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Feature

posted 1 Jan 2001 in Volume 4 Issue 4

"Your Say": Knowledge management in the pharmaceutical industry

The pharmaceutical industry perhaps relies more than any other on innovation and the efficient transfer of knowledge, yet knowledge management is yet to have a pervasive impact on companies operating in the sector. Simon Lelic talks to representatives from eRoom, Smith & Nephew, Sopheon, Think Tools and NewsEdge, and asks how far KM has come within the pharmaceutical industry thus far, and what the future holds.

As the knowledge economy gathers pace, knowledge management will emerge as a key corporate discipline for each and every business, regardless of the economic sector it operates in. This was one of the primary conclusions drawn by participants in last month’s Your Say feature, a consideration of the future of knowledge management. Naturally, however, the take-up and implementation of KM will vary from industry to industry, and organisations from the pharmaceutical sector are battling with a number of challenges unique to the area they specialise in. Equally, the benefits

KM can offer pharmaceutical companies differ significantly enough to warrant an in-depth exploration of the impact knowledge management is having, and will have, on the pharmaceutical sector.

Immediately, this month’s participants disagree on how much of an impact KM has already made on the industry. Dirk Mueller, a member of the executive committee at Think Tools, argues that the pharmaceutical sector is far from at the leading edge of knowledge management, with topics such as strategic focus (for example, diversification versus focus on life sciences), biotechnology and e-commerce taking precedent for pharmaceutical firms. "KM is clearly important," says Mueller, "but it has not yet, in my experience, emerged as a primary area of focus." Rob Allison, European director of eRoom Technology, opposes this view, however, suggesting instead that take-up has been far quicker in the pharmaceutical sector than in many others. "This is because the pharmaceutical industry is really an intellectual capital industry at heart," he says. "The faster a drug can be brought to market, the faster it can make money during the life of its patient, and knowledge management can help get the drug to market months earlier."

There is, though, more of a consensus regarding the industry-specific benefits knowledge management has to offer. James MacFarlane, vice president of business development at Sopheon, points out that KM has assisted the industry in improving research processes, accelerating time-to-market and, ultimately, in cutting overall costs. "The pharmaceutical industry is facing increased pressure from shortening new product development times, from escalating research costs, and from governmental reforms aimed at constraining healthcare costs," says MacFarlane. "In this climate, companies depend on their ability to discover, develop and market innovative products faster and more effectively than the competition. When knowledge management is tied directly to critical business processes, it can deliver remarkable benefits." These ideas are echoed by Joanna Parr, UK country manager for NewsEdge Corporation. "KM allows pharmaceutical firms to co-ordinate the entire drug cycle more efficiently, enabling them to introduce new drugs ahead of their competition and monitor market response more quickly," she says. "It also enables companies to be more efficient and productive, with the elimination of duplicated information and effort across the organisation."

Both Mueller and Allison also highlight the need for pharmaceutical firms to avoid ‘reinventing the wheel’ in their production processes. "Knowledge management has enormous potential, especially in research and development, where technical development is very rapid, and involves combining knowledge from a number of different areas in the creation of new products," says Mueller. "On the production side, creative insight and experience are necessary to guarantee high product quality at low cost. This knowledge is often not shared effectively within and between divisions." Similarly, and as Simon Hudson, e-marketing and strategic intelligence manager at Smith & Nephew, suggests: "KM also has specific benefits in assisting companies with the inherently global nature of the industry. It can help to deliver both global and local knowledge where it is required and, in particular, help to insulate against corporate intellectual property erosion due to staff movements - both geographically and functionally, within the company and out of the company - and due to time, especially bearing in mind the long-term nature of many pharmaceutical projects."

But the effective implementation of knowledge management programmes within pharmaceutical companies is also hindered by a number of factors unique to the industrial sector. As MacFarlane points out, organisations operating in the pharmaceutical sector must blend the creative aspects of high-technology discovery and cutting-edge science with the constraints associated with the industry being the most highly regulated in the world. "Put this against the enormous costs of drug development, and the high failure rate of drugs being licensed," he says, "and you have an industry that poses unique challenges for enterprise systems, including knowledge management." Regulatory issues also restrict what a pharmaceutical firm can ‘publish’, even internally. This is primarily, as Hudson says, because information may relate to potential product claims, capabilities or statements. "This reduces our ability to communicate opportunities or issues in a formalised manner, and certainly provides considerable inertia to the flow of information," he continues. "This becomes even more pronounced when trying to move information to potential customers or the general public."

Knowledge management is also faced with the challenge of coping with the quantity, and often the enormous complexity of much of the knowledge surrounding, in particular, research and development projects, as both Parr and Mueller recognise. Equally, as Parr says, the fact that pharmaceutical companies have traditionally operated as autonomous units means creating a standard platform with which to make knowledge available poses a unique problem for KM, particularly when no ‘corporate ownership’ of the knowledge management project has been established. And on a very practical level, Allison points out that pharmaceutical companies also face the requirement of having to marry KM with industry-specific applications, such as molecular structure databases. "As KM is still poorly understood," says Mueller, "people tend to underestimate the benefits. We are still a long way from successfully combining knowledge management systems into an integrated knowledge metabolism."

But modern technologies are already going a long way to addressing the KM needs of the pharmaceutical sector. "To this point, portals and document management systems have had the biggest impact on the pharmaceutical sector," says MacFarlane. "Until recently, most companies have focused on managing the storage and transportation of documents, and mining the information stored in those documents through the use of portals and various search engines. These technologies have already provided the pharmaceutical industry with significant paybacks, particularly in the regulatory submission process." Looking forward, MacFarlane believes that the most viable KM technologies will be those that combine process and content. "The best solutions will come with high-value content already built in, allowing immediate adoption and the realisation of usage benefits as soon as the technology is placed on the desktop," he says. Allison highlights the value of search, collaboration, categorisation and push technologies, as well as summarisation tools for firms operating in the pharmaceutical sector, while Mueller believes that today’s more isolated solutions will lead to company-wide integration of internal KM systems, linked through web-based knowledge portals. "These internal K-portals will be tied into a broader external network incorporating relevant scientific organisations and corporate partners," he predicts.

Hudson places a great deal of emphasis on the role intranets can play as part of the knowledge management initiatives launched by companies in the pharmaceutical sector. "Intranets form a vital type of corporate memory," he says. "Coupling this to advances in mobile communications and computing creates the opportunity for almost ubiquitous knowledge sharing." Driven primarily by internal cost-saving needs, as well as a desire to cope with the threat of information overload, Smith & Nephew launched its intranet project just over a year ago, with the first version going live last January. The core components of the intranet include a central ‘knowledge base’, a product system, clinical papers, conferences, a yellow pages directory, discussion groups, external information resources, and market research reports. A full case study detailing Smith & Nephew’s experience follows on page 11, and while it is true that the company’s intranet is in a constant state of evolution, it has already become a vital tool for facilitating knowledge exchange within Smith & Nephew.

As the sophistication of KM tools increases, says Allison, so will the respective pay-off. And according to MacFarlane, as organisations begin to get the document management challenge under control, the next wave will be to improve the quality of the content stored within knowledge repositories. "The need to reuse and repurpose content is moving the application of KM practices from managing documents (macro-content) to managing the information at word, phrase and paragraph level (micro-content)," he says. "This represents a fundamental shift in focus from managing and mining intellectual capital after it is created, to assisting knowledge workers in the creation process." In fact, as pharmaceutical companies begin to fully realise how to make best use of knowledge management technologies - which are themselves developing and improving at an astonishing rate - the dangers of duplication of effort and inefficient use of resources will be tamed, if not entirely eradicated.

Indeed, knowledge management as a discipline, encompassing the use of KM tools and technologies, promises to become the primary source of differentiation and competitive advantage in the pharmaceutical industry. "The knowledge efficiency of most pharmaceutical companies (the percentage of knowledge shared and used effectively across borders within the company, in relation to knowledge that has to be regenerated from scratch) is still quite low," argues Mueller. "The companies that are able to improve their efficiencies in R&D and production will not only have a clear cost advantage, but will also be far more productive. A richer and better-focused product pipeline, more closely related to consumer demand, will provide a clear competitive advantage." Central to this progress, in Hudson’s opinion, is the extension of knowledge management across functional boundaries. "In particular," he suggests, "blurring the distinction between knowledge and communications belonging to companies, academia and customers, will change the nature of the interactions we are able to have, as well as the shape of our accessible knowledge base."

Admittedly, knowledge management has a long way still to go in the pharmaceutical sector. According to Mueller, most current KM systems only manage information, by identifying its location and facilitating its accessibility. "True KM systems will address knowledge, which we can define as systemically integrated information that enables effective action," he says. "If knowledge is to be shared effectively, it must be captured in its multi-dimensional, integrated context and made available throughout the company." On a similar note, Parr stresses the need for knowledge management to be integrated across all company levels for those organisations working in the pharmaceutical sector, while Hudson highlights the unexplored debate as to whether the industry as a whole has more to gain or lose by sharing knowledge with competitors more freely. But in an industry so reliant on intellectual property and innovation, knowledge management clearly has a powerful role to play, perhaps more so than in industries that have already embraced KM and fully recognised the benefits the discipline has to offer.