I recently attended a conference session with many New England area researchers from the biotech and pharmaceutical industry. The conversation moved to risk management and I ended up talking about drug recalls (particularly Vioxx and Bextra) as being critical issues to consider in developing a risk management framework. (Related article: How to avoid distractions like product recalls?)
What surprised me was the ferocity with which the researchers opposed any drug recalls. Mind you that Vioxx was voluntarily recalled by Merck and Bextra was recalled only after months of foot-dragging by Pfizer. The company essentially left FDA with no choice. The researchers suggested that drugs should simply carry warnings rather than be recalled. (Related article: Bextra recall hurts Pfizer)
All product recalls are extremely painful for everyone in the value chain. The litigation process that sets in almost immediately after a recall can mean bankruptcy for the companies involved. The researchers get hurt the most since they often take pride in their research work (in the case of Merck it appears that the R&D folks were pointing out the risks for a while but the aggressive sales and marketing groups decided to ignore them) and they are among the first one to let go after the drug is no more on the market. (Related article: Lessons from recall of Vioxx)
What does it mean for you?
What surprised me was the ferocity with which the researchers opposed any drug recalls. Mind you that Vioxx was voluntarily recalled by Merck and Bextra was recalled only after months of foot-dragging by Pfizer. The company essentially left FDA with no choice. The researchers suggested that drugs should simply carry warnings rather than be recalled. (Related article: Bextra recall hurts Pfizer)
All product recalls are extremely painful for everyone in the value chain. The litigation process that sets in almost immediately after a recall can mean bankruptcy for the companies involved. The researchers get hurt the most since they often take pride in their research work (in the case of Merck it appears that the R&D folks were pointing out the risks for a while but the aggressive sales and marketing groups decided to ignore them) and they are among the first one to let go after the drug is no more on the market. (Related article: Lessons from recall of Vioxx)
What does it mean for you?
- Do no evil. And I am not saying this because I am preaching morality here; this simple principle is fundamental to shareholder value creation.
- Have a product recall strategy for each product so that once problems arise you do not react to circumstances but respond using a well thought out strategy. Merck and Pfizer are in deep trouble because they are merely reacting to market forces rather than executing a proper product recall strategy.
- Never ignore the researchers. I have often heard disparaging remarks by senior level managers about their employees in R&D. While they may not have skills in marketing or sales or strategy (they need not have these), they know the products and their risks better than anyone else. Trust their input more than the input of sales people and attorneys.