In the field with STADA

At a glance

• In under 10 years, German pharma company STADA has emerged as an agile player that consistently outperforms its larger rivals in sales and profitability.  

• STADA’s success has been strongly predicated on its leadership’s commitment to the core values that shape organizational culture and its faith in culture as both a determinant and predictor of business performance.  

• STADA’s embrace of generative patterns in culture-making, coupled with adaptive behaviors in its workforce, has enabled a uniquely robust and agile foundation for future growth.  

By traditional Big Pharma standards, the German multinational pharma company STADA may be considered a mid-sized player. Yet, since it came under new ownership in the late 2010s, the firm has consistently posted double-digit sales and profits, and has outpaced its competitors in terms of growth and profitability. STADA was once a loosely coordinated network of organizations with overlapping structures and processes, which largely operated as standalone fiefdoms across Europe. By 2023, STADA had emerged as a force to reckon with, constantly punching above its weight: It employed a workforce of nearly 12,000, cooperated with 500 development and production partners around the world and sold its products in 120 countries. Throughout this period, the company’s leaders retained a single-minded focus on nurturing a STADA brand of organizational culture. This approach has kept the international entity and its local subsidiaries together, and is a proven factor in driving and calibrating future performance.  

The broader issue

Historically, Big Pharma conglomerates have enjoyed significant brand value and a portfolio of household-name, cash-cow products, on top of deep pools of clinical research and innovation. To compete successfully, firms that do not quite fit into the “Big” bracket need to develop and deploy a strong set of attributes such as agility, a startup-like sense of entrepreneurship and rapid adaptability to changing market conditions.  

Companies with a robust culture often outperform those with a weak culture, particularly when there is an alignment between culture and strategy, and when culture acts as a bridge to lead the firm to achieve its long-term business objectives. STADA’s business goals were to outgrow, outrun and outperform through adaptability and nimbleness – specifically, by marketing local brands, exploring niche offerings and coming to market with better and more affordable medications.  

What this has required from its top executives, particularly the CEO, is the pursuit of a positive and highly intentional impact on the culture across STADA. Culture would be the fundamental, non-negotiable force to power the company’s future success, resilience and growth.  

A new approach

An organizational culture is essentially a value system. Our discussions with the company’s executives revealed a strong presence of core values – initial conditions that arAe systematically reinforced through a handful of simple governing principles. For STADA, the core values of Integrity, Entrepreneurship, Agility and One STADA – its collaborative work and personal growth initiative – have directly shaped the company’s evolving culture. Adherence to these values is also measured and reflected in cultural performance indicators that are subject to regular review, just like standard key performance indicators (KPIs).  

Acting on the value of integrity, for instance, implies constantly speaking up. Entrepreneurship manifests itself as a commitment to new ideas and actions – which ultimately contribute to future growth and value. Agility is anchored in the ongoing journey of personal development, evidenced by the company’s emphasis on self-management among both employees and executives. Finally, acting in the best interests of the entire company in day-to-day decisions is what has driven the success of One STADA.  

During our fieldwork, we discovered that the STADA culture upholds and celebrates the decision-making power of the individual while at the same time matching that power and autonomy with accountability. The company’s entrepreneurial talent has allowed it to design some of its processes instantly at scale, rather than having to optimize, pilot and implement them over time. In smaller markets, the same manager might be in charge of finance, people, IT and compliance, leading to much shorter decision lines – as the decision is often just a quick phone call away. This deliberate bypassing of bureaucracy and hierarchy has fueled a level of cross-functional and cross-border collaboration that has facilitated transparency and continual knowledge transfer.  

Did it work?

Shortly into the transformation, executives at STADA internalized the notion that values are far from abstract qualities. To a large extent, a successful company can truly run on strong values. These values give rise to a vibrant culture, which in turn powers high performance. In addition, STADA’s leaders recognized that attracting employees whose own values are congruent with the company’s core values would result in staff satisfaction and productivity.  

At present, 95% of STADA’s employees work in local organizations, with flat hierarchies and lean overheads. Every year, STADA’s staff survey attracts up to 30,000 comments and suggestions. The shared platform STADA+ provides employees with a safe space to generate business ideas and own them; the ideas are thus empowered from the concept stage to real-world implementation. This is the power of consciously adopting adaptive behaviors as linchpins of an organizational culture.  

Throughout, STADA’s leadership has tirelessly reminded employees that if they lose sight of developing agility, in any context or everyday situation, the organization could fall back into rigidity – the old hierarchical ways of complex reporting lines and blurred task and project ownership.  

Reaping the benefits

In 2023 the STADA Group increased its sales by 14% to €3.73 billion – despite geopolitical uncertainty that made the company spin off its once-promising Russia business. Across the sector, STADA has established itself as a partner of choice with customers, regulators, capital-market stakeholders and society.  

In our conversations with STADA executives, they emphasized that the unique culture has laid the foundation for sustained success in the years to come. The current team, product mix and sales pipeline are all in a strong position to maintain STADA’s strong growth momentum well into the future.  

“Our performance continues to progress ahead of major competitors. Our culture with entrepreneurial focus is delivering new launches from our extensive pipeline, on top of strong organic growth.” 

– STADA CEO Peter Goldschmidt 

Meanwhile, the corporate governance ratings agency, Sustainalytics, ranked STADA among the top 6% of firms for environmental, social and governance (ESG) performance in its ESG Risk Rating assessment of 900 pharmaceutical companies worldwide. The agency rated STADA’s ESG risk as Low and its management of ESG material risk as Strong.   

The STADA experience corroborates what studies by IMD have proposed: Bold organizational redesigns can occur even in highly regulated industries such as pharma. Increasingly, companies in these industries recognize that measured elements of stress and instability can be conducive to enhanced flexibility and collaboration in an organization. In addition, they understand that a leaner organizational architecture provides a better fit for data-driven decision making.  

STADA’s leadership designed the organization for resilient planning and stronger employee engagement. Thus far, these design principles have demonstrably translated into better bottom-line performance.  

This article is based on IMD case IMD-7-2453, available from The Case Centre at www.thecasecentre.org 

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