Pharma’s Understanding of Competitive Intelligence

A recent piece on Linkedin, by an intelligence manager at the Johnson & Johnson Company in Switzerland, exposes unwittingly why pharma is ranked number one in spending on competitive information and among the last on the effective use of intelligence.

The writer, a young competitive intellegence (CI) professional serving two years as CI lead, relayed in the piece her personal experience that led her to believe a CI lead in a pharma company needs certain qualities to succeed on the job. The list is comprehensive, including skills required during the different phases of the familiar “intelligence cycle”-from planning to collection, analysis to communication, to process skills.

A lot of emphasis is placed on “soft skills” of collaboration and presentation, interviewing and motivating skills, but even more so on interacting with other functions, helping companies prepare for change and influencing decision-makers. The successful CI lead will possess curiosity and perseverance, left brain capabilities and right brain deep skills. And the list goes on and on.

On its face, this looks like a great compliment to pharma that its successful CI people are so talented. But it should immediately raise one suspicion in a discerning executive not prone to hype:

• Does it really take that much hard work, effort, and almost superhuman talent to make a pharma company sit up and take notice of CI?

• Shouldn’t it be only a superhuman executive who doesn’t need to consider the competitive implications of his or her strategy?  

Type I error

I have trained the vast majority of CI managers in the Fortune 500. It is very clear to me that there is no correlation between the quality of the intelligence producer and the way pharma uses intelligence.

Even if one accepts, without question, the profile of an ideal pharma CI analyst as superhuman, it doesn’t take such hard work to make high-tech companies, or defense contractors, or even energy companies to bring CI into their executive suits. The reality is that most pharma companies don’t actually use CI at all. It doesn’t mean they do not pay millions for reports, “projects,” and “research.” They just hardly ever use it as a serious input into their strategy-making/decision-making process. That, in a nut shell, is what’s wrong with CI in pharmaceutical companies.

The underlying broken relationship

The reason for the broken relationship between the producer of intelligence in the typical pharmaceutical company and the user is that what the consumer of intelligence inside a pharmaceutical firm considers valued intelligence has little to do with what intelligence is or what it can do for the decision maker. If the consumer of intelligence isn’t ideal, the “ideal” CI analyst doesn’t matter. The US government spends hundreds of billions on intelligence; do you consider presidents Obama and Trump as ideal users of that expensive intelligence?

Keep hoping for the first scenario

Pharma companies can sigh in relief for at least the next few years: The American Health Care Act (AHCA) and President Trump are not going to bring free market competition into the industry. Even if the “Freedom Caucus” succeeds at the margin in introducing amendments, pressure on price will not come from real market forces, but from governments and payers. Pharma knows very well how to deal with governments and large insurers. What it doesn’t know, and perhaps because it doesn’t have to, is how to compete for consumer preferences. So as long as the consumer remains largely marginal in determining spending in the industry, pharma’s margins are safe.

But as AHCA fails (chances are it will), there are two scenarios: the US will be following the European model, or the conservative free market advocates like Rand Paul convince America that healthcare will never be efficient under government control, and market forces can do better to lower prices. In the latter case, pharma better make it easier for competition analysts to influence its executives without being superman.

Benjamin Gilad, PhD, is President, FGH-Academy of Competitive Intelligence. He can be reached at bgilad@academyci.com