Pharmaceutical Scenario and Alternative Futures
Question
Overview
Executives regularly make decisions in the face of uncertainty. When planning the future of the organization, how should leaders make assumptions for the near or long term? Scenario planning is a technique for identifying forward-looking alternative realities in which the organization can sustain itself.
A scenario is defined by Godet and Roubelat (1996, p. 8) as a "description of a future situation and the course of events which allows one to move forward from the original situation to the future situation." Scenario frameworks are used for preparing for alternative futures but not as a vehicle for forecasting the future.
Business scenarios are used as analytic tools to inform strategic decisions. A business scenario is a view of a possible competitive environment based on a set of assumptions about important uncertainties that face the business and industry and may affect organizational performance. For example, decisions on competitive strategy such as new product development are based on projections of product and market conditions.
Using frameworks, companies can create scenarios, allowing leaders and managers to be more cognizant of the external environment and status of their company. Scenarios can be of three major categories: (1) exploratory, starting from past trends leading to a likely future; (2) anticipatory or plausible built on different definitions of the future, desired or feared (the Oxford method); and (3) probabilistic stance (best case/worst case) (Godet & Roubelat, 1996; Ramirez et al. (2017).
This assignment gives you the opportunity to evaluate the four scenario-building frameworks presented in the assigned readings and apply the frameworks to plan for the future of one segment of the pharmaceutical industry. You will use the Scenario and Alternative Futures Template to complete your assignment.
Instructions
Industry Segments
Choose one of the following industry segments for this assignment:
United States name-brand pharmaceutical manufacturers develop prescription and over-the-counter products that are used to prevent or treat illnesses in humans or animals. Name-brand drugs and medication have patent protection. This industry does not include nutritional supplement or cosmetics manufacturers. In 2020 the industry size was $205 billion in revenue (Kennedy, 2021, 32541a).
United States generic pharmaceutical and medicine manufacturers develop prescription and over-the-counter drug products that are used to prevent or treat illnesses in humans or animals. Generic drugs are produced and distributed without patent protection, and industry operators are not significantly engaged in the research and development of new drugs. The industry does not include manufacturers of nutritional supplements or cosmetic beauty products. In 2020 the industry size was $58 billion in revenue (Kennedy, 2021, 32541b).
Part 1: Scenario Synthesis
The first portion of your assignment requires you to evaluate the following four scenario frameworks by critically assessing their main ideas or constructs and synthesizing the research findings. You will evaluate the research of Day & Schoemaker (2005), Godet & Roubelat (1996), Hussain et al. (2017), and Ramirez et al. (2017) using the Scenario Synthesis Matrix (Table 1) section of the Scenario and Alternative Futures Template [DOCX]. Remember, as in all of the course assignments, all assigned and researched articles should be entered into your Capstone Literature Matrix.
Day, G. S., & Schoemaker, P. J. H. (2005). Scanning the periphery. Harvard Business Review, 83(18), 135–148.
Godet, M., & Roubelat, F. (1996). Creating the future: The use and misuse of scenarios. Long Range Planning, 29(2), 164–171.
Hussain, M., Tapinos, E., & Knight, L. (2017). Scenario-driven road mapping for technology foresight. Technological Forecasting and Social Change, 124, 160–177.
Ramirez, R., Churchhouse, S., Palermo, A., & Hoffmann, J. (2017). Using scenario planning to reshape strategy. MIT Sloan Management Review, 58(4), 31–37.
The matrix is a synthesis, not a summary. A synthesis requires different main points or arguments presented by the authors from each of the scenario articles on their respective scenario frameworks. Complete the following steps:
Evaluate and identify the main points of each article.
Populate the first column of the synthesis matrix with the main points.
Work down the column from article to article. How does each article relate to the main points identified? Note: some articles may not cover all of the main ideas listed. Leave the field blank if the article does not address that main point.
Complete the final column: your synthesis.
Provide an introduction to the matrix and the process steps you followed. The matrix itself will be followed by a written summation of your findings on scenario constructs and frameworks and their application.
Part 2: Scenario Framework for Pharmaceutical Industry
You are a consultant hired to facilitate a meeting of executives at MiracleDrugs to conduct a decade-futures look. As the consultant, review the industry discovery summary of your research in the IBISWorld industry database that you previously provided to the client. Complete the following for this section:
Identify which scenario framework from Part 1 you will use to facilitate the meeting and explain why you chose this one over the others.
Identify five current state pharmaceutical industry trends or performance indicators essential to begin developing 10-year scenarios.
Based upon the selected framework, create five trigger questions for the executive team to use in creating 10-year pharma scenarios.
Remember to choose the name-brand pharmaceutical industry as discussed in US Industry (NAICS) Report 32541A or the generic pharmaceutical industry using US Industry (NAICS) Report 32541B.
Trigger questions are provocative prompts for creating innovative solutions to problems. "What if" is a great way of asking trigger questions that would shake up or change the industry.
Justify your selection and include the current industry outlook based on your research. To help you in your analysis, take the time to review the Day and Schoemaker (2005) article Scanning the Periphery, which offers valuable insights on the skill sets needed for futures thinking.
Note: You will need a minimum of three references in addition to the assigned readings. Add any new references to the Capstone Literature Matrix [XLSX] and include the Excel document with your assignment submission.
Your assignment should include the following headings:
Introduction.
Part 1: Scenario Synthesis.
Part 2: Scenario Framework for Pharmaceutical Industry.
Conclusion.
References.
Review the assignment scoring guide to ensure that you meet all criteria before submitting your assignment.
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Solution
Pharmaceutical Scenario and Alternative Futures
When faced with uncertainty, executives regularly make decisions through the scenario planning technique. Scenario planning is a mechanism of denoting the realities of forward-looking alternatives, leading to organizational sustainability. Companies used business scenarios as analytic instruments to inform business choices. Business scenarios also view potential competitive domains based on assumptions about uncertainties that face the industry and business, which may influence organizational performance. This research evaluates the scenario-building frameworks highlighted in the assigned readings by critically examining their main ideas and constructs and identifying which scenario framework is suitable for facilitating a pharmaceutical meeting.
Part 1: Scenario Synthesis
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Godet & Roubelat, (2003) |
Hussain et al. (2017) |
Your Synthesis |
|||
|
A |
Although the past is not the most accurate predictor of the future, it can illuminate blind spots in a company or industry. |
All who proclaim to predict the future are liars. |
Scenario planning is a modern foresight technique used in technology strategy growth. |
Instead of predicting the future, enterprises need to bolster their capabilities to deal with uncertainty. |
In life, it is not the most intelligent of species, nor the strongest who flourish, but the ones most welcoming to change. |
|
B |
Research indicates that people filter and ignore vast amounts of information that reach their senses. |
The future is not written anywhere. So it has to be constructed. |
Technology road mapping typically assumes a single scenario or a straight-line projection and can become less critical in the face of sudden, systemic, or volatile change. |
A novel approach to scenario planning can help organizations restructure their long-term strategies by developing several plausible scenarios. |
A scenario planning technique can be essential and credible if transparent, coherent, likely, and relevant. |
|
C |
Almost all surprises have discernible antecedents. |
Even though the world is diversifying, the trajectory of change is unknown. |
Scenario planning does not entail predicting the future; it entails preparing an organization for many prospective futures. |
Instead of tying the company's future to a strategy geared to a single set of events, numerous senior executives believe that intelligent management benefits from a deeper understanding of the current prospects afforded by multiple views regarding possible futures. |
Scenario planning can be utilized in inter-organizational domains. |
|
D |
In assessing the current landscape, managers should separate signals from noise. |
A pre-active, anti-fatalistic, and pro-active attitude is essential in the accelerating speed of change, the uncertainties of the future, and the increasing complexity of interactions and phenomena. |
Scenario planning presents a chance to envision plausible future states and thus helps develop risk-reduction strategies to avoid potential threats and take advantage of opportunities. |
Scenario planning became prominent after the Second World War and gained popularity in the corporate realm in the late 1960s and 1970s. |
Knowledge is gained with scenario-planning activities. |
|
E |
Companies in unique, quickly changing environments need well-developed peripheral vision. |
In modern society, anticipation is imperative. |
Although scenario planning is extensively used in organizational strategy development, there are numerous instances of its application in different contexts like specific technologies or industries. |
While various approaches to scenario planning have risen since the Second World War, the Oxford scenario planning mechanism is based on probability by identifying the part of the uncertainty that is unpredictable. |
There are no one scenario planning technique but various construction methods (some sophisticated, some simplistic). |
Part 2: Scenario Framework for Pharmaceutical Industry
Pharmaceutical manufacturers (like MiracleDrugs) create over-the-counter and prescription products to treat or prevent ailments in animals or humans. Hence, these companies need to conduct a decade-future look because future events can catch these companies by surprise and cripple their operations. For example, in 2020, Moderna and Pfizer revealed preliminary outcomes from the phase three coronavirus vaccine examinations to be at least 95% effective in preventing the illness. AstraZeneca also reported its vaccine to be highly effective. With these briefings, the scope of uncertainties narrowed for business executives as they saw a potential end to the crisis.
However, Schwartz (2020) says that many questions remain in his almost 50 years of scenario planning. Like the researcher, the world had never witnessed the uncertainty that arose from the COVID-19 outbreak. Hence, leaders require guidance on how to plan for the future. The sales teams of many companies have been monitoring the numerous uncertainties surrounding COVID-19 since March 2020 (Schwartz, 2020). As a result, they have formulated various scenarios that highlight a selection of possible critical outcomes and helped show this range of possibilities for leaders to consider. Considering potential effects and uncertainties can help any organization make transparent choices during significant change.
Identify Which Scenario Framework from Part 1 you Will use to Facilitate the Meeting
The Oxford Scenario Planning Approach (OSPA) is what I will use to facilitate the executive meeting. How may the Oxford Scenario Planning Approach (OSPA) assist in navigating COVID-19's volatility, unpredictability, novelty, and confusion? Admittedly, it has been beneficially employed by several businesses, scientific and intergovernmental organizations, and non-governmental organizations (Ramirez & Lang, 2020). However, it has been emphasized that when pandemic situations have been conducted, even in recent years, they have not been quickly adopted and transformed into policy.
According to Ramirez and Lang (2020), this has a lot to do with one of the OSPA's basic principles: one must begin the scenario design process by establishing the intended user and usage. This is much too often not followed. Suppose one does not initially ascertain the user and purpose, and there is no obvious user or purpose. In that case, the scenario set will be (unsurprisingly and unhappily) ineffective and unacted upon (Ramirez & Lang, 2020). The pandemic's nature influences how scenario planning might be more successfully undertaken in its midst - both to grasp how things could be after it passes to prepare for and aid with recovery and to deal with it urgently as it develops.
Identify Five Current State Pharmaceutical Industry Trends or Performance Indicators Essential to Begin Developing 10-Year Scenarios
1. Clarity on the Difference Between Scenario and Contingency Planning
Typically, contingency planning entails limiting risk – it may be an extreme and terrible danger. One determines the significance of risk and then makes a contingency plan if the dangerous circumstance materializes. A good example is purchasing a fire extinguisher or preparing an army (Ramirez & Lang, 2020). This is in contrast to scenario planning, which is concerned with predicting future hazards and discovering new possibilities, partnerships, and communities. Thus, scenario planning highlights possible incidents that may need the implementation of a contingency plan.
2. Paying Attention to Anchoring
Anchoring determines one's more outstanding or lower judgments based on previously supplied external data. This is sometimes advantageous. However, the pandemic's severity highlights a predisposition toward 'anchoring bias' — a state of mind captivated by the present circumstance (Ramirez & Lang, 2020). Scenario planning assists in overcoming anchoring by including fresh, diverse voices and freeing the power of dissent to enhance the quality of judgment calls.
3. Stretch Plausibility
Well-off individuals in leadership positions have personally experienced the uncertainty (TUNA) associated with the outbreak. Thus, the plausibility of any given scenario set may now be extended and made more complicated – and therefore more illuminating and valuable – than it could even a few years ago.
4. Considering Shorter Time Horizons
Non-linear change and the speed at which exponential change occurs are well-known concepts. As a result, the longer-term has reduced, allowing for scenarios to be performed over shorter periods (Ramirez & Lang, 2020). Scenario sets are valuable because they allow leaders to look at the world through the eyes of a few fictitious characters, and that viewpoint is what makes them so effective.
5. Moving Online and Adapting the Duration of Sessions
The scenario set can be produced online as people become more isolated, with day-long workshops trimmed and sessions redesigned. As a result, more scenario set iterations can also be expected.
Five Trigger Questions for the Executive Team to use in Creating 10-Year Pharma Scenarios
I. Is the Burden of Chronic Illnesses Soaring?
Chronic illnesses such as diabetes are becoming more prevalent worldwide. In addition, as increased longevity compels many nations to raise the retirement age, many individuals will be working at the onset of these illnesses (White, 2007). As a result, chronic illness treatments' social and economic worth will increase proportionately. Still, MiracleDrugs Company will have to lower its pricing and depend on the volume sales of such goods since many nations would be unable to pay them otherwise.
II. Are Healthcare Payers and Policy-Makers Increasingly Influencing or Mandating What Doctors can Prescribe?
As treatment regimens increasingly replace individual prescription judgments, Pharma's target audience becomes more concentrated and potent, affecting its sales and marketing strategy. As a result, the corporation will have to compete for its funds more aggressively, partner with healthcare payers and providers, and enhance patient compliance.
III. Is Pay-for-Performance on the Rise?
A rising number of healthcare payers are assessing the pharmacoeconomic value of various medications. In addition, the widespread use of electronic medical records will provide them with the outcomes data they need to establish best medical practices, terminate products that are more costly or less effective than similar therapies, and compensate for treatments based on their results (White, 2007). Thus, MiracleDrugs Company will need to demonstrate that its medications are practical, cost-effective, and superior to other means of intervention.
IV. Are the Boundaries Between Various Forms of Healthcare Blurring?
With medical advancements, the primary care industry is also growing. The self-medication market increases as more prescription medications are made available over the counter. As a result, the demands of patients are evolving (White, 2007). Patients will need more thorough information if treatment shifts away from the doctor and towards extra care or self-care. In addition, a shift from the hospital to primary care necessitates new services like home delivery for patients.
V. Are Governments Starting to Focus on Prevention Instead of Treatment?
The company can expand its portfolio due to this shift in focus. First, however, it will need to rehabilitate its reputation since healthcare professionals and patients will not trust the company to deliver such services unless they are confident it is acting in their best interests.
Current Industry Outlook
The Brand Name Pharmaceutical Manufacturing business has had multiple new medicine releases throughout the five years to 2021, with over 50 new active ingredients introduced in 2019. According to Informa PLC research, the number of new medication releases in 2019 was more than twice that of 2016, with many new drug launches targeting rare illnesses and cancer (Kennedy, 2021). Due to increased pricing scrutiny, generic competition, more significant market rivalry among brand-name producers, and rising research and development (R&D) costs, several manufacturers have changed their strategic emphasis to more profitable therapeutic areas, such as rare illnesses and cancer.
Consequently, several operators redirected their pipelines toward rare illnesses. However, low prescription numbers might be countered by high per-unit costs and the benefit of orphan medication exclusivity in the United States and the European Union. In addition, several branded pharmaceutical companies have extended their product portfolios to include biologics.
According to EvaluatePharma, biologic pharmaceuticals' worldwide sales contribution is expected to increase from 23.0 percent in 2014 to 27.0 percent in 2020 (Kennedy, 2021). However, biologics growth is projected to be dampened by the expanding market for generic biosimilars, which are biologics that have previously been authorized by the US Food and Drug Administration (Kelleher et al., 2020). Despite increased competition from biosimilars, the market is predicted to rise at a compound annual growth rate of 2.9 percent to $207.0 billion during the five years to 2021 (Kennedy, 2021). This includes a rise in income of 10.3% and 8.1 percent in 2020 and 2021, respectively, as a direct outcome of the coronavirus pandemic.
Strategic relationships with the federal government in vaccine development helped the business, resulting in revenue growth. Revenue is expected to expand at an annualized rate of 2.8 percent to $237.3 billion during the next five years until 2026 (Wilcock, 2020). Numerous industry participants are predicted to increase biologic medication sales volumes while simultaneously increasing the pricing of specialty pharmaceuticals. Investments in research and development will likely increase as many pharmaceutical companies expand their drug pipelines with specialist medicines and orphan medications, which often have a smaller disease population and need fewer clinical trials. Profitability is also predicted to improve over the next five years.
Conclusion
Although the peripheral vision complexity can defy simple recipes, this research has revealed that MiracleDrugs and other Big Pharma can strengthen such vision. Like being cognizant that an unexpected outflow of a tide is a sign of an incoming tsunami, identifying early warning signs can determine the fate of a company. If MiracleDrugs portrays an excellent peripheral vision, it can gain an incredible advantage over its competitors by acting on plausibilities more efficiently. Of course, it takes the ability to do this perfectly, but as the environment shifts more rapidly and becomes uncertain, the benefits from peripheral vision can be more significant than ever before. As Charles Darwin said, the species that survive are most welcoming to change.
References
Day, G. S., & Schoemaker, P. J. (2005). Scanning the periphery. Harvard business review, 83(11), 135. https://www.researchgate.net/profile/Paul-Schoemaker-2/publication/31769140_Peripheral_Vision_Detecting_the_Weak_Signals_That_Will_Make_or_Break_Your_Company_GS_Day_PJH_Schoemaker/links/588688a0a6fdcc6b791939e7/Peripheral-Vision-Detecting-the-Weak-Signals-That-Will-Make-or-Break-Your-Company-GS-Day-PJH-Schoemaker.pdf
Godet, M., & Roubelat, F. (1996). Creating the future: the use and misuse of scenarios. Long range planning, 29(2), 164-171. https://www.sciencedirect.com/science/article/pii/0024630196000040
Hussain, M., Tapinos, E., & Knight, L. (2017). Scenario-driven roadmapping for technology foresight. Technological Forecasting and Social Change, 124, 160-177. https://www.sciencedirect.com/science/article/pii/S0040162517305851
Kelleher, K., Kumar, K., Patel, P., & Schrader, U. (2020). Pharma operations: the path to recovery and the next normal. https://www.mckinsey.com/~/media/McKinsey/Industries/Pharmaceuticals%20and%20Medical%20Products/Our%20Insights/Pharma%20operations%20The%20path%20to%20recovery%20and%20the%20next%20normal/Pharma-operations-The-path-to-recovery-and-the-next-normal-vF.pdf
Kennedy, S. (2021). Brand name pharmaceutical manufacturing in the US. IBISWorld Industry Report 32541a.
Ramirez, R., & Lang, T. (2020). The Oxford Scenario Planning Approach in the era of COVID-19. Saïd Business School. https://www.sbs.ox.ac.uk/oxford-answers/oxford-scenario-planning-approach-era-covid-19
Ramirez, R., Churchhouse, S., Hoffman, J., & Palermo, A. (2017). Using scenario planning to reshape strategy. MIT Sloan Management Review, 58(4), 31. https://search.proquest.com/openview/27d54ad979f5570e5d3d176d45d46ab6/1?pq-origsite=gscholar&cbl=26142
Schwartz, P. (2020). With vaccines on the horizon, here's how business leaders can plan ahead. World Economic Forum. https://www.weforum.org/agenda/2020/11/vaccines-on-the-horizon-how-business-leaders-can-plan-ahead/
White, S. (2007). Pharma 2020: the vision-which path will you take?: pharmaceutical practitioner. SA Pharmaceutical Journal, 74(8), 40-41. https://journals.co.za/doi/abs/10.10520/EJC81800
Wilcock, M. (2020). Pharmaceutical marketing—greater than the sum of its parts?. Drug and therapeutics bulletin, 58(10), 147-149. https://dtb.bmj.com/content/58/10/147.abstract
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