Novavax Organization Health-Related Failure

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Introduction

The US healthcare system has faced substantial criticism as people are not satisfied with the quality, costs, efficiency, and so on. Health-related organizations failures also contribute to peoples dissatisfaction making them believe that health care has become a very expensive product marketed by corporations (Desselle, Zgarrick, & Alston, 2016).

Borkowski (2015) stresses that vision and mission (as well as strategic planning and organizational culture maintenance) are critical to the success of a healthcare organization. The recent failure of Novavax manifested in significant financial losses can become an illustration of health-related organizations failures and their implications for the development of these organizations as well as the entire healthcare system.

Brief History of the Organization

Novavax, Inc. is a clinical-stage vaccine developing company that concentrates on the development and commercialization of vaccines and adjuvants (Novavax, n.d.). It was incorporated in 1987, and it is one of the leading companies in the industry (Reuters, 2017). The organization targets such populations as the elderly, infants mothers, and children between 6 months and 5 years old. The company focuses on such health conditions as various infectious diseases including respiratory syncytial virus (RSV), seasonal influenza, Zika virus, and Ebola virus. Novavax has a joint venture with CPL Biologics Private Limited and Cadila Pharmaceuticals Limited. The company has developed numerous effective vaccines used around the world, but the most recent trials have become one of the major failures in the history of the organization (Daniel, 2017).

In 2016, Novavax announced the results of the third phase of the trial of its RSV vaccine (Daniel, 2017). The vaccine did not meet its endpoints as more older adults that were vaccinated were infected as compared to the group that received a placebo. This news led to a dramatic fall in the companys share price. The net loss reached $77.3 million at the beginning of 2016. The crisis lasted up to May 2017 when the company managed to address the issues associated with its losses. The recovery started with decreased net losses that reached $43.9 million of a net loss.

Causes of the Failure

It may seem that the cause of the company is purely financial as the company simply invested too much into a project. The failure of the project led to reputational losses and certain panic associated with its shares (Daniel, 2017). Nevertheless, the problem is more complex. First, the failure of the companys vision was the underlying reason for the financial and clinical issues. Poor management (especially risk management) hurt the companys performance. At that, several external factors also came into play. These factors included the governmental (and public) focus on prevention, American peoples trust in technology, shareholders expectations.

Vision and Poor Management

The companys vision is based on the focus on technology, innovation, and transparency. Novavax has invested substantial funds in the development of the RSV vaccine (Daniel, 2017). However, the company relied heavily on technology and was too optimistic as to its products. Importantly, the company violated one of its core values, which is transparency.

Of course, Novavax revealed the results of Trial III in detail. However, it could have shared some preliminary data to unveil potential issues and gaps. Transparency is one of the pillars of healthcare philosophy (Borkowski, 2015). The organization and its shareholders were unprepared to receive such negative results as no details concerning the research were provided. The company did not have a sound plan for the situation that occurred. Top management seemed to be at a loss for a while and came up with certain strategies that were also rather controversial.

Public and Government

As far as the external factors, they did not cause the problem but considerably increased its scale. First, it is necessary to note that the US government emphasizes preventive health services and improvements in health care for the elderly (Borkowski, 2015). It has been acknowledged that RSV is one of the major reasons for the increased death rate among older adults (Daniel, 2017). Demographic peculiarities of the USA, as well as the entire Western world, make researchers pay more attention to the provision of healthcare services to the elderly. Therefore, peoples expectations were rather high.

Strategies that Did Not Work

Novavax was struggling with its financial losses during the end of 2016 and the first part of 2017 (Daniel, 2017). The central strategies used to address the problem were a limited investment in the use of technology and a significant decrease in the number of employees. The company also entered some partnerships and started paying more attention to other projects. The undertaken steps showed certain positive results as the companys share price started increasing in the first part of 2017.

Nevertheless, some of these strategies are likely to become rather ineffective or even harmful in the long run. As to the partnerships and diversification, these are effective measures and can be beneficial if implemented properly (Borkowski, 2015). The company has partnerships with other leaders in the field and smaller businesses, which has led to effective trials and results. Novavax also addressed the FDA concerning the implementation of informational analysis (Daniel, 2017). This collaboration suggests that the company has drawn correct conclusions and has become more focused on transparency and trustworthy research.

At the same time, the decrease in investment in technology and innovation reveals potential risks associated with the use of the strategies mentioned above. First, the development of vaccines requires the use of certain technology. The company has concentrated on genetically engineered nanostructures that cannot be produced using outdated equipment and methods (Novavax, n. d.). The development of medicine requires significant investment in equipment and materials (Desselle et al., 2016). On the contrary, Novavax reduced its R&D expenses from $69 million to $37.7 million (Daniel, 2017).

Another strategy that is likely to lead to more losses is the companys decision to reduce its staff by 30% (Daniel, 2017). Any redundancy leads to low employees morale, which inevitably results in poor performance, lack of enthusiasm, and creativity (Borkowski, 2015). When a company cuts its employee-related costs, there are high risks of losing talent. Creativity is also one of the central factors contributing to the development of any organization especially when it comes to developers of drugs and vaccines.

Strategies to Implement

Communication

One of the strategies that could help Novavax address its financial and reputational losses in the development of a communication strategy that will target shareholders and the public. Borkowski (2015) claims that public opinion can affect the development of a healthcare organization as peoples trust is central to these companies success. In the case of Novavax, it is necessary to start a wide campaign revealing the major details of the research process.

The results of the trials have been published in a peer-reviewed journal and announced at a conference (Daniel, 2017). However, it can be beneficial to make the most relevant details of new trials known to the public. The development process will remain uncovered as it is confidential information. The components and peculiarities of the vaccine production cannot be fully known as the companys competitors can use this information and come up with an effective vaccine faster. Nevertheless, some highlights of the progress can be appropriate.

Another aspect to pay attention to is the importance of the vaccine under development and the peculiarities of the disease. As has been mentioned above, one of the governments priorities is health issues prevention among older adults as this population is increasing rapidly (Borkowski, 2015). It is important to stress that the development of the vaccine is consistent with governmental and societal priorities. Another topic to highlight is the need to be patient when developing medication. Stories of past failures and successes associated with the development of vaccines or important drugs can help the public (and shareholders) tolerate some delays and minor failures.

To make the communication strategy effective, it is important to use diverse platforms to deliver the companys messages. Its official website should be one of the communication channels used. However, the academic discussion is even more useful. It can be important to publish some peer-reviewed articles and participate in several conferences. Some of the most common and very influential communication channels are social media now (Desselle et al., 2016). The number of users of social networks is increasing exponentially, and the characteristics of these people are very different. These are people of all ages, ethnicities, socioeconomic and educational backgrounds. Therefore, the use of this channel will enable the company to reach a very wide audience.

Other Projects

Apart from the development of a large-scale communication campaign, Novavax has to work on several projects simultaneously. This can require substantial investments and collaboration with several partners (including investors and governmental bodies).

However, this strategy will also reduce the risks associated with possible failures. Hence, the company should not allocate funds unevenly. Working on different projects and paying similar attention to each of them (with the use of the communication strategies mentioned above) can help the company implement effective financial strategies. The company is involved in the development of several vaccines at a time, but the allocation of funds and other resources is not equal among the projects (with significant differences).

It can be effective to facilitate the collaboration between Novavax and the FDA through information sharing on different issues. Apart from the contacts concerning their RSV F vaccine, the company can address the FDA to engage in mutual research of some diseases affecting children. Other collaborations can be implemented with other health-related organizations. It is also possible to cooperate with some educational establishments and independent laboratories on various issues. For instance, it is possible to share data concerning the discovery of new viruses or new features of known ones.

Human Resources Management

Finally, it is vital to improving HRM strategies as it is clear that the company may face serious issues shortly. As has been mentioned above, staff reduction could hurt the personnels morale. It could also lead to uncertainty and fears of further reductions of personnel. Therefore, it is important to inform the employees about the overall situation, the reasons for the reduction, as well as the major improvements that took place at the beginning of 2017. Employees should receive such kind of information from top management rather than rumors (Borkowski, 2015).

It can also be necessary to reward the most committed employees, those who worked hard during a difficult period. It has been acknowledged that the monetary reward is not the most effective type of motivation (Borkowski, 2015). However, it can still be used in a limited number of cases. The promotion of the most creative and hard-working employees and those who displayed effective leadership skills can help the company improve the staffs morale. Besides, rewards in the form of more flexible schedules can also be used. Various benefits often help motivate employees without the need to invest considerable funds.

It can also be beneficial to revisit the organizational culture with the focus on its vision and mission. As has been mentioned above, the companys vision entails the major emphasis on innovation and transparency (Novavax, n.d.). However, these principles have been somewhat violated. Likely, the companys employees do not share the organizational culture. It is important to pay more attention to this sphere as it defines the way the organization develops (Ratnapalan & Uleryk, 2014). First, it can be effective to place more information concerning the culture on the companys official website, which will be seen as an illustration of transparency among shareholders and the public. It can also encourage employees to act with organizational values. The encouragement can be facilitated by such responses as benefits, flexible schedules, promotion, and, in some cases, monetary rewards. HR specialists can also develop training programs that could focus on (or address) the adoption of the organizational culture.

Conclusion

On balance, it is necessary to note that Novavax experienced considerable financial and reputational losses due to the companys failed vision (and overall organizational culture), ineffective research, and some external factors. To mitigate the negative effects of the failed trial and associated financial losses, the company cut R&D costs and reduced its staff by 30%. Such strategies are likely to have negative effects on the development of the company. To avoid further losses, Novavax has to develop an effective communication strategy, develop effective partnerships, and improve its human resources practices. As to the new communication strategy, the company should be more transparent and reveal more details concerning its research and development operations.

Of course, there is no need in revealing the secrets of the trade, but it can be beneficial to provide some updates. The use of social media is the key component of the strategy as a wide audience will be reached. As for the partnerships, these can be a collaboration with other health-related organizations, educational establishments, and governmental agencies. The change should also be implemented in the sphere of HRM as the companys employees should adopt the culture. To address this goal, the company should develop a sound organizational culture based on the principles of transparency and innovation. Certain training and the use of rewards will improve the personnels morale, which is essential for the future success of the company.

References

Borkowski, N. (2015). Organizational behavior in health care. Burlington, MA: Jones & Bartlett Publishers.

Daniel, G. (2017). Sentiment turns bullish on Novavax, Inc.

Desselle, S., Zgarrick, D., & Alston, G. (2016). Pharmacy management: Essentials for all practice settings. New York, NY: McGraw Hill Professional.

Novavax. (n.d.). About us.

Ratnapalan, S., & Uleryk, E. (2014). Organizational learning in health care organizations. Systems, 2(1), 24-33.

Reuters. (2017). Novavax Inc.

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