The pharmaceutical industry is highly complex. The technologies leading to drug
discovery and development are at the limits of human knowledge. The huge size of the
companies and the complexities of their processes and technologies presents many
organisational and management challenges. The development and management of the
distribution system is highly costly.
However while excellence in managing all these aspects of the industry is a necessary
condition for the survival of the global pharmaceutical companies, the uncertainty of the
discovery process and the potentially huge returns from the discovery of a single drug
means that like drilling for oil or randomly choosing the black beans from a jar of
overwhelmingly white ones, success in the industry depends on a high measure of luck.
Much of the thinking about business strategy in the industry is how best to cope with this
uncertainty. This has not always been the case. Colonel Ely Lilly gained his initial
competitive advantage, in manufacturing, by producing 'true to label' products in
competition with the various 'snake oils' and other dubious concoctions of the era.