Limits of Scale : Pharmas need to successfully restructure around a few therapeutic franchises to grow

Big pharmaceutical companies may need to radically reorganize their businesses around therapeutic franchises if they are to maintain high growth rates. For the past 11 years, drug sales of the sector's five largest companies have quintupled to $16.8 billion dollars. Yet their operating margins rose only one percent. They have quadrupled their R&D spending yet produced no more drugs. This article explains that Big Pharma's organization model, based on strict functional boundaries around R&D, sales, and marketing, seems to limit fast decision making and hurt business performance. The article lays out a new model built on independent but integrated therapeutic franchises.