In this article, I shall explore unconventional ways of “Building sustainable Pharmaceutical Brands” thinking outside the box, after quickly taking you through the “Challenges of Change” in the evolving dynamics of the Indian branded generic market.
A paradigm shift has taken place:
To get insight into the future challenges of the pharmaceutical industry in general ‘Complete Medical Group’ of U.K conducted a study with a sizable number of senior participants from the pharmaceutical companies of various sizes and involving many countries. The survey covered participants from various functional areas like, marketing, product development, commercial, pricing and other important areas.
The findings in the paper indicate that a paradigm shift has taken place in the global pharmaceutical industry, where continuation with the business strategies of the old paradigm will no longer be a pragmatic approach.
The situation is not much different in India too, due to rapidly evolving change in the dynamics of pharmaceutical business environment.
Besides the above finding, my own experience also vindicates that just as today is not a mega yesterday, tomorrow will never be a mega today.
The lessons learnt:
Taking a cue from the above study, which brought out several big challenges facing the global pharmaceutical industry in general and turning it into Indian perspective particularly in the post product patent regime beginning in 2005, my submissions are as follows:
- The increasing interventions of the Government is creating an all pervasive pricing pressure both for branded generics and patented drugs in various ways. The critical issue of predictability in the business environment along with the factors related to gaining greater market access are the ‘top of mind’ concerns of the pharmaceutical players in India.
- Better understanding of the new and differential value offerings that the doctors and patients will increasingly look for beyond the physical pharmaceutical products; will indeed be the cutting edge for the winners in this new ball game.
- Top management of the pharmaceutical companies should start evaluating the long term sustainability of the current pharmaceutical business model, especially for the branded generics. They will now need to include in their strategy wider areas of healthcare value delivery system with a holistic disease management focus.
- Offering just a better choice of medication for the treatment of a disease may no longer be considered enough without further value addition. Added value with disease prevention initiatives and help managing the ‘quality of life’ of patients, especially in case of chronic ailments, will assume increasing importance in the pharmaceutical business process.
- Greater and more frequent incremental innovation across the pharmaceutical value chain will be critical success factors.
- The ability to harness new technologies, rather than just recognize their potential and flexibility to adapt to increasingly demanding regulatory environment together with newer value requirements of the patients, should be an important part of the business strategy of any pharmaceutical company in the changing paradigm.
- More complex, highly fragmented market with cut throat competition along with various questionable sales and marketing practices, especially in the area of branded generics, demand for better, more aligned and integrated decision making process across various functional areas of the pharmaceutical business.
- Avoiding silos and empire building have long been a significant issue, especially for big pharmaceutical companies. Better and high quality strategy will include more pragmatic and efficient sales and marketing investment decisions, a robust ethics and compliance mechanism and jettisoning all those activities, which will no longer deliver intrinsic or extrinsic differential value to the stakeholders.
- Growing regulatory control in the business environment, including change in the MCI regulations for the doctors, strict implementation of long overdue ‘Uniform Code of Pharmaceutical Marketing Practices (UCPMP)’ drafted by the Department of Pharmaceuticals for the industry and recent developments in the Clinical Trial process, will prompt a drastic change in the existing business practices.
- There will be a greater need for more innovative management of the pharmaceutical communication channels, including social media, striking a right balance between ‘pushing’ information to the doctors and patients and helping them ‘pull’ the relevant information, whenever required, through various well structured processes.
Need to think outside the box:
Unfortunately, even in the changing paradigm, the fundamental way by which the pharmaceutical industry has been attempting to address all these challenges has not changed much.
Though one should hope for the best, it will not be a bad idea to have a contingency plan ready, just in case prescriptions in generic names are made mandatory in India, even if selectively. Otherwise effective marketing of branded generics may be in jeopardy.
To explore the future growth potential the pharmaceutical companies are still focusing on the areas like, new product development, conventional sales and marketing, leveraging IT in all areas of decision making process including supply chain and greater market penetration skills, to name just a few.
Though these areas are not totally irrelevant today, adhering only to such tools and responses steadfastly, do ring an alarm bell to me. In a changing paradigm, only these tools are just not good enough for business excellence and to squarely address the new “Challenge of Change”.
The moot question will therefore be why have we not been able to address the needs of the new world order, as effectively as in the past, with these traditional tools?
More importantly, if we do not try to address today’s business issues thinking ‘outside the box’ or with ‘lateral thinking’, the implications could be rather serious in the times to come?
A different concept of “Building Mega Brands”:
Building brands, as we know, involve creating equity around an entity that delivers value to the customer, over and above the key functional properties of any product. Traditionally, the pharmaceutical companies have been largely focusing on building mega brands following widely varying strategies.
In the Indian scenario, rapidly evolving pharmaceutical business environment could make such strategies unsustainable or vulnerable, more for the branded generics, as mentioned above.
To meet those disruptive but emerging changes in the business environment, there is a need to take the conventional brand building exercises, especially for the likes of branded generics, beyond the confinement of just a single product.
A thought:
That said, I would now like to make a provocating submission.
Instead of investing huge sums in building a single product brand, can we build a larger brand with a well thought out cluster of products?
Cost efficient yet a powerful and different type of brand building process could well be thought around, say, the ‘Corporate franchise’ with a cluster of products in different price bands for different customer segments belonging to a specific therapy category or disease area or falling in some other area, yet bonded with a strong commonality criteria?
Thus, instead of consistently watching large branded generics grow, mature and die following even an extended product life cycle, pharmaceutical companies could well explore another opportunity to build a more sustainable and a much longer term emotional equity into their brands.
Who knows, tomorrow’s list of India’s top mega brands may not be dominated by the likes of Augmentin, Corex, Monocef, Voveran or Human Mixtard, but perhaps by quite different types of mega brands like, GSK Anti-infectives, Cipla Respiratory Care, USV Diabetic Care, Abbott Cardiac Care or Galderma Derma Care, just to cite a few examples.
‘Serum Institute Vaccines’ perhaps could well be considered as one such mega brand, incubated and grown in the pharmaceutical green field of India, over a long period of time and now known the world over.
Conclusion:
It is quite clear now that the pharmaceutical business models are undergoing an acid test and serious re-evaluation in the changing paradigm. There is a view that further changes are inevitable due to variety of factors that are squeezing both sales and profit margins, posing severe challenges to future growth at a brisk pace.
Some strategic measures to address this ‘Challenge of change’ are now being deliberated upon. However, how profound will these changes be or how effectively the pharmaceutical players counter these changes for a long term sustainability of business excellence, will indeed be quite interesting to watch.
By: Tapan J. Ray
Disclaimer: The views/opinions expressed in this article are entirely my own, written in my individual and personal capacity. I do not represent any other person or organization for this opinion.