Tunnah’s musings: has Facebook stopped us landing on the moon?
All the buzz this week has been about Facebook – about which pharma companies have kept their pages going and which have deserted the most popular social media site in the world.
For those who live on the moon and might have missed this, the whole fuss revolves around the fact that pharma companies have lost the ability to prevent user comments on their Facebook pages (as of August 15th), prompting a flurry of furrowed legal brows and concerned looking regulatory compliance folks fretting about potential patient comments, bad PR etc.
However, I’m not going to go into the whys and wherefores of who has stayed, who has gone and what pharma should be doing on Facebook – this has been covered by many good pieces over the last few days.1 For me there is a much more bigger issue at play here – is the meteoric rise of social media sites like Facebook actually indicative of our inability to think in a long-term coordinated manner?
“…is the meteoric rise of social media sites like Facebook actually indicative of our inability to think in a long-term coordinated manner?”
Economists have long speculated that we are rapidly moving into a culture of extreme short-termism, with the Bank of England’s Andrew Haldane and Richard Davies talking on this very issue recently.2 The premise is that we are ever more looking for the short-term fix, with companies now obsessing about quarter-on-quarter results driven by shareholder pressure, rather than long-term prosperity. This is quite a dangerous obsession for any company, but particularly so for those in the pharma industry, where early drug development inherently has to maintain a view of what the market will want in ten to twenty years’ time.
Short-termism is something that is also very fundamental to human nature. The “quick fix” immediate gratification from using social media sites like Facebook, Twitter and so on pleases a very basic part of our brain. This basic drive that we see being accepted more and more in the modern world also goes some way to explaining the horrendous riots we saw in London recently – the need for immediate rewards and expectation of it being OK to expect everything here and now.
However, behaving this way takes attention away from those parts that focus on the bigger picture – the visionary parts of us that are critical in thinking big picture and long-term. It has been speculated by some economists that the human race now lacks the ability to land on the moon or build cathedrals, because we no longer have the coordination and visionary thinking to see these big projects through to completion.3
“It has been speculated by some economists that the human race now lacks the ability to land on the moon or build cathedrals…”
So what’s the problem? After all, is anything really achieved by going to the moon, do we really need to build any more cathedrals and, more importantly for us, why should the pharma industry care?
Well, there’s some really quite good examples of why ignoring the bigger picture can be problematic, in particular the current economic strife we find ourselves in (house prices could never go down could they?). There’s a reason why companies like Enron and Lehman Brothers didn’t survive – the pursuit of short-term success at the expense of everything else leaves companies exposed to fatal downsides. It’s also the reason why the majority of the world’s wealthiest investors, such as Warren Buffet, base their success on fundamental analysis and investment periods of more than just a few years.
Right now, pharma is particularly exposed to short-termism and I’d warrant that those companies not viewing the bigger picture will go the same way as Enron.
We all know that pharma is undergoing a period of tremendous change and it’s not just due to the advent of the social media age, which is impacting every industry. Pharma is also faced with the challenge of declining innovation (or more specifically, declining increments in new innovation), loss of patent protection on older blockbuster products and increasing cost containment on medicines the world over.
“Right now, pharma is particularly exposed to short-termism and I’d warrant that those companies not viewing the bigger picture will go the same way as Enron.”
There’s two ways to deal with these issues and they are, you guessed it, either short-term or long-term solutions. Short-term solutions are things like licensing in new drugs, acquiring other companies with good products, entering into new markets (although results from this don’t flow overnight) or, and perhaps the in vogue approach, cost-cutting – laying off thousands of staff, outsourcing, implementing process efficiencies and so on.
Of course, these are all a bit like plugging the holes in the dam in when what you really need is a new dam. Buying in new drugs or even companies doesn’t give you the ability to suddenly be more innovative and even emerging markets need to reduce healthcare spend, so expect to see cost containment making it big there pretty soon. I’m not saying they don’t help, but be afraid if they’re the only things you’re doing as you’re fighting a losing battle.
So the long-term solutions are things like realigning the development process to ensure drug positioning is accounted for early on to take account of cost containment, engendering a culture of change and innovation, dealing with PR issues (as Alex Butler so lucidly covered last week) entering into completely new product or service areas aligned with the company vision and so on.4 If your company isn’t dealing with these issues, then you’ve got big problems ahead.
“Would you rather be licensing drugs or strategic planning a new business model?”
Here’s the thing though – read the short-term and long-term paragraphs above again and think about how exciting they sound as activities if they were your job. Would you rather be licensing drugs or strategic planning a new business model? I’m guessing that, if you’re honest with yourself, most people’s brains tingle a bit more at the prospect of the former than the latter. That’s the instant gratification “Facebook effect” in action.
Of course, the real trouble is that all the licensing, deals, emerging markets and operations streamlining folks are too busy Tweeting, Facebooking and Google-plussing, so we’re not even getting those done.
So here’s my advice to pharma – if you’re taking a break from Facebook, why not take the time to do some long-term business planning instead?
Until next month, stay well.
The next part of Tunnah’s musings will go live 16th September.
1. Pharma and Healthcare Page Deathwatch, Jonathan Richman, Dose of Digital, August 2011
2. Human capability peaked before 1975 and has since declined, Bruce Charlton, Bruce Charlton’s Miscellany, June 2010
3. The Short Long, speech by Andrew Haldane and Richard Davies (Bank of England) at the 29th Société Universitaire Européene de Recherches Financières Colloquium: New Paradigms in Money and Finance? in Brussels, May 2011
4. A room with a view: heathcare PR and the steam powered elephant, Alex Butler, pharmaphorum, August 2011
About the author:
Paul Tunnah is Founder and Managing Director of www.pharmaphorum.com, the dynamic online information and discussion portal for the pharmaceutical industry featuring news, articles, events / company listings and online discussion. For queries he can be reached through the site contact form or on Twitter @pharmaphorum.
Does pharma need to do less firefighting and more long-term planning?