Project Management. Zeropain Project case - Essay Example

Question To what extent has the Zeropain Project been successful? The Zeropain project has been an unmitigated disaster for Alpex. The loss of business is only one of the aspects of the case. From a projected market share of 10 percent in Germany (the ceiling laid down by BGA) the product has been restricted for use only in a niche market (severe post-operational pain) in entire Europe, a very small fraction of the market for analgesics. In addition Alpex and Planomed have lost credibility in the eyes of the authorities, putting future projects also into jeopardy. The impact of the problem is bound to impact sales and marketing of the product in the US also where the product is yet to be launched. The problem is not the drug itself; but has roots in the way Alpex conducts its business and which needs serious consideration before launch of the new product – Toraxin. Market study, and customer behaviour have not been given due importance in the introduction of Zeropain. The aim of any company in the final analysis is not producing and selling a product but customer satisfaction (Kotler, 2003, p41). This can be achieved only through proper study of the customer needs and behaviour. Lack of proper organisation and setting up of a systematic approach to the task at hand has characterised the entire project. While the product is apparently doing well in China and is found effective and useful in post-operative treatment for pain in hospitals, the expense outlay in the development, promotion and marketing was obviously geared to be recovered from much larger volumes. The fixation of end price would have been based on the sales forecast. This has placed Alpex and Planomed under financial strain that is not possible to assess from the lack of data in this respect. The only bright side of the episode is that the failure of the Zeropain project might just be the right ‘kick in the pants’ for Alpex management to improve its systems, methods and policies for the future. Question 2 Evaluate the ways in which the Zeropain Project has been organised and managed. To what extent can the project be criticised? Acquisitions offer one of the quickest ways for a company to grow and improve performance; they also represent the largest area of risk taking. The acquisition of Teutonia Pharma AG by Alpex was a case of a ‘horizontal’ (DePamphilis, 2002, p7) acquisition where both companies were in the same line of business with the intent of finding operational synergy and an effort to diversify into higher growth products and markets. The fact that Teutonia owned a licence from CPW for the European market made it an attractive preposition for Alpex. However, Alpex paid a premium on the basis of sales projections of a product which was not even tested by the original manufacturer. Roll (1986) argues that takeover gains are overestimated, if they exist at all. Any bids made over the market price represent an error and are made on the basis of an overbearing presumption by the bidders that their valuation is correct. The entire handling of Zeropain represents an attempt to justify the acquisition. The basic rules for the testing, positioning, promotion, and launch of a product were ignored by Alpex management – to disastrous consequences. New products are the ‘lifeblood of the research-intensive pharmaceutical industry’ (Taylor et al, 2002, p106-7). Given the huge cost of development, in this case the premium paid, and limitations placed on patent protection at the time of approval for marketing, the need to bring products to market quickly is very real (Salek & Edgar, 2002, p53). Phase IV trials are simpler and look at testing over more patients than the pre-approval Phase III trials. Clinical trials, and how much testing is enough, are moral and economic requisites that drug companies have to face (Santoro & Gorrie, p287). Top management has to monitor the implementation of new product strategy by establishing policies and broad strategic directions and ensure they are involved at key decision points. This was given a go-by by the Alpex management despite the fact that the reputation and future of the whole company would hinge on the performance of Zeropain. The organisation of the team, the near complete independence given to it and the lack of monitoring its activities amounts to total abdication of responsibility on the part of Alpex management. John Hammers lament “Who is to blame?” should be directed at himself. The company has been in the pharmaceuticals business for some time now and is apparently doing well in its older business, due to their presence in the market, they must have built up considerable strength in relation to having good teams of sales personnel, and an effective supply chain and so would Planomed, why management thought to alienate these and establish a new supply chain defies logic. Some of the key events and issues during project Zeropain need to be examined to understand what went wrong. These are highlighted below: Inadequate supplies of the drug for large-scale clinical trials Management expected Zeropain to be a ‘blockbuster’ CPW reported cases of hypotension with an incidence rate of 1.09% in Phase II trials The recommended dosage was reduced to 100mg per day in 1990 yet it was found to cause ‘substantial’ hypotension when pulse rates exceeded 120. In 1992 the project was put on hold for study of effects on the liver Trials were conducted in 1992 on 2000 patients under ‘daily blood analysis’ (hardly the type who would be very active physically). The Zeropain team was led as a separate ‘entrepreneurial’ entity, which could circumvent corporate decision processes and transparency was limited. No regular pharmacovigilance reports were filed. In 1994 pre-marketing was limited to communication, no samples were available for testing by physicians. The above is a veritable recipe for disaster and shows the undue haste with which management was pushing for the completion of studies and launch of the product. It is obvious that all systems within the company for due diligence were shortcut and the product was launched. In China much attention is not paid to packaging and inclusion of warnings on the labels and promotional literature yet the Chinese partners chose to modify their product. They had much fewer cases of hypotension, which may probably attributed to the cultural systems availing there that do not look at much physical activity which was responsible for triggering the hypotension in the first place. CPW not only changed their packaging they also informed Alpex in 1994, while there was still time to take corrective action, and even sent a reminder but the Zeropain team chose to ignore this because they were in the eye of the management to deliver and in their haste to do so discarded all advice that would delay the introduction of the product into the market. The worst thing was that they also did not report it to higher management (for fear of the reaction?). Another major mistake made was the launch of the product in all segments of the market simultaneously. It would have been much wiser to introduce the product only where it would be administered by qualified physicians and the effects monitored before allowing it to filter down GP’s. Such introduction would have provided Alpex an opportunity to correct errors in the warnings contained in the inserts and labels etc. as well as to modify dosage if required. An important aspect of any new product launch is the market entry scale in case of sensitive products like a new drug it is always advisable to follow the sequential roll-out method while targeting a specific market segment to start with and slowly extending the product to cover the entire target market (Thomas, 1993, p282). Drugs of the nature of Zeropain would benefit tremendously from word-of-mouth publicity and would be ideally suited to adoption of a roll-out launch rather than the strategy chosen by the company. Alpex and Planomed also failed to provide for any system of gathering feedback from the market and authenticating information received. When confronted with data they had no response. Collection of market feedback would have allowed the management to take corrective action and helped gain credibility even in the face of adversity. The Japanese have developed a system for achievement of exceptional performance which has the following essential elements in addition to Zero inventory and Zero defects. Zero customer feedback time Learning from customers reactions as soon as possible Zero product improvement time Improving product continuously Management at Alpex failed to recognise the need for feedback and quick reaction to adverse customer feedback. They still wonder ‘what case was he referring to?’ Overall the entire case study shows a lack of basic skills and arrogance on the part of top management, a lack of attention to detail and improper administration. Management has shown poor team building and delegation skills and must now own up to the responsibility of causing the failure of the Zeropain project. Question 3 The Company is about to launch a new drug. What would you do differently this time? While emphasising on proper testing, clinical trials and test marketing can be easily recommended, we must recognise that in pharmaceutical products, time is also of the essence. The company must recover its investments in research and development before the patent expires (Salek & Edgar, ibid). The trials of the new drug have to be completed in all phases under the responsibility of the project team but with complete transparency to corporate authority, regulatory affairs and Pharma-co-vigilance have to have full involvement and provide their endorsement not only to the drug but also its packaging and promotional materials. Excellent tools exist to analyse the possibilities of failure such as Failure Mode and effect analysis (FMEA) (Wiebull). It is based on the principle that during the design of a product, process or service the possibility of failure and its effect on overall performance is carefully analysed, and the chances of failure are reduced by making changes in the design before it is implemented. Another important method is Quality Function Deployment (QFD) which is a comprehensive technique used in development of a product or service, marketing of a brand and product management. The concept has been developed into a comprehensive system to assure quality and customer satisfaction in new products and services (Mizuno et al, 1994). It would be essential to use such a method to identify all possible chances of failure and address every issue using the expertise available in-house and chalk out a program for the launch and marketing of Toraxin. The implementation may be delegated to empowered teams and a system of checks and balances have to be put in place. A comprehensive system has to be evolved and put in place to gather feedback from the market, its collation and appraisal at regular intervals. The intensity of this effort has to be at its maximum in the initial one year at least and if all goes well it may be tapered off slowly – but never closed. The company is in the drugs business already and obviously has a network of dealers and salespersons that have good rapport with medical staff at different levels. This strength of the organisation has to be brought to bear on the efforts to make the marketing of the new drug a success – no valid purpose was served by alienating them during the Zeropain project. The launch of the product itself should be limited to a specific level where the drug may initially be administered under qualified supervision and side-effects, if any carefully monitored and attended. It might even be useful to contain the launch to one selected area. References: DePamphilis, D: Mergers, Acquisitions and Other Restructuring Activities, 2002, Elsevier, US, ISBN: 0122095529 Kotler, P. 2003: Marketing Insights from A to Z, John Wiley and Sons, ISBN:0471268674 Mizuno, Shigeru and Yoji Akao. 1994. QFD: the customer driven approach to Quality Planning and Deployment. [Translated by Glenn Mazur]. Tokyo: Asian Productivity Organization. ISBN: 92 833 1122 1 Roll, R. 1986: The Hubris Hypothesis of Corporate Takeovers. Journal of Business 59: 197-216. Salek, S. and Edgar, A.: Pharmaceutical Ethics, 2002, John Wiley and Sons, ISBN: 0471490571. Santoro, M.A. and Gorrie, T.M.: Ethics and the Pharmaceutical Industry, 2005, Cambridge University Press, ISBN: 0521854962. Taylor, B.H.; Smith M.C.; Kolassa, E.M.; Perkins, G.: Pharmaceutical Marketing, Haworth Press, 2002, ISBN: 0789015838. Thomas, R.J. 1993: New Product Development, John Wiley and Sons, ISBN: 0471572268. Wiebull, Failure Mode and Effects Analysis, retrieved on August 16, 2006 from: http://www.weibull.com/basics/fmea.htm Read More