Project Management Tools in a Matrix Structure to Develop Successfully a Drug

Important Project Management Tools in a Matrix Structure to Develop Successfully a Drug

TABLE OF CONTENTS

1. Introduction……………………………………………………………………4
   1. Drug Development Process……………………………………………….4
   2. Why is important to develop successfully a drug?………………………………..4
   3. Matrix Organizations………………………………………………………5
   4. Examples of pharmaceutical companies with a matrix structure…………7

2. Important Management Tools in Matrix Organization………………………..7
   1. Schedule……………………………………………………………………8
      1. Schedule Development………………………………………………8
      2. Schedule Management………………………………………………10
   2. Cost………………………………………………………………………..11
      1. Cost Planning………………………………………………………..11
      2. Cost Management……………………………………………………12

3. Analysis and evaluation of the Project Management Tools……………………13
   1. Benefits of the Project Management Tools………………………………..13
   2. Advantages and Disadvantages of Matrix Organizations…………………14
   3. Implications………………………………………………………………..15

4. Conclusion……………………………………………………………………….16

5. References……………………………………………………………………..18

1. Introduction

1.1 Drug Development Process

Drug Development process is a very complicated and risky process with several stages involving different departments along pharmaceutical companies. There are five main stages:

• Discovery. Companies take different strategies to discover new drugs like improve current market drugs to either decrease side effects or improve effectiveness or study one brand new drug.¹
• Preclinical Research. Studies in vivo and in vitro to demonstrate that the drug is reasonable safe to use in humans and to seek some evidence of the drug’s biological activity. Pharmacology and toxicity studies have to be done in compliance with Good Laboratory Practices (GLP).¹
• Clinical Research. Clinical trials are divided in three phases. First, companies study the metabolism and pharmacological actions of the drug. Second, they evaluate the effectiveness of the drug for the proposed indication within a controlled saved environment. Ultimately, they evaluate the efficacy and monitor the adverse reactions in controlled and uncontrolled studies.¹
• FDA Drug Review. Sponsor has to be submitted the New Drug Application (NDA) and FDA will review it.¹
• FDA Post-Market Drug Safety Monitoring. After the FDA approval, sponsor has to manage drug advertising, reported problems, active surveillance, or manufacturer inspections.¹

1.2 Why is important to develop successfully a drug?

Nowadays, pharmaceutical companies spend a lot time and money trying to develop a drug that quite likely will not be approved by the FDA. First, they spend around 12 years developing a drug. As you can see in the figure 1, discovery and preclinical research are between three to six years, clinical trials are around six to seven years and FDA review are one to two years.²

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Second, according with the Tufts Center for the Study of Drug Development (CSDD), pharmaceutical companies spend $2.6 billion to get an approved drug on the market, a 145% expense growth for the same process since 2003. They estimate that companies spend $1 billion during drug discovery and preclinical studies, $1.4 billion for clinical trials and the rest for post-marketing studies.³

Figure 1. Summary of drug development process.²

Over the past years, develop a drug and get the approval has become a challenge. As industry and regulatory bodies understand more about diseases through experience and technology, FDA makes process of approving a new drug more challenging and restricted. As the Figure 1 shows, you need minimum 5,000 compounds on the discovery stage to launch one drug to the market, and only the 20% of the drugs that initiate the clinical trials get the approval. In 2016, only 22 drugs (50% fewer than the year before) were approved by the FDA in the United States.⁴

Due to the time and cost, pharmaceutical companies need to develop a drug successfully through the approval. These companies are working under pressure trying to develop a lot of molecules in parallel. They realize that project management tools to coordinate the different departments involve in the process, manage risks that they take or have a strategy planning can be crucial to get the approval and manage different products at the same time. Consequently, project management has become a vital part of the drug development process in order to success and get the drug approval.⁵

1.3 Matrix Organizations

Matrix structure is a type of organization that mixes the horizontal structure of project management and the normal functional structure. The project is divided in two structures, one along functional lines and the other along project lines, project teams normally report to one of the lines and dotted line to the other. Matrix organizations are described to ideally utilize assets by having people work on numerous projects as well as being competent on performing ordinary functional obligations.⁶

There are different types of matrix structures like weak matrix, balanced matrix and strong matrix. However, the most common is balanced matrix. Along balanced matrix, project managers designate the plan for the project, roles and responsibilities between the different departments, or schedules and timelines. On the other side, functional managers have the responsibility to designate who employees are going to be along the project to make it according with the instructions and timelines that the project managers established it.⁶

Figure 2. Matrix Organization Structure in a Pharmaceutical Company⁷

In a matrix structure, there are four main positions in terms of project management: project manager, functional managers, project team members and upper management.⁵

Figure 3. Key positions of Matrix organizations⁵

Each group has their own responsibilities and roles inside the company, but the connections between them are inevitable. Furthermore, a strong and effective communication become vital to the productivity of the matrix organizations.⁵

1.4 Examples of pharmaceutical companies with a matrix structure

Novartis is a Swiss multinational pharmaceutical company that have been succeeding since its foundation. However, the company realized that they had a lack of communication and cooperation that were impacting on their businesses and they decided to change the organizational structure of the company to a matrix organization. Novartis required external consultants that helped the company implement a completely different way of working by training and educating their force task. Novartis made different training modules simulating real-life cases because they wanted employees to have both functional and project skills. Novartis needed leadership in both dimensions of the structure, this was key to be successful under the new structure. In addition, they had to learn how to work in a matrix organization within different geographic as Novartis has 80,000 employees in over 140 countries. It is believed that Novartis was very successful implemented this structure.⁸

2. Important Project Management Tools in Matrix Organization

Having an effective planning and management of resources in pharmaceutical companies are vital to develop a drug successfully.⁹ It is very important to make an estimation for the time and cost that each work package will need it in order to develop a drug. Oftentimes, companies try to compile previous projects to see how much time and money a similar activity needed. The time estimations are made first, and knowing the time, companies can estimate the cost.⁷

2.1 Schedule

Time in pharmaceutical companies as in other companies is critical because if the company doesn’t manage it properly, it can generate loss of money and drug patents. Different studies show that each day that the drug is delayed launching to the market a successfully drug can cost 1 million dollars in lost incomes. Consequently, it is vital to make a plan to develop and manage the schedule in order to have successful drugs on the market.⁹

2.1.1 Schedule Development

During schedule development, each timeline for each activity of the project will be clearly identified and assigned to each department or functional line within the project. Agreement of these timelines, their restrictions and their constrains will be discussed between the different functional groups.¹⁰

Time-Scaled Arrow Diagram (TAD)

Pharmaceutical companies use a diagram to study, plan and schedule their projects to obtain the different activities’ timelines with the minimum cost.

Figure 4. An example of time-scaled arrow diagram¹⁰

Project managers should have an understanding about the network scheduling. Nowadays, many pharmaceutical companies hire scheduling experts from non-pharmaceutical companies and they provide them the drug development knowledge.⁷ In addition, project managers must be aware of the project scope, the roles and responsibilities and the available resources during the project.¹⁰

Project managers need to follow different stages to make the diagram. First, the project manager has to decide what level of information should be detailed in the project diagram. The level of detail must include sufficient information to avoid any confusion or misunderstanding throughout the project. After the level of detail is decided, they have to identify the different activities that project will consist of. One way to do that is with the Work Breakdown Structure (WBS) identifying the activities and making work packages. Usually, pharmaceutical companies divide the work packages following the different drug development stages and the departments that are involving on the stages. Second, activities need to follow a logical order within the project because some activities will need to start when others are finished (for example, a drug must be tested in animals to be tested in humans), or two activities need the same resources (the same equipment should be used in two different activities). There are different ways to establish the sequences, but the most common one is “finish to start” (activity B can start only when activity A is over). Third, project managers have to find the different resources available for each activity to develop it successfully. Once they have the resources, they have to calculate how long the work package will take to complete. Project managers ask for time recommendations to the employees of the different functional department who are more familiar with the different activities and they know how much time can spend in those activities. For example, an employee needs to spend 140-160 hours in a clinical study, if he or she works only on that activity, the worker needs around 4 weeks working 8 hours to finish the activity. After that, project managers make the diagram. The activities are narrows that are connected with other activities. There are two manners to draw the diagram in cascade (one zone, one activity) or in spine (one zone, multiple activities). Different computer programs make the diagram as soon as the project manager introduces all the necessary data. Finally, project managers identify the critical path and they have two methods. The first is watching what sequence is the longest one and the second is with the forward/backward pass process. Clinical and toxicological studies are usually activities that are on the critical path.^7,10

2.1.2 Schedule Management

Schedule management consists of making sure that the project activities have been developed according with the timelines established, evaluating changes in the course of activities related with project scope, and building up another standard schedule when it is necessary.¹⁰

Slip Chart

The chart tries to track the progress of the project activities making an estimation of how much time the project is in front of or behind the pattern plan at the time of reviewing. When successive evaluations are connected, a pattern line is shaped.¹⁰

Figure 5. Example of Slip Chart¹⁰

Project managers have to follow different stages to develop the chart. First, they must track and

monitor the project activities to make sure that everything is going according with the defined

duration. In pharmaceutical companies, one does not know how the project is going to evolve

because it depends on many things that meetings are crucial to make sure how they are using the

resources to develop the different activities on time. Second, they evaluate the impact that delays

can have on the project. The focus is first on critical activities and then, on activities that are

close to the critical activities. Functional and project managers combine the delays for individual

activities to establish how many delays are on the overall schedule. Finally, they review the

timelines and predict the schedule completion. Project managers can use the tool to make

changes on the end dates. For example, in figure 5, the slip chart shows that the project is three

weeks behind the baseline plan when they reviewed it during the week six. They can push the

project to make quicker or can make a new end date. However, project manager must be careful

because a lot of changes on the schedule can create frustration, loss of confidence and lack of

motivation among the different departments involve on the project. For that reason, it is

recommended to use the slid chart with another schedule management tool to make sure that the

changes are necessary to develop the project successfully.^9-10

2.2 Cost

Project managers must make a precise budget for two main reasons. First, overspending decreases the company profit and removes money opportunity for other projects. Second, underspending can increase the profit, but if the company does not identify this money on time, other projects cannot take advantage of that money.⁷

2.2.1 Cost Planning

The main goal is to make the project budget. The budget explains how much money is agreed to spend in each activity. As I mentioned before, drug development is an uncertainty process that depends on different elements and project managers must be aware of that introducing extra money on the cost planning for contingency plans.⁷

Table 1. All organization levels are involved in the cost-planning process¹⁰

Cost Planning Map

Project managers must complete diverse stages to build up the map. First, they should define the

cost planning and they should be aware of the project scope and the quality and quantity of data.

Second, they select the cost plan uses. There are three principal uses: assess the capital cost,

establish the schedule and cost baseline and evaluate potential risks. According with the

available resources, project manager needs to establish the cost baseline combining the schedule

activities with the estimated cost. This allows the project manager to make the cash flow curve

that mix the timelines with the cost for each activity. In addition, project managers need to

allocate some money to make changes along the project (contingency plan). Third, project

managers should identify the cost plan scope. They need to choose what cost estimate type will

be used. There are different types, but the most commons are order of magnitude, budget and

definitive estimates. Cost estimates are ordinarily communicated in currency units, for example,

dollars, empowering a simple examination along the projects. However, projects in a few

businesses support assesses in labor hours. Finally, project managers design the cost-planning

process. They start doing a preplanning determining how they intend to perform the cost

planning. Knowledge of due dates for the estimation or who are the end users of estimation are

some of the things that can help the project management to estimate the cost planning. After that,

they make a detailed description of the different elements and activities that will be estimated

including a physical description or the scope boundaries for each element. Once the detailed

description is finished, project managers have to make a cost-estimating relationship (algorithm

or formula that processes the project information). Equipment, materials or labor are examples

that can be estimated through the algorithms. When cost estimation for individual activities are

finished, they have to make a separation between direct cost and indirect cost. Ultimately, they

check, review and improve the cost planning.¹⁰

2.2.2 Cost Management 

Project managers have to make sure that the project has been developing within an approved budget preventing budget overruns. They must prevent budget changes with the help of different cost management tools.¹⁰

The Cost Management Plan

The cost management plan is a tool that portrays how the financial plan and costs will be overseen on the project. It sets the procedures for how project costs are estimated, announced, and controlled by the project manager. Along a drug development project can be changes. For that reason, each pharmaceutical should have a project management software to introduce different information and keep project cost and budget under control. ^7,10

Cost management plans have different stages that the project managers must follow it. First,

they should start the plan establishing the purpose of the plan and information of

who will have the authority to manage the project’s costs. Second, they make procedures of how

they will be managed the cost during the project. Additionally, it is explained how they

get the baseline budget and the different roles and responsibilities. Third, they explain

everything about expenditures (how will be tracked, how often, what tools will be used) and

they represent the standard metrics that will be utilized to track and report the different

project budget costs. As I mentioned before, it is vital to have meetings to know how they are using the budget because the drug development process is unpredictable and can change in one day. Finally, project managers describe the procedures to follow when a change on the budget is required and they describe the final project budget divided into different sections like fixed costs, material costs, other direct costs, or budget contingency.¹⁰

3. Analysis and evaluation of the Project Management Tools

3.1 Benefits of the Project Management Tools

-          Time-Scaled Arrow Diagram (TAD): one of the unique benefits that the diagram has is that project managers are able to read the whole project schedule, when one activity starts and finishes with the duration and the total slack for each activity. In addition, with the diagram is easy to follow the sequence of activities and the dependency between the activities.¹⁰

-          Slip Chart: the chart is very visual making easier to project managers to see the different information. Also, project managers can notice when a corrective plan needs to be done because the chart has the ability to record the project progress.¹⁰

-          Cost Planning Map: the map gives clear instructions to be followed for the project teams. It provides clear information about the cost estimate type and cost baseline decreasing risk of poor cost planning that can lead to a misusing of company resources.¹⁰

-          Cost Management Plan: it establishes how the project cost will be managed and who is going be the responsible to do it. It is necessary for all type of projects to control the project costs and resources.¹⁰

3.2 Advantages and Disadvantages of Matrix Organizations

Advantages of Matrix Organizations

-          Increased flow of information: employees are in constant communication with project and functional managers increasing the facility to transfer the information around the project. A faster communication can lead with more efficient decision-making.⁸

-          Flexible and efficient resources: matrix structure gives flexible utilization of resources inside the projects. It is the most efficient structure because employees can distribute their energy among different projects.⁶

-          Strong project focus: having a project manager who is responsible to coordinate the project prevents from different project management problems.⁶

-          Easier post-project transition: employees who worked on the project have their functional departments and they will have another roles and responsibilities when the project is done.⁶

-          Retention of disciplinary teams: matrix organizations maintain the functional structure of each department. The motivation of the employees increases because each specialist wants to work with other specialists of the same discipline.¹¹

Disadvantages of Matrix Organizations

-          Two bosses can generate tension and stress: it can be tension between functional and project managers. These problems can cause a negative environment inside the project generating delays on the project. In addition, employees can have stress because they have two bosses providing different information. Therefore, it is important to have a good relationship between project and functional managers and a good communication between the managers and the employees.^6,11

-          Infighting: each project and functional managers think that their projects are the most important. Any circumstance in which facilities, equipment, resources, money are being shared across the different projects can lead conflict between the different managers and the upper managers.⁶

-          Slow: in theory, the matrix structure can have a good communication producing quicker decision-making. In practice, decision making has to pass across multiple groups. Consequently, project among matrix organizations can become really slow.⁶

-          Higher overhead costs: each project has two managers that generate undoubtedly a higher project cost at first. Small companies must be careful about that because it can change the course of the company.⁸

3.3 Implications

As I stayed previously, in these times, it is really difficult to launch a drug to the market and companies are trying to develop in parallel different drugs trying to succeed. In addition, pharmaceutical companies have changed from worldwide product marketers to completely worldwide activities in the period of the last 25 years. Formerly, companies tried to develop the drug in one country and then try to spread the drug market among different countries. In contrast, nowadays, pharmaceutical companies try to develop the drug in different countries, so companies have to use the most appropriate and proficient tools for making and keeping up their products. Consequently, having a project management methodology improve the speed to get the drug on the market, the effectiveness and the capacity to increase the drug development projects. In addition, changes on the large and cross-functional projects in pharmaceutical companies only can success if the company has a well-defined and robust project management structure.⁹

A lot of pharmaceutical companies are working with project management office (PMO) to manage and organize the different drug development projects. This provides an independent organization with a high objectivity in driving activities along the projects. In general terms, companies create a new department that the aim is to optimize the projects with project management tools. Therefore, having a PMO that centers around undertaking brilliance enables the organization to build up the leaders expected to accomplish corporate objectives in changing business situations.⁹

As you can see, having a project management experience and knowledge in pharmaceutical companies are necessary to make the schedule and cost planning/management that can lead to a success drug development project.

4. Conclusion

In the course of recent years, the pharmaceutical companies have encountered a huge change. A few basics may have remained the same like strict regulatory procedures, the increase of generics, or the trouble of finding new brand drugs. In any case, the comprehension of disease at the molecular and deepest dimension is enhancing quickly making scientific, technical and regulatory difficulties that make drug development riskier than any other time in recent memory.¹²

Pharmaceutical companies must develop different projects with different drugs at the same time in order to have the opportunity to have one drug on the market. This is very difficult to manage different projects with a not well-defined and robust project management strategy inside the company. Consequently, matrix organization can help the pharmaceutical companies to develop different projects in parallel.  Having a mixture of project management structure and functional structure can lead to have more focus on the developing of different drugs.

Project managers in a matrix organization have important roles inside the projects like plan and manage the schedule and cost of the project company. First, it is important to plan the different timelines for the different project activities. Project managers use different tools depending on the project like the Time-Scaled Arrow Diagram that it is a diagram of the overall timelines of the project with the critical path, the different sequences and dependencies. Second, another crucial role for project managers is schedule management. They have to make sure that the project is according with the timelines established on the schedule plan. One of the most common tools is the Slip Chart generating an overall picture if the project is in front of or behind the pattern plan. Third, project managers must make an estimated approach of cost planning on different project activities generating the cost-planning map. Lastly, they have to ensure and track that the project budget for each activity is going according with the planning cost. They have to make a cost management plan to establish who are in charged to approved changes related with the budget, or how project cost will be estimated and investigated.

Nowadays, it is very important to market a drug because it generates money to the company and opportunities to develop more drugs. In addition, not only money, it increases the motivation and confidence of the employees because they know the route that they have to follow to success again. Consequently, matrix organization with specific project management tools like schedule and cost plan/management can improve the management of projects inside the pharmaceutical companies leading with a drug development successfully.

5. References

1. Office of the Commissioner. The Drug Development Process [Internet]. U S Food and Drug Administration Home Page. Center for Drug Evaluation and Research. Available from: https://www.fda.gov/ForPatients/Approvals/Drugs/default.htm
2. Pharmaceutical Research and Manufacturers of America [Internet]. Phrma. Available from: https://www.phrma.org/
3. Mullin R. Cost to Develop New Pharmaceutical Drug Now Exceeds $2.5B [Internet]. Scientific American. 2014. Available from: https://www.scientificamerican.com/article/cost-to-develop-new-pharmaceutical-drug-now-exceeds-2-5b/
4. Martin P. Speeding Time to Market With Better Pharmaceutical Project Management [Internet]. PharmTech Home. 2017. Available from: http://www.pharmtech.com/speeding-time-market-better-pharmaceutical-project-management
5. Pattanaik, A. “Complexity of project management in the pharmaceutical industry. Pending.”2014, https://www.pmi.org/learning/library/project-management-complexity-pharmaceutical-industry-1487
6. Gray CF, Larson EW. Project management the managerial process. New York, NY: McGraw-Hill Education; 2018.
7. Harpum P. Portfolio, program, and project management in the pharmaceutical and biotechnology industries. Hoboken, NJ: John Wiley & Sons; 2010
8. Best Practices in Matrix Organizational Structures [Internet]. Available from: http://www.gssaweb.org/wp-content/uploads/2015/04/Best-Practices-in-Matrix-Organizational-Structures-1.pdf
9. Babler SD. Pharmaceutical and biomedical project management in a changing global environment. Hoboken, NJ: Wiley; 2010.
10. Martinelli RJ, Milošević Dragan. Project management toolbox. Hoboken, NJ: John Wiley & Sons, Inc; 2016.
11. Stuckenbruck L. The matrix organization. Project Management Quarterly [Internet]. 1979;10(3):21–33. Available from: https://www.pmi.org/learning/library/matrix-organization-structure-reason-evolution-1837
12. Martin, Philip. “Speeding Time to Market With Better Pharmaceutical Project Management.” PharmTech Home, 10 Aug. 2017, www.pharmtech.com/speeding-time-market-better-pharmaceutical-project-management