Risk Management of strategic alliances projects within the pharmaceutical industry

Details

Supervisors

Paque, Bernard

Faculty

Louvain School of Management

Degree label

Master [120] en sciences de gestion

Abstract

For several years, the interest for risk management has grown and has become a key focus area for project managers in the pharmaceutical industry. In fact, the role of project managers is to develop and manage project plans resulting in the integrated delivery of the project at or above the established quality, in line with deadlines and budget expectations. To be successful in this role, project managers have to take into consideration all elements that could have an impact on the project viability, timing or cost. Therefore, one of their main tasks is to focus on the identification and the management of all risks related to their project. Besides this expanding interest for risk management, the pharmaceutical industry is also currently a growing sector, which is predicted to grow even further in the coming years, mostly because of the demographic growth and the purchasing power increase of emerging countries. Still, the pharmaceutical industry is a highly complex sector that faces many external pressures and challenges on a daily basis. To face those challenges, this industry often makes use of strategic consolidation tools. Indeed, strategic alliances are very common strategies in the pharmaceutical area as it becomes vital to combine strengths in order to sustain the globalization and being competitive. Motivations for strategic alliances in this area are quite different from those in other industries. Nevertheless, although the revenue increase remains a major incentive for consolidation, the positive relation between consolidation and revenue is rarely observed in reality. On the contrary, lots of researches display that strategic alliances such as mergers, acquisition and joint ventures hardly lead to positive return on investment or even growth. Moreover, a majority of them even fail to meet their initial strategic objective, mostly due to misalignment between partners. This is the reason why – it is even more critical for companies in the pharmaceutical sector to implement risk management in the project manager role’s scope when it comes to strategic alliance. The following thesis is dedicated to the definition, identification and study of the design process to anticipate, assess, minimize and manage risks linked to strategic alliances. The study case subject to this research is a current strategic alliance project at GlaxoSmithKline Vaccines. The content of the following thesis is divided into three main sections: literature review, case analysis and managerial recommendations. The first section is dedicated to the literature review of the subject main concepts. A chapter is dedicated to each of them. This section is based upon secondary data collection and consolidation related to the chosen issue. The first chapter of the literature review is devoted to the global analysis of the current pharmaceutical market as well as its specificity and challenges. The second chapter is dedicated to the definition and analysis of the three main types of strategic alliances in the pharmaceutical industry: mergers, acquisitions and joint ventures. Finally, the last chapter of the literature review is focused on the risk management concept as a whole as well as a more specific study of risk management in a pharmaceutical environment. This chapter reviews basic definitions and details three different sets of project risk management best practices commonly used in the pharmaceutical industry. The following section is based upon inputs such as secondary data issued by the company itself (internal database, intranet, internal tools) but also by primary data collection (trainings, meetings, expert interviews, personal experiences and observations) (See Figure 1). The first chapter of the second section is primarily devoted to an overview of the company subject of the case study. The following two chapters are dedicated to the description of the strategic alliances and the project risk management processes in place at GSK. The fifth chapter of this section describes the chosen case study in its context. The last chapter of the second section is focused on the case study risk analysis. The collection, analysis and comparison of those inputs allowed identifying the main high-level and high severity risks behind strategic alliance projects. Each identified risk will be associated to recommended mitigation plans. The objective of the last section of this thesis is to develop learning and recommendations from the former analysis. This section proposes a list of general key lessons learned and key focus points from practical and theoretical sections as well as specific room for improvement at GlaxoSmithKline.