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Drug Pricing: Why Justify On R&D Cost Rather Than Precise ‘Customer Value’?

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While looking around, it won’t be difficult to spot many types of steep-priced highly innovative products, where high costs aren’t justified by high R&D expenditure, but for unique ‘customer value’ offerings. Many consumers evaluate those and decide to settle for one, instead of opting for cheaper variants – delivering the basic customer requirements in that product class or category. Although, both pharma and electronic goods belong to high tech-based knowledge industries, similar examples are in plenty of the latter, but hardly any in pharma.

Agreed that pharma is a highly regulated industry, unlike electronic goods. But so are banks, financial services, airlines, telecommunication, among many others. Interestingly, all these industries are building great brands without talking about their investment costs in R&D, while doing so.

In this article, I shall focus on – despite facing a formidable headwind, mostly for the same, pharma industry, in general, continue to lack in two critical areas of brand building. But, before doing that let me quote from some recent research papers wondering, how is this situation continuing unchanged, despite all concerned being aware of it.

Two opposing views:

Just to recap, let me put below, two diametrically opposing views that continue to clash with each one, since long:

  • New and innovative drug costs being excessive, globally, lowering their prices will not harm the progress of innovation.
  • Drug industry argues, any restriction of free pricing of innovative drugs, will seriously jeopardize innovation of newer medicines and treatments.

So much of divergence in the views of two key partners within the industry, can’t just continue any longer, without a serious intervention of governments across the world, including the United States.

Pharma does want to talk about ‘Cost & Value of Medicines’. But…

It’s not that pharma doesn’t want to talk about ‘Value of Medicines,’ but not, apparently, to create an ‘emotional connect’ with its stakeholders, including the patients. It appears, more as a general justification for the high cost of new drugs. For example, a pharma trade association’s communication, after acknowledging ‘that many are struggling to access the medicine they need,’ says upfront: ‘Discussions about costs are important.’ It follows a series of much-repeated common justifications, which are no- brainer, such as:

  • Medicines Help Patients Avoid Expensive Hospital Services,
  • Developing New Treatments and Cures is a Complex and Risky Undertaking,
  • Medicines are Transforming the Treatment of Devastating Diseases.

But, the reality is, these justifications are not working on the ground, as these are not quite in sync with ‘customers’ value’ expectations, both from the company as well from the brand. Moreover, instead of establishing an ‘emotional connect’, this approach probably is further alienating many stakeholders, as several governments are now broaching the issue of price control, or some other mechanism to set drug prices.

Pharma marketers need to be eclectic:

Instead of keep following the age-old marketing and communication models, young pharma marketers need to be empowered to be eclectic. They should look around and try to fathom how is ‘marketing,’ as a business domain, changing in other fast-growing industries, and act accordingly. As pharma is a high-tech knowledge industry, let me draw examples from other similar industries, such one that innovates and manufactures electronic products.

Unlike any high-priced, high-tech electronic product companies, such as Google, Apple or Microsoft – pharma marketing communications are more like ‘justification’ centric, for charging high prices for medicines. This approach, apparently, is not just a bit defensive, but virtually negative. Whereas, unlike drug manufacturers, the above tech companies are constantly focusing on the following two areas, for creating a robust ‘corporate brand’ that infuses consumer-trust in each of their products:

  • Establishing ‘emotional connects’ with customers
  • Focusing on the total value of unique value offerings, rather than the high cost of innovation to justify high prices

Let me deliberate briefly on each of the above two.

The importance of establishing ‘emotional connects’ with customers:

With the penetration of technology, almost in every household, with a varying degree, though, access to a gamut of information becomes increasingly easy, so are the options available to customers. This is impacting almost every industry, including pharma and healthcare.

Thus, for corporate performance excellence, customers are now creating a space for themselves at the core of the pharma business strategy. Consequently, a need arises for the pharma marketers to enhance end-to-end customer experience. Besides, brand value offerings, this includes both short and long-term customer service offerings to ensure an ongoing emotional connect with customers, for more intense and longer-lasting engagement with trust, both on the ‘corporate brand’ and also on individual products.

Therefore, creating effective ‘emotional connects’ with customers are assuming a cutting-edge strategic importance – in multiple facets of pharma business. More ‘emotionally connected’ customers also act as a force-multiplier to enhance corporate reputation. Although, it mostly happens through word of mouth, in recent days, value added omnichannel communication by respective companies, is playing a crucial role for success in this area.

In the good old days, reaching patients or patient groups directly, would have been a challenging proposition. Most communications on products, diseases and treatments, used to be through healthcare providers. But, this is no longer so, especially in the digital world, that opened a new spectacle of opportunities for crafting patient-centric strategies – as patients become more digital-savvy, too.

Focus on brand value offerings, not on cost of innovation to justify high prices:

To dwell in this area, a series of questions that one may possibly encounter, such as: ‘How do you define value? can you measure it? What are your products and services actually worth to customers?’ Way back, these points were deliberated in the article – ‘Business Marketing: Understand What Customers Value,’ published in the November-December 1998 issue of the Harvard Business Review (HBR). It said: ‘Value in business markets is the worth in monetary terms of the technical, economic, service, and social benefits a customer company receives in exchange for the price it pays for a market offering.’ From this paper let me pick up just two critical components of value, as follows, for better understanding:

  • Value in monetary terms: Such as, dollars per unit
  • Value for a customer: What the person gets in exchange for the price it pays

Nevertheless, the important point to note: As ‘market offering has two elemental characteristics: its value and its price, raising or lowering the price of a market offering does not change the value that such an offering provides to a customer. Rather, it changes the customer’s incentive to purchase that market offering.’

When applied in the pharma perspective:

When the above concept of value is applied in the pharma industry perspective, it vindicates an important. Which is, tangible value offerings of an exclusive, high-priced patented products, and the same in its off-patent low-priced avatar remains unchanged, regardless of significant change in its monetary value per unit. However, unlike a patent protected drug, options for generic equivalents will be many, with differing prices.

This brings out another important facet of ‘value’. As the above HBR paper states, considerations of value take place within some context. Even when no comparable market offerings exist, there is always a competitive alternative. For example, in the pharma business, one possible competitive alternative for patented products could well be – when the Government decides to issue a Compulsory License (CL) for make the product available at a cheaper price to patients.

The name of the new game:

Thus, for an exclusive new drug, instead of focusing on cost of innovation to justify high prices, a sharp focus on ‘total value offering’ of the brand would possibly be the name of the new game. It will entail persuading the ‘connected customers’ to realize the total value of both the tangible and intangible cost of each benefit that the product offers, rather than simply the cost of a pill. In doing so, a pharma marketer and his entire team, must have an accurate understanding of what its customers value, and also, would value. This calls for a painstaking research, and a mammoth real time data analysis.

Developing a unique ‘Customer Value’ model:

As the above HBR article reiterates, ‘customer value’ models are not easy to develop. Unfortunately, pharma’s ‘value delivery system’ is still tuned to a self-serving mode and not ‘customer value’ centric.Thus, marketers may wish to note some key points in this regard, as below:

  • Many customers understand their own requirements, but do not necessarily know what fulfilling those requirements is worth to them.
  • This leaves an opportunity to demonstrate persuasively, the total ‘customer value’ that the new brand provides, and how it fulfills their requirements.
  • The strategy makers would have to necessarily generate a comprehensive list of ‘customer value’ elements, based on robust data, on an ongoing basis.
  • The acquired insight on – what customers value, and would value, to gain marketplace advantages over competitors, would form the core of the business strategy.

The next stage would be a pilot study to validate the model and understand the variations, if any, in the estimates. It is also vital to note that an improvement in some functionality may appear important, but may not necessarily mean that customers are willing to pay for it. The aim should always be delivering superior value, and get an equitable return for it. Thus, enhancing end-to-end customer experience in this effort, becomes a critical ingredient to brand success.

Conclusion:

After the article – ‘Business Marketing: Understand What Customers Value,’ published in the November-December 1998 issue of the Harvard Business Review (HBR), in June 2000, a similar article was published in the ‘McKinsey Quarterly.’ The paper titled, ‘A business is a value delivery system,’ also emphasized the importance of a clear, well-articulated “value proposition” for each targeted market segment.

This means a simple statement of benefits that the company intends to provide to each segment, along with the approximate price the company will charge for each of those. The paper also underlined, the strength of the buying proposition for any customer is a function of the product value minus the price. In other words, the ‘surplus value’ that the customer will enjoy, once that product is paid for.

Over a period of time, high prices of new and innovative drugs are attracting negative headlines, like - ‘High cost of hepatitis drug reflects a broken pricing system.’ This continues, despite high decibel justification of the ‘exorbitant’ cost of innovation. Undaunted, Big Pharma and its large trade associations remain reluctant to jettison their old advocacy toolkit.

They seem to be still on a – ‘Listen and believe what we are saying’ mode. This is vindicated by the December 14, 2019 report that revealed: ‘The Pharmaceutical Research and Manufacturers of America, the drug industry’s top lobbying group, filed a lawsuit this week against the state of Oregon, claiming two laws it passed requiring greater transparency of drug prices are unconstitutional.’

Continuation of such approaches, on the contrary, is further alienating many stakeholders, especially the patients and the governments. Thus, time appears more than ripe today to focus more on delivering measurable ‘surplus value’ of new products, to well engaged and connected patients, both globally and locally.

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.

 

Pharma Branding At Tough Times

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“About two-thirds of drug launches don’t meet expectations. Improving that record requires pharmaceutical companies to recognize the world has changed and adjust their marketing accordingly.” This appeared in an article – “The secret of successful drug launches,” published by McKinsey & Company in March 2014. There isn’t any recent evidence, either, that this situation has improved now.

Even innovative drugs no longer guarantee a commercial success, as greater competition is building up there, as well. Today, the number of such drugs per indication has risen by 37 percent since 2006 making the task tougher, according to another article of McKinsey & Company, titled ‘Why innovative products aren’t enough for a successful pharma launch,’ brought out in August 2017.

Top marketers’ intimate involvement in these launches, backed by robust marketing strategies notwithstanding, large scale ‘brand failures’ or rather ‘branding failures,’ still remains unavoidable. Although, its telltale signs are more often visible immediately after launch, but may happen even several years after.

Pundits are just not scratching their heads, but doing extensive research to fathom why it happens. However, with changing times – the market dynamics and the research outcomes/inferences keep changing too. And that will be the focus of my today’s discussion in this article, while I explore various facets of the same.

Is pharma branding just a marketing exercise?

That pharma branding is not just a marketing exercise and its failure at any stage – from launch to even years after, I reckon, isn’t the sole responsibility of the pharma marketer. This is mainly because, doctors would ideally prefer to prescribe specific pharma brands and patients would feel confident to use those, because of successful construction of a positive brand bias. Which in turn creates a higher perceived efficacy and a low anticipated safety concern with the brand.

Although, it will be right to assume that good pharma marketers are solely responsible for the creation of this intangible brand asset, but the tangible intrinsic brand value should necessarily be ingrained into each dose of the same that patients consume, always.

Thus, tangible brand value creation, its maintenance, if not enhancement, span across many other functional domains of a drug company. Some of these include, unbiased reporting with expected disclosures of all clinical trial results, maintaining a robust and highly efficient supply chain network or high-quality manufacturing facilities, besides a few others. Evidences exist that irrational pricing could also result in a kind of brand failure. Considering these aspects in totality, creating a positive bias during a pharma brand-building process, is a collective responsibility, and not just of the marketers.

Why creating a positive brand bias is a collective responsibility?

There are ample examples to substantiate that creating a positive stakeholder bias during its brand-building process, is a collective responsibility. Let me illustrate this point by drawing a few examples of branded failures prompted by supply-chain network, disclosures on clinical development and of course perceived ‘irrational’ pricing that falls basically in the marketing domain. It is worth noting, similar incidents may also be related to the manufacturing process, even for top selling generic drugs.

Supply-chain: In the beginning of 2008, serious adverse drug events, some even fatal, were reported with Heparin (Baxter), which used to be widely used as an injectable anticoagulant. Around 80 people died from contaminated Heparin products in the U.S. The US FDA reported that such contaminated Heparin was detected from at least 12 other countries. The primary reason of the same was a serious breach in the supply-chain integrity.

Disclosures on clinical trial results: On 30 September 2004, Vioox (rofecoxib), a non-steroidal anti-inflammatory drug (NSAID) that had been on the market since 1999, was suddenly withdrawn by its manufacturer MSD, owing to concerns about its effect on cardiovascular health.

‘Irrational’ pricing: Like a lot of new cancer drugs, Zaltrap (aflibercept) wasn’t cheap carrying a price tag of USD 9,600 a month. But its price was quickly taken down. This followed some serious public flak, such as, doctors from Memorial Sloan-Kettering (MSK) wrote a blistering review for The New York Times in November 2012. They declared that MSK was taking the drug off the institution’s formulary, because less expensive and just as good alternative angiogenesis inhibitors were available. Although, Sanofi initially defended the price, it subsequently backed down, cutting down the price by half.

Manufacturing process: On September 13, 2019, the FDA announced that preliminary tests found low levels of N-nitrosodimethylamine (NDMA) in ranitidine (Zantac), a heartburn medication. Consequently, almost all companies, including Novartis (through its generic division, Sandoz), GSK, Apotex and many others announced its withdrawal from a large number of markets. Interestingly, these announcements came after a Connecticut-based online pharmacy informed the FDA that it had detected NDMA in multiple ranitidine products under certain test conditions. The NDMA impurity was believed to have been introduced by changes in the manufacturing process. There are several other well-reported examples, as well.

These examples vindicate that creating a positive brand bias remains a collective responsibility throughout the product lifecycle. And it involves several functional areas of drug companies. That said, let me now focus on the creation of a positive bias for pharma brands.

Creating a positive brand bias:

Skillful creation of a positive brand-bias, supported by high quality – tangible and intangible value offerings, is the net outcome of any successful branding process. It augments stakeholder confidence, leading to an increased prescription generation, alongside a favorable patient experience.

More often than not, a positive brand-bias successfully brings into being greater perceived brand-efficacy and higher perceived brand-quality, with lesser anticipated safety concerns. Consequently, the process invigorates an emotional bonding with customers for a long-term brand-loyalty. A positive brand-bias also creates a strong brand equity that often helps in working out a good pricing strategy for the company.

An interesting strategy prescribed – recently:

The October 8, 2019 issue of Fierce Pharma featured an article on creating a positive brand-bias with “Prime and prompt” marketing strategies, outlined by CMI/Compas.

According to Changing Minds: ‘Priming works by providing people with information that is easily brought to mind. The prompt that brings the information to mind can be an implanted and specific trigger or can be an associated term that will naturally bring back the primed information.’ Illustrating the point, it adds: ‘Prime-and-prompt can be a bit like firing a gun, where priming cocks and prompting pulls the trigger.’

Putting this concept in the pharma industry perspective, the CMI/Compas officials explained in the above article, ‘pharma marketers can create primes with product messages that condition people to recall their product when they need medicine or are diagnosed with a condition.’

Hence, a pharma marketer’s adroitness in the ‘priming’ strategy helps ‘prompt’ the desirable action, such as, going to a doctor to ask about a product. Hence, the persuasion technique is termed – ‘prime and prompt’, the paper explained. Naturally, the question that follows: what are the key principles behind this strategy?

Key principles behind ‘prime and prompt’ strategy:

As elucidated by the Changing Minds, when thinking and deciding, we are influenced by related information from the past. At that time, our memories would supply that information, which helps us understand, make sense, decide and act on the subject at hand. Thus, those things that come at the top of mind will have a more immediate and disproportionate influential effect, while those things which are long forgotten may have little or no effect.

It further adds: ‘Priming is driven by implicit memory, where recall is entirely unconscious as the person ‘just knows’ without having to think hard or otherwise put effort into remembering or working things out.’

How to apply the ‘prime and prompt’ strategy in pharma?

It’s no-brainer that to use ‘priming’ in the persuasion process, say for increasing prescription support, the marketers need to provide stakeholders with relevant information beforehand, and more importantly, in a different setting. And only thereafter, they need to focus on a normal brand persuasion strategy. One may most appropriately comment, this is easier said than done in the drug industry.

Taking a cue from the above interview with the CMI/Compas officials, some of the broad steps of the ‘prime and prompt’ strategy, I reckon, may be summarized as follows:

  • Consistent messaging through omnichannel media achieving target reach and frequency, as I had explained before.
  • For intended top of mind recall, a combination of print, digital, social, search, display at appropriate places and in TV, especially for OTC drugs, should consistently surround the target audience for ‘priming.’
  • According to a recent research, the most highly rated ‘priming’ spots for pharma ads for physicians are medical journals, conferences and the likes. Similarly, for patients, appropriate displays at doctors’ clinics and similar places also appeared to be one of the top-rated ‘priming’ spots.

Consequently, a well thought-out ‘priming’ strategy, skillfully executed – based on research findings, is expected to be effective. It will then help trigger desirable ‘prompts’ for the target-audience, augmenting a successful branding process. However, it comes with a caveat that the tangible intrinsic value of the brand, especially those which originate in other functional areas, don’t get compromised or changed in any way.

Conclusion:

Branding exercise in the pharma industry has never been more challenging, as it is today – both for innovative and generic drugs. As stated above, the number of innovative drugs per indication has risen by 37 percent since 2006, making the market competition tougher. Likewise, product proliferation with cut-throat pricing for branded generics, is also making the generic drug marketers grasping at straws, as it were.

In this challenging situation, creating a positive stakeholder bias for brands, as the net outcome of the pharma branding process, is a collective responsibility. Any non-marketing misstep in the tangible brand value offering, could sweep a brand away to oblivion – not just during launch, but at any stage of its life-cycle. Pharma marketers will of course be solely responsible to create the critical intangible brand assets, such as a positive stakeholder bias for brands.

At this tough time for pharma branding, several fresh marketing concepts like, ‘prime and prompt’ are now being seriously evaluated. Thus, I reckon, its also a time for astute marketers in the pharma industry to test the water, in pursuit of excellence.

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.

 

Changing – The Key Differentiator To Boost Pharma Market Share

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Health problems, affecting populations of any country, are many. So are the issues related to the delivery of effective health care solution, that most patients would consider satisfying and meaningful. From this perspective, prevention, treatment and effectively managing any disease is basically a problem-solving situation, for all, as we see around.

Interestingly, an ailment, per se, may not necessarily be the only problem that needs to be solved by a doctor, hospital or a pharma company with its drugs. Other associated factors, playing a key role in the process of patients’ search for a meaningful solution – could often post to be tougher barriers in finding the solution. Therefore, patients’ problem during any disease treatment process, is much more than the disease or availability of required drugs.

Consequently, it is very important for all, especially the pharma marketers, to properly understand what these specific influencing factors are, for each patient-groups or types, if not each patient. Obviously, it would call for generation of relevant data to precisely define the problem, or a set of problems, as the patients feel and envisage. Conversely, these problems should not be defined by the company, based mostly on gut feel, just as it’s so difficult to fathom how another person would feel in a distressing situation. Thus, the need to chart a strategic roadmap to provide a solution to those problems will arise only thereafter.

In pharma context, there are several critical elements in this problem-solving process. However, in this article, I shall focus only on two areas. As these could provide a cutting edge, if used in creative ways by drug manufacturers in arresting patients’ and other stakeholders’ attention on this crucial process.

Three critical elements to the problem-solving process:

Among several others, I reckon, the following three elements would play critical roles in the problem-solving process that is specific to the pharma industry:

  • The mindset to follow the problem-solving approach with all sincerity.
  • Communicate the problem-solving process in a creative way to patients and others.
  • Walk the talk, earning patients’ delight and enhancing the corporate reputation.

Since, the third element, although very important, is involved with the strategic roadmap of the organization, let me discuss here the first two elements to justify the need for this stratagem.

The key differentiators are changing:

A clear shift is underway that will influence what drug will be prescribed and the treatment process that individual patients would prefer.

Not so long ago, and to a large extent even today, one of the key differentiators to sell high price patented products used to be the narrative of ‘billions of dollars’ of investments that go behind time-intensive and high-risk R&D. Nevertheless, this age-old recital now finds lesser and lesser number of takers, largely within patient groups.

Alongside, run several other product-centric differentiators, such as claims and counterclaims on technological and clinical superiority, or how a new drug prolongs life of some cancer patients by a few months over other drugs. These are the old workhorse of differentiators, which are just not enough to increase brand market share, in today’s fast-changing environment.

Brand differentiating factors should reach much beyond the product:

As more patients are getting increasingly interested in their personal health interests and rights, the differentiating factors should reach much beyond products. Some drug companies are already sensing that more patients have started looking for a desired and effective solution, whenever they face a health-related problem. Accordingly, the ability of a pharma player to provide a custom-made solution, as it were, to patients, is emerging as a crucial differentiating factor. This has immense potential to boost the brand market share faster.

Let me underscore, yet again, that this change is surfacing due to changing demands of patients in this area. Thus, soon pharma companies would require shifting their focus from product-centric brand differentiation to patient-centric ones, with problem-solving offerings for patients in creative ways.

Communicate the problem-solving offerings in creative ways to patients:

That the core purpose of pharma business is to prevent, cure or effectively manage illness, is known to many. However, that doesn’t explain one critical parameter that patients now value most. This is, how a drug company provides effective solution to specific health problems of individuals – making the company’s product and services most meaningful to him or her.

Encouragingly, some top pharma advertising companies dealing with pharma, healthcare and wellness products, have started advising so, to their respective clients, as reported by Fierce Pharma on June 17, 2019.

One such ad agency honcho said: “The reality is that pharma and health are closer to doing good anyway, that’s just part of what they do.  Looking for opportunities to serve the patient in a creative way is what we need to do in pharma as well, not just, ‘let’s go and sell this drug.’ Admitting the current issues with most pharma players, he further articulated: “But there’s a huge trust gap because people think pharma companies are just out to make money. The more they can do that supports their customer base, which is patients, the more quickly we’ll erode that.”

As reported in the same article, this advice was given to the pharma industry at the Cannes Pharma Lions Awards function on June 17, 2019. It is one of those top award functions, where one gets to know about the best creative communications of pharma and health care companies, designed to facilitate understanding and awareness on various health problem-solving processes for patients.

An interesting platform to know about pharma’s problem-solving offerings:

One of the well-respected platforms where one can witness creative and innovative communications in the pharma industry, is during Cannes Pharma Lions Awards. This ‘is considered the largest gathering of the advertising and thecreative communications industry. The five-day festival, incorporating the awarding of the Lions awards, is held yearly at the Palais des Festivals et des Congrès in Cannes, France.’

New age creative pharma communication, bringing science and innovation to life, compete in the Pharma Lions award functions. These facilitate not only disease awareness – both mitigation or management, diagnosis and patient’s-need-based prescriptions, but also add value while engaging with healthcare professional and patients, more effectively.

Some of the entries vindicate that creativity in pharma communications has started moving ahead and faster than expected, with special focus on patients’ problem-solving. As an illustration, let me cite the example of top Pharma Lions Winner at Cannes 2019.

GlaxoSmithKline GSK) and its ad agency McCann Health picked up this coveted award in pharma advertising with a mobile application called Breath of Life. This is a diagnostic tool for COPD developed for GSKand is aimed at raising awareness and increasing diagnoses of the disease in China. COPD affects an estimated 100m adults in China, but only around 7 percent is properly diagnosed, as the report highlights.

Now, an example from the wellness area:

This specific approach for a Vitamin D fortified dairy product, is also equally innovative, as quoted in the above Fierce Pharma article. Many may be aware that Vitamin D deficiency is not uncommon in India – 80 percent of children in Delhi, reportedly, suffer from this deficiency. The manufacturing company launched its campaign in schools to move the traditional, outdoor morning assembly to noon, when brief sun exposure could have a big effect on vitamin D levels. The campaign invited schools to a launch event, providing a solution to the problem of Vitamin D deficiency in children. The idea clicked with excellent media coverage.

As the ad agency said: “We didn’t make a TV commercial or run print ads. We looked at a problem and how we could solve it and showed that the brand cares about kids.” Nevertheless, he added, make no mistake, it was also an ad, which made parents want to buy the brand.

India and Cannes Lions Awards in health and pharma categories:

The good news is, Indian companies are also participating to showcase their creative communication skills, in problem-solving areas of health, wellness and pharma domain. Although, one doesn’t find the names of any large domestic pharma players in the list,  India had put up a good show by bagging a total of four awards, including a gold, two silvers and a bronze in the health and pharma categories on Day 1 of the Cannes International Festival of Creativity, in 2018.

In the years ahead, one hopes that Indian drug manufacturers will show greater interest in this area, to sharpen their critical differentiating tool in disease awareness, brand marketing focused on problem-solving for patients, who search for an appropriate solution while addressing a disease condition.

Is pharma in search of a different approach?

Instances, such as, Cannes Pharma Lions Award, indicate that an increasing number of pharma players have, at least, started recognizing that old ways of differentiating brands, would no longer fetch desired outcomes, as patients’ mindsets are changing – fast. Patients’ outlook for prevention, treatment and managing chronic ailments are also changing – empowered by a plethora of unlimited free information – as and when they require.

Accordingly, drug companies who are partnering with creative pharma ad agencies are being persuaded more to look for a radically different approach to be on the same page with their customers. It also requires the top management mindset to be in sync with this fundamental change, inviting full commitment from all. The new communication package, then becomes a fine blend of top-class creative inputs and modern technology platforms for delivery. The core purpose is to effectively connect with patients, doctors, hospitals and governments, being an integral part of their problem-solving process in health care.

Conclusion:

The article titled, ‘Solving Problems Is More Important Than Selling Your Differentiators,’ published in Forbes on June 14, 2018, highlighted a very important point. It wrote, if a company keeps zeroing in on its traditional brand differentiator, as discussed above, the business is likely to miss out on potential new customers and the revenue they could bring with them.It then elaborated: ‘The real trick to getting noticed comes down to shifting your focus. It’s not about you. And it’s definitely not about you versus them. It’s all about solving problems and evoking the right emotions.’

The short list of Cannes Pharma Lions Awards, signals that this process has just begun, but yet to gain a critical mass within the industry. In this area, as yet another head honcho puts it: “Given the shortlist for the Innovation Lions, you can already see a trend where agencies have focused on making work that impacts patient lives on a day-to-day basis, through more meaningful use of technology for practical and life-changing purposes.”

Thus, it is important for new age pharma marketers to note that their business environment is changing – faster than ever before. The traditional brand differentiators, however much honed, may not fetch desired increase in the market share, in the future.

The new crucial differentiator in this area, isthe ability of a pharma player to conceive, design, provide and effectively communicate, virtually a custom-made disease treatment solution to patients. Equally important is the skill to communicate this ‘problem-solving process’ to the target audience in creative ways, for top of mind recall, at least, the company’s name. In turn, it would also facilitate the prescriber choosing a company’s brand, that rings a bell to the patient. And that’s the new way for pharma marketers to boost their brand market share, faster.

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.

 

While Pharma Leadership Change This Atypical Skill Counts

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Effective September 01, 2019, the global pharma major Sanofi will have a new CEO, as the present CEO retires attaining his retirement age of 65 years. This appears to be a mandatory announcement from the company, as is required during the top leadership change in any large and listed organization.

However, there is something novel, as well, in this announcement, especially when specific qualities, skills and experience of the new CEO were highlighted by the company’s Board of Directors. According to Sanofi Press Release, the new CEO – Paul Hudson “has proven his strategic vision, his strong leadership and his ability to achieve the greatest challenges, particularly in terms of innovation and digital transformation.”

Among the stated experience and skills, the one that appeared atypical to me, is the experience of digital transformation, particularly in the position of the CEO of a global pharma major. I In this article, I shall, therefore, explore, why knowledge and experience in this atypical skill is gradually becoming critically important for pharma leadership positions, at all levels.

Why is the need for digital transformation of pharma business?

According to the Internet Trends Report 2019 by Mary Meeker, at 3.8 billion internet users, more than half the world’s population is now online and it is growing. This number would obviously include patients.

As we know, the core purpose of pharma business is to offer a unique patient experience during any disease treatment process. And, the expectations of which from Internet-savvy individuals will be significantly more for various related reasons.

To achieve this objective, drug players would always require to be in sync with customers’ perceptions, expectations and aspirations, among others. Moreover, it’s also not ‘one size fits all’ type of a solution. These will significantly vary for different patient groups, so are the processes of engagement with them – based virtually on real-time information.

Interestingly, the core purpose of digital transformation is also to facilitate this process, with a great amount of precision. The entire process of creating a unique patient experience, involves generation of a massive amount of customized data, customize analysis of which is done through sophisticated analytics, and thereafter, translating and using them as key strategic business inputs, on an ongoing basis. Traditional organizational methods, systems and processes are incapable to deliver the same. Hence arises the crucial need of digital transformation of the organization, across the board.

The transformation is not just about software, hardware and data: 

That said, it is also essential to realize that digital transformation is not just about software, high-tech hardware, mobile apps and sophisticated wearables and data. These are, of course, some of the vital tools – used while transforming a company into battle readiness to create and provide a unique customer experience.

Such unique experience for each customer should cover all touchpoints, spanning across – before, during and after treatment with the company’s medication. This, in turn, helps generate an increasing number of prescriptions from doctors, which otherwise would not have been possible, following the conventional means.

Why this atypical skill is in demand today?

Like any other transformation process within an organization, digital transformation should necessarily be driven by the company CEO, having adequate experience in this area. Even the Board of Directors of many pharma players believes that such a CEO can facilitate the process faster and more effectively. Hence, the demand for this atypical skill is increasing, also for a pharma CEO position, besides leaders in various functional areas, as it is being considered as pivotal to achieve the core purpose of a pharma business, in the digital world.

Thus, if a CEO doesn’t properly understand, how the digital world operates with increasing number of visitors in the cyberspace and convinced about its relevance for business excellence, the organization would ultimately lose its competitive edge. One may, therefore, question, did the need for this atypical skill also arise during the selection of the new CEO of Sanofi?

Is this atypical skill for a new CEO more important now?

The answer, I reckon, could be both, ‘probably yes’ and also ‘no’.

‘Probably yes’, mostly because, being an uncommon skill for a pharma CEO, so far, it arrested the attention of many while reading ‘Sanofi Press Release’, for the appointment of their new CEO. Nevertheless, Sanofi is not the first pharma company placing so much of importance on digital transformation, especially for the key leadership positions. In an interview with the Wall Street Journal (WSJ) of February 18, 2018, the CEO of Novartis said: “We need to become a focused medicines company that’s powered by data science and digital technologies.”

Why it is so important for a pharma CEO?

The AT Kearney paper titled, “New Medicine for a New World – Time for Pharma to Dive into Digital,” also captured that an increasing number of pharma customers are now getting engaged and have started interacting in the digital space, more than ever before. This trend is fast going north – becoming an ‘in-thing’ of the industry, as it were. But more probably to be seen as trendy or display that they are also in it, by ‘dipping a toe in the digital waters.’ Whereas, ‘it’s time to take the plunge,’ as the paper cautions them.

‘Plunging into the digital water,’ doesn’t mean sending people to some external training program – with the word ‘digital’ prominently featuring as the course objective. It means bringing out ‘digital transformation’ of the entire organization, spearheaded by the CEO. The leadership of each functional area would then implement from the same playbook, with a structured and custom-made plan designed specifically to achieve the vision, mission, goals and values of the company.

We have recent examples of, at least, two top global pharma majors taking a plunge in the digital water to make the digital transformation of the organization a reality. The key purpose of the same, is to create a unique customer experience, being on the same page with them, in more effective ways, for business excellence. To move in this direction, the organization must imbibe the non-negotiable principle – ‘digital first,’ across the organization.

Only the CEO can decide ‘digital first’ as guiding organizational principle:

None other than the CEO of a drug company, can decide that ‘digital first’ will be the guiding principle of the company, across all the functional areas of the business. As the above paper articulates, it ‘should be explicitly incorporated into core business processes.’ It further says: ‘Top management must challenge any parts of the business that have not explicitly considered the opportunities from digital in their plans.’

Functional leaders to be in sync with digital transformation: 

All in the pharma organization, across all functions, must work for the end consumer of any pharma business – the patients. Every single employee in the company should strive delighting them with the company’s products and services, at every touchpoints, during their quest for relief from illnesses. As I said before, this is the single most important factor that determines not just the pace of growth of a drug company, but help enhance its reputation, too. It goes without saying, its ultimately the patients who are playing a catalytic role in the digital transformation of an organization.

It is essential for the CEO to make sure that entire corporate, functional and even departmental leadership teams are in tune with the need of digital transformation of the organization. Despite the detail explanation, if some remain unconvinced about the rationale behind the transformation of the core business process, the right leader should assume the responsibility.

This is because, even with one loose knot at the leadership level in this area, the entire objective can seriously get thwarted – down the line. Such changes, as, if and when required, can be achieved in various different ways, not through attrition alone. For example, by encouraging them to work with members of his peer group who can set good examples to emulate.

Brand promotion to physicians will still remain as important:

In tandem, no company should lose sight of the fact that their face-to-face interaction with physicians, will continue to play an important role in brand promotion. Primarily because, doctors and hospitals help patients to get desired solace from ill-health by prescribing recommended medicines, and consequently, will keep prevailing as an integral part of the pharma marketing process, supported directly or indirectly by every employee in the company.

The key challenge in digital transformation:

The key challenge in the digital transformation of a pharma company is broadly possible inflexible or a rigid mindset of some of its leaders. This is generally fueled by the fear of moving out of their respective comfort zones – rather than resources and expertise required to make the technology put to use. A well-running-business with a grand idea for the future, will generally be able to garner necessary resources and other wherewithal, without much problem.

All pharma leaders should always consider themselves as an important solution for the future success of the organization, Otherwise, he or she may be construed as a part of the problem and a hindrance in achieving the corporate goal and should make way for the capable ones, in this area. Hence, selecting leaders with the right spirit to make digital transformation effective, is so critical for the CEO.

To commence this journey, the leaders may either be willing to acquire the experience of a disruptive digital transformation, guided by the domain experts or may be recruited from outside having the necessary experience. Collective and well-coordinated steps towards this transformation can neither be tentative, nor should it commence without having the right leader at the right place with required will and experience.

Digital players entering into health space with game changing ideas:

Pharma players should also note, how the big technology companies, such as, Apple, Google, Microsoft and Amazon, besides many startups, are trying to create space for themselves in the health care arena. Several of them are also trying to reinvent health care with zest, much beyond what traditional drug companies could even envisage, till recently.

The digital transformation of the organization would help drug players to align the company’s business model with the tech companies in those specific areas to reap a rich harvest. More opportunities will also unfold – either to collaborate with them for targeted projects or moving into the tech space with well-calibrated measures, for business synergy. Without digital transformation of business, either facing such competition or benefitting from the available opportunities, will be challenging for drug companies.

Conclusion:

In the digital world, while patients are emerging as a key driver of change in the health care space, traditional pharma operational systems, including sales and marketing are likely to give a diminishing return on investment. Although, many drug companies can sense this ongoing metamorphosis, several of them are still wondering how to go about it. Moreover, to test the ‘digital water’, some of them have started converting several traditional operational methods, systems and processes in the digital format, as well. Yet, are unable to fathom, why such efforts are not clicking – leading to a quantum increase in the operational efficiency – in pursuit of excellence.

The good news is, global pharma organizations, such as, Sanofi and Novartis, besides several others, have realized that incremental performance improvements with small tweaking here or there, across the organization, aren’t just enough. The corporation needs to move towards a holistic digital transformation, spearheaded by its CEO, having experience in this process. This new breed of pharma CEOs, well-supported by his team of leaders, fostering a burning desire to produce pace setting results, can usher in this ‘disruptive’ transformation. Because, they realize, traditional pharma operational systems, when tempered through the fire of the digital transformation process, can yield game changing outcomes for the organization.  The entire process, as it comes to fruition, helps delivering greater customer value, creating a unique customer experience – similar to what customers want – on an ongoing basis.

In fine, strategic intervention of this genre, initiated by the CEO and cascading down the organizational hierarchy, creates a whole new patient-centric outcome, which is much more than what a company can get through re-engineering the operational processes. Hence, especially the young mangers of date, may wish to note note that during virtually every leadership transition, this atypical skill is now likely count much more than ever before – with an ascending trend.

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.

Pharma Marketing: Time For A Disruptive Change with A New Breed of Marketers

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In Today’s fast-changing world, as I indicated in several of my previous articles, more and more people first try to understand the causative factors of their ailments, and options available for effective remedial measures. They strive to get such information, either from the cyberspace or by word of mouth from well informed individuals or other sources. This process starts before treatment, and continues, at times, even after remission of the disease.

Even in the developed countries, a scope exists for self-medication for common ailments with OTC drugs, duly approved by respective country’s drug regulators. A point to ponder, most of these were ‘only prescription’ medicines before going off-patent, and after enjoying 20 years of exclusivity with pricing freedom. During their patent life, self-treatment was illegal with any of these molecules, if not dangerous. The same tradition continues today.

The bottom-line is, many patients are now trying to understand their diseases from sources other than the physician. Good or bad, the reality is, such patients generally prefer to visit a doctor as and when they deem it necessary. While visiting a clinic, they already have, not just some idea of the ailment, but also in what way they would prefer to get themselves treated and approximate cost of each. One should not presume, either, that majority of them are unaware of the risks involved with this approach.

Pharma marketers today can’t just wish away this emerging trend of patients and patient groups getting increasingly more informed. Trying to stop this trend will be a Herculean task, similar to swimming against a very strong current. Managing this situation in a win-win way is now a key task of a pharma marketer. In this article, dwelling on this trend, I shall focus on the need for a disruptive change in pharma marketing and the new breed of drug marketers.

Calls for a fundamental shift in pharma ‘marketing focus’:

Achieving this objective warrants a fundamental, if not a disruptive shift, in the ‘marketing focus’ of pharma companies – from traditional ‘product management’ to modern ‘brand management.’

With patented ‘me-too’ drugs, including ‘Fixed Dose Combinations (FDCs)’, as well as generics, now dominating the market, some sort of ‘commoditization’ of drugs are taking place in the pharma industry, whether one likes it or not.

No significant differential advantages oruniqueness exist between such products manufactured by different drug companies. Consequently, doctors or patients have enough choices to prescribe or buy, drugs with comparable efficacy, safety, quality standards and matching price range, from different pharma players.

Shift from product marketing to brand marketing:

One may possibly ask aren’t both quite the same? Is there any meaningful difference between these two? Thus, taking a pause, let us try to understand what’s the difference between these two.

Yes, for many there is not much difference between these two, especially in the pharma industry. Hence, many drug companies name this function as ‘product management’, while others call it ‘brand management’. In fact, these two are often used as interchangeable terminologies in the drug industry. Nonetheless, this understanding is far from being correct.

The key focus in ‘pharma product marketing’ is on the drug itself – its intrinsic value offerings to patients in terms of efficacy, safety, quality and often the cost. Thus, ‘product marketing’ approach may work for breakthrough drugs, but not for ‘me-too’ patented drugs or generic ones to achieve the desired goals of the respective companies, consistently.

Whereas, pharma ‘brand marketing’ in its true form, creates much more value than pharma ‘product marketing.’ The former dovetails intrinsic values of the drug with a set of strong feelings and emotions around the brand, purely based on what patients or consumers would want to experience from it. This process makes even a me-too brand stand out, creating a strong personality around it and differentiating itself head and shoulder above competitors. Importantly, the bedrock of conceptualizing these powerful feelings and emotions, must necessarily be robust, relevant and fresh research data. No doubt, the task is a challenging one– and not every marketer’s cup of tea.

Why building personality for pharma brands and services is necessary?

If we look around the healthcare industry, we shall be able to realize the importance of building personality for a medicine, especially generic drugs with a brand name, in the Indian context.

For example, many hospitals offer similar medical treatment facilities, follow similar treatment guidelines and their cost may also not be very different. But why different people prefer different ones among these, and all hospitals don’t get a similar number of patients? Same thing happens during the patients’ selection of doctors from many, having similar qualification, experience and expertise.

This happens mainly due to the attachment of a persona around each that creates a particular feeling and emotion among patients while choosing one of them. The process and reasons of creation of a persona may be different, but it certainly differentiates one from the other for the consumer. The same thing happens with virtually undifferentiated ‘me-too’ patented drugs or generic medicines.

Time to create a ‘strong pull’ for a drug, instead of ‘push’ by any means:

To create a ‘strong pull’ successfully, specifically for ‘me-too’ patented molecule or generic drugs, there is an urgent need for a fundamental change in the organization’s marketing approach – a shift in focus from ‘product marketing’ to ‘brand marketing’.

Otherwise, current pharma marketing practices for creating a ‘strong push’ for drugs that often involve alleged serious malpractices’ will continue. But continuation of this approach is not sustainable any longer, for scores of reasons.

The benefits of pharma ‘brand marketing’ in bullet points:

To summarize the key benefits of ‘brand marketing’ in pharma, the following points come at the top of mind:

  • ‘Brand marketing’ of drugs helps escaping avoidable and unsustainable heavy expenditure to create a ‘strong product push,’ often resorting to contentious marketing practices.
  • Proper ‘brand marketing’ of drugs needs high quality cerebral and multi-talented marketing teams, rather than the power of ‘deep pocket’ to buy prescriptions. This creates a snowballing effect of cutting edge talent development within the organization, along with a culture of leading by examples, for a sustainable future success.
  • ‘Brand marketing’ is a better, if not the best way to make a drug most preferred choice in a crowd of similar branded generics or ‘me-too’ patented drugs.
  • Paying doctors for prescribing a drug does not help developing loyal customers, but creating feelings and emotions for a brand among them, helps foster brand allegiance.
  • Creative ‘brand marketing’ of drugs will appreciably boost the image of the organization, as well, but ‘pharma product’ marketing in its present form, will not.

Pharma ‘brand marketing’ and ‘patient-centricity’ to work in tandem:

My article, ‘Increasing Consumerism: A Prime Mover For Change in Healthcare’, published in this blog on June 11, 2018, deliberated an important point. It was:

If the pharma strategic marketing process is really effective in every way, why is healthcare consumerism increasing across the world, including India?

The focal point of rising consumerism in the pharma industry is unsatisfied, if not anguished or angry patients and patient groups – in other words consumers. There could be various different reasons for the same. But the core point is, contentious marketing practices that pharma players generally follow, is self-serving in nature. These are not patient-centric, and mostly devoid of efforts to create feelings or emotions for the product, among both prescribers and other consumers.

The pharma marketers to keep pace with changing environmental demands:

As I discussed several times in the past, pharma marketers are often found wanting to meet the changing demands of the business environment. This is important, as the general pharma practices of influencing the prescribing decision of the doctors are facing a strong headwind of increasing consumerism, India included. This is slowly but surely gaining momentum. For example, patients in India are realizing:

  • That a vast majority of people pay ‘out of pocket’, almost the total cost of health care, without having even a participatory role in their treatment choice, including drugs.
  • That they no longer should remain unassertive consumers, just as what happens in other industries when a consumer buys a product or service.
  • That they need to involve themselves more and be assertive when a decision about their health is taken by doctors, hospitals, realizing that pharma and medical device companies often ‘unfairly’ influence doctors’ prescribing decisions.

The role and requisite talent required for pharma marketers have changed:

Keeping aside ‘one size fits all’ type of strategy, even if I look at so called ‘targeted marketing’ in pharma, it appears somewhat baffling. It is somewhat like, ‘empty your machine gun magazine at the target with a hope to win over competition.’ Whereas, today’s environment requires making healthcare product marketing, including drugs and services, more personal, and in some cases even individual, like latest cancer therapy. The wherewithal for technological support to move towards this direction is also available. State of the art marketing and product research tools and analytics should be put to use to facilitate this process.

Increasing usage of digital marketing, in an integrated or holistic way, is going to make traditional pharma marketing less and less productive, whether we like it or not. To maintain a sharp competitive edge in this new ball game, on an ongoing basis, pharma marketers will need to keep raising the bar.

Consequently, the role and requisite talent required for pharma marketers have also changed. The new generation of drug marketers will not just be creative, but their creativity will be guided by a huge pool of credible research-based data, avoiding gut-feel. All guesses in this area must pass the acid test of validation by what the research data reveals. Moreover, pharma marketers will need to possess, at least the working knowledge of various digital platforms and possible usages for each of these.

Conclusion:

There is an urgent need to realize that drug marketing is now at the crossroads, pharma players will have a choice, either to follow the same beaten path or gradually make a course correction to keep pace with changing environmental demands. If a company decides to choose the second one, the role of pharma marketers and the talent required for doing the job effectively, will be significantly different from what it is today.Maintaining the status quo in this area, carries an inherent risk for the future success of pharma companies.

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.

 

Uniting Pharma With Business Ethics: A Bridge Too Far?

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Operating ethically not only is the right thing to do but also is fundamental to success in business. Poor governance and poor ethical business practices can lead to fines, public scrutiny and distrust – overshadowing good performance, destroying reputation, and undermining the morale and engagement of employees. …We must act in ways that build and maintain the trust of patients, healthcare professionals, governments and society. This was articulated in the Novartis Corporate Responsibility Report 2017, highlighting how important it is to unite pharma operations with business ethics for each company. But is it happening in reality?

The same question haunts yet again with the announcement of a new Code of Marketing Practice by the International Federation of Pharmaceutical Manufacturers and Associations’ (IFPMA),effective January 2019. The pronouncement prescribes ‘a global ban on gifts and promotional aids for prescription drugs wherever the association’s member companies operate.’

However, the overall scenario gets more complex to comprehend, when on January 03, 2019  Bloomberg Law reported: ‘The change is causing concern among both U.S.-based and multinational companies like Astra Zeneca, Bristol-Myers Squib, Johnson & Johnson, and Pfizer Inc. about how to balance appropriate business behavior with respect for cultural norms in other countries.’ Interestingly, the IFPMA membership virtually covers all MNC drug companies, operating across the world. Thus, any concern on its implementation, especiallyamong some of the bigger names, raises more questions than answers about its effectiveness. What exactly has been the outcome of all such actions being taken, especially by the multinational pharma industry associations, from time to time. Have the patients been benefited – at all?

Keeping this recent development as the backdrop, I shall try to gauge in this article, is the bridge still too far to mitigate the widening gap between overall pharma operations and the standard of business ethics -voluntary code of practices of pharma associations notwithstanding?

Why pharma ‘business-practices’ and ‘business-ethics’ are so important?

Before charting onto the sensitive areas of ‘business practices’ and ‘business ethics’, let me recapitulate the meaning of these two terminologies to fathom why these are so important in pharma to protect patient health interest.

  • Business practice is defined as a method, procedure, process, or rule employed or followed by a company in pursuit of achieving its objectives. Itmay also refer to these collectively.
  • Similarly, Business ethics is defined as a form of professional ethics that examines the ethical and moral principles and problems that arise in a business environment. It applies to all aspects of business conduct on behalf of both individuals and the entire company.

Thus, ethical business policies and practices for pharma industry, when worked out both by an industry association or an individual company, aims at addressing potentially controversial issues, such as corporate governance, insider trading, bribery, discrimination, corporate responsibility and fiduciary responsibilities.

Ironically, despite well-hyped announcements of voluntary codes of practices from time to time, no commensurate changes in patients’ health interest are visible in real life. Thus, the very relevance of such edicts is now being seriously questioned by many.

What do reports reflect on ongoing pharma business practices?

To get an idea in this area, let me quote below from three reports, out of which one is specifically on the Indian scenario, which has not changed much even today:

“The interaction between physicians and medical representatives (MRs) through gift offering is a common cause for conflicts of interest for physicians that negatively influence pre- scribing behaviors of physicians throughout the world.” This was articulated in an article titled, “Gift Acceptance and Its Effect on Prescribing Behavior among Iraqi Specialist Physicians”, published by Scientific Research Publishing (SCIRP) in June 2014.

A couple of years before that, on September 07, 2012, Reuters also published an article with the headline: “In India, gift-giving drives drug makers’ marketing.” Thereafter, many similar articles were published in various newspapers and magazines, possibly to trigger remedial action by the regulators in the country.

Very recently, on January 18, 2019, The New York Times (NYT) came out with a mind boggling headline – “Study Links Drug Maker Gifts for Doctors to More Overdose Deaths.” Elaborating on this JAMA study, the NYT wrote: “Counties where the doctors got more meals, trips and consulting fees from opioid makers had higher overdose deaths involving prescription opioids.”

The point I want to drive home here is that freebies in the form of gifts, travel to exotic places with free meals and stay, fees of various types clubbed under a mysterious nomenclature ‘consulting fees’, purported to influence doctor’s prescribing behavior, are now rampant. These are adversely impacting patients, as they are often compelled to buy high-priced drugs, unnecessary drugs, including antibiotics, sedatives and opioids, to name a few.

Are big pharma companies following the codes – both in letter and spirit?

The doubt that surfaces, are these changes just for displaying to the stakeholders how well and with stringent measures, drug companies are self-regulating themselves, on an ongoing basis? Before jumping to any conclusion, let us try to make out whether, at least the big pharma players are following these codes in both letter and spirit.

To establish the point, instead of providing a long list of large pharma settlements with governments for various malpractices, I shall cite just the following two relatively recent ‘novel’ examples related two top global pharma companies, for you to have your own inferences.

  • The first one is related to reports that flashed across the world in May 2018 related to Novartis. One such article described, “Congress demands info from Novartis about its USD 1.2m in outflows to Michael Cohen, just as it was negotiating payments for its cancer drug.” The report further elaborated, Novartis’ USD 1.2 million payment was made in the shell company of Michael Cohen, President Donald Trump’s personal lawyer and so-called ‘fixer’.
  • The second one is the September 13, 2018 report of The New York Times. It revealed: ‘Dr. José Baselga, the chief medical officer of Memorial Sloan Kettering Cancer Center, resigned on Thursday amid reports that he had failed to disclose millions of dollars in payments from health care companies in dozens of research articles.”

The report also stated: “Dr. Baselga, a prominent figure in the world of cancer research, omitted his financial ties to companies like the Swiss drugmaker Roche and several small biotech startups in prestigious medical publications like The New England Journal of Medicine and The Lancet. He also failed to disclose any company affiliations in articles he published in the journal Cancer Discovery, for which he serves as one of two editors in chief.”

Indian companies aren’t trailing far behind, either:

Many Indian companies are, apparently, sailing on the same boat. Let me illustrate this point by citing an example related to India’s top ranked domestic pharma player.

What it said: Way back on November 13, 2010, Sun Pharmain a communication expressed its concern by saying: ‘Over four decades since Independence, the government nurtured a largely self-sufficient pharma industry. But the entry of MNCs is putting most drugs beyond the reach of millions.’

The communique further added: ‘Even as the domestic industry begins to feel the heat of an unprotected market, public health experts are examining why drug prices in India are higher than in Sri Lanka, which imports most of its drugs. The MNC takeover raises the specter of an MNC-dominated pharma sector selling drugs at un-affordable prices, a throw ‘back to the scenario just after Independence, which the government painstakingly changed over four decades. Are we setting the clock back on the country’s health security?’

The reality thereafter: It’s a different story that today, the same Sun Pharma, despite alleged ‘high price drugs of MNCs’, occupies the top ranking in the Indian pharmaceutical market. Be that as it may, the point to note that the same company is now facing similar charges from other countries, almost a decade after. On March 2017, a media report came with a headline: ‘Sun Pharma, Mylan face price fixing probe in US.’

Incidentally,the company is mired with allegation on governance related issues, as well. A media report dated November 20, 2018 carried a headline: ‘Governance cloud over Sun Pharma, stock at 6-month low.’ This example is quite relevant to this discussion, as well, for its link with ethical business practices, as discussed earlier.

Additionally, class-action lawsuits in the United States for alleged business malpractices, including ‘pay for delay conspiracies’, against Indian pharma companies are also on the rise – Sun Pharma and Dr. Reddy’s top the list in terms of those who face most class-action litigation, reported a leading Indian business daily on September 02, 2017.

Pharma malpractices continue, DOP is still to make UCPMP mandatory: 

In this quagmire, where self-regulation doesn’t work, the government usually steps in, as happened in the United States and Europe. Whereas, in India, no decisive government action is yet visible to curb this menace, especially for protection of patients’ health interest. Let me try to illustrate this point with the following chronology of four key events:

  • On May 08, 2012, the Parliamentary Standing in its 58th Report, strongly indicted the DoP for not taking any tangible action in this regard to contain ‘huge promotional costs and the resultant add-on impact on medicine prices’.
  • Ultimately, effective January 01, 2015, the Department of Pharmaceuticals (DOP) put in place the Uniform Code of Pharmaceutical Marketing Practices (UCPMP) for voluntary implementation, despite knowing it has not worked anywhere in that format.
  • When voluntary UCPMP did not work, on September 20, 2016, the then secretary of the DoP reportedly said, the mandatory “UCPMP is in the last leg of clearance with the government. The draft guidance has incorporated suggestions of the pharma industry and other stakeholders.”
  • After another year passed by, on April 16, 2018, a news report reconfirmed: ‘4 years on, code to punish pharma firms for bribing doctors still in works.’ Its status remains unchanged till date.

Conclusion:

Even after Prime Minister Modi’s comment on April 2018 regarding the alleged nexus between doctors and pharmaceutical firms and doctors attending conferences abroad to promote these companies, decision paralysis of DOP continues on this important issue.

Pharma companies continue practicing what they deem necessary to further their business interest, alongside, of course, announcing their new and newer voluntary codes of practices. But, patients keep suffering, apparently for the apathy of the DOP to curb such malpractices forthwith.

Coming back to where I started from, when the malice is so deeply rooted, would any global ban ‘brand-reminders’, such as gifts, even if implemented religiously, work? Thus, the doubt lingers, for uniting pharma operations with corporate business ethics is the bridge still too far?

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.

The Hype of Digitalization in Pharma Marketing

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Having access to the fountain of knowledge residing in the cyberspace, fueled by word of mouth information and aided by social media, patients’ behavior is fast changing globally. Its degree may vary. But the change is real. The good news is – in a digital world of today, people are talking about ‘digitalization’ to rejuvenate per dollar productivity even in the pharma business, while navigating through a strong environmental headwind.

But, the bad news seems to be, that many pharma players, especially in India, can’t possibly quite fathom, just yet, the profound impact of the changing customer profile. With the hype of ‘digital marketing’ and associated cacophony, most of them seem to be focusing on automation of various processes with digital tools, rather than a customer-centric pan-organization digitalization of business. In this article, I shall dwell on the relevance of such intervention in the pharma marketing model, including the processes, before it’s too late for an organization.

The reality – profile of pharma consumers is changing:

It is well documented today that the profile of pharma consumers is changing. There are several studies in this area. For example, the McKenzie paper of November 2014, titled “A digital prescription for pharma companies,” penned some important observations in this regard, as follows:

  • Consumers in the healthcare sector are becoming more informed, empowered, and demanding.
  • The vast majority of connected patients using an array of digital tools, to take control of their health and the health care services they access and buy.
  • Over 70 percent of patients who are online in the United States use the Internet to find healthcare information, and around 40 percent of people who diagnosed their condition through online research had it confirmed by a physician.
  • Patients equip themselves with information about product safety, efficacy, cost comparison, quality indicators from websites and online communities.
  • The more healthcare data become digitally accessible, the more patients will use it to weigh—and potentially reject—expensive health care treatments, as is particularly true in the United States.
  • These patients are demanding more information, so they can apply the same cost-benefit analysis and research techniques they use to purchase cars or phones when they purchase health care.
  • They are also making more informed, rational choices about where they put their money.
  • If pharma companies do not join the digital dialogue and influence the conversation, they will lose an opportunity to shape it, and they may be put on the defensive trying to refute the statements made by those that do take part.

In this evolving scenario, the expectations of pharma customers even in India, are also changing. It may not be as fast as in the United States, but certainly can’t be ignored in any way, for long term business success. Thus, I reckon, it would be futile to keep the basic process of business as tradition-bound as it has always been, of course, with some interesting tweaking here or there.

When everybody talks about digital intervention, what it is really?

To effect this desired change, all concerned are now talking about ‘digitalization’. It has already become a buzz word and is often considered as a ‘magic wand’ by many enthusiasts. There is nothing wrong in this hype, provided this process is properly understood. I tried to explain it in my article, published in this Blog on January 2018. Are we missing wood for the tree? Let me start with the current ‘digitalization’ focus of pharma marketing in this area, particularly in India – as I see it.

Where’s the current focus on ‘digitalization’ in pharma marketing?

Generally, the pharma marketing focus broadly covers two different categories:

A. Push marketing 

B. Pull marketing

A. Push marketing: 

In my view, ‘push marketing’ involves targeting physicians through Medical Representatives and other means, including several contentious ones. These ensure that the doctors “push” the identified pharma brands of the company while writing prescriptions for patients. Some experts call it an ‘inside out’ and brand focused strategy of the industry players to drive sales.

Many companies are taking major digital steps to introduce automation in this area, which are not transformative, but incremental and aimed at improving productivity. Such drive encompasses many areas of a pharma organization, including the field staff related functions. For example, replacing usage of paper-based items, such as detailing folders or reporting material, with algorithm-based digital tablet devices. These reforms help answer customer questions promptly, besides almost real-time entry of accurate doctors’ call related data into a remote computer server for continuous analysis and feedback.

Automation of such types may free enough time of the field staff for greater customer contacts in different ways, but may not be considered as digitalization of the organization. Moreover, these are not transformative in nature either, as the overall process of doing business remains the same.

Nonetheless, process automation and its re-engineering add significant, but incremental value to the business, as the organization continues to maintain similar ‘inside-out’ focus on brands. The re-engineered processes also become faster and more accurate to help improve productivity. However, patients’ knowledge-base, needs, demands, values and aspiration keep changing fast, which just process automation can’t leverage to excel in business.

B. Pull marketing: 

Unlike ‘push marketing’, ‘pull marketing’ targeting pharma consumers who are increasingly becoming more informed and want to get involved in their treatment decision making process, including selection of a drug. The evolving trend suggests, to succeed in business, pharma players would require focusing more on patients, using various digital tools and platforms of engagement, in different ways.

To make this process meaningful, it is essential for a drug company to venture into mapping the patient’s journey from end-to-end for a specific disease or a set of diseases. This means capturing real-life data right from the time patients feel the need for a medical intervention, through the search for the right treatment, to effective disease management or cure, including follow-up, if any. Thus, mapping this arduous and complex odyssey would demand application of state-of-the-art digital tools.

Thereafter, equally sophisticated measures structured on digital platforms and formulated accordingly, require to be and implemented on the ground. It then becomes the ground-rock to transform the company’s focus – ‘through brands to patients’ to – ‘through patients to brands.’ Dovetailing this new marketing concept to a pan-organization initiative will call for new insight and wherewithal of the right kind.

When implemented by the right kind of people, this approach will encouragepatients to “pull” the demand of the selected brands, as they participate along with doctors in the drug selection part of the entire treatment process. The informed patients won’t hesitate posing questions to doctors – why ‘this’ drug is being prescribed and why not ‘that’ drug?’ The doctor would require responding with convincing answers in that situation. Some experts have termed this process as – an ‘outside in’ strategy.

Difference in impact – one ‘Incremental’, the other ‘transformative’:

It’s important to reiterate that the impact of digitalization for an ‘inside-out push strategy’, is generally incremental. Whereas, the same for ‘outside-in pull strategy’ is expected to be transformative in nature, not just in the business performance, but also the way pharma business is viewed and conducted as on date, especially in India.

Conclusion:

As I understand, process automation may be based on digital platforms and even with the application of Artificial Intelligence (AI) or robotics, the overall business process remains unchanged. It brings greater efficiency in the same business processes, improving employee productivity, and usually adds incremental success to brand performance.

Whereas, digitalization helps create a new way of achieving excellence – gaining a new insight for the business. This happens, first through generation, and then detail analysis of an enormous amount of relevant customer-centric data. Effective interpretation and use of the same, help transform the business – giving shape to new business processes for organizational distinction.

Simply speaking, automation improves the business efficiency with its key focus on ‘pushing brand prescription demand’, as much as possible. Whereas, digitalization aims at business transformation for a long-term organizational effectiveness. It creates a new purpose for business based on changing customer profile, across the organization. A sharp focus on delivering research-based and well-targeted customer values help ‘pulling brand prescription demand’, the decision of which is often jointly taken by the doctors and the patients or will happen that way even in India, sooner than later.

In this perspective, what we see in pharma marketing, generally in India, is automation of various types, of course, by using digital tools, platforms and even AI, in some cases. There isn’t anything wrong in that. But, digitization would call for much more. First, the core organizational focus to shift from being ‘brand-centric’ to ‘customer-centric’ for financial achievements, and then effectively delivering customer values through each ‘company-brand-customer interface’ and beyond that. This is essential for sustainable excellence of pharma players in the digital age.

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.

Pharma Brand Building: Criticality of Enhancing End-To-End Customer Experience

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In today’s fast-changing world, the types of medicines being developed, the way technology contributes to health, and how the value of health care is calculated, are all undergoing a metamorphosis. A wave of cell and gene therapies are bending the definition of what constitutes a drug, both clinically, and in terms of expectations of outcomes, duration of treatment and costs. Global health is poised to meet a series of key turning points, and changes seen in 2018 will mark the key inflections that drive the outlook for the next five years and beyond.

These are examples of key observations, as captured in the March 13, 2018 research report, titled: “2018 and Beyond: Outlook and Turning Points,” of the IQVIA Institute (previously IMS Institute). Arising out of these, the report envisages the following key impacts on the pharma industry in the next five years – from 2018 to 2022:

  • Patent expiry impact will be 37 percent larger than the prior five years, including both small molecule and biologics.
  • New medicines’ growth will be slower in 2018 – 2022 than the period from 2013 -2017.
  • Net price levels for branded drugs will rise modestly in the United States at 2–5% per year but will fall in other developed markets.
  • Volume for existing branded and generic medicines will remain slow, with the ongoing shifts towards newer medicines over time.
  • To increase access to medicinesGovernment and other payers to focus on addressing outstanding healthcare disparities or to invest in approaches to address system inefficiencies.

Such a situation, would obviously impede performance and productivity of many pharma players – both research-based and also the generic ones, across the world, including India. Against this backdrop, I shall discuss about the criticality of ‘enhancing end-to-end customer experience’ in pharma brand building exercise. The words to specially take note of are – ‘end-to-end customer experience’ and not just in some ‘touchpoints’. This would help many pharma players to navigate through this strong headwind to remain in the organizational growth trajectory.

Not a solitary finding:

Another series of articles from Bain & Company, published on June 30, 2015, May 25, 2017, May 09 and May 23, 2018, not just reflect similar core concern, as articulated in the IQVIA article. Moreover, the barriers to deliver growth from the in-market portfolios being tough, many drug companies are using even steep price increases as a key lever to achieve their financial goals. It continues to happen, despite strong criticisms both from the public and some powerful governments, such as the United States and also India, further denting industry’s public reputation.

Pharma sales reps no longer a primary learning resource about medicines?

It also came out clearly from some of these articles that ‘doctors in many developed countries have been moving away from pharma sales representatives as a primary resource for learning about medicines.’ It’s just a matter of time, I reckon, similar situation will prevail in India. So, what do the pharma organizations do now – wait for a similar situation to arise and then act, or initiate a proactive strategic marketing process, as soon as possible?

Enhancing customer experience in pharma brand building:

To mitigate this, a new concept for improving market share is gaining ground. It suggests, the intrinsic value of a brand, and its value delivery system should enhance the customer experience during the entire treatment process with the drug. Achieving this would prompt widely capturing and in-depth analysis of targeted customer expectations, preferences and aversions. Just listening to a patient or a doctor won’t suffice, any longer, for a pharma company to succeed in business.

The February 24, 2017 article, titled “The Case For Managing By Customer Episode,” published in Forbes very aptly said, ‘companies that once relied on developing new product features and improving customer service increasingly see competitive advantage rooted in the entire experience that’s wrapped around the product.’

The same point has been corroborated in several research studies, since the last few years. For example, a 2014 survey by McKinsey & Company came out with some interesting findings. It highlighted, by optimizing customer experience at every ‘touchpoint’ – ensuring a reasonably seamless customer journey, a company can potentially increase its revenue by up to 15 percent and lower the customer service costs by 20 percent.

Another research article dated May 23, 2018, titled ‘Why “Episodes” Matter for Doctors’, published in the Pharmaceutical Executive finds that about 40 percent of a doctor’s drug recommendations are linked to how effectively a firm delivers an overall experience, as distinct from product-related attributes such as clinical data. This share rises to about 60 percent for factors within the control of the commercial organization. Doctors who give high marks for their experience with a company, are between 2.3 and 2.7 times more likely to prescribe the company’s products as those who give low marks.The authors further highlighted, loyalty scores run low, both for the average firm and for many individual episodes for the pharma industry as a whole. That’s because firms have focused mostly on pushing out sales and marketing messages through as many channels as possible.

Units of ‘customer experience’ management:

Different publications acknowledge the need to have some key unit for managing customer experience. These units are described in different names by different experts, such as ‘episode’ or ‘touchpoint’.

Bain & Company said, each ‘Episode’ covers all tasks that a customer requires to complete for fulfilling a need. For each unit of ‘episode’, the clock starts as a customer feels and identifies a related need and ends when these are met with his/her full satisfaction. ‘The sum of a customer’s episodes over time comprise the entire experience of dealing with the company.’ So far as ‘Touchpoints’ are concerned, according to  McKinsey & Company, these are the individual transactions through which customers interact with parts of the business and its offerings. It reflects organization’s accountability and is relatively easy to build into operations.

Difference between ‘episode’ and ‘touchpoint’ in ‘customer experience’ management:

There is a difference between ‘episodes’ and ‘touchpoints’. Whereas ‘touchpoints’ are each point of contact or interaction, between a business and its customers,‘episodes’ focus on end-to-end design of a specific customer-need of an organization, as they align management and the front line around the customer experience.

Many companies believe that customers will be happy with the interaction when they connect with their product, customer service, sales staff, or marketing materials. However, McKinsey found that this siloed focus on individual touchpoints misses the bigger, and more important picture: the customer’s end-to-end experience or the ‘customer journey.’ It includes many things that happen before, during, and after the experience of a product or service. The companies providing the customer with the best experience from start to finish along the journey can expect to enhance customer satisfaction, improve sales and retention, reduce end-to-end service cost, and strengthen employee satisfaction.

Thus, only by looking at the customer’s experience through his or her own eyes, throughout the entire journey taken – a company can begin to understand how to meaningfully improve its performance.

Focus areas to create an exemplary customer experience:

According to Bain & Company there are 5 imperatives to focus on to create an exemplary customer experience, which I summarize, as follows:

  • Examine the experience from the outside in – from the customer’s point of view, not the organization’s structure and processes.
  • Meet customer expectations consistently.
  • Invest to provide outstanding experiences in the areas that have the greatest impact on customer advocacy.
  • Use rapid prototypes to deliver new services to customers.
  • Develop closed-loop feedback processes, continuously refining experiences to match or exceed ever-rising customer expectations.

Conclusion:

The mediocre performance of the pharma industry, especially, since the last few years, is bothering many stakeholders.The challenges to deliver business growth from in-market portfolios, coupled with frequent backlashes for using steep product price increase as a key lever to achieve financial goals, are some of the key causal factors.

Enhancing ‘customer experience’ in the process of pharma brand building initiatives, has also caught the imagination of some players. This is commendable. Nonetheless, several research studies indicate, if these are focused on individual customer-‘touchpoint’ based strategies, which, I reckon, is rather common, the outcome may remain quite far from expectations.

What really matters, is enhancing end-to-end experience with a brand – throughout a patient’s journey for disease prevention or effective treatment or even cure. This may, for example, begin with the search for effective and affordable treatment options – participating in arriving at the right treatment – prescription of right drugs, and finally receiving continuous requisite guidance throughout the course of treatment for better management of the disease or effective cure. Thus, pharma brand building by enhancing end-to-end ‘customer experience’, now assumes a critical strategic dimension.

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.