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To Allay Customers’ New Apprehensions Pharma Needs A New Conversation

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Since the beginning of 2020, witnessing the rapid spread of Covid pandemic with very high global fatality rate – virtually the entire global populations – directly or indirectly, have been looking up to the health care industry for help. This, of course, includes the drug industry – with high expectations of people on deliverables, blended with palpable apprehensions on what’s happening around.

Amid the wave after wave attack of Covid-19, many have realized that there will neither be any quick-fix or immediate solution to tame the virus. As India goes through the Covid 2.0 catastrophe, while waiting for Covid 3.0, a similar situation prevails in the country – with a sense of lurking fear for future uncertainties, slowly but steadily creeping in.

Thus, an unprecedented public expectation for speedy disentanglement of Covid-19 disruptions, confer a huge responsibility to all health care providers and entities, such as, the drug industry, which will be my key focus in this article. Just as any extraordinary situation calls for extraordinary initiatives, this national tragedy also demands from pharma professionals to start a new and proactive conversation, driven by ‘out of-box’ thinking.

I shall explore in this article, in which areas pharma needs to roll out a new conversation to meet with new expectations of its stakeholders, formed during the Covid Pandemic. This engagement needs to go beyond drugs and vaccines, spanning across key contemporary developments that are bothering pharma customers. The aim should be to help customers visualize a brighter horizon based on scientific reasons, in not-too-distant future, such as:

  • How several pharma companies are taking novel initiatives, as a part of their corporate objectives to save lives and livelihoods, faster.
  • How pharma players are thinking ‘out of the box’ to allay Covid related public apprehensions and neutralizing gross misinformation on Covid cure – based on scientific reasons, often selectively deploying their staff members.

In this regard, let me start with a recent advice of a top pharma veteran of global repute, especially on political and public expectations of ‘the endpoint’ for successful prevention and effective treatment of Covid-19 infections.

When focus is on ‘the end point – the price point’, it needs pharma’s attention:

Former CEO of Novartis Joe Jimenez – Ex-Novartis CEO and CEO & Cofounder of Aditum Bio, advised the same in an interview with Reuters Events, published on April 06, 2021. Although this was against the backdrop of the United States, the same is applicable to India, as well.

There, Jimenez said: “And I think the political focus in the United States is too often on the end point, the price point, which definitely needs attention, but not enough on the whole pipeline. And that absolutely needs attention and can bring down the price point at the end of the day.”

“It’s the pharmaceutical industry’s responsibility to show how their drug can lower total costs through the system, whether it’s reducing hospitalization or whether it is reducing other health care costs and comorbidities that lead to ever increasing budgets. If the industry focuses on that, I think I think that’s going to result in better launch success in the next few years,” he added.

However, there is another endpoint – of equal importance, especially in the Covid-19 prevention and the treatment process.

The other end point is equally important, as there may be an extended need for Covid vaccines: 

Wider access to Covid drugs and vaccines is another political and general public’s ‘end point’ of expectations, besides price. As I wrote in my previous article, on October 02, 2021, India and South Africa had proposed at the WTO about an IP waiver for Covid-19 drugs and vaccines to resolve the issues of access and affordability for these products.

Thereafter, on May 05, 2021, the United States also issued a statement supporting the IP waiver for Covid-19 vaccines at the WTO, in its ‘service of ending this pandemic.’ As reported on May 13, 2021, even China now backs the drugs and vaccine IP waiver at the WTO.

Patent waiver for Covid drugs and vaccines make sense for the coming years, especially, in view of the reports that ‘Pfizer, Regeneron CEOs see extended need for COVID-19 vaccines, treatments as pandemic enters the next phase.’ Adding that the data stressed a “need” for re-vaccinations, the Pfizer CEO said, while protection remains high for those six months, it does “go down by time.” Thus, the need for Covid vaccine may continue to remain as important as of date, to prevent the pandemic over, at least, a couple of years, if not beyond.

That apart, some interesting developments followed soon – coincidentally or otherwise.

Meanwhile, some pharma companies responded with laudable initiatives: 

Presumably, for wider availability and affordability of Covid drugs and vaccines, several pharma players alone or in association with governments, took some laudable initiatives. A few examples are, as follows:

  • On May 10, 2021, BioNTech, which has partnered with Pfizer to produce its COVID-19 vaccine, said it plans to set up a new manufacturing site in Singapore, with a capacity to produce several hundred million doses of mRNA-based vaccine.
  • As reported on the same day, as above, Eli Lilly promised to supply India with thousands of tablets of baricitinib for hospitalized COVID-19 patients. It also pledged to sign a royalty-free, non-exclusive voluntary licensing agreements with Cipla, Lupin and Sun Pharma—to expand baricitinib’s availability in the country. Notably, in this month itself, the DCGI has authorized baricitinib plus remdesivir combo for emergency use of ‘hospitalized patients requiring supplemental oxygen, invasive mechanical ventilation, or extracorporeal membrane oxygenation (ECMO).’ Baricitinib has also faced a shortage of during the Covid 2.0 surge.
  • As per reports of May 12, 2021: ‘The US is looking at joint production of Johnson and Johnson’s Covid vaccine in India and ways to help manufacturers like Serum Institute of India (SII) to boost production,’

Pharma’s new role to allay public apprehensions in many Covid related areas:

In this complex scenario, various public apprehensions on Covid vaccines and drugs, need to be explained with scientific evidence – in a common man’s language. These include frequent changes in the dosage interval between two doses of some vaccines, whereas for other vaccines there isn’t any change in this area. Or why in India even within a group of fully vaccinated individuals, wearing masks or maintaining social distancing norms are necessary, when these requirements have been relaxed for fully vaccinated people in the United States. Or, when reports like: ‘Covid Cases Double In World’s Most-Vaccinated Nation, Raising Concerns,’ add fuel to the fire of public apprehensions in this regard.

Drug companies, especially those who are engaged in the global battle against Covid-19 – in their research lab, product development process, including clinical trials, can play an additional stellar role in this area, too. With ‘out of the box ideas’ for Covid related public engagement, they can scientifically respond to all public apprehensions with scientific reasons, in a simple language, on what is happening around most people, nowadays. Selective deployment of their own staff members can also make the initiative more meaningful.

This conversation may also include, science-based response to some bizarre claims of ‘Covid cure’ – from religious leaders having significant followers, and even by Union Ministers, without hurting their feelings or sentiments. These ‘advices’ were widely circulated by the mainstream global and local media, including the Wall Street Journal.

For example, one such report said: The president of a century-old religious organization declared that “consuming cow urine and cow dung will stop the effect of infectious coronavirus.” The swami added that a “person who chants ‘om namah shivay’ and applies cow dung” on his body “will be saved.” However, it was also reported that ‘Indian doctors warn against cow dung as Covid cure.’ Similar advice in different forms, even by elected politicians, keeps misguiding many unsuspected members of the public.

Conclusion:

A series of Covid related contemporary needs and apprehensions, besides the traditional ones are surfacing. These are to be mitigated, on an ongoing basis. Pharma players – individually and collectively, instead of being always reactive, may wish to volunteer to proactively address these issues to help people move in the right direction.

As Covid appears to be a medium to long-haul battle – unlike most other pandemics, pharma companies need to think ‘out of the box’ to create innovative – new – and proactive conversation models in this space. In turn, the initiatives will help them win long-term trust and loyalty of customers – that will always remain as invaluable assets, fueling sustainable growth in business.

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.

 

Credible role of CCI and NPPA should allay fear of possible ill effects of FDI in Pharmaceuticals

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On August 3, 2011, ‘The Hindu Business Line’ reported, “Domestic drug-makers worried by side-effects of MNC buyouts.” It opined, “Acquisitions in the pharma industry came in for sharp focus, after several domestic drug-makers sold their operations partially or entirely to overseas companies – raising concerns of, among other things, increase in medicine prices.”

However, on August 4, 2011 the same business daily retorted, “MNC drug-makers allay fears of rise in prices.” It asserted, “Multinational drug-makers have stressed that they are committed to achieving the country’s healthcare goals”.

March 18, 2011 issue of  ‘Export Import News’ wrote, “FDI in pharma sector comes down during current financial year as debate on ‘Take-Overs’ rages on”.

The Union Health Minister Mr. Ghulam Nabi Azad is reportedly arguing in favor of putting a cap on the FDI limit for pharmaceuticals in India. This is based on an apprehension that such FDI would have an overall adverse impact on the health care scenario of the country, especially, on pricing and availability of medicines to the common man.

It has also been reported that the Commerce Ministry is in favor of reviewing the situation after taking into consideration of the report to be submitted to them by an international consulting firm. This seems to have been prompted by the request of the Department of Pharmaceuticals (DoP) based on the recent takeovers of Indian companies by the Multi National Pharmaceutical Corporations. It appears that the recommendations of the Ministry of commerce, prepared in consultation with the DoP, will then be forwarded to the Economic Advisory Council to the Prime Minister for a final direction on the much hyped and talked about issue.

Views of the Planning Commission of India:

Meanwhile, most of the daily business papers of India reported that on July 12, 2011, the Deputy Chairman of the Planning Commission of India Mr. Montek Singh Ahluwalia commented, “I don’t think there is any move anywhere to prevent the expansion of existing 100% foreign owned pharmaceutical companies or to prevent green field investment by foreign companies.”

A reasonable comment:

This comment of Mr. Ahluwalia seems quite reasonable, considering the fact that full control of powers on Mergers and Acquisitions of the Competition Commission of India (CCI) effective June 1, 2011, has already been notified.

CCI to address all possible adverse impact on competition due to M&A:

The Competition Commission of India (CCI) will now carefully scrutinize the possibilities of the market being less competitive due to Mergers and Acquisitions (M&A) of companies across the industry in the country. This concern becomes even greater, especially, in the horizontal mergers and acquisitions between the comparable competitors in the same products or geographic markets, as we have been witnessing also in the pharmaceutical sector of India, over a period of time.

However, the country is yet to notice any quantifiable ill effects of such horizontal or vertical M&A. Neither is there any major case pending with the CCI in this regard for the pharmaceutical sector.

Competition related scrutiny is nothing new in the developed markets:

Competition related scrutiny during M&A is nothing new in the developed markets of the world and is already being followed in the USA, the countries within the European Union (EU) and elsewhere.

Key concerns with M&A in pharmaceuticals:

Many believe that M&A even in the oligopolistic nature of pharmaceutical market in any country, if not abused will not do any harm to competition.  Possibly for this reason, it will be rather difficult to cite many examples, the world over, where companies have been stopped from merging by the regulators because of anti-competitive reasons.

Another school of thought, however, believes that large M&A could ultimately lead to oligopolistic nature of the pharmaceutical industry with adverse impact on competition. Thus M&A regulations are very important for this sector.

Moreover, we need to remember that competition no longer depends only on the number of players in any given field. To explain this point many people cite the example of two large global players in the field of brown liquid beverages, Coke and Pepsi, where despite being limited competition, consumers derive immense value added economic benefits due to cut throat competition between these two large players.

It goes without saying, CCI must ensure that in any M&A process, even within the pharmaceutical industry of India, such rivalry does not give way to an absolute monopoly, directly or indirectly.

M&A activity in India:

In India, the consolidation process within the Pharmaceutical Industry started gaining momentum way back in 2006 with the acquisition of Matrix Lab by Mylan. 2008 witnessed one of the biggest mergers in the Pharmaceutical Industry of India, when the third largest drug maker of Japan, Daiichi Sankyo acquired 63.9% stake of Ranbaxy Laboratories of India with US $4.6 billion.

Last year, in May 2010, Chicago based Abbott Laboratories acquired the branded generics business of Piramal Healthcare with US$3.72 billion. This was soon followed by the acquisition of Paras Pharma by Reckit Benkiser.

The ground realities:

In India, if we look at the ground reality, we find that the market competition is extremely fierce with each branded generic/generic drug (constituting over 99% of the Indian Pharmaceutical Market, IPM) having not less than 50 to 80 competitors within the same chemical compound. Moreover, 100% of the IPM is price regulated by the government, 20% under cost based price control and the balance 80% is under stringent price monitoring mechanism.

In an environment like this, the apprehension of threat to ‘public health interest’ due to irresponsible pricing will be rather imaginary. More so, when the medicine prices in India are the cheapest in the world, cheaper than even our next door neighbors like, Bangladesh, Pakistan and Sri Lanka.

CCI and NPPA will play a critical role:

One of the key concerns of the stakeholders in India is that M&A will allow the companies to come together to fix prices and resort to other anti competitive measures. However, in the pharmaceutical industry of the country this seems to be highly unlikely because of effective presence of the strong price regulator, National Pharmaceutical Pricing Authority (NPPA), as mentioned above.

Thus even after almost three years of acquisition, the product prices of Ranbaxy have remained stable, some in fact even declined. As per IMS MAT June data, prices of Ranbaxy products grew only by 0.6% in 2009 and actually fell by 1% in 2010. Similarly post acquisition of Piramal Healthcare by Abbott USA and Shantha Biotech by Sanofi of France, average product price increases of these two Indian subsidiaries were reported to be just around 2% and 0%, respectively.

However, even if there is any remote possibility of M&A having adverse effect on competition, it will now be taken care of effectively by the CCI, as it happens in many countries of the world,  Israel being a recent example involving an Indian company.

‘Competition Commission’ does intervene:

In the process of the acquisition of Taro Pharma of Israel by Sun Pharma of India in 2008, being concerned with the possibility of price increases due to less competitive environment in three generic carbamazepine formulations, the Competition Commission in Israel intervened, as happened in many other countries.  As a result, Sun Pharma was directed by the regulator to divest its rights to develop, manufacture and market of all these three formulations to Torrent Pharma or another Commission approved buyer.

There are many such examples, across the world, of Competition Commission playing a key role to negate any possible ill effect of M&A.

Will the new Competition Law delay the M&A process?

Some apprehensions have been expressed that the new competition law could delay the process of a Mergers and Acquisitions (M&A) . However, it is worth noting, in case the CCI will require raising any objection after the voluntary notification has been served, they will have to do so within 90 working days, otherwise the M&A process will deem to be solemnized.

Conclusion:

I reckon, in the M&A process, the entire Pharmaceutical Industry in India would continue to act responsibly with demonstrable commitment to help achieving the healthcare objectives of the nation.

Global players will keep on searching for their suitable targets in the emerging markets like India, just as Indian players are searching for the same in the global markets. This is a process of consolidation in any industry and will continue to take place across the world.

Adverse impact of M&A on competition, if any, will now be effectively taken care of by the CCI. In addition, the apprehension for any unreasonable price increases post M&A will be addressed by the National Pharmaceutical Pricing Authority (NPPA).

Thus, there are enough checks and balances already being in place to avoid any possible adverse impact due to M&A activities in India.In this evolving scenario, it is indeed difficult to understand, why the FDI issue related to M&A in the Pharmaceutical space of India is still catching headlines of both in the national and international media.

Be that as it may, it goes without saying that as we move on, the role of CCI in all M&A activities within the Pharmaceutical Industry of India will be keenly watched by all concerned, mainly to ensure that the vibrant competitive environment is kept alive within this sector.

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.