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Conclusion

Sun Tzu once said “Know your enemy and know

yourself, if you do so, then you will win a hundred Reputaion
out of a hundred batles”. There is no quesion that

Big Pharma companies that decide their compeiive risks are the
strategy is to dominate one disease area and grow

organically will provide handsome pay-ofs for misalignment
shareholders (e.g. NovoNordisk). However, there are

a number of qualitaive factors, potenially afecing
between our
proitability in the long-term, for those that do so.

projected idenity
An ability to sustainably increase both distribuion
and margins; applying the same “mousetraps” to ”

new market segments; to augment one’s patent and our perceived
pipeline faster than the compeiion; to retain and

atract talent; an ability to protect trade secrets idenity.
and IP; to proacively miigate risks to reputaion

including governance, ethical and product-related m
risks.
.co
ess
xpr
oto
Limiing one’s strategy to organic growth also puts ph
future value at risk, paricularly in a market dynamic

that is enabled by M&A and JV’s to accelerate Risks in China M&As
Risk management is the coninuous applicaion
growth and distribuion. Whilst there is certainly throughout the lifecycle. Sustaining alignment

value in looking at new ways to invest in R&D Due diligence on potenial partners for successful with stakeholders is core to maintaining trust and
through tradiional externalizaion models, in a JV and M&As is diicult, with limited availability protecing a company’s reputaion. Establish real-

market where rule of law is oten vague, IP and its and dubious quality of inancial and commercial ime early warning and monitoring systems in all
enforcement is lax and talent churn is an issue and data. Sanoi and Merck only chose to partner with funcional areas of the company that are directly

puts the core “innovaion” strategy at risk.
companies they had worked with extensively in aligned to key stakeholder groups and the key
the past (KPMG), however they are sill exposed risks of the organizaion. This should include an

If Big Pharma wants to capitalize on the potenial to local pracices and ethical standards. Corporate analysis of “inside out” – what people inside are

of the Asian market growth, local M&As and/or values may also conlict and company visions may saying about the company and “outside in” –your
JV aciviies and innovaive R&D models must be difer. More than 2,470 company related risk issues stakeholder’s percepion of the company. Point-

considered. For it appears to be the most efecive have been published since 2006 by internaional in-ime survey style audits leave Big Pharma open
way to directly tackle risks related to product lifecycle news agencies on China’s pharmaceuical sector to risks and missing opportuniies.

acceleraion, IP protecion, talent management, (RepRisk AG, 2013). These violaions of internaional
increased poliical protecionism, compeiion, and environmental, social and governance (ESG) 2. Factor outrage into the company’s risk analysis

distribuion.
standards have impacted access to capital, resulted and scorecard. Risk Managers typically score for
in regulator imposed drug recalls and billions of hazard and probability. However, we know that the

Underwriing this with an efecive reputaion dollars in ines.
risks that kill people, e.g. lack of exercise, are not
risk management program serves to support Big the same as the risks that upset people, e.g. GMO

Pharma to then proacively allocate resources Reputaion Risk Management
(Sandman, 1987). Therefore, understanding your

to miigate related risks and to take advantage stakeholder’s expectaions of your company’s
of market opportuniies. This should include an Reputaion risks are the misalignment between legal obligaions to operaing and also social and

efecive muli-stakeholder engagement plan that our projected idenity and our perceived idenity, ethical expectaions, is criical to ensuring relevant
includes a coninuous dialogue with stakeholders or: “who we say we are as a company and how we risks are ideniied, weighted appropriately and

around key risks and issues for the company in operate” versus “the stakeholders’ percepion”. resourced for efecive engagement and risk
order to build the necessary trust to acquire or Achieving alignment and building and maintaining miigaion.

retain market access; the implementaion of a trust with our stakeholders remains a challenge.
real-ime reputaion risk monitoring system that 3. Build a mulidisciplinary risk council to

coninuously monitors the internal and external However, there are three key steps that Big Pharma review, assess and benchmark the organizaion’s
landscape for risks; factoring probability of outrage, companies can take to manage risks to reputaion performance. Establish clear KPIs and integrate

not just hazard, into the risk register, and having a in China.
them into the organizaion across people, process,
mulidisciplinary risk council that evaluates core KPIs
and technology. KPIs provide an opportunity to
and related risks in order to achieve organizaional 1. Understand your key reputaion drivers in quanitaively and qualitaively measure progress

strategy. Big Pharma can achieve a compeiive China. Build and maintain an ongoing dialogue to for performance and assess, adapt and reallocate
advantage in China, however, it cannot do it alone. achieve alignment on core strategic issues with key essenial resources where necessary to ensure an

-Leesa welcomes comments on this aricle at: ls@rlexpert.com
stakeholders.
unrestricted license to operate.

ISSUE 6 Pharmaceuicals l 19