In many pharma organisations, once a therapy area or business segment crosses a certain revenue threshold, leadership often considers creating a new task force, division, or business unit to accelerate growth. While this strategy can be powerful when executed with clarity and discipline, it can just as easily backfire, leading to years of lost revenue, internal stress, and eventual closure of the new division.
One of the biggest risks is that new divisions are frequently resourced by diverting manpower, budgets, and brands from existing businesses. This creates a double impact: the current business weakens, and the new division struggles to gain meaningful traction. Before leaping, leaders must critically evaluate a few key pitfalls that regularly undermine such initiatives.
Key Pitfalls to Avoid When Launching a New Pharma Division
1. Overlap Instead of Complementarity
A common error is assigning similar or identical molecules, with different brands of the same molecule, to two divisions. Without a clearly differentiated customer segmentation strategy, this leads to internal cannibalisation, with both divisions eating into each other’s market share rather than expanding it.
2. Mixed Messaging to the Same Customers
When two divisions promote conceptually different molecules for the same condition to the same physicians without a clear rationale, confusion ensues. The result is diluted prescription flow. Distinct patient profiles, usage occasions, and disease-stage clarity are essential to maintain a coherent clinical narrative.
3. Leadership Misalignment
Having separate leadership for a new division at the outset can generate conflicts of interest, biased resource allocation, and inconsistent strategies. Early-stage divisions benefit from shared leadership with the existing business until break-even is achieved. This ensures alignment, accountability, and consistent execution.
4. Overestimating Customer Spread and Underestimating Depth
Increasing the number of customers with low prescription depth rarely sustains long-term revenue. Instead, divisions should focus on maximising P/D (prescriptions per doctor) by offering a logical product mix that supports different stages of the disease or complementary therapy options. Depth, not breadth, drives profitability.
5. Poor Product-Mix Logic
A robust product mix in a new division should cover different conditions within the same therapy area, rather than multiple molecules for the same condition. This widens clinical relevance, protects against cannibalisation, and positions the division as a comprehensive disease-management partner.
6. Changing Product Mix for Short-Term Gains
Sometimes divisions alter their product portfolio prematurely to “justify” the division or show quick break-even. These reactive changes may produce short-term numbers but often compromise long-term strategic intent. Respecting the natural break-even timeline is crucial. A division built on an incoherent product mix rarely sustains performance.
Conclusion
Creating a new business division can unlock significant value, but only when done with clarity of purpose, disciplined execution, and a deep understanding of market dynamics. Leaders must ensure complementarity, alignment, clinical coherence, and long-term thinking. The true objective of a new division should be expanding the market and deepening therapy leadership, not redistributing existing revenue within the company.
