| Carl Dugdale at George Group Consulting assesses the competitive advantage of achieving ‘agility’ across the industry
Today, many pharmaceutical organisations are still looking towards mergers to drive increased shareholder value, even though study after study continues to show that long term value is rarely achieved through acquisition – at least not to the acquirer. In our opinion, the most successful long term approach to delivering real value is through organic revenue growth from innovative new products and services. It should be noted that the most successful companies derive 25 per cent or more of their revenue from products or services, which are less than three years old.
To be truly successful, new offers must be differentiated. This can be in terms of product functionality, service offer, target market or any combination of these factors. A great example is Apple’s iPod/iTunes. This combined a radically new physical product with a radically new service design and process, as well as a new market definition. The effect: the redefinition of an entire industry. The result: more value than any imaginable acquisition.
So far, so obvious, you may be thinking. But counter-intuitively, it is not always necessary to be the first-to-market with a new innovation to reap significant commercial rewards. The most critical element is to get to market quickly. Research from the Product Development Institute shows it is the first few entrants who capture high margins, with the late-comers forced to achieve only commodity returns as they compete with multiple providers.
Furthermore, it is critical to meet demand with high quality right from the outset. Second chances to relaunch services or products due to poor quality are fast becoming unaffordable luxuries. And finally, it is critical to be able to rapidly scale to meet rising success and keep followers at bay (1). |
