EDITOR'S NOTE
LSL
LIFESCIENCELEADER.COM THE CMO LEADERSHIP AWARDS 2015
4
the budget or realize expected returns. For
example, the article discusses how a new
computer adopted by Oxford Health Plans to
better process paperwork ultimately resulted
in problems that caused a 63 percent drop in
the company's stock price. Another example
was Union Pacific Railroad's purchase of
Southern Pacific, which resulted in traffic
issues, lost cargo, and massive delays.
Of course the life sciences industry is not
immune to the concept of delusional optimism.
I'm sure most of you can cite your own exam-
ples of when this affected a previous project
you were working on. And as the amount of
outsourcing in the industry increases, so too
does the potential for flawed decision making.
After executing an outsourcing model for a
long period of time, overconfidence could seep
into a sponsor company's leadership. Hubris
could blind the company, causing it to pay less
attention to the quality, reliability, and regula-
tory knowledge of it partners. The results, of
course, could be disastrous.
Helping you avoid any disasters due to over-
confidence with outsourcing is one of the
purposes of this CMO Supplement. We want
to help you make the right decisions by keep-
ing you informed of best practices and giving
you access to insights from experienced
industry experts. For instance, in the pages
that follow, you'll find informative articles
giving you advice on choosing a CDMO and
finding capital funding.
Beyond this supplement, we're endeavoring
to continue to bring you exclusive and impact-
ful outsourcing content via our Outsourced
Pharma West Conference & Exhibition. The
standing-room only sessions at our 2014
event prompted us to schedule two of these
conferences this year, one in San Diego in
August and a return engagement in San
Francisco in November.
No matter what stage you're at with adopting
an outsourcing model, it's always good to occa-
sionally take a step back and reevaluate your
status quo. Hopefully, this supplement and our
conference can help you with that process.
l
LIFE SCIENCE LEADER
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M A R CH 2 015 CM O S U PPLE M E NT
ight now, enthusiasm in the
pharma and biopharma markets
seems to be running high. My col-
league Rob Wright, chief editor of
Life Science Leader , recently returned from
the JP Morgan Conference in San Francisco.
One of his takeaways was the current level of
excitement in the industry. Several sources,
he says, noted we can expect to see major
biotech deals inked in 2015. Biosimilars?
Declining revenue? Recession? Patent cliff?
Damn the torpedoes! Full speed ahead!
But while enthusiasm is good, we must be
careful not to let it cloud our business deci-
sions. One of the best articles I read last year
was from the July 2003
Harvard Business
Rev iew,
titled "Delusions of Success:
How Optimism Undermines Executives'
Decisions." The advice is valuable and time-
less. Simply put, overconfidence can often
lead to poor decision-making.
This problem is more common than you
might think. The authors note that 70 per-
cent of new manufacturing plants in North
America close within a decade, and 75 percent
of mergers and acquisitions never pay off.
Even efforts to enter new markets, a growth
strategy for many pharmaceutical firms, end
up largely unsuccessful.
A key observation in this article was the role
of flawed decision making. In the grip of what
the authors call the planning fallacy, manag-
ers base decisions on "delusional optimism"
— overestimating benefits and underestimat-
ing costs. Consequently, they have an attrac-
tion to initiatives that are unlikely to satisfy
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Enthusiasm Is Good…
But Don't Overdo It
E D M I S E T A Executive Editor
R