The document discusses project-based organizational change management in the pharmaceutical industry based on the author's personal experience. It provides context on drug development processes and clinical trials as projects. It then uses a fictional example of a company, Endera, acquiring another CRO, Irva, to illustrate the complexity of such an industry acquisition and importance of internal communications. Key challenges included integrating new personnel, addressing employee concerns about changes to roles and responsibilities, and managing rumors in the absence of clear communications from leadership.

1. Project-based Organizacional Change Managementin thepharmaceuticalenterprises. My personal experience 1 David LópezGonzález, PhD IE Business School Master in International Management 26 May 2011

2. Audience´sReturn of Investment Pharmaindustrybasics Drugdevelopmentprocess Clinicaltrials as projects Industrycomplexity Practical Case Internalcommunications Summary 2 IE Business School, MIM May 2011 David LópezGonzález

4. several clinical research roles with GlaxoSmithKline, Roche and Celgene. IE Business School, MIM May 2011 David LópezGonzález 3

5. IE Business School, MIM May 2011 David LópezGonzález 4 Pharmaindustrybasics

6. Model of a pharmacompany: MD: Medical Department R+D: Research + Development MK: Marketing Department MD R+D Candidate molecules MK Pharmaceutical Products IE Business School, MIM May 2011 David LópezGonzález 5

7. Pipeline and Portfolio Portfolio: Set of productsavailablefordevelopment. Pipeline: set of candidatemoleculesforonefamily of diseases. IE Business School, MIM May 2011 David LópezGonzález 6

8. Key bussinessrequirements - Higherinvestment in efficient R+D. - Makestrategicclinicaldevelopment - Pharma marketing programs € Pharma Product lifecycle time R+D LaunchNew indicationsNew competitors/ generics IE Business School, MIM May 2011 David LópezGonzález 7

9. Pharmaindustrybasics Drugdevelopmentprocess Clinicaltrials as projects 8 IE Business School, MIM May 2011 David LópezGonzález

10. DrugDiscovery and DevelopmentProcess http://www.youtube.com/watch?v=3Gl0gAcW8rw

11. TheDrugDevelopmentProcess 10 http://www.youtube.com/watch?v=DhxD6sVQEYc

12. Patent IND Approval Filing Launch commercialization Regulatory 4 10 0 12 Time (years) Late stage research Clinical Preclinical R+D phases IV Synthesis I II III Biological development ~300 patients ~3000 patients ~100 sane Pharmacologic screening Clinical Phase Animal Toxicology Chemical Design/development Pharmaceutical Development Number of candidate molecules 5000 1 15-8 8-4 3-2 1 Cost (mill €) 0 550 Pharmacologicalproductdevelopmentprocess IV IE Business School, MIM May 2011 David LópezGonzález 11

13. Deliverable of theproyect IE Business School, MIM May 2011 David LópezGonzález 12 Scientificpublications are the final deliverable of eachclinical trial. Sets of scientificpublicationswillbeusedforpatent, approval dossier, patientcareguidelinesetc

14. IE Business School, MIM May 2011 David LópezGonzález 13 Pharmaindustrybasics Drugdevelopmentprocess Clinicaltrials as projects Industrycomplexity

15. Pharmaceuticalcompanies and contractresearchorganizations (CROs) molecule approval clinical trials and related services IE Business School, MIM May 2011 David LópezGonzález 14

16. 15 Pharmaindustrybasics Drugdevelopmentprocess Clinicaltrials as projects Industrycomplexity Practical Case IE Business School, MIM May 2011 David LópezGonzález

17. Company: Endera Established in 1992 13,500 employees Operations in 30 offices worldwide Generated 390 million€ in revenue in 2010. Endera secures R&D and consulting services in the drug development and discovery sciences, for a wide range of global clients and partners. Anythingthat is stated in this personal experience case situation is purely fictional. Any statements which appear to have a resemblance to real people or institutions or events, past, present or future, are unintentional and the result of pure coincidence. IE Business School, MIM May 2011 David LópezGonzález 16

18. Company: Endera 17 Patent IND Approval Filing Launch commercialization Regulatory 4 10 0 12 Time (years) Late stage research Clinical Preclinical R+D phases IV Synthesis I II III Biological development ~300 patients ~3000 patients ~100 sane Pharmacologic screening ClinicalPhase Animal Toxicology ChemicalDesign/development PharmaceuticalDevelopment Numberof molecules 5000 1 15-8 8-4 3-2 1 Cost (mill €) 0 550 IE Business School, MIM May 2011 David LópezGonzález 17

19. Endera Competitor Map Direct Competitors Indirect Competitors Large Reference Labs:Quest LabCorp AmeriPath Covance Quintiles Charles River Labs MDS Pharma SMOs:Radiant Research AmericasDoctor, Inc. SMO-USA, Inc. nTouch Research Central Labs Quintiles Parexel Covance ICON PPDOmnicare Kendle PRA Full Service CROs: Quintiles ICON Omnicare Kendle Early Stage CROs: Covance Inveresk AaiPharma MDS Pharma SFBC Intl Charles River Labs Other CROs: MDS Pharma PharmaNET AaiPharma Inveresk i3 Research Phase II/III/ IIIb/IV Endera Phase I AMCs:BRANY Harvard Duke Johns Hopkins Pittsburgh ClinRsch NetworkColumbia-Cornell-NY Presbyterian Quintiles Biotechs:Amgen Genentech Others Pharmaceuticals: Pfizer GSK Sanofi-Aventis Others 18

20. HowcouldEnderaacquireits actual configuration? IE Business School, MIM May 2011 David LópezGonzález 19

21. Throughseveralprocesses: - internationalexpansionintoseveralcontinents.- activities in everyphase of drugdevelopment.- buyingbiotechs, withthepurpose of developingtheirproducts- adquiringserviceproviders,ie, clinicalinformation software, analysislaboratories- sharedriskbusinessmodel, gettingallianceswithpharmaceuticalcompaniesforthedevelopment of families of drugs- spinning-off parts of business IE Business School, MIM May 2011 David LópezGonzález

22. “Endera” in 2005 Duetoanstrategicdecision, thecompany “Endera” decides tobuy “Irva”, another CRO, which has businesswithotherparties in thesametherapeuticarea. Upper Management Teams Goal: obtaincompetitiveadvantage Anything that is stated in this personal experience situation is purely fictional. Any statements which appear to have a resemblance to real people or institutions or events, past, present or future, are unintentional and the result of pure coincidence. IE Business School, MIM May 2011 David LópezGonzález 21

23. Nov 2005 Jan, 2006 Dec,2005 Mar, 2006 Jul, 2006 Teammatescomingfrom a meeting at Company HQ arrivewith “secret” news IE Business School, MIM May 2011 David LópezGonzález 22 T “goingtoeat up a CRO in thesummer”

24. Nov 2005 Jan, 2006 Dec,2005 Mar, 2006 Jul, 2006 “Consultants” are hired and startworking in our office, justlikeanyothercolleagues, butwithout a formal explanation of theirtask.... 23 UM Wetookthemoutfor lunch and itwasclearthattheydidn´t do anythingclinical… one of themwas a lawyer and theother a “technicalengineer”. Theydidn´tansweranything concrete…. T IE Business School, MIM May 2011 David LópezGonzález

25. Nov 2005 Jan, 2006 Dec, 2005 Mar, 2006 Jul, 2006 Thereisan email from “EnderaCorporateCommunications” informingthereisplanstoreachanagreementwithIrva´sChiefExecutiveOfficeronthe “jointventureplans” forbothcompanies. 24 UM “So, thisisthereasonfortheseconsultants… Workwasalreadyunderwaybutitwasnotofficial…” T rumours are starting IE Business School, MIM May 2011 David LópezGonzález

26. … Nov 2005 Jan, 2006 Dec,2005 Mar, 2006 Jul, 2006 In thefollowingmonth, thereis a newspiece in theEndera intranet statingthatthe “jointventurenegotiationswithIrva are comingto a halt” UM Rumourlevelamong theteamsisbuilding up… Steaming… T IE Business School, MIM May 2011 David LópezGonzález 25

27. 26 Nov 2005 Jan, 2006 Dec, 2005 Mar, 2006 Jul, 2006 Brief Oficial announcement of theIrvacompanypurchase at theEndera General Company Meetingon Mar, 2006 UM Nowwe are notgoingtogofor a jointventure.. What a change!!! T And theyonlytellusvia a short email?!!!! IE Business School, MIM May 2011 David LópezGonzález 26

28. … Nov 2005 Jan, 2006 Dec, 2005 Mar, 2006 Jul, 2006 Afterjust a month, rumours are widespread… in ourcompanyinformationisscarce, and onlyabouttheprogress of theovertake… dates and dates … no details. 27 T “Whowillbeour new colleagues? Whatisgoingtochange in my role? Will I havetowork more? Add new responsabilities? Irvacolleagues are leavingthecompany…” IE Business School, MIM May 2011 David López González

29. Nov 2005 Jan, 2006 Dec, 2005 Mar, 2006 Jul, 2006 Integration of incomingpersonnel: Instantincrease of theamount of employees and projects in thecompany Newcomersintegrated in new orexistingteamsteamscreatedforthepurpose However, thereis no new employeesfrommiddle/uppermanagementfromIrva… IE Business School, MIM May 2011 David LópezGonzález 28 UM But … where is the expertise of the company? How are we supposed to continue Irva´s projects… T

30. Whatishappenninginside of themerger? Peoplereacttochange: usuallywithresistance: are wecondendedtochange… whyus? feartochange, and criticsabouttheresults of thechange. IE Business School, MIM May 2011 David LópezGonzález 29 Which is the impact of the motivation in Endera´s employees? How could people feel in situations like this? Could it impact on the costs and profitability of the company? On the scope of projects? Any new risks? What could happen to the assets from Irva?

31. Risk and Flight Model Source: Change Management Learning Center IE Business School, MIM May 2011 David LópezGonzález 30

32. The Goal of Change Management Source: Change Management Learning Center IE Business School, MIM May 2011 David López González 31

33. Which is the single most relevant factor for the success of Change? organizational change is any transition that requires a change in human performance. The human aspect... Communication IE Business School, MIM May 2011 David LópezGonzález 32

34. Communicationmanagement: Changeleadership: Mustcreatea crisisto generateneedforchange Thenempowerpeople so thattheyget familiar withchange and achievethe… IE Business School, MIM May 2011 David LópezGonzález 33 Greatest obstacles: Resistance from employees and managers Inadequate senior management sponsorship Cultural barriers Lack of change management expertise Stakeholder compromise

35. Greatest Success Factors Active and visible sponsorship Use of Change Management process & tools Effective communications Employee involvement Effective project leadership and planning IE Business School, MIM May 2011 David LópezGonzález 34

36. No, theremustbeanalignment in allthe 9 Project Management areas IE Business School, MIM May 2011 David LópezGonzález 35 Isthe “transformation leader” supposedto do thisbyhim/herself?

37. How can thisbeachieved? http://dti.delaware.gov/majorproj/changemgmt.shtml As the “change process” fits the characteristics of a project, it can be managed with the application of project management methodology IE Business School, MIM May 2011 David LópezGonzález

38. HumanResourcesmanagement: Stakeholdercompromise Employeemanagement and training Minicase: In a secondmergerthat I experienced, no onefromthemergedcompanyactuallyworkedwithus…. IE Business School, MIM May 2011 David LópezGonzález 37

39. Summary Pharma industry basics Drug development process Clinical trials as projects Industry complexity Acquisition Internal communications IE Business School, MIM May 2011 David LópezGonzález 38

40. IE Business School, MIM May 2011 David LópezGonzález 39 Thankyouverymuch foryourattention Anyquestions??