosen, it is key that the two people can work together efficiently to make sure the customer’s requirements are met in order to provide the desired material
r on time, r in full, r in spec,
r with all the relevant documentation and the regulatory support, and r at a reasonable price.
These technical challenges take on human relations dimensions more or less immediately. In the past, researchers from different disciplines tried to understand why some projects were a success, while others failed. One of the key lessons learnt has been that the biggest part of human behavior is still driven and controlled by emotions. Even well-trained industrial employees are human beings and therefore the interaction with suppliers is also influenced by so-called soft factors. Some organizations even develop protocols to minimize the human element: Suppliers are compared and ranked according to given criteria. These criteria may be hard factors such as technologies, capacity, and performance, but may also contain soft factors, for example, credibility, communication, and responsiveness. It will be interesting to see how this model develops over the next few years; no matter how these models develop, they cannot avoid the human touch and the way interactions happen. From the project managers’ perspective, they always have to make sure that human relations are in their focus and that they seek to understand the motivators of each and every member of their teams. This is not just a specialty
Project Management in Exclusive Synthesis 109 of pharmaceutical projects and their management, but is also of a more general interest. Therefore, a good project manager will work to develop strong working relations with his/her project team and the team of his/her supplier or customer.
To be efficient, it is vital that the two people understand each other and also understand the way the different companies work and how decisions are prepared and made. It is important not only to get the people motivated but also to give them all the information they need to do the job properly and to stay motivated. When the success of a project is analyzed, it is astounding how often the real key success factor is the relationship between individuals and the trust they have in each other. Therefore, before we start with the first project, we must firstly try to build up a relationship with the counterpart in our client’s organization. For us, this is the key factor for later success. To build this trust, we discuss openly and frequently and share information as well. Over the years, the understanding of the different organizations develops and the relationship improves. This relationship building may take time, even if legal formalities like confidentiality agreements are handled quickly and the wording is immediately understood by both sides. BUSINESS CULTURE AND ETHICS
Working with external partners also requires that different company cultures work together. Not every company has the same ethos, quite apart from the fact that different cultures can clash and there might be some different expectations on both sides, for example, the interpretation of confidentiality or of the value of intellectual property. The concept of a “long partnership” may differ from company to company; it may not necessarily be part of a company’s (or country’s) culture but of the business ethics and what is convention.
National cultural behaviors have to be taken into account as well. The opportunities of a globalized world are closely connected to the risks. Therefore, the understanding of business ethics and the way different cultures do business is crucial. Members of international companies may be aware of the different interpretations of simple words and the trouble they might cause among colleagues, but this is also true for the interaction between companies. It does not mean that such interactions cannot add value, but it should be clearly understood that dealing on an international basis is always challenging. People who like to do it will develop with the years an understanding of the differences and will learn how to deal with it. There have been some great investigations about cultural differences between countries and people, one of the pioneers being Geert Hofstede who developed the so-called “cultural dimensions” and the tools to measure them. The easiest access to his findings is the Internet, but for a deeper understanding, his books are even better (1–5).
Confidentiality of projects is a must for the pharmaceutical industry. The structure of a new API or even of a key intermediate is often the most valuable information and has to be protected. To understand the importance of this is extremely important. Sometimes even the business relation between a sponsor
110 von Hippel and a supplier may be protected information as well, for example, when a small company is in negotiations for venture capital and wants to raise funds by having a big company as supplier for the API or the formulated drug in the background. In this case, even the name of the supplier will add value to the sponsor’s project and this information must therefore be protected as well. Typically, all information that is more or less directly related to the project—from the perspective of the pharmaceutical company—has to be protected and, therefore, the supplier must do so.
The confidential information also includes the application fields of the new drug, the status of the clinical trials, chemical, pharmacological, or toxicological information, analytical methods, reference materials, impurities, and, of course, the project timeline and later commercial expectations. This list is not comprehensive, and there will always be more information in a project that the pharmaceutical company wants to keep secret. However, for the supplier, or better the development partner, it is very important to have information about the overall situation of the project. This helps to understand what actions should be taken and how to support the project in the best way. Supporting a project may mean sometimes to just stop the development work altogether to avoid adding further costs, but even then the picture should be clear for all the parties working together.
Sometimes, inconsistencies in the sponsor’s organization become visible: From the project’s perspective, all this information has to be kept secret, but other parts of the organization might have to use this information for other purposes to make it public. The project manager of a pharmaceutical company might like to keep everything secret, but the investor relations manager might, for other reasons, like to bring the pipeline, the status of a given project, and the future commercial potential including production volumes into the public domain. In particular, the later commercial expectations are often part of the discussions with analysts, and more and more companies tend to publish project data on their company Web pages, making them public. Therefore, it can be hard to judge as to what should be subject to confidentiality. In general, reliable partners will keep everything secret, even the name of the companies they cooperate with. Big companies might be seen to work with almost all organizations on a global scale, smaller companies might have some restrictions due to limited resources in marketing as well as in R&D and in production. Big players might be in a position to cover the majority of requested technologies, while smaller companies might play a role in niche technologies. However, a reliable partner will always keep confidentiality. Without written permission, he/she will never use customers’ or project information for an advertisement or differentiation strategy.
On the other hand, the chemical supplier will also have intellectual property he/she wants to protect. The supplier’s organization has special capabilities that make it well suited for the project. The supplier’s interest will always be to have the freedom to use its technologies for other companies as well. After all, the business model is to serve the pharmaceutical industry in general and to offer services to the companies requiring them—as a full package or just parts of it.
Project Management in Exclusive Synthesis 111 This leads to a wider area of concern between the two parties as how to deal with intellectual property and how to protect it. In recent years, the industry has witnessed different routes of development into extreme positions: Some pharma companies have tried to secure all intellectual property not only on a project’s basis but also the general technology background of their supplier. The acceptance of this position would usually have destroyed the supplier’s business basis within a short time and therefore has not been generally acceptable. This position can also damage the basis of the interaction between companies, making it hard to rebuild a working relationship based on trust.
This leads to the key finding: Confidentiality—besides all legislative implications—is a part of business ethics and a confidentiality agreement is, first of all, only paper and a statement of how the partners intend to act. In some cases, the paper may not even provide an adequate basis for troubleshooting. In the past, some pharma companies intentionally tried to keep their supplier poorly informed, only providing some information on the overall status of the project. This led to the case that the development partner did not always correctly understand the real requirements for the project work. In some cases, the projects slowed down because the urgency for action was never properly appreciated, while in other cases the development partner acted too quickly and invested too many resources. Even if these examples are rare, the fact that they exist shows there is room for improvement.
Therefore, the selection of the development partner and the trust between the parties will be the most important ingredient for a later project’s success. All people working for a long time in project management will agree that trust is a basic requirement for a project’s success. If the partner is selected as a compromise choice, and is therefore not the most trusted one, the chances for the project to fail are extremely high. And vice versa, analyzing the best and most successful projects has led to the conclusion that the successful projects were characterized by a high level of mutual trust and understanding as well as recognition of the needs of both parties.
COMMUNICATION
The success of most big comedians results from playing with misunderstandings. Remember Laurel and Hardy? The two gentlemen always want to be kind, try to live with the rest of the world in peace, but fail to communicate in a proper way. So, at the end of the story, everything is in a mess and the spectator is amused. Or take the black comedy “War of the Roses”: The inability of the couple to talk to each other and to keep communication going leads directly to the final catastrophe. Everybody also knows examples from their own experience. It is the reason why some jokes work: Take the joke of a man driving his car. The police stop him and he seems to be drunk. So the officer asks him to take an alcohol test. The driver answers, obviously delighted, “Certainly, officer, in which pub do you want to start?”
112 von Hippel In most cases, misunderstanding does not happen because people want to be evil or want to destroy relationships or goods. It just happens because of a lack of communication or the misinterpretation of given information. So, one of the challenges for project management has been described and this challenge grows in times of globalization and at a time of complex projects involving specialists from different companies. A project manager needs to remember every day that communication is key. Communication is not only necessary to inform people, but also to keep them motivated, to make sure that they work in the same direction and that they have the same picture of the project status and the actions to be undertaken. Pictures can be a tremendous help to support communication and that is exactly the reason why project managers try to visualize as much as possible, for example, by drawing a project timeline, searching for the critical path, defining work packages with objectives, and so on. However, it does not mean that everybody has understood what is expected and that it is agreed: The project manager, therefore, has to anticipate:
r Spoken does not mean heard. r Heard does not mean understood. r Understood does not mean accepted. r Accepted does not mean memorized.
So after every meeting and between meetings, the project manager must work hard to keep the communication going and to understand what might go wrong and what actions might be necessary to keep all people on track. If this work is not invested, the project might be trapped between different interpretations of what was discussed or shown. As a result, in the worst case, different priori- tization of actions may happen in the different subteams. Depending on different information status the project team members have, the actions taken may differ as well. Therefore, the project manager has to frequently check the understanding of the team members to make sure that heard became understood and remained memorized. This is a hard job and, in particular, scientists coming from natural sciences tend to ignore it. So please stay aware of the really challenging fact that communication is more important than you ever dreamt and have fun with your next Laurel and Hardy film.