Management consultants deal in cold, hard, numbers


  • An ideal of shareholder primacy, powerfully championed by Milton Friedman in a 1970 New York Times Magazine article entitled “The Social Responsibility of Business is to Increase its Profits,” gave the newly ambitious management consultants a guiding purpose.
  • Today, top executives boast immense powers of command—and, as a result, capture virtually all of management’s economic returns.
  • The Massachusetts attorney general said McKinsey had helped the maker of OxyContin fan the flames of the opioid epidemic.
  • McKinsey provided the intellectual underpinning for pharma companies to rethink radically in the mid-2000s when drug pipelines seemed to have dried up and research productivity fell.

If you’ve been in pharma for a while chances are that your senior management hired a management consulting firm like McKinsey. In this author’s opinion, these management consulting firms have done more damage to the industry than greedy CEOs.

First, let’s take a step back. In 1970 Milton Friedman wrote that the primary responsibility of business was to increase profits for shareholders. Yet Henry Ford said “that a business that makes nothing but money is a failure” When looking at pharma I think most will say that making money is their primary goal, often at the expense of patients.

About five years ago I remember sitting in a presentation in Cambridge while a management consulting firm recommended that they raise the price of a cancer drug 145% “to maximize profits”. There was no mention of the effect this would have on patients or the pushback from Oncologists. The company instituted the price increase and market share dropped but profits went up.

Global health, a field dedicated to improving the health and wellbeing of the poor and most vulnerable, has quietly developed a penchant for highly-paid management consultants and their business world tools. How these secretive businesses, which mostly profit from serving corporate interests, are shaping global public health is an open question — and one that’s hard to answer.

“After 30 years of work at many institutions, nothing done by management consultants comes to my mind as having been brilliant, and a lot has been inappropriate and wasteful of time and resources,” said Mukesh Kapila, a global health pioneer who led the UK’s first HIV/AIDS program, and has worked with consultants from multiple firms over the decades.

The problem with all this is that it neglects people in favor of spreadsheets and PowerPoints on how to make more money. Is the goal of pharma to really maximize profits or create life-saving drugs that we all can afford?

Management consultants know that there is a lot of money to be had in healthcare. They don’t care what the media says or how people view the industry the objective is to keep shareholders happy. Stories abound about failed drug trials and their effect on the company’s stock price.

When I was working at Lilly and we lost the patent on our leading drug our CEO only took a salary of $1.00. He knew how to guide the company through rough times yet today too many CEOs are rewarded on profits and ensuring that their lead drug doesn’t come off patent.

Management consultants deal in cold, hard, numbers. The problem is our industry helps people who aren’t numbers. I’m still looking for ht CEO who leads rather than follows the advice of expensive management consultants.