Tag Archives: beyond

Covid Prompts Pharma To Move Away From Competition Driven Business Model

Posted on by
Reply

As deliberated in my just previous article in this blog, Covid has been a watershed in several areas of pharma business. One such key area is its competition driven strategic business model. It aims to deliver significant value for a longer time than the competition, protected by a patent thicket driven TINA factor – and only for those who can afford such patented drugs. It didn’t matter, if a vast majority of patients are denied access to these medicines, with a dangerous pricing trend acting as an insurmountable barrier. Flying solo has been the motto of most players in this ball game, to delight the stock markets.

Interestingly, Covid pandemic seems to be changing this model. Pharma industry, by and large, is now trying to demonstrate its core value for the society – moving away from displaying competition driven one-upmanship. In this article, I shall deliberate on this area.

Covid poses both – a humongous challenge and a great opportunity:

As the article, published in the MIT Sloan Management Review on April 16, 2020 highlights: ‘The COVID-19 pandemic may well prove to be the biggest challenge for humankind since World War II.’ The same holds good for the pharma industry, as well. The drug companies are now expected by all, to play a pivotal role in the fight against the pandemic ‘that is bringing health care systems to their knees and sending shock waves through economies across the globe.’

This is generally because, pharma industry possesses wherewithal to develop effective drugs and vaccines to combat this health crisis – if not alone, but certainly collectively. It also offers a great opportunity for pharma to ‘walk the talk,’ by demonstrating upfront that meeting all patients’ unmet needs lie at the core of the pharma business. As I quoted a global CEO in one of my articles articulating, this crisis also comes as ‘a Shot at Redemption in Pharma Industry.’

Thus, if the industry reacts quickly and responsibly, it may have the chance to also redeem a reputation that’s been tarnished for years. Some of these instances are, illegal marketing practices, corruption scandals, and obscene pricing of vital drugs, the MIT Sloan article underscored. Flying solo in this situation may not be just enough, if not foolhardy.

Flying solo in this situation may not be enough:

Taking this initiative won’t be a piece of cake, either, if pharma companies prefer to do it alone during this unprecedented health crisis.  The drug players will need to be willing and able to successfully collaborate with other players in the race to develop treatments and vaccines. Otherwise, their legitimacy will be fundamentally questioned, especially when the entire world is running against time.

The rationale of two top drug companies entering into collaborative arrangements is obvious – the realization that pooling of all resources together is the best way of delivering effective Covid related solutions to the society at the shortest possible time. The good news is, pharma has already taken the first step in this direction, even when some of them are competitors, in several areas – moving away from their competition driven business models, as of now.

Once strange bedfellows – now partners:

The article published in the Bloomberg Law on June 05, 2020 very aptly observed: ‘The race to address the pandemic has brought together strange bedfellows as big-name companies’ partner with their rivals.’ The Scientist also wrote on July 13, 2020: ‘The urgent need for tests and therapeutics has brought companies together and pushed researchers to work at breakneck speeds.’

One can find this happening on the  ground now, as some major pharma and biotech companies, including Eli Lilly, Novartis, Gilead, and AstraZeneca, formed a group called COVID R&D to share resources and expertise to try to accelerate the development of effective therapies and vaccines for COVID-19. Besides, Roche Holding AG and Gilead Sciences Inc. have teamed up on trials for a drug combination to treat Covid-19.

There are several instances of such collaboration also in the Covid vaccine area. For example, GlaxoSmithKline plc struck a deal with Sanofi to produce 1 billion doses of a coronavirus vaccine booster. Besides, Pfizer from the US and BioNTech from Germany are joining hands to co-develop and distribute a potential Coronavirus vaccine, aimed at preventing COVID-19 infection.

It’s a reality today that Covid-19 has brought not just the strange bedfellows within pharma and biotech companies together. Academia and governments have also moved on to the same collaborative platforms, to save people from a deadly and super contagious infection, in the shortest possible time. We have witnessed this

in India, as well. For example, the Council of Scientific and Industrial Research (CSIR) and Aurobindo Pharma Limited have also announced a collaboration to develop vaccines to protect against SARS-CoV-2 or COVID-19.

The rationale and some possible issues: 

Each of these players is bringing some expertise and intellectual property to the table. “As they work together, they’re going to create more, so you have the ‘yours,’ the ‘mine,’ and the ‘ours’ of collaboration,” as the Bloomberg Law points out. That said, any collaboration of such nature and scale will have its own share of legal issues, such as, patents, trademarks, trade secrets, revenue sharing models, and more.

The collaborators, in pursuit of saving mankind from Covid-19, are expected to find enough alternatives to resolve these glitches for a win-win outcome – not just for now, but much beyond – with the dawn of a new collaborative model. The rapid general acceptance of this collaborative model by more and more drug companies to meet unmet medical needs in many other areas – much faster, in all probability, will delight the health care consumers and also be appropriately rewarded.

Leveraging the collaborative business model beyond pandemic:

E that as it may, it still remains an open question to many, whether such collaborative model will be leveraged for an accelerated rate of drug, vaccine and diagnostics development beyond the pandemic.

The good news is, as The Scientist article reported, some pharma players are seriously pondering how to continue working in this new way – with the same sense of urgency and purpose, for other disease areas too. They believe, the lessons being learned with the collaborative models, may help expedite development of therapeutics in other serious conditions, such as, Alzheimer’s, intractable cancers and autoimmune diseases.

If and when it happens as a predominant business model, suffering patients and the society, in general, would lap it up and the innovators would be suitably rewarded. However, the paper also says, there are still some drug companies who prefer to continue working in a more insular fashion, as was happening in the old normal. But, experts also feel, that should not cause any worry, as long as majority prefers to continue following the collaborative models, in the new normal, as well.

Pharma would make a good profit from collaborative business models too:

For those who say that drug companies won’t make good profit from Covid drugs and vaccines, Pfizer CEO has an answer. Albert Bourla, Pfizer’s CEO, reportedly, has no patience for the argument that pharmaceutical companies should not be making a profit on the drugs and vaccines they introduce to fight Covid-19. This article highlights, at $19.50 per dose, the 1.3 billion doses of Pfizer BioNTech Covid vaccine that the Pfizer plans to make by the end of next year, could translate to nearly $13 billion in sales, after the company splits its revenue with its partner BioNTech. It is roughly the same as Pfizer’s all-time best-selling drug Lipitor sold in its best year.

Adding to it, another article on the same issue, published by Fierce Pharma on August 13, 2020, further reinforced the above expectation. It wrote, the longtime Evercore ISI pharma analyst haspredicted the total market for COVID-19 vaccines would be worth $100 billion in sales and $40 billion in post-tax profits. It assumed frontrunner Moderna would supply about 40 percent of the market, Novavax would take 20 percent and the other vaccine developers would split the rest. “One could look at the field under this base scenario and conclude it is reasonably valued in total,” the analyst concluded.

Nonetheless, there could still be several points that remained unanswered in this analysis. But the bottom line is, the collaborative model is not just profitable, it starts generating profit earlier and faster – virtually eliminating the cost of possible delays when a company flies solo.

Conclusion:

With a seemingly flattening curve, the Covid pandemic still continues, alarmingly. As of October 25, 2020 morning, India recorded a staggering figure of 7,864,811 of Coronavirus cases with 118,567 deaths.

With this backdrop, COVID-19 has provided the pharma industry a new opportunity to demonstrate its true value to the society – not the self-serving ones. It’s now clear that no one can rule out, there won’t be a similar unprecedented health catastrophe in the future too. It may come in various different forms, or may even be from a rapid and complex mutation of the same lethal virus.

Moreover, such crisis may not come and go in just a few months – may even linger for a long time. In any case, these may again be equally disruptive – or even more disruptive to lives, livelihoods and the economic growth engine. In such a scenario, putting the brightest scientific brains of the world together will be critical, and adding top speed to the process being the essence to come out of the crisis with least possible damages.

Covid pandemic has also demonstrated that the competition-based model of the drug could be a serious retarding force in that endeavor. What will matter, is a well-structured collaborative model that can create a win-win situation – both for patients and the business. I reckon, it’s about time to move into this model to find most effective drugs and treatment solutions for many other unmet needs related to a host of intractable diseases, much sooner.

There could, of course, be some business issues with this model. But those can be resolved amicably for an all-weather greater success in business, along with protecting the society – for all. From this overall perspective, it appears, Covid pandemic now sends a strong signal to pharma companies to move away from predominantly competition driven business models, expanding more into collaborative ones.

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.

 

Moving Beyond The Pill: No Longer An Option

Posted on by
Reply

Many of us would prefer to live, as long as possible, in the comfort zones of old paradigms, hoping to succeed in the same way as we had succeeded in the past. But the wheel of time keeps moving, triggering a significant shift in various paradigms. This includes even the health care space. Most of these changes, as they tend to attain a critical mass, capture the imagination of some in the pharma industry – escaping the attention of many.

One such area of a shifting paradigm is increasing patient preference to get actively engaged in their health care. More specifically, such preferences span across the entire chain of any disease management process – from diagnosis to treatment, often including continuous monitoring, whenever required.

Thus, the creation of well-differentiated value-added patient engagement services, based on credible research data of statistical significance, craftily bundled around the pill, will assume paramount importance. More importantly, such value offerings should lead to demonstrable improvement in treatment outcomes.

This, I reckon, would be the new recipe for pharma marketing excellence in the coming years. In this article, I shall focus on this fast-evolving landscape.

Dawns a new realization:

Early realization of this change is working as an impetus for some global pharma majors to redraw their strategic business models, making appropriate course corrections, which are mostly fundamental in nature.

The article titled ‘How Pharma Can Offer More than Pills’, published in the Harvard Business Review (HBR) on July 23, 2015 identifies the following two realizations as the impetus behind moving beyond the pill initiatives:

  • Medicines alone are often not enough for patients to achieve optimal clinical outcomes.
  • As pharmaceutical pipelines dry up, beyond-the-pill businesses can be valuable new sources of revenues.

Joseph Jimenez, the global CEO of Novartis, appears to be one of the first and foremost to recognize this requirement when he said in 2014 that: “Creating value by embedding products into a holistic offering with the aim to improve patient outcomes and provide tangible competitive advantages.” Jimenez said at that time, “Beyond-the-pill is a logical and inevitable path forward for all.”

As this new realization gets effectively translated into cutting-edge business strategies, “Medicines could accordingly reach market with a label that includes an ‘around the pill’ solution such as a wearable or another tracking device”, as the above HBR article foresees.

Shifting success requirements:

Going forward, delivering only the value of a pill won’t be quite enough to make the sales revenue and profit trend moving north, registering a steep gradient.

As more patients want to experience differential values in the entire disease treatment process through greater participation and engagement, business success requirements of pharma players call for a major shift, accordingly. This would involve moving away from the traditional model – from increasing sales through a growing number of treatments, to boosting revenue through patient-centric well-differentiated value offerings. I repeat, the entire process should ultimately lead to quantifiable improvement in treatment outcomes.

Direct ‘patient engagement’ is easier said than done:

Direct patient engagement is easier said than done. It is not just something that is ready to happen at any given point of time. Pharma companies will require to first equip much greater number of patients, through various means, to become actively engaged in health care, as they step into this direction.

It is envisaged that most of these direct patient engagement endeavors of pharma will be on various digital platforms. The process would require accurately identifying the target groups, what exactly they consider of immense value for such engagement –  and finally effectively delivering those value offerings in innovative and customized ways to them, for improved treatment outcomes.

‘Patient engagement’ should be measurable:

The level of such engagement needs to be continuously measured through ‘patient activation’ tools to establish cost-efficient improved outcomes. Researchers have established that patients with a lower ‘activation score’ ultimately incur higher costs.

An interesting article on ‘patient activation’ describes this terminology as ‘the skills and confidence that equip patients to become actively engaged in their health care.’ It says that health care delivery systems are now turning to ‘patient activation’ as yet another tool to help them and their patients improve outcomes and influence costs. To establish this point, the paper examined the relationship between ‘patient activation levels’ and billed care costs.

In this analysis of 33,163 patients, the researchers found that patients with the ‘lowest activation levels’ had predicted average costs that were 8 percent higher in the base year and 21 percent higher in the first half of the next year than the costs for patients with the highest activation levels. Both are significant differences.

Following an analogous approach, Novartis has been able to demonstrate better disease outcomes with its cardiovascular drug Entresto, as reported in the Financial Times dated April 14, 2017. Ably supported by remote monitoring and coaching programs for patients with advanced heart failure, Novartis has reportedly been able to establish that its customized disease treatment solution brings down hospitalization and cardiovascular death rate by around 20 percent.

Greater pharma accountability needed for treatment cost versus outcomes:

The authors of this paper, further established ‘patient activation’ as a significant predictor of cost even after adjustment for a commonly used “risk score” specifically designed to predict future costs. This trend, when reaches the decisive moment, is likely to assign greater accountability for costs and outcomes, even to the pharma players.

While moving into this direction:

Accurately knowing patients’ ability and willingness to manage their health will be a critical piece of information for the drug companies. This would prompt the pharma marketers to be highly proficient in generating a huge pool of credible data on target patient groups in various relevant areas, including expectations, aspirations, preferences and treatment related behavior. Thereafter, strategic game plan for business excellence should be based on in-depth analysis of this huge database, created on an ongoing basis.

If any skill gap exists in generating and analyzing the data meaningfully, pharma companies may wish to collaborate with external expertise in this area. A few excellent examples in this area have already started being reported, such as

Astra Zeneca’s partnering with Vida Health to offer free health coaching services to heart attack sufferers, or Sanofi partnering with Verily (previously known as Google Life Sciences) to develop new services for patients to manage diabetes better.

With similar initiatives, pharma players can effectively demonstrate to their stakeholders, details of better health outcomes that their patient-centric disease treatment solutions are offering – eventually taking their brands to a new trajectory of more inclusive success.

Conclusion:

Those days are not too far when many patients, especially with chronic diseases, such as hypertension, arthritis or diabetes, would prefer to buy a comprehensive disease management solution to lead a better quality of life, instead of just buying a pill – and quite often for lifelong.

In a new paradigm, with changing ‘value expectations’ of many patients in the entire treatment process, ‘value creation’ and ‘value delivery’ mechanisms of drug companies are likely to change accordingly. One of the key barriers to this shift is mostly the traditional business culture of most pharma players. Another significant one is its slow pace of moving into the digitized world, as compared to other science and technology driven industries.

Moving ‘beyond the pill’ would necessitate a basic shift in the mindset – from selling a pill to selling better health outcomes. In this endeavor, pharma CEOs require leading from the front. Instilling courage within the organization to ensure this fundamental strategic shift in the company’s business model taking place on the ground, is their prime responsibility. Thus, stepping into this new paradigm with requisite wherewithal, sooner, would no longer be just for business excellence, but for its long-term survival too.

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.

 

Quantum Value Addition With Health Apps, Going Beyond Drugs

Posted on by
Reply

Besides all important brand attributes and how well those are communicated to the doctors, the ‘game winning’ differentiating factors in the prescription drug business, as it appears today, would revolve around overall quality of patient-centric approach and offerings of pharma companies, craftily tagged with the associated products.

To hasten business growth, being more and more patient-centric, in increasingly competitive, demanding and complex environment, pharma players would require to leverage the cutting-edge technology to its fullest for significant value addition in their respective sales and marketing models too.

Keeping pace with today’s ‘technology revolution’, rapid advent of various game-changing and user-friendly digital health applications for consumers are showing immense potential for a refreshing catalytic change in the overall landscape for patient-centric healthcare services as a key differentiating tool from the pharma players’ perspective.

The capability and capacity of ‘out of box’ thinking, professional expertise to choose and customize the right technological tools, making them key components of pharma sales and marketing models and above all, their effective implementation on the ground, would eventually differentiate men from the boys in the ball game of competitive excellence in the Indian pharma industry.

This emerging opportunity brings to the fore immense potential to revolutionize the treatment process of many serious chronic ailments with significant value creation, even in India, generating a unique synergy between the drugs and customized disease related digital tools.

In this evolving ball game; wearable, decent looking and user-friendly ‘Health Apps’, installable in smartphones having Internet and Bluetooth connectivity along with touch screens; signal a great potential for augmentation of the overall disease treatment process.

Consequently, it would kick-start a healthy competition within the pharma companies to continuously raising the bar of unique value offerings to patients, more than ever before.

A close experience:

Purely prompted by my keen interest in technology for a long while,the ‘Health App’ that I have bought and installed in my iPhone and wearing for sometime, is basically a multifunctional and multi-dimensional fitness tracker.

From the decent looking digital ‘Wrist Band’ that comes with it, the Health App tracks on a daily basis, kilometers that I have walked (from pre-calibrated steps), calories that I have consumed with intake of different food types and burnt up through physical workouts, total duration of time that I have slept in a day, quality of my sleep (sound and light sleep) with duration, number of times that I woke up at night, precise daily intake with quantity of nutrition, such as, fluid, carbohydrate, protein, fiber, different types of fat, salt etc., pulse rate, breathing and mood, besides many others.

Current users:

Besides some global pharma companies that I shall deliberate below, the current users of ‘Health Apps’ are mostly those people who are increasingly becoming fitness and diet conscious (at any age) and also want to take proactive measures for prevention of many chronic ailments.

A study:

According to a report co-authored by an official of IMS Institute of Healthcare Informatics, a study based on nearly 43,700 purported Health or Medical Apps available on Apple’s iTunes App Store, found that 69 percent of those Apps targeted the consumers and patients, while 31 percent were built for use by clinicians. Most of the ‘Consumer Healthcare Apps’ were simple in design and do little more than provide information.

The study observes, a large number of Health Apps are being designed to track simpler data on health and fitness. However, the more sophisticated Apps are capable to perform advanced functions, such as, real-time monitoring and high-resolution imaging.

Possibility for much wider use in healthcare:

Although, many of these Apps have been devised as personal fitness and health trackers directly by the consumers, the information and hard data thus captured can possibly be shared with the medical practitioners by the patients, as and when required. This data could serve as valuable patient life-style information inputs for the doctors, while managing their serious chronic illnesses.

Health Apps could also help the users reduce, at least, the primary care costs through preventive self-monitoring measures and take control of their own basic health.

In tandem, I reckon, there is a good possibility for a much wider use of such Health Apps in India by the pharma companies, along with many drugs, especially those, which are used for chronic ailments.

For example, real-time data tracking on:

-Exercise, diet and Body Mass Index (BMI) for patients on anti-diabetic and anti-hypertensive drugs

- Quality of sleep for patients with sleep disorders and are on related medicines

- Mood for patients taking anti-depressant medications

The data captured by the Health Apps in all such related areas could be useful for both the doctors and the patients in the process of effective disease management along with the drugs. 

Going beyond drugs:

Based on this emerging trend, it is envisaged that in not too distant future, it won’t be very uncommon for patients, suffering from especially serious chronic diseases, to get prescriptions for both the drug and an the related customized Health App, for better quality of life through effective disease control.

Similarly, some hospital discharge orders may possibly include downloading of related mobile Health App on patients’ smartphones, primarily to provide an ongoing link between the doctor and the patient for better patient care and more effective follow-up visits.

Pharma players showing interest in Health App market:

It is, therefore, no surprise that pharma players have started showing keen interest in Health App market. In fact, this emerging market is now dominated by the big pharma players, with Bayer having 11.2 percent market share, followed closely by Merck, Novartis, Pfizer, and Boehringer Ingelheim.

The top 20 Health App makers are as follows:

No Company No. Of Health Apps
1. Bayer 139
2. Merck 111
3. Novartis 108
4. Pfizer 62
5. Boehringer Ingelheim 51
6. Janssen 45
7. AstraZeneca 44
8. GlaxoSmithKline (GSK) 41
9. Roche 41
10. Johnson &Johnson (J&J) 39
11. Novo Nordisk 32
12. Siemens 29
13. Amgen 28
14. Medtronic 27
15. Abbott 24
16. Biogen Idec 20
17. Merial 20
18. Sanofi 20
19. Genentech 19
20. Allergan 17

(Source: Pocket.md as of 12/2/2013) 

A novel business expansion opportunity:

Pharma players in India may consider to actively focus on, with requisite resource deployment, to collaboratively develop and market smartphones based digital Health Apps, for quantum value addition in their brand promotion.

Moving towards this direction, pharma sales and marketing strategy for a chronic disease treatment should consider making Health Apps an integral part of doctors’ prescription along with the related drugs of the company.

Some examples:

To give an idea of the evolving trend, I am citing below a few examples, out of lot many, in this emerging area:

- Betaseron (interferon beta-1b) of Bayer: This drug is indicated for the treatment of relapsing forms of multiple sclerosis to reduce the frequency of clinical exacerbations. The company launched its first iPhone App, named ‘myBETAapp’ with ‘Personalized Tools’ to assist people on Betaseron (interferon beta-1b) in managing their Multiple Sclerosis (MS) treatment.

myBETAapp provides patients with injection reminders, injection site rotation assistance and injection history.  Through Internet, myBETAapp also gives patients access to the BETAPLUS Web page on Betaseron.com, including links to educational tools, peer support and contacts listed on the site.  With active phone service, patients enrolled in the BETAPLUS program can dial directly to speak to BETA Nurses, who are specially trained in MS.

- Tobi Podhaler (tobramycin inhalation powder) of Novartis: This drug is indicated for the treatment of Cystic Fibrosis.

Podhaler Pro App is an iPhone based navigation tool for patients and also the doctors during treatment with Tobi Podhaler. This Health App is a customizable digital pocket companion that helps, besides many others, with timely reminders to keep track of treatments, real patient stories and access to a live PodCare nurse to answer questions about taking treatment.

- Pradaxa (dabigatran etexilate)of Boehringer Ingelheim: This drug is indicated for ‘Reduction of Risk of Stroke and Systemic Embolism in Non-Valvular Atrial Fibrillation; Treatment of Deep Venous Thrombosis and Pulmonary Embolism and Reduction in the Risk of Recurrence of Deep Venous Thrombosis and Pulmonary Embolism’. It comes with a Health App, available in online ‘Apple Stores’. This is a tool providing healthcare professionals with information about stroke risk in Von-valvular Atrial Fibrillation.

Pradaxa Health App contains a ‘Stroke Risk Calculator’, ‘Bleeding Risk Calculator’, Renal function and dosing and administration information.

Pradaxa Health App also has a great resource section, split into ‘Patient and Health Care Professionals’ sections, which can be sent to patients via email.

- Xarelto (rivaroxaban) of Janssen Pharmaceuticals: This drug is indicated for ‘Reducing Stroke Risk in Patients With Non-valvular Atrial Fibrillation (AF); Treating Deep Vein Thrombosis (DVT) and Pulmonary Embolism (PE) and Reducing the Risk of Recurrence; DVT Prophylaxis After Knee or Hip Replacement Surgery’. It  also comes with a Health App, called Xarelto Patient Center and available in online ‘Apple Stores’.

Xarelto Patient Center App features include, personalize questions that help patients speak with their doctors about treatment with Xarelto, Appointment reminder, Xarelto ‘Savings Programs’, Registration to receive more information, Videos that share more information on Xarelto and hear from others who have been treated with the drug, After receiving a prescription the patient can enroll in the ‘XARELTO CarePath’ patient support and savings program.

Thus, especially for high-risk ailments, such iOS Apps directed at patients with information on the drug, including interactions with other medicines, dietary requirements, fitness/health trackers, besides many others, can add additional value both to the prescribers and the patients in the process of effective disease management.

Tightening the loose knots:

A 2014 report titled, ‘r2g mobile Health Economics’ by ‘Research2Guidance’ states, even though they try hard, most of the pharma companies fail to have a significant impact on the mHealth App market. Some pharma companies have published more than 100 Apps available for iOS and Android, but have generated only limited downloads and usage.

It states, pharma companies have created only little reach within the smartphone/tablet App user base. In fact, the leading pharma companies have been able to generate 6.6m downloads since 2008 and have less than 1m active users.

Analysis and comparison of the App activities of the top 12 Pharma companies in the report, gives reasons why pharma companies have not succeeded in becoming leading mHealth Apps providers, as follows:

- The App portfolios are not globally available:  Almost half of the pharma companies’ Apps target only local markets. This means that their apps are available only in 3 or less countries.

- The App portfolio is built around the core products of the pharma companies and not around the actual market demand:  For example, if a company specializes in the treatment of hematological diseases, the App portfolio reflects that. Apps in this case would provide references to the latest research, support diagnosis and facilitate information exchange with/between the experts. There exists an App market for such products, but there are other segments e.g. health tracking, weight loss, fitness or diabetes condition management, which attract more users.

- No cross-referencing or common and recognizable design:  So far, pharma companies have not used the full potential of cross-referencing between their Apps. They also do not use common style guides for their App portfolio. Both of these could improve their App visibility as well as strengthen their corporate identity in the App market.

From this research analysis, it is quite evident that there is a need to tighten the loose knots in the Health Apps space by the pharma players. All improvement areas, as indicated above, should be addressed, sooner, especially, the need to targeting patients globally and inclusion of segments such as health/fitness tracking, weight loss, together with patient management focus areas of chronic illness conditions, such as, diabetes or hypertension, which have been attracting more users.

A comprehensive look and well thought-out action would help realizing true potential of the Health Apps market in India.

Conclusion:

Based on the emerging trend, it appears, those days are not quite far off, when it will become quite common for the doctors and also for the hospitals to co-prescribe with the drugs, user-friendly, disease related smartphone based Health Apps for the patients. This practice would provide an ongoing link between the doctors and the patient, leading to not just better quality of treatment, but a comprehensive overall healthcare in that specific disease condition.

However, currently there does exist a down side to this approach, which can’t be totally ignored either. The reason being, such Health Apps are not quite affordable to many, just yet, especially in a country like India. This affordability barrier could probably be overcome, if Indian IT software and hardware development companies consider this area lucrative from an emerging business opportunity perspective, as the country moves on with its ‘Make in India’ campaign.

If it makes sense…probably it does, it needs to be tried out sooner, in a much larger scale, for a win-win outcome.  To begin with, the interested pharma players can tailor these well differentiated value offerings, at least to suit those, who can afford such augmented treatment process for a better quality of life, going much beyond drugs.

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.

 

Is The Core Purpose of Pharma Business Much Beyond Profit Making?

Posted on by
Reply

Dr. Margaret Chan, the Director General of the World Health Organization (WHO), at a briefing to discuss the Ebola outbreak in West Africa at the UN Foundation in Washington on September 3, 2014 said:

“Big Pharma’s greed for profits, not lack of funding, delaying Ebola treatment development.”

Highlighting that the disease has already taken lives of 4,951 people in West Africa, Dr. Chan castigated the pharmaceutical industry for failing to develop an effective treatment for the deadly virus Ebola since 1976. “Though the Ebola crisis has become the most severe acute public health emergency seen in modern times, a profit-driven industry does not invest in products for markets that cannot pay”, Dr. Chan added.

That said, the Big Pharma has now initiated some efforts in this area, as the disease currently poses a significant threat to non-African countries, including America.

The sentiment reverberates:

Echoing similar sentiment, an article published in the BBC News on November 7, 2014 reiterated:

“Big pharma companies are in the business to make money, so will generally develop those drugs that offer the greatest potential for profit. This means a number of important drugs are neglected – the current Ebola crisis being a case in point.”

The profit oriented approach isn’t restricted just to the diseases of Africa:

The above article also points out that, besides diseases of the developing world, the Big Pharma has been slow to develop newer and multi-drug resistant antibiotics, as well.

This is mainly because, it is lot more difficult for the pharma companies to make huge quantum of profit from discovery of newer antibiotics for acute infections having limited use for around 7 to 10 days, as compared to the medicines for chronic illnesses that people will have to necessarily take every day, for life.

It appears today that the ongoing public opinion and pressure are possibly not adequate enough to trigger even a slightest change in the fetish for profit-making incentives of the Big Pharma companies.

Despite high profitability, the fetish for even more profit continues:

The pharma industry that basically exists to help saving lives of patients of all types, status and color in various ways, now seems to focus mostly on generation of more and more profit than ever before.

- The following table would vindicate the point of profitability of the industry:

Highest and Lowest Profit Margins of 5 key Industrial Sectors, 2013                        (Profit Margin in %)

No.

Sectors

Highest

Lowest

1.

Pharmaceuticals

42

10

2.

Banks

29

5

3.

Carmakers

10

3

4.

Oil & Gas

24

2

5.

Media

18

6

NB: Highest and lowest margins achieved by individual company                             (Source: Forbes, BBC News)

To generate mind boggling profits, many of the Big Pharma constituents have reportedly resorted to various types of gross misconduct and malpractices too, the Chinese saga being the tip of the iceberg.

- The following are some recent examples to help fathom the enormity of the problem:

  • In September 2014, GlaxoSmithKline was reportedly fined US $490m by China for bribery.
  • In March 2014, the antitrust regulator of Italy reportedly fined two Swiss drug majors, Novartis and Roche 182.5 million euros (U$ 251 million) for allegedly blocking distribution of Roche’s Avastin cancer drug in favor of a more expensive drug Lucentis that the two companies market jointly for an eye disorder.
  • Just before this, in the same month of March 2014, it was reported that a German court had fined 28 million euro (US$ 39 million) to the French pharma major Sanofi and convicted two of its former employees on bribery charges.
  • In November 2013, Teva Pharmaceutical reportedly said that an internal investigation turned up suspect practices in countries ranging from Latin America to Russia.
  • In May 2013, Sanofi was reportedly fined US$ 52.8 Million by the French competition regulator for trying to limit sales of generic versions of the company’s Plavix.
  • In August 2012, Pfizer Inc. was reportedly fined US$ 60.2 million by the US Securities and Exchange Commission to settle a federal investigation on alleged bribing of overseas doctors and other health officials to prescribe medicines.
  • In April 2012, a judge in Arkansas, US, reportedly fined Johnson & Johnson and a subsidiary more than US$1.2 billion after a jury found that the companies had minimized or concealed the dangers associated with an antipsychotic drug.

Many more of such instances are regularly being reported by the international media, unabated.

More profit through high drug pricing – The key argument in favor:

The Big Pharma argues that high drug pricing is absolutely necessary to generate a kind of profit, that is essential to fund heavy investments for drug innovation to meet the unmet needs of patients. Moreover, only 3 out of 10 drugs launched are profitable, on an average.

This argument really goes over the top. It does not hold much water either, as the Big Pharma reportedly spends more on the process of drug marketing than on innovation (R&D) of new drugs.

The following table would paint a different picture altogether, marketing expenditure being far more than the R&D costs: 

R&D and Marketing Spend of World’s largest Pharmaceutical Companies

Company Total Revenue (US$ Bn.) R&D Spend  (US$ Bn.) Marketing Spend (US$ Bn.) Profit (US$ Bn.) Profit Margin (%)
J & J (US) 71.3 8.2 17.5 13.8 19
Novartis (Swiss) 58.8 9.9 14.6 9.2 16
Pfizer (US) 51.6 6.6 11.4 22.0 43
Roche (Swiss) 50.3 9.3 9.0 12.0 24
Sanofi (France) 44.4 6.3 9.1 8.5 11
Merck (US) 44.0 7.5 9.5 4.4 10
GSK (UK) 41.4 5.3 9.9 8.5 21
AstraZeneca(UK) 25.7 4.3 7.3 2.6 10
Eli Lilly (US) 23.1 5.5 5.7 4.7 20
AbbVie (US) 18.8 2.9 4.3 4.1 22

(Source: GlobalData, BBC News)

Thus, it is difficult to fathom why are numbers of drugs, such as, Sovaldi and others costing as much as US $ 84,000 and above for a treatment course, when the cost of manufacturing is no more than an insignificant fraction of that treatment cost?

Considering all these and looking at the published profit and loss accounts of various pharma companies, it appears that, the line between ‘making reasonable profit’ and ‘profiteering’ is getting increasingly blurred in the pharma world.

Why is the marketing cost so high?

Since about the last decade and half, despite reasonably high expenditure on R&D there does not seem to have been many reports on breakthrough innovations. According to an expert of the World Health Organization (WHO), “of the 20 or 30 new drugs brought to the market each year, typically 3 are genuinely new, with the rest offering only marginal benefits.”

In a situation like this, when the challenge mostly is of generating targeted revenues with the new products of ‘me-too values’ rather than with those having intrinsic ‘unmet values’, marketing costs to generate doctors’ prescription would obviously escalate disproportionately. Even the process followed to generate these prescriptions, often cross the red line of regulatory, ethics and compliance standards, as have been cited above.

The following questions come up consequently:

- Are these exorbitant avoidable marketing expenditures adding any tangible or intangible values to the ultimate consumers – the patients?

- If not, why burden the patients with these unnecessary costs?

India is no different against similar parameters:

Back home in India, the deep anguish of the stakeholders over similar issues is now being increasingly reverberated with every passing day, as it were. It has also drawn the attention of the patients’ groups, NGOs, media, Government and even the Parliament.

The quality of the pharmaceutical sales and marketing process in India has touched a new low and continues to go south, causing suffering to a large number of patients. Well documented unethical drug promotion is increasingly becoming an emerging threat to the society.

Even today, the Ministry of Health and the Department of Pharmaceuticals of the Government of India provide few checks and balances on unethical drug promotion in India and prefer to keep the eyes meant for vigilance, closely shut.

Despite deplorable inaction of the government on the subject and frequent reporting by Indian media, the national debate on this issue is yet to attain a critical mass. A related Public Interest Litigation (PIL) is now pending before the Supreme Court for hearing, hopefully in the near future. Its judicial verdict is expected to usher in a breath of fresh air around a rather stifling environment for healthcare in India.

I deliberated on a similar issue in one of my earlier blog posts of September 1, 2014, titled, “Pharma And Healthcare: Mounting Trust deficit In Post Halcyon Days”

Conclusion:

While it is well-acknowledged that pharma industry has contributed immensely for the development of a large number of life saving new drugs to save precious lives all over the globe, none can also deny that for such efforts the companies concerned have not been hugely profited either…and, as we have been witnessing, not necessarily through legitimate means, always.

That said, in the backdrop of all the above examples, the core issue that emerges today as raised by many, including the World Health Organization (WHO), is the growing inherent conflict between predominantly the profit driven business goals of the pharma players and the public health interest of a nation.

Considering a number of recent serious public outbursts of the global thought leaders and also from the international media on the ‘profit dominating goals’ of the pharma industry, in general, the following questions need to be addressed with all seriousness:

- Is there a need to define afresh the core purpose of pharmaceutical business for all?

- Does the core purpose go much beyond profit making?

- If so, how would the industry plan to engage the stakeholders for its credible public demonstration?

Meanwhile, taking a serious note of it and learning from the past examples, India should initiate experts’ debate on the subject soon, to effectively resolve the conflict of two different mindsets, not resting on the same page in many ways.

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.

 

A global pharmaceutical iconoclast, who sees “Fortune” beyond the creamy top layers of the society … even at the bottom of the Pyramid

Posted on by
Reply

In March 2009 GlaxoSmithKline (GSK) unraveled a path breaking vision, within the global pharmaceutical industry, with the creation of a ‘voluntary patent pool’to spark development of new treatments for neglected diseases of the poorest countries of the world.

The head honcho of GSK Andrew Witty articulated, as reported by Reuters, ‘he feels that this is the right way to help research, especially of tropical diseases like malaria, filariasis, cholera etc. to meet the unmet needs of the poorer population of the world’.

Cares for the poor:
Simultaneously, Witty also announced that GSK will sell its patented medicines in the 50 poorest countries of the world at 25% of their cost in the developed nations and invest 20% of profits made in these poorest countries to help creating and developing local healthcare infrastructure and treatment facilities for the indigenous population.

It appeared to me that this young global pharma CEO is charting the yet uncharted frontiers where there are no footsteps to follow. Witty attained this iconic status when he aired his views without slightest hesitation by admitting openly, “Society expects us to do more in addressing these issues. To be frank, I agree. We have the capacity to do more and we can do more”.

Challenged the global pharmaceutical industry:
The young CEO, to utter surprise of many, further added, “he was challenging the industry to go further to address global health problems by being more flexible on patent protection and pricing in the neediest countries”.

That was March 2009…Came March 2010…

Repeated the firm resolve:
During his visit to India in March 2010, Witty reiterated the same resolve with unequivocal clarity. When a Journalist from “The Economics Times” asked him, ‘There are concerns among some of your global peers about the patent and regulatory environment in this country. Are you concerned with the existing regulatory environment in India?’, Witty replied with his usual conviction and élan as follows:

“I am relatively relaxed with the Indian regulatory environment. The government has made it clear about the direction to have an intellectual property (IP) mechanism and to be TRIPS compliant. Some people are unrealistic and want everything to change overnight. But we should be absolutely realistic about pricing to keep it affordable for India. If someone has the IP right, it does not mean that it should make it inaccessible for lower income people. Over the next 10-15 years India will become increasingly IP defined market.”

Is it a mere ‘lip service?’:
If you ask me, does this leader belong to a different genre? I shall reply with an emphatic ‘yes’. Andrew Witty seems to be indeed ‘walking the talk’ and is understandably quite capable of thinking much beyond of pleasing ‘The Wall Street’ and the likes of it, just with quarter to quarter business performance and ‘guidance’. He thinks about the patients both rich and poor. There are no reasons to doubt this patient-centric noble intent, Nor does it appear to me as a mere ‘lip service’.

One can interpret a ‘one-off statement’ made by any global pharma CEO in a way that one would like to. However, repetition of the same statement time and again in different counties possibly reflects nothing but firm resolves of a young visionary, determined to translate the same into reality with unprecedented courage.

Conclusion:
This iconic CEO, I reckon, is doing no charity or philanthropy with his path breaking vision, as those are not certainly the purpose of any business. Neither should one do charity or philanthropy with shareholders’ money and without their clear consent. Andrew Witty, in my view, perhaps is in the same page as with the management Guru C.K. Prahalad, who first postulated, now an oft repeated hypothesis, ‘The fortune at the bottom of the pyramid’.
Witty, as I have been witnessing, has already demonstrated his prowess with the traditional pharmaceutical global business model, in a comparative yardstick. Now professionally equipped with a strong pharmaceutical marketing background, honed over so many years, I am sure, Andrew will succeed even more in curving out a lion’s share of the global pharmaceutical business for his company, in the long run, creating a win-win situation for much over six billion global people, including a vast majority of the ailing, poor, neglected, hungry and marginalized population of the world.
By Tapan 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.

The Union Budget 2010-11…the issue of improving access to healthcare…encouraging innovation… and beyond

Posted on by
Reply

The Primary role of the pharmaceutical industry in India, like in many other countries of the world, is to make significant contribution to the healthcare objectives of the nation by meeting the needs of the ailing patients through improved access to modern medicines.

This role could be fulfilled primarily in the three following ways through Public Private Partnership initiatives:

1. By improving the healthcare infrastructure and the healthcare delivery systems
2. By creating a favorable echo system for developing newer innovative medicines through R&D initiatives in the country
3. By taking policy measures towards a robust healthcare financing system for all strata of our society

Improving access to modern medicines:

In the Union Budget 2010–11, the Finance Minister has proposed an increase in allocation towards healthcare from Rs. 19,354 Crore to Rs. 22,300 Crore. It is expected that a significant part of this increased allocation will be utilized in improving healthcare infrastructure and delivery systems, in the country.

Moreover, extension of ‘Tax Holiday’ for hospitals set-up in rural areas from 5 to 10 years, is expected to encourage development of rural healthcare infrastructure. The Finance Minister has also proposed that ‘Tax Holiday’ will be available for hospitals set-up even outside rural areas.

The proposal for extension of health insurance to NREGA beneficiaries is also expected to have a positive impact in improving access to modern medicines within this sector of the population.

It is my strong belief that currently, improving access to healthcare in general and medicines in particular along with encouraging innovation, should be the top-priorities of our policy makers. High incidence of mortality and morbidity burden in a country like ours can only be addressed through such priority measures. It is believed that Indian Pharmaceutical Industry would always remain committed to actively support all such efforts from all corners to help achieving this objective.

Encouraging innovation:

The budgetary proposal of enhancement of scope of weighted deduction on expenditure incurred on in-house R&D to 200% and the same on payments made to national laboratories, research associations, colleges, universities and other institutions for scientific research to 175%, are welcome steps.

However, in my view only the above steps are not adequate enough to properly encourage innovation within the country. Ongoing efforts in Research & Development (R&D) would require a robust national policy environment that would encourage, protect and reward innovation. Improving healthcare environment in partnership with the Government remains a priority for the pharmaceutical industry in India.

Despite progress made over the past decades in developing new medicines for some acute and chronic illnesses by both the Indian pharmaceutical companies and R&D organizations, innovation, like in other developed countries, still remains critically important in the continuous and ever complex battle between disease and good health in India.

Other encouraging budget proposals:

The following proposals of the Finance Minister are also expected to benefit the Industry:

- An annual Health Survey to prepare the District Health Profile of all districts in 2010-11

- Uniform concessional basic duty of 5% for all medical appliances and exemption of import duty from specified inputs for the manufacture of orthopedic implants, are good initiatives.

- Reduction of Corporate surcharge from 10% to 7.5%, though corporate Minimum Alternate Tax has gone up to 18%

- Tax incentives for the business of setting up and operating “Cold Chain” infrastructure, which is an integral part in the logistics for vaccines and many biotech products

- Under section 10B, extension of sunset clause is expected to benefit the Export Oriented Units (EOUs)

Adverse impact on affordability:

Some steps taken in the Union budget may have major impact on the Indian Pharmaceutical Industry, which are as follows:

• Goods and Service Tax (GST) coming in April 1, 2011 and Minimum Alternate Tax (MAT) hiked to 18% could prompt restructuring of ‘supply chain’ of many companies

• Increase in fuel prices and withdrawal of ‘Service Tax’ exemption on transportation of goods by rail, could make pharmaceutical products more expensive.

The Union Budget 2010–11, which has been largely hailed as a good budget across the industry, unfortunately does not propose much in terms of major fiscal and policy measures for the pharmaceutical industry.

Conclusion:

Be that as it may, going beyond the budgetary expectations, the pharmaceutical industry in India should keep focusing on good corporate governance. This encompasses adherence to high ethical standards in clinical trials and in promotion of medicines, regulatory and legal compliance, being harsh on corrupt practices, addressing all issues that support good healthcare policies of the Government and takes care of the healthcare needs of the common man through inclusive business growth.

It is obvious that the Pharmaceutical Industry alone will have a limited role to play to address all the healthcare issues of the country. Important stakeholders like the Government, Corporates and the civil society in general must contribute according to their respective abilities, obligations and enlightened societal interests, towards this direction.

By Tapan 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.