The amount of efficiency savings delivered so far is $1.6 billion.
A biopharmaceutical company faced growing competitive and environmental pressure, and it had been lagging its peers and the overall market in value creation. When a new management team took over, they sought to improve the company’s cost structure and effectiveness in order to boost earnings and shareholder value. In addition, management wanted to change the culture to become more agile, entrepreneurial, and accountable.
BCG evaluated the situation and developed a structured transformation program with clearly defined improvement targets. The transformation team also defined and prioritized initiatives, redesigned relevant organizations and activities, created roadmaps for each initiative, and monitored the overall implementation of the program.
In all, the company developed more than 300 initiatives across the R&D, commercial, and manufacturing operations, with a total savings target of nearly $2 billion. Prioritization was critical—the top 15 initiatives contributed approximately one-third of the savings, and the next 30 contributed an additional third.
The team implemented a rigorous approach to manage the change effort, creating milestones for each initiative, employing structures for effective governance, and clarifying roles and accountabilities through a program management office (PMO). The PMO tracked progress, shared relevant status updates to key stakeholders and program sponsors, and highlighted potential problems and issues in time to effectively address them.
After four years, the initiative yielded efficiency savings of $1.6 billion, and the company received positive coverage from equity analysts, including several ratings upgrades.