Millennium transformed itself from a pharmaceutical company, focused on upstream activities
of value chain such as diseased focused discovery and target specific to a fully vertically integrated company with proven capabilities in discovery research, development and commercial arenas. Millennium as a response to uncertainties in R&D process, such as time and cost associated in R&D to develop a marketable drug, tried to influence the source of uncertainty by combining fields of genetics and information technologies. Rationale behind using this response was to form a technological platform that would revolutionalize the pharmaceutical industry by drastically improving the speed, effectiveness and cost of drug discovery. Millennium has become very good at the process of discovering genes & ensuring that they can become marketable drugs. In pharmaceutical industry where innovation of a successful drug is a key to revenue generation, Millennium tried to maintain its flexibility as a response to the uncertainties in market and technological innovations. Although millennium retained a wide variety of rights, including ownership of any discoveries outside the scope of strategic alliance. Rational behind maintaining flexibility was that partnership agreements required millennium to make major capital commitments and prevented it from doing its own research, core competency, in areas covered by the agreements. The third response to uncertainty of mapping of human genome, a possible technological innovation, was the timing of decision to become vertically integrated company and acquisition of ChemGenics in 1997 as a logical downstream movement into drug development. The rational was that competitive advantage in drug discovery was rapidly disappearing as information technology and tools became more widely available to other market competitors. CEO’s belief was that if a pharmaceutical company weren’t downstream, it would be history. Millennium hoped to create a sustainable competitive advantage by creating an unrivaled drug discovery, development and commercialization process.
2. In order to become successful vertically integrated company, Millennium would need to
develop distinctive capabilities in area of commercialization and development. Commercialization as part of value chain of vertically integrated bio-pharmaceutical company has inherent strategic dissimilarities. Moreover, different disease area such as cardiovascular, oncology within commercialization require different skills sets as the target customers are entirely different for different drugs. Although acquisition of COR has helped forming a minimal base level in commercialization. Millennium would still need to create synergies between its downstream core competency of drug discovery with drug development and commercialization process. Not only do development and commercialization require very different capabilities, they also require different planning systems, different approached to control and human resource management, and different top management styles and skills. As organizations grow they need to change their structure & their strategy. Another concern in Millennium’s case is the organization’s structure. To become into a fully integrated pharmaceutical firm Millennium needs a structure that allows for the most efficient allocation of resources. Millennium has a loosely defined corporate structure that is based on the business areas it operates in. Thus Millennium needs to be able to create a more robust structure for it to succeed & without one it won’t be successful over coming years. Striking a balance between its R&D capabilities and commercialization, while utilizing minimum tangible resources such as research laboratories, distribution networks in overlapping areas would be a key success factor.
3. Organizational changes that required executing above-mentioned strategic imperatives would
mainly be a) adaptation to bounded rationality b) allocation of decision-making c) avoiding goal conflicts. These changes would help millennium to shift its organizational structure to have a divisional structure. Millennium is currently facing organizational problems in almost all areas. It is finding hard to maintain high intensity and passion among employees. Executive meetings are shifting from informal mode to professional more formal executive meetings. Resource allocation decisions in R&D are more Political influenced than strategic. Employees are frustrated and de-motivated because of poor recognition and relationship based compensation system. Divisional structure would help millennium pharmaceutical to solve its two ore root problems: allocation of resources and conflicting interest of shareholders and employees. Divisional structure would also help promote already established entrepreneurial spirit in millennium, solve accountability problems, provide performance base incentive structure and establish distinctive capabilities in area of commercialization and development. The role of CEO would be to manage linkages between millennium’s different divisions such as drug discovery, development and commercialization. On one hand, it would help different areas of value chain to create core competencies in their respective divisions. On the other hand, it would allow management and CEO to create consistent and closely linked corporate strategy, business strategy, external environment, together with the firm’s resource, capabilities, structure, systems, leadership style and culture. A pre-requisite for success in vertically integrated bio-pharmaceutical millennium.