GlaxoSmithKline and Sanofi have lower levels of "bad complexity" than Novartis, J&J, Pfizer and Roche. But it's Bayer that struggles the most with excessive complexity, says a report from the Global Simplicity Index.
As it turns out, pharma is among the most complex of industries, according to researchers who studied the 200 largest companies in the world. "It will take far more than factory closures to simplify the pharma industry," write Melvin Jay and Simon Collinson in the PharmExecBlog. GSI calculates that on average the world's largest companies are wasting 10.2% of profits due to bad complexity.
In some circumstances, complexity aids business performance, the authors say in the report. But continually adding complexity will be bad for performance. All companies possess both good and bad complexity, so all can improve performance by removing the bad.
Closing manufacturing plants will reduce operating costs but it won't reduce the "stifling levels of complexity" within the drug industry, they write. Fixes need to be made to simplify strategy, organizational structure and process, for example. And change is needed in management behaviors "to ensure that complexity does not creep back into the organization."