Karen Tibbals worked for many years as a market researcher for some large pharma companies. She recently left pharma and marketing research to enter divinity school. At the same time, she started her own blog. For her first post, Tibbals discussed the need for innovation in marketing research. The second one described how the preferred vendor system in pharma specifically stifles this sort of necessary originality.
With Finance and its henchmen in Purchasing and HR running pharma's operations, intangibles such as insight, veracity and innovation are low priorities when it comes to selecting suppliers. Finance and its minions claim that such qualities, in fact, don't really exist because they are not easily quantifiable or amenable to spreadsheet analysis. Absent such characteristics, marketing research becomes a commodity service that the pharmas can retain on a lowest cost basis. Some companies even go so far as to make supplier candidates compete for retainers by means of negative auctions -- lowest bidder wins. Since it works for hog bellies and soybeans, why not use it for marketing research?
The process isn't confined to staff support services such as marketing research. The preferred vendor system also led to production problems and recalls in every division of Johnson & Johnson: pharmaceuticals, consumer products, devices and diagnostics. Quality assurance and other production people started complaining about requirements to use low bid vendors, yet Finance and Purchasing just shrugged as the recalls started coming every other week. Meanwhile the CEO who looked the other way received $143 million as a goodbye kiss from the board of directors while he moved his chair down the hall from chief executive to chairman.
Pharma's current struggles with patent expirations, unethical and illegal practices, payer cost constraints, and unproductive new product development suggest the need for one basic quality among the businesses that support the industry. People may use different terms to describe it and apply the approach in a thousand separate ways, but essentially it consists of truth telling. The necessary practices all begin with telling the client pharmas how the world is working, together with the fact that their current approaches aren't adequately addressing those realities. Yet that is exactly the sort of professional integrity that the preferred vendors systems eliminate.