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Continues ‘The Cat And Mouse Game’ In Pharma Business?

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Many are already aware of the critical factors that make generic drugs so important for patients – virtually for all. These don’t just facilitate greater access to health care – offering affordable alternatives to high-priced off-patent innovative drugs. This is as relevant in the largest pharma market in the world – the United States (US), just as in India. Let me illustrate this point with two examples – one from the US and the other from India.

According to US-FDA, ‘9 out of 10 prescriptions filled, are for generic drugs’ in the United states, as off-patent branded generic drugs cost more than their generic equivalents. The US drug regulator explains, ‘Increasing the availability of generic drugs helps to create competition in the marketplace, which then helps to make treatment more affordable and increases access to healthcare for more patients.’

However, unlike the US, there prevails a unique perception difference even within generic drugs – between branded and unbranded generics. The Indian Survey, undertaken to review and analyze various facts on branded and equivalent unbranded generic medicines, found a huge difference in prices between them in the country. Interestingly, as the researchers also noted, although, more consumers want an economical alternative to high priced branded generics, most physicians do not prefer unbranded generic medicines.

There is another important point worth noting regarding India made generic drugs. Although, Indian pharma sector caters to around 40 percent of generic demand in the US, as IBEF reports, many Americans nurture serious apprehensions on the quality of generic drugs manufactured even by India’s top drug companies. 

This is quite similar to apprehension that exists in India between the quality branded and unbranded generic medicines in India. The only difference is – the above perception in India is not based on impartial and credible scientific studies, whereas it is not so in America. The New York Times report, published on May 11, 2019 vindicates this point. It questioned: “Americans Need Generic Drugs. But Can They Trust Them? The fake quality-control data, bird infestations and toxic impurities at the overseas plants that could be making your medication.” Incidentally, there aren’t any such large-scale accusations regarding dubious quality of drugs manufactured by Big Pharma. 

On the other hand, big pharma players have long been accused of drug price gouging or price-fixing of life-saving drugs, primarily to maximize earnings by ‘extending’ product patent-life. Curiously, in recent times, even the generic drug players are being accused of following a similar practice. Thus, in this article, I shall explore how generic drug players are also trying to hoodwink measures to bring down the drug price, either through price control or through the encouragement of intense competition – playing a ‘cat and mouse game’, as it were, whenever an opportunity comes. If it continues and probably it will, what is the way ahead? Let me begin by recapitulating a historic pace-setting move in the global generic market by an Indian drug player.

A historic pace-setting move by an Indian generic drug player:

Being a major exporter of generic drugs in many developed, developing and even poor countries around the world, India is often termed as ‘the pharmacy of the world.’ That apart, a historical move in this space, by a top domestic player – Cipla, earned global accolades, at the turn of this new millennium. In 2001, Cipla slashed the price of its triple-therapy drug ”cocktails” for HIV-AIDS – being sold by MNCs, ranging from USD 10,000/ USD 15,000 a year to USD 350 a year per patient to a doctors’ group working in Africa.With the generic industry’s focus on a deeper bottom line, the scenario has changed now. Finding ways and means for the price increase, evading both competitive pressure and also drug price control, as in India, has turned into a ‘cat and mouse game’, as it were.

Generic drug pricing – ‘a cat and mouse game?’

Pricing pressure, especially for generic drugs, from patients, payers, politicians and governments, is gradually becoming more intense. More the pressure greater is the effort of affected players to come out of it, in any way –akin to a ‘cat and mouse game’, as it were. Although, it has recently started in the USA, the same exists in India, since 1970, when the first drug price control was introduced in the country. Intriguingly, in the midst of this toughest ever drug price control, phenomenal rise of almost all top Indian companies, including the top ranked company in the Indian pharma market commenced – from scratch. Nonetheless, to get a feel of how is this game being played out, let me start with the Indian scenario.

How this game is played in India to evade price control:

Instead of taking a deep dive into the history of drug price control in India, let me give a bird’s eye view of a few mechanisms, out of many, used to evade price control, since it commenced. The idea is to give just a feel of how this ‘cat and mouse game’ game pans out, with a few of such examples in a sequential order, since 1970, as much as possible, by:

  • Including price decontrolled molecule in the FDC formulations.
  • Replacing a price-controlled molecule by a similar decontrolled one, keeping the brand name unchanged, when the number of controlled molecules came down.
  • Making a major shift towards selling more of higher-priced decontrolled molecules, jettisoning low priced controlled molecules.
  • Resorting to vigorous campaigns, when the government started encouraging prescription of low-priced generic molecules, to ensure further shift to branded FDC prescriptions, alongside image enhancement of branded generics over equivalent unbranded ones. Its outcome is visible in the above Indian Survey on the image of branded and unbranded generics.

Has Indian pharma industry succeeded in this game?

It appears so and gets reflected in the CAGR of the industry. According to IBEF, “The country’s pharmaceutical industry is expected to expand at a CAGR of 22.4 per cent over 2015–20 to reach US$ 55 billion.” I underscore, this is value growth.

Thus, the point, I reckon, that the government should ponder: How both can happen, at the same time – price control is bringing down drug prices, extending real benefits to patients on the ground, and at the same time the industry is recording an impressive growth rate in value terms?  Whatever it means, let’s now try to explore, how such ‘cat and mouse game’ is being played to increase generic drug prices in the United States.

How similar game is played in the US to increase generic drug price:

On May 10, 2019, international media reported that ‘44 US states announced a lawsuit alleging an anti-competitive conspiracy to artificially inflate prices for more than 100 drugs, some by more than 1,000 percent.’ This lawsuit is based on an investigation involving a number of generic drug companies. The process, which took five-years to complete, accused twenty generic drug players. Teva Pharmaceuticals USA, whose parent company is based in Israel was, reportedly, named as the ringleader of the price-fixing. The company raised prices of around 112 generic formulations.

Other companies, reportedly, named in the complaint, include Pfizer, Novartis subsidiary Sandoz, Mylan, and seven Indian drug companies, including Lupin, Aurobindo, Dr. Reddy’s, Wockhardt, Taro Pharmaceutical Industries (a subsidiary of Sun Pharma) and Glenmark. Some of the 15 senior company executives who were individually named in the lawsuit for their involvementin this alleged “multibillion-dollar fraud ”belong to Teva, Sandoz and Mylan.

The ‘cat and mouse game’ in this case is slightly different. Instead of government price control, the US drug regulator encouraged intense generic competition to bring down the price. When the priced did not come down as expected, the State of Connecticut, reportedly, began investigating select generic drug price increases in July 2014. Subsequently, other states also joined the investigation, and uncovered the reason for prices not coming down.

According to the complaint, between July 2013 and January 2015, Teva significantly raised prices on approximately 112 different generic drugs. Of those 112 different drugs, Teva had colluded with its competitors on at least 86 of them. The complaint noted: “Teva had understandings with its highest quality competitors to lead and follow each other’s price increases, and did so with great frequency and success, resulting in many billions of dollars of harm to the national economy over a period of several years.” In this way, the impact of intense competition on drug prices, was made ineffective.

Not the first time, it was detected:

The 2019 anti-trust lawsuit against the generic drug makers may be ‘the biggest price-fixing scheme in the US history’, but not the first lawsuit of this kind in America. A similar lawsuit for illegal price-fixing against six generic companies, was filed by the states in 2016, as well, which is still being litigated. The 2019 case is a sweeping version of the same and is the result of a much wider investigation. It indicates, instead of taking corrective measures, the ‘cat and mouse game’ still continues. However, almost all the companies have vehemently denied this allegation.

Is this game existential in nature of the business?

One may well argue that such ‘cat and mouse game’ with the government is existential in nature, for the generic drug business. When price control or intense market competition brings down the price to such a level, it becomes a matter of survival of most businesses. There doesn’t seem to remain enough financial interest for them to remain in the market. If and when it happens, causing shortage of cheaper generic drugs, patients’ health interest gets very adversely affected. It also prompts the manufacturers to find a way out for the survival of the business. This is understandable. But it needs to be established, supported by scientific studies.

An off the cuff solution:

A general and off the cuff solution to the above issue would naturally be, there should be a right balance between affordability of most consumers and the business interest of the drug makers. This broad pointer is also right and understandable. But again, no one knows the expected upper limit of the generic drug profit margin for their manufacturers – where hardly any breakthrough and cost-intensive R&D is involved. Equally challenging is to know – below what margin, generic players, by and large, loose interest in this business?

What do some available facts indicate?

According to the year-end report of the Pharmaceutical Export Promotion Council (Pharmexcil) the total pharma exports from India has been pegged at USD 19.14 billion for 2018-19. This represents a growth of 10.72 per cent over USD 17.28 billion in thelast year. It further reported, “The top 25 export destinations contribute 76.52 per cent of the formulation exports amounting to USD 10.38 billion. Among these, the US continues to be the largest export destination with over 38.62 per cent of the total generic exports to that country at USD 5.24 billion.” Does it mean business as usual, despite ‘price-fixing’ law suits in the US, since 2016?

Similar impression one would probably get from the Indian scenario, as well. Notably, despite price control, which is continuing since last five decades, the growth rate of the Indian pharma market, which is dominated by branded generics, remains very impressive.According to the January 2019 report of IBEF: “The country’s pharmaceutical industry is expected to expand at a CAGR of 22.4 per cent over 2015–20 to reach USD 55 billion.” So also the same game, probably!

Conclusion:

It appears, there is certainly a huge reputation or image crisis for the generic drug industry, as such, due to such alleged delinquencies. However, from the business perspective, the manufacturers are still having enough leeway to move on with similar measures, supported by fresh thinking. At the same time, it seems unlikely to have any form of drug price control in the United States, at least, in the foreseeable future. Nevertheless, price pressure due to cut-throat competition could even be more intensive, as it gets reflected even in the US-FDA statements.

Nearer home, the Indian generic drug business has been hit with a double whammy – allegations for dubious drug quality standards, on the one hand, and price manipulation on the other, besides dented reputation and image – widening trust gap with patients and governments.

Moreover, unlike the best export market even for generic drugs – the United States, India has been following some patchy policy measures for health care, as a whole. The drug price control system is one such. Till a holistic policy on health care is put in place for all, backed by an effective monitoring system, The Indian price control system may remain like a ‘maze’, as it were, with several ways to hoodwink it.

Hence, the ‘cat and mouse game’, albeit in a different format, is likely to continue, until one gets caught, or till all concerned puts their act together – putting patients at the center of the core business strategy.

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.

Why D&I Is A Powerful Growth Driver For Pharma Industry

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‘Diverse India’ now needs an ‘inclusive society’, vowed the Prime Minister of India, after his massive electoral win on May 23, 2019. Many may consider a part of it as rhetoric, notwithstanding, as and when the government policy of Diversity and Inclusion (D&I) gathers wind on its sail, the realization of its importance would reverberate – even in the corporate world, including the pharma industry, especially in India.

I discussed this subject in my article of June 25, 2018 ,in the context of transforminga pharma company to a customer-oriented, profit-making organization, with implementation D&I within the organization. However, in this article, I shall deliberate, over and above, the current status of D&I in the pharma industry, why most drug companies are still not leveraging it as one of the powerful business growth drivers. While opening this discussion, let me recapitulate what these two words mean to us, and their importance in the drug industry.

Recapitulating D&I:

As there are several, but similar definitions of D&I, I am quoting below just one – from the Ferris State University. It goes, as follows:

  • “Diversity is the range of human differences, including but not limited to race, ethnicity, gender, gender identity, sexual orientation, age, social class, physical ability or attributes, religious or ethical value system, national origin, and political beliefs.”
  • “Inclusion is involvement and empowerment, where the inherent worth and dignity of all people are recognized.”

The relevance and importance of D&I as a corporate growth policy for the drug industry is immense. It will not just, help them recognize and create business policies, based on diversity in people – a wide range of human differences in their consumers or potential consumers. In tandem, it will also help promote, and sustain a sense of belongingness with the society and communities where it operates – their values, beliefs, expectations and desire for a healthy living.

D&I begins within the company, and for the customers:

There are clear indications that many pharma companies are slowly, but surely realizing that for a consistent and sustainable financial performance the whole approach to business needs to undergo a metamorphosis. One such area of transformation, is a sharp focus on effectively satisfying a set of well-defined expectations of both their external and internal customers.

This journey begins with the creation of a Diverse and Inclusive (D&I) workplace. Nevertheless, the key goal remains – meeting expectations of the society where the drug companies operate, including a diverse set of customers – by saving and improving their quality of life, with affordable and accessible medicines.

While talking about diversity to Business Insider on January 10, 2018, GlaxoSmithKline CEO Emma Walmsley also reiterated, for a future facing employer in an industry, D&I should be a priority corporate strategy – for aggressively modernizing the business.

D&I ‘may be most important in the health care industry’:

This has been well-articulated even in the Workforce – a multimedia publication, where it says: D&I ‘may be most important in the health care industry, where the workforce needs to be both business savvy and socially empathetic to serve their increasingly diverse communities.’

Quoting another CEO, a different article titled, ‘Diversity and inclusion in the pharma industry’, published in PMLiVE on June 27, 2018, emphasized: ‘The global Biopharma industry is one of the most powerful and important industries today, directly affecting the lives of billions of people around the world on a daily basis. In order to understand and meet the critical unmet medical needs of patients, the industry must represent the population it serves.’

D&I is a growth driver for an organization:

“Many successful companies regard D&I as a source of competitive advantage. For some, it’s a matter of social justice, corporate social responsibility, or even regulatory compliance. For others, it’s essential to their growth strategy.” This was highlighted in the January 2018 research paper of McKinsey titled, ‘Delivering through Diversity.’

The article further elaborates: ‘D&I is a powerful growth strategy for an organization because it creates ‘a diverse and inclusive employee base – with a range of approaches and perspectives – would be more competitive in a globalized economy.’

Importantly, this research established a statistically significant correlation between greater levels of diversity and inclusion in company leadership and a greater likelihood of outperforming the relevant industry peer group on a key financial performance measure – profitability.

Some drug companies are moving in this direction:

That some drug companies are gearing up to adopt this growth strategy, but still there is a lot of ground to cover in this area, gets reflected in the December 2018 ‘Diversity & Inclusion Benchmarking Survey’ of PwC. The survey included 183 corporate respondents from 5 regions and 15 countries. As many healthcare organizations have publicly declared their commitment to D&I, the study wanted to measure how they have translated strategy into execution and what impact it is leaving on the employee experience. The following are some of the key findings

  • While D&I is a stated value or priority area for 68 percent of organizations, only 51 percent of respondents disagree that diversity is a barrier to progression at their respective companies. Thus, ‘Diversity still remains a barrier to progression.’
  • Only 4 percent of healthcare organization’s D&I programs reach the highest level of maturity.
  • D&I program goals are quite varied. For about 38 percent it’s a way to attract and retain talent – 25 percent – a way to comply with legal requirements – 17 percent to achieve business results – 13 percent to enhance the external reputation and 8 percent to respond to customer expectations.
  • Interestingly, in 39 percent of cases there was no D&I program-leader in place, 32 percent cases the person reports to senior executives, 19 percent of cases the responsibility was assigned to staff with non-D&I responsibilities and only in 10 percent of cases – the leader is a peer to C-suite.
  • Only 29 percent leaders are tasked with specific D&I goals.

These may not be the points to cheer about – not yet, nonetheless, the survey findings send a clear signal about the beginning of D&I in the pharma industry.

Two facets of D&I for a pharma company:

As I said before, D&I is more important in the health care space, especially for drug companies, where the employees across the organization not just be business savvy with patient orientation, but also be inclusive and socially compassionate to benefit the diverse communities.Thus, there are two clear facets, I reckon, around which organizational D&I policies, especially for pharma players, should be formulated, as follows:

  • For employees within the organization.
  • For stakeholders outside the organization – putting patients at the core of the business strategy.

The above PwC survey is on the first one – D&I for employees within the organization. However, a holistic D&I policy requires dovetailing business savviness with a socially empathetic mindset to serve increasingly diverse communities, is even more challenging.

More challenging is dovetailing business savviness with social empathy: 

To serve increasingly diverse communities, dovetailing business savviness with socially empathetic mindset, appears to be more challenging for the pharma industry, in general. Its manifestations are varied, such as, dented image or its declining reputation – leading to trust deficit with many stakeholders, including patients. Likewise, one of primary causative factors that give rise to such manifestations is considered to be in the drug pricing area.

The current scenario in this area has been captured in a paper titled, ‘Curbing Unfair Drug Prices’, published by The Yale Global Health Justice Partnership (GHJP), Yale Law School, Yale School of Public Health, National Physicians Alliance and Universal Health Care Foundation of Connecticut. The article unambiguously states, the high cost of prescription drugs is unsustainable, wherever it is. Spending on prescription drugs is increasing, either for different payers, or directly to patients through ‘out of pocket’ expenditure – at a faster pace than any other component of health care spending. Consequently, it is forcing many patients to skip doses of critical medicines, and several others to choose between their health and necessities, like food and rent.

The paper adds: “Meanwhile, the pharmaceutical industry continues to launch new drugs at exorbitant prices, increase prices of many old drugs without justification, and reap record profits. Evidence has unequivocally shown that high drug prices are not linked to the actual costs of research, development and manufacturing. Instead, inflated drug prices are a result of drug manufacturers’ power to charge whatever price the market will bear. The need for legislative action is urgent.”

One of the most recent examples of such jaw-dropping drug price was reported by Reuters, along with many others, on May 25, 2019 as: “Swiss drug maker Novartis on Friday won U.S. approval for its gene therapy Zolgensma for spinal muscular atrophy (SMA), the leading genetic cause of death in infants and priced the one-time treatment at a record $2.125 million.”

That said, achieving this facet of D&I, is not just desirable, but also necessary to gain a sharp and well-differentiated competitive edge in sustainable financial performance. It is noteworthy that to be successful in this area, one of the key requirements is to assign specific accountability for D&I to that individual, where the bucks stop.

Assigning specific accountability for D&I implementation:

Yet another article titled, ‘Diversity and Inclusion: A Pharma 50 Perspective’, published in PharmExec on June 23, 2016, asserted that there is little point in tackling diversity without solving for inclusion.

It underlined: ‘Whereas diversity is the hardware bringing different machines together, inclusion is the software that brings the system to life.’ The authors suggested, as many others would: ‘Hiring a chief diversity officer can help, accelerating the process at the highest levels.’

Conclusion:

The good news is, the above McKinsey research study also found: ‘Corporate leaders increasingly accept the business imperative for D&I, and most wonder how to make it work for their firms and support their growth and value creation goals.’ The article reiterated the correlation between D&I and company financial performance. Thus, to effectively leverage this factor, developing a robust corporate D&I strategy aimed at both – the employees and the society, at large, appears to be the right choice.

From this perspective, a diverse and inclusive pool of employees, with varied range of approaches and perspectives are expected to meet both business expectations and the health needs of the society with more innovative ideas. Consequently, this deserves to be an organizational growth strategy, having a sharp competitive edge. It is mainly because, the initiative will uncover newer and unconventional pathways for providing greater access to affordable medicines, to save and improve the quality of many more lives. As the process rolls-out, it will keep gathering critical momentum, with support from all around and, more importantly, the enormous goodwill that the D&I strategy will attract from public, in general.

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.

Focus On Patient Compliance To Boost Pharma Sales…And More…

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One high-impact area in the healthcare space that often finds its place in the backseat is – patient noncompliance. A term that is commonly used in regard to ‘a patient who does not take a prescribed medication or follow a prescribed course of treatment.’ It comes with a steep price, for causing serious adverse impact not just on human health and health system, but also in the pharma business. Intriguingly, such incidents are still not scientifically monitored enough and vigorously acted upon, both globally and locally.

The World Health Organization (W.H.O) has also flagged it as a huge problem, as it reports, 10 percent to 25 percent of hospital and nursing home admissions result from patient noncompliance. Furthermore, about 50 percent of prescriptions filled for chronic diseases are not taken correctly, with 40 percent of patients not adhering to the treatment regimen.

In this article, just after giving a flavor to its financial cost to patients, I shall dwell mostly on its impact on the pharma players, as overcoming this important problem doesn’t generally fall in the area of strategic focus for most of them. Finally, I shall explore how drug manufacturers can translate this problem into an opportunity – as the third growth driver for business, creating a win-win situation for all.

Economic and health impact on patients:

Noncompliant patients suffering from both acute and chronic ailments, pay a heavy price, not just in terms of longer suffering arising out of complications, but also incurring significantly more health expenditure for treatment of the same diseases. According to IMS Institute for Healthcare Informatics, on average, less than 40 percent of patients around the world are fully complying with their treatment instructions.

Even in the Indian context, the problem is no different. Let me illustrate the point with the example of a chronic disease, such as Asthma. The article published on June 26, 2018 in ‘Lung India’ – the official publication of Indian Chest Society reported: “The mean annual direct costs among compliant and non-compliant patients were ₹14, 401 and ₹24, 407, respectively. Percentage of hospitalization was less among the compliant group (6 percent) when compared with noncompliant group (17 percent).”

The study concluded, asthma is not only associated with patient-specific impairment, but also creates a significant economic burden for the family and society. The major contributors to the burden are the medication cost and hospital admissions. Patient compliance with prescribed drugs can help keep asthma under control, thereby decreasing the economic burden and emergency hospital admissions – avoiding the economic risk from ill health with high out of pocket payments.  Productivity loss is another under-appreciated source of economic loss contributing to indirect cost. The rising costs of investigations, interventions, and treatment of chronic diseases further complicate the problem.

Economic impact on pharma business:

According to November 16, 2016 report, published by Capgemini and HealthPrize Technologies, globally, annual pharmaceutical revenue losses had increased from USD 564 billion in 2012 to USD 637 billion due to non-adherence to medications for chronic conditions. This works out to 59 percent of the USD 1.1 trillion in total global pharmaceutical revenue in 2015.

The report highlights, besides medication nonadherence being a serious global health issue that needs to be addressed immediately, it also happens to be a critical business issue for pharmaceutical companies. Thus, it is the only area of their business where a sharp strategic focus “can generate significant top – and bottom-line growth, improve outcomes, and create substantial savings for the healthcare system – all at the same time.”

Major reasons for patient noncompliance:

Several reasons are commonly attributed to patient-noncompliance to medicines, such as:

  • Lack of knowledge of its health and economic impact
  • Importance of completing the full-course of the drug and dosage regimen for long-term remission, following immediate relief
  • Untoward side-effects and other inconvenience
  • Forgetting therapy because of preoccupation
  • Financial inability to complete the prescribed treatment regimen due to the high cost of drugs.

Nevertheless, the 9th Edition of Global Research Report by Capgemini Consulting underscores that reality is more complex. Patient adherence initiatives, if any, when undertaken, even by pharma companies, often lack a thorough understanding of the root causes of discontinuing treatment and failure to effectively engage patients with a holistic approach to the issue. It also emphasizes: “Individual tactics are tried by different brands and then discontinued as budgets and priorities shift, before their impact is known. Successes are seldom pulled through and expanded across the organization.”

Using it as the third major growth drivers for pharma:

The two primary factors that drug manufacturers are leveraging to boost growth of the organization are:

A.  New product introduction – gradually extending to line extensions and new indications. One such illustration is the cholesterol-fighting drugLipitor of Pfizer. The lifetime sales of this brand as of the end third quarter 2017 generated a stunning USD 150.1 billion of business for the company. Incidentally, Lipitor patent expired in 2011. There are many similar examples, including Humira of AbbVie.

B.  Regular and hefty price increases for already marketed products, for various reasons, but almost regularly. According to this 2019 report, percentage price increases, on a huge base, of some of the world’s top pharma brands were as follows:

  • AbbVie: Humira, a blockbuster drug with USD 15 billion in sales in the first 9 months of 2018: +6.2%
  • Allergan: Many of its brand-name drugs, including dry-eye medication Restasis: +9.5%
  • Biogen: Multiple sclerosis drug Tecfidera: + 6%
  • Bristol-Myers Squibb: Eliquis, a drug that prevents blood clots and is on pace for USD 6 billion in sales in 2018: + 6%
  • Eli Lilly: Type 2 diabetes medication Jardiance: + 6%

Many studies have captured the importance of regular price increase, as a key pharma strategy, not only to drive the internal growth, but also to keep their investors, as well as, the stock market on the right side. There are examples that for some of the top global pharma players, this strategy was directly responsible for 100 percent of earnings-per-share growth in 2016, and more than 20 percent of the revenue made in the first three quarters of 2018.

On the other hand, some top analysts’ findings highlight that drug companies serious strategic focus just on the issue of patient noncompliance with novel tactical measures, could fetch as much as a 30 percent increase in annual earnings per share for many players, even in India.

This brings up to the point – can strategic focus to minimize patient’s non-compliance, supported by adequate resources, be the third growth driver for drug companies?

Can focus on patient noncompliance be the third growth driver for pharma?

For a moment, leaving aside the above two primary growth drivers, if we look at the estimates, as quoted above, well over 50 percent to 60 percent of a brand’s potential sales is wasted due to patient noncompliance. Isn’t it huge? Can this be ignored? Obviously not. Instead, why not pharma converts this problem into an opportunity, with a sharp strategic focus, leveraging technology.

Translating this potential opportunity into reality is neither very easy nor is every company’s cup of tea. But the reward for the winners is indeed phenomenal. To chart on this frontier, one of the toughest barriers, besides a winner’s mindset, is getting access to credible and meaningful patient-data, for various reasons. On the other hand, it isn’t an insurmountable problem, either – especially, with today’s rapidly progressing technology.

Some companies have started the long march:

According to the review article, published in the New England Journal of Medicine: ‘The ability of physicians, to recognize non-adherence is poor, and interventions to improve adherence have had mixed results. Furthermore, successful interventions generally are substantially complex and costly.’

Realizing that it as a potential opportunity – disguised as a problem, several pharma players have started thinking about exploring this not much charted territory, confirm reports coming from different countries of the world. To give an illustration, November 22, 2016 edition of Fierce Pharma reported: ‘Pharma companies have more recently joined the conversation with partnerships and programs that include adherence aims.’

It is generally believed today that rapid ascendency of modern technology, and its strong influence on people, will help create a new awareness of its current adverse impact both on patients and the drug companies.

What else could be done in a much wider scale?

Digital interventions, such as smartphone apps, are becoming an increasingly common way to support medication adherence and self-management of chronic conditions. In this regard, the May 14, 2018 study titled, ‘Smartphone apps for improving medication adherence in hypertension: patients’ perspectives’, published in the journal of Patient Preference and Adherence, concluded as follows:

‘These data showed that patients can identify the benefits of a medication reminder and recognize that self-monitoring their blood pressure could be empowering, in terms of their understanding of the condition and interactions with their general practitioners.’ But some loose knots are still to be tightened.

Tightening the loose knots:

Having leveraged the state of the part digital technologies to tighten the loose knots in this area,a host of AI-enabled smartphone health and diagnostic apps, capturing patient compliance details, especially in chronic disease areas, are fast coming up. Most of these are being developed by large, small and medium sized non-pharma pure tech companies, including startups. For example, according to reports: ‘With the release of the Apple Health Record and Apple Watch with a single-lead ECG, it’s evident that Apple has officially entered the healthcare space.’

A good number of these apps have received even the US-FDA approval, such as: MyDose Coach - a reliable dose calculating app for type 2 diabetic patients who take insulin once-daily in concert with physician guided insulin recommendations. Or, GoSpiro – a home spirometer, to measure air output from the lungs for COPD patients and connects wirelessly to provide hospital-quality data regarding breathing.

That many non-pharma entities are trying to create a space for themselves in a high-tech, but non-drug treatment segment within the pharma space, has prompted, several drug manufacturers to rewrite their marketing playbook, incorporating this ‘new notation’.

It’s real now…for some:

As the above Fierce Pharma article reported: ‘Pharma companies have more recently joined the conversation with partnerships and programs that include adherence aims; efforts from Verily and Sanofi and IBM and Novo Nordisk have recently made the news.’Further, on November 07, 2018, in another report it brings to the fore that Geisinger Health System has developed mobile apps to manage asthma with AstraZeneca, and a wearable app to manage pain with Purdue. It also joined forces with Merck to develop tools for patients and caregivers to improve care coordination and medication adherence.

Moreover, on February 09, 2019, Japanese drug major Astellas and WiserCare - a company that develops healthcare decision support solutions, announced a collaboration that includes improving patient adherence to care plans, and improve the overall care experience.

In tandem, concern on patients’ data privacy, may also now be addressed, possibly by making use of blockchain or similar technology for such initiatives, as I discussed earlier in this blog.

Conclusion:

‘Acquiring new customers is important, but retaining them accelerates profitable growth,’ is the theme of an article, published in Forbes on June 08, 2016. Therefore, just as any other business, this dictum applies to the pharma industry, as well, especially in context of patient noncompliance to medicines, with a clear strategic focus to minimize its impact on performance.

The major reasons for patient noncompliance ranges from ignorance of its adverse impact on health to side effects, forgetfulness and right up to inability to afford full-course of the prescribed drug treatment. Despite its continuity over decades, adversely impacting patients, health system and the pharma players, it won’t be prudent to infer that no attempt was being made in the past, to address this critical issue. Nevertheless, those measures have not worked, for many reasons, as we see today from various research studies in this area, even in the Indian context.

Once again, intervention of technology to make patients compliant to medicine, is showing promise for following it up more vigorously. That some global drug majors are entering into collaborative arrangements with non-pharma, technology companies of various sizes, sends a signal of the emergence of a third major growth driver for pharma, as discussed above.

This issue is so important, especially considering that the low hanging fruits of R&D have mostly been plucked, just as regular hefty increases of drug prices are meeting with tough resistance, squarely. In this scenario, a robust strategic focus on patient compliance would not only boost pharma sales but would also reduce the disease burden of a large section of people significantly. This will benefit all and harm – none.

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.

Adopt A Hybrid Business Model For Better Sales – Not A Large Field Force

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For aggressive business expansion or to attain greater market access, creating a large sales force has been the thumb rule in the pharma industry, since long. To meet the challenge of changing market dynamics, going for a thorough re-engineering of even a rattling sales and marketing machine, is still considered a risky proposition.

Many studies have captured the common reasons of such hesitations. For example, the McKinsey article titled, ‘Cutting sales costs, not revenues,’ finds that field force being a major growth engine for sales, since long, the thought of overhauling it fills senior executives with dread. Thus, to keep sales flowing, companies will make piecemeal ongoing repairs as long as they can – ‘no matter how patched up or spluttering that engine may be.’

Nevertheless, some compelling business reasons have now prompted several pharma players to accept the ground reality – fast-evolving over the last one and half decades. Many of them have realized that in today’s changing market dynamics, a leaner and smarter sales force (or field force or medical rep, or MR) will fetch the desired results than ‘flabby’ and larger ones.

In this article, I shall not discuss the obvious reasons of downsizing, such as to record profit under trying circumstances, or when per rep productivity keeps declining consistently, or during a change in the promoted product-mix, or a decision to reduce focus on volume intensive-low margin generic brands. But, what I shall discuss is, the reasons for an urgent need of creating a hybrid sales and marketing model, during this changing paradigm.  

It begins with accepting a change in the business environment: 

If the objective of sales force size reduction remains limited to cost-cutting for short-term improvement of the bottom-line, it could be grossly counterproductive, possibly with many unforeseen consequences. Field staff will continue to remain one of the key growth drivers in pharma and biotech business, but not the sole mechanism to increase brand prescriptions. Finding a well-integrated alternative model would begin with acceptance of a significant change in pharma business environment.

Undoubtedly, a perceptible change is noticeable today in pharma stakeholders’ mindset. This change is being further fueled by rapid increases in their usage of various digital platforms and networks. For example, many patients are trying to be reasonably informed of even various disease treatment options and the cost of each, much before they visit a doctor’s clinic or a hospital. The nature and quality of their interaction with health care providers, including doctors, are also changing. Patient-experience during a treatment process, and the value offerings that come with a pharma brand, will have increasing relevance to business performance – more than even before. Anything going against the patient-interest will possibly be shared with all, mostly in social media, which has a potential to precipitate serious consequences.

As this trend keeps going north, pharma market dynamics would change, commensurately, making pharma’s key business success factors significantly different with medical reps no longer being the sole prescription generators. A new hybrid – digitally empowered sales and marketing model is, therefore, the need of the hour. In this new ball game, as a growth driver, the role and size of the field staff will be quite different, where the senior management warrants a new vision for pharma business.

The situation warrants a new vision for pharma business:

In this changing situation, to generate more prescriptions from doctors by deploying a large field force, could prove akin to swimming against a strong tide. Whereas for achieving business success at this time, pharma players would require creating a well-oiled augmented value delivery system for enhanced customer experience, primarily for patients during their entire treatment process.

While creating this sleek and effective system, it would be necessary to cut unproductive or less productive flab in the frontline, with great precision. However, this process must be dovetailed with implementation of other communication and customer engagement platforms, mostly digital, to achieve the set objectives.

The new strategy being augmented value delivery to customers, the process would entail, besides innovative and modern tools, a different genre of field staff members, possessing some critical skill-sets. The goal of need-based field force downsizing complemented by new synchronous measures for operational synergy, must not only be clear to senior management, but also be explained to all concerned.

What would ‘augmented value delivery’ to customers lead to?

Another McKinsey article titled, ‘The few, the proud, the super-productive - how a smart field force can better drive sales,’ articulated: ‘Indeed, our perspective on the past five years is that leaders that used field reductions to actually rethink the commercial model – rather than taking a “blunt instrument” approach to cuts – are reaping rewards.’

As the current pharma sales and marketing models are undergoing a metamorphosis, globally – this transition phase throws several tough challenges – from defining new roles and capabilities for field staff to creative use of various interactive communication platforms.  As the McKinsey article underscores: ‘new capabilities need to be added even as we continue to use the tried and true current model, albeit with less success.  It further adds: ‘The inconvenient truth: we will have to sweat the current model and build the capabilities for the future in parallel. Those hoping for a ‘flip the switch’ transition, are likely to be disappointed.” With his, I reckon, will emerge a robust ‘augmented value delivery system’ for the business leading to:

  • Higher profitable sales through satisfied customers
  • Increase in sales per employee ratio
  • Containing/reducing sales and marketing spend as a percentage of total revenue.

Several initiatives to translate this concept into reality is now palpable, globally. A few examples may suffice to drive home this point.

Downsizing field force complemented by new measures for synergy pays:

Here also there are several research studies to bring home this point. One such is the paper titled, ‘Big pharma proves that oncology pays as workforces shrink,’ published in ’Vantage’ of Evaluate on July 23, 2018. The researchers touched upon this area while discussing the workforce productivity for Bristol-Myers Squibb (BMS). It found that a substantial shrinking of its workforce, alongside some other important measures, has given BMS a big boost in sales, with a dramatic impact on its overall performance. As the study indicated, even investors will find this fact hard to ignore. Let me hasten to add that ‘downsizing workforce’ mainly involved sales and R&D staff in this analysis.

The article further highlighted, during the period of 2007 to 20017, the management teams of some other pharma majors, as well, such as GlaxoSmithKline), AstraZeneca and Eli Lilly, either reduced their workforce significantly or kept flat. According to this study the changes in the workforce of these 4 companies are as follows:

Workforce Bristol-Myers Squibb GlaxoSmithKline AstraZeneca Eli Lilly
2007 42,000 103,483 67,400 40,600
2017 23,700 98,462 61,100 40,655

However, even in the year 10, all the four companies - Bristol-Myers Squibb, GlaxoSmithKline, AstraZeneca and Eli Lilly posted not just sales growth, bit all-round performance improvement, as may be seen by clicking on each.

Having deliberated on the impact of downsizing field force, let me now focus on powerful complementary measures for augmented value delivery to customers.

Today’s reality for pharma business in India can’t be wished away:

The EYstudy titled, ‘Reinventing pharma sales and marketing through digital in India,’ captures the current situation quite well. I am quoting below just a few of those:

  • Today’s tech-savvy physicians are relying far less on reps and more on digital devices for healthcare information. Only 11 percent of healthcare professionals in India prefer in-person visits from a company representative, according to a 2016 study by Health Link Dimensions. Likewise, many patients arming themselves with medical knowledge available online, gradually relying less on only physicians’ decision-making. Thus, the rules of engagement need to be redefined.
  • With a shift in focus toward more complex or specialty medicines, pharma companies continue to add new layers of MRs to increase geographic coverage. The increasing number of MRs and the number of brands under each of them have drastically reduced the time and quality of sales pitches – from being scientific to mere brand name reminders.
  • Physicians’ place at the center of the pharma ecosystem as almost the sole-decision makers, is very likely to become a thing of the past with the emergence of a broad array of customers with a new mindset.
  • New tech-based entrants providing information platforms, analytics, e-consultation services and access to medicine online are challenging pharma’s value creation story.

Enhancing customer experience needs a hybrid business model:

The new market dynamics, demands cutting-edge brand-value augmentation measures, enhancing customer-experience with some tangible benefits. These telltale signs can only be ignored at one’s own peril. Let me also illustrate this point with the findings from another research study.

According to 2015 Oncology Customer Experience Tracker of ZS, “Oncology companies can add USD 50 – USD 75 million in incremental sales for every USD 1 billion in current sales by delivering a better customer experience.”

This vindicates that creating a better customer experience should be the key goal of pharma’s augmented value delivery system – going much beyond the traditional communication of key product features and its clinical benefits. This new concept is fast emerging as the fulcrum – not just for creating a strong brand pull, but also enhancing the public image of the organization. And can be achieved with a right blend of:

  • ‘Must do’ mindset of top management,
  • Expertise in well-targeted – multi-channel content making,
  • Expertise on data-science and analytics to churn out the right information from a large pool of data,
  • Wherewithal for effectively using the right digital platforms, either directly to customers or through a leaner and digitally-skilled sales force having a ‘can do’ attitude, as the situation will demand.

Some companies are testing the water:

Conventional ways to improve Sales Force Effectiveness (SFE), especially with soft skills, besides, of course product knowledge, is not new to the pharma players. What they need to do is change the primary focus of increasing sales through delivering mostly the key intrinsic value of the brand, to increase profitable sales by delivering augmented brand value, leading to enhanced customer satisfaction.

This is a major shift from the traditional paradigm and would surely entail application of digital technology and data science. As I wrote before, many companies have started adopting this approach – mostly with one baby step at a time, right or wrong.

Observation and findings of an India specific study: 

Noting that ‘Indian pharma’s journey to a digital world has just begun,’ the same EYstudy, as quoted above, reported the following findings, among a few others:

  • Lack of a clear digital strategy/value proposition and change management are the two key barriers to embracing digital.
  • Whatever was being done manually earlier is now being done digitally. But we are not adding additional value. On the other hand, companies globally are now cautiously moving toward being digital practitioners.
  • Indian pharma majors will need to grow into integrated health care providers – offering both products and services, forging patient-centric partnerships and demonstrating value to a broad array of customer groups.

The good news is, some of the key observations of the study also include the following:

  • Some are using digital technology to capture untapped and unstructured data, to make their sales and marketing decision making process more agile and robust.
  • Powerful apps with dynamic, meaningful content and the right value proposition are gaining popularity.
  • Several players, while staying within the realms of regulatory boundaries, are enabling patients to actively manage their care. 

Conclusion:

As we look around, many drug companies, especially in India, continue to remain focused on the age-old transactional sales and marketing models, delivering the intrinsic brand values, irrespective of the changing pharma market dynamics, especially disregarding what today’s customers in the knowledge economy look for. Traditional training and incentivizing a large, and often flabby, sales force on product and rupee value territory-sales against the target, are the general ways to achieve these. The focus on achieving the internal sales targets, regardless of the processes being contentious or not.

Modern time warrants a different conversation altogether – creation of a unique customer experience – with augmented value delivery systems. Achieving this goal would entail astute applications of modern technology, complementing the reach and impact of the right-sized field staff efforts, and leading to improvement in ‘sales per employee ratio.’

Thus, I reckon, higher sales or the need for an expanded market access, may not necessarily entail a larger field force, but a new breed of leaner and especially skilled MR to deliver the needs of the changing healthcare landscape.

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.

How Creative Is Pharma Industry?

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“Because the purpose of business is to create a customer, the business enterprise has two – and only two – basic functions: marketing and innovation. Marketing and innovation produce results; all the rest are costs. Marketing is the distinguishing, unique function of the business,” said the management guru of all times – Peter Drucker, decades ago. He further added, “The aim of marketing is to know and understand the customer, so well the product or service fits him and sells itself.” What needs to be underscored in this visionary articulation of Drucker is, effective marketing should create such a strong pull for a product or service that renders hard selling less relevant.

The word ‘innovation’ is used frequently within the pharma industry, and more by the multi-national players on a specific context. The purpose is mainly to douse stakeholder concern on high prices of innovative drugs – building a narrative around expensive, complex and time-intensive drug innovation process. That said, just as creativity is necessary to discover new drugs, creative minds also help in effectively reducing the cost of innovation – creating more customers for the company.

Curiously, in this debate the other key business function – ‘marketing’, often takes a back seat, with its usage getting generally restricted to product features and benefits, including ‘freebies’ of various kinds. Neither is there any palpable effort to make the culture of ‘creativity’ and ‘innovation’ prevail across the organization, for overcoming several critical growth barriers that keep looming over all functional areas.

Is it happening because of a hubris, as it were, within the pharma and biotech industry? This article will try to figure out why this has been happening over decades and would also ponder whether the time is ripe for changing the charted path of the business model. For a clear understanding of all, let me start with the difference between creativity and innovation from the business perspective.

Creativity – a fundamental requirement in a business, is different from innovation:  

This was examined in the article titled, ‘The Importance of Creativity in Business,’ published by Northeastern University, Boston, Massachusetts, on November 09, 2017. It emphasized, although “creativity” and “innovation” are often used interchangeably, these are two separate concepts. “Creativity is different because it is a mechanism to being innovative. You can have great ideas, but not be innovative,” the paper underscored. It brought to the fore that ‘creativity’ – being the fundamental ingredient for being ‘innovative’, is essential in the highly competitive business environment. It fuels big ideas, challenges the employees’ way of thinking, and opens the door to new business opportunities.

The IBM study also confirms this fact:

The study titled, ‘‘Capitalizing on Complexity: Insights from the Global Chief Executive Officer Study,’ led by the IBM Institute for Business Value and IBM Strategy & Change, also confirmed the above fact. The study is the fourth edition of IBM’s biennial Global CEO Study series, involving more than 1,500 Chief Executive Officers from 60 countries and 33 industries worldwide.

The study reported, CEOs selected creativity as the most important leadership attribute and the number one factor for future business success. It added: ‘Creative leaders invite disruptive innovation, encourage others to drop outdated approaches and take balanced risks. They are open-minded and inventive in expanding their management and communication styles, particularly to engage with a new generation of employees, partners and customers.’ Importantly, ‘creativity’ ranked higher than rigor, management discipline, integrity or even vision, as each of these will require creativity. According to the study, successfully navigating through an increasing complex world of ‘accelerated industry transformation, growing volumes of data, rapidly evolving customer preferences, can be overcome by instilling ‘creativity’ throughout an organization.

‘Necessity is the mother of invention’ – does it apply to pharma, as well?  

In today’s complex business environment, pharma’s business challenges are spreading rapidly across many areas. Besides innovation of new drugs, following are four broad, but critical areas, where fostering of creativity, innovative thinking and invention of game changing ideas, across the organization, I reckon, can fetch a sustainable return, in a win-win way:

  • Intense ‘pricing pressure’ to make innovative drugs affordable for greater access to patients: Just as innovative ideas are of fundamental importance to develop new drugs; disruptive innovative ideas in this area, can help resolve this issue, effectively – not any incremental measure.
  • Declining corporate image and eroding public trust: Placing patients’ interest at the center of the business model, and then effective marketing of the same, can reverse this trend, with better business outcomes.
  • Lack of business transparency: Make business processes, including pricing, sales and marketing more transparent, by leveraging the power of data with modern technology.
  • Declining per dollar marketing productivity: Move away from the old and traditional business models to find a new pathway for success, using the process of simulation, on an ongoing basis.

While above are some of the pressing needs for steering the course of pharma and biotech industry, the business keeps charting the same patch, with a bit of tweaking, here or there. Thus, the good old saying – ‘necessity is the mother of invention,’ still doesn’t work in pharma.  The question, therefore, is why? We shall discuss it in just a bit. Before that, let me explore how creative the pharma industry, joining some critical dots.

How creative is pharma and biotech industry?

To explore this area, I shall try to touch upon the following two points:

  • Is there any perceptible financial impact on pharma sales revenue, net profit and gross operating margin, for not creatively resolving some critical growth barriers, as stated above?
  • Where does pharma and biotech industry stand in global ‘creativity ranking’?

For this purpose, when I look at the following four major areas, some interesting findings emerge:

  • Top 10 in sales revenue.
  • Top 10 in net profit
  • Average Gross and Operating Margin
  • Creativity ranking of some major pharma and biotech companies

Top 10 in sales revenue:

The overall sales revenue of the pharma/biotech companies remains healthy. On the face of it, there doesn’t seem to be any storm signal.  According to Market Research Reports, Inc. the top 10 companies on 2018 sales revenue, are as follows:

  1. Pfizer Inc.: USD 53.647 Billion
  2. Novartis AG: USD 51.90 Billion
  3. Roche Holding AG: USD 45.5896 Billion
  4. Johnson & Johnson: USD 40.734 Billion
  5. Sanofi S.A: USD 39.288 Billion
  6. Merck & Co., Inc.: USD 37.689 Billion
  7. AbbVie Inc.: USD 32.753 Billion
  8. Amgen: USD 23.7 Billion
  9. GSK: USD 22.968 Billion
  10. Bristol-Myers Squibb: USD 22.600 Billion 

Top 10 in net profit:

There isn’t any storm signal visible in this area, either, as it is seen in isolation. According to Statista, the 2018 ranking of the top 10 biotech and pharmaceutical companies worldwide, based on net income, as appeared in the Financial Times 2018 equity screener database, is as follows:

Rank

Company

Net income ($ Billion)

1.

Johnson & Johnson (USA)

15

2.

Novartis (Switzerland)

13.8

3.

Pfizer (USA)

11.9

4.

Roche (Switzerland)

10.5

5.

Amgen (USA)

8.5

6.

Gilead (USA)

7.7

7.

AbbVie USA)

6.8

8.

Novo Nordisk (Denmark)

6.0

9.

Bayer (Germany)

4.3

10.

Biogen (USA)

4.1

Let’s now look at the average gross and operating margin in the pharma and biotech industry.

Average Gross and operating Margin – still the best:  

This also looks healthy, as compared to others. According to the January 2018 study by New York University’s Stern School of Business, average gross margin of 481 biotech and 237 pharma and biotech companies was reported at 70.71 percent and 68.60 percent, respectively. And their operating margins were at 25.45 percent and 24.89 percent, severally – against 12.32 percent of all the 7209 companies surveyed.

Creativity ranking of some commonly known pharma and biotech companies:

Here there seems to be an issue. When I look at the 2018 Forbes list of ‘The World’s Most Innovative Companies,’ it will be challenging to find any of the above top names of the pharma and biotech companies within the Top 100 ranking. Just to illustrate the point, let me reproduce below some commonly known names of our industry:

Rank Company Country 12-month sales growth% Innovation Premium%
#7. Incyte USA 38.93 70.59
#14. Celltrion S. Korea 45.25 62.3
#16. Regeneron Pharmaceuticals USA 20.82 61.11
#17. Vertex Pharmaceuticals USA 46.2 60.93
#22. Alexion Pharmaceuticals USA 17.32 58.04
#82. Allergan Ireland 9.4 37.59

Some interesting possibilities:

The above data, points towards some interesting possibilities:

  • Because of its sales and profit margin remaining generally lucrative, the focus on innovation of most pharma and biotech companies, get restricted to new drug discovery and development processes.
  • Top management’s encouragement of creativity across all functions of the organization appears inadequate, to successfully navigate through the key growth barriers, to maintain future business sustainability.

But, some critical signals do indicate: ‘shape up or ship out’:

But the real picture isn’t as rosy. Analysis of some key trends does capture several critical storm signals for the industry According to the July 09, 2018 study of EY (Ernst and Young): ‘Margins of pharmaceutical companies are continuing to decline – the future lies in new ecosystems.’ It further indicated: Although the margins of the 21 largest pharmaceutical companies in the world are declining, the businesses ‘are still growing, thanks to blockbuster drugs and new active ingredients against cancer. 40 per cent of the active ingredients that are currently being developed worldwide are cancer drugs.’

The paper concluded, the future lies in designing completely new types of ecosystems and business models. With the aim of providing comprehensive support for healthcare customers, including patients. “Data-driven business models will permanently change the pharmaceutical industry,” the paper articulated. The study forecasted, ‘life Science startups will take over between 30 and 45 per cent of the market by 2030.’ Isn’t this a clear signal, especially for large and longtime pharma players to ‘shape up or ship out?’

Conclusion: 

Let me now revert to what Peter Drucker said on two basic functions of a business – Innovation and Marking. None can question pharma on its consistently bringing to market innovative drugs to effectively tackle many diseases, including complex and life-threatening ones. Given, that ongoing new drug development is the lifeblood of growth of pharma business. Nevertheless, that aspect of innovation is mostly perceived as an exclusive internal business value for most companies. The majority of stakeholders perceives the value of drug innovation as inclusive, when it is made accessible to a large population of patients at an affordable price, along with a decent Return on Investment (ROI) for the corporation. This expectation cannot be wished away. Instead, its core concept should drive the other basic function of business – marketing

This stage can be attained by building an innovative organization, fostering the culture and process of ‘creativity’ – across its functions. It is now a fundamental requirement for pharma and biotech companies. Beyond new product development, innovation immensely helps organizations navigating through strong headwinds to achieve its financial goals and objectives, in an inclusive manner. When IT – another knowledge industry, can reduce the cost of innovation through creative processes, across all functions, making its product and services affordable to a large population, e.g. Reliance Jio, why not Pharma? In that sense, I reckon, pharma and biotech companies are yet to become creative – in a holistic way.

By: Tapan J. Ray     

Disclaimer: The views/opinions expressed in this article are entirely my own, written in my individual and personal capacity. I do not represent any other person or organization for this opinion.

A New Pharma Marketing Combo Places Patients At The Center Of Business

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As discussed in several of my previous articles, most pharma players need to walk the talk on ‘patient-centricity’, coming out of prevailing high decibel lip-service. This is not an easy task, and far from being every company’s cup of tea.

Effective implementation of patient-centricity by an organization, entails understanding of behavioral science by today’s pharma marketers. Many of them, I am sure, have already studied it in Business Schools. Be that as it may, by harnessing this scientific knowledge, the insights that they will acquire on primary and secondary pharma customers, will be unique. The important cues that will come out of the insights, will help them create well- targeted strategic marketing game plans having a cutting-edge. When implemented on an ongoing basis, this will help catalyze a win-win business environment, for reaping a rich harvest over a long period of time.

In today’s article, I shall dwell on the increasing relevance of an interesting combo of behavioral science – predictive analytics and patient-centricity, for a sustainable business performance. This is especially for the millennial pharma marketers to try and implement. With blessings from the top management, this model will help them jettison – the increasingly counterproductive – ‘gratification model’ of pharma business, imbibing ‘patient-centric ones’ – that patients themselves can feel and will appreciate.

The basic requirements to make it happen:

The basic requirements of the pharma companies to make it happen is to gradually move away from its core strategy of ‘buying prescriptions’ that often happens through contentious means. No doubt, it has the power to create a temporary strong brand push. But is definitely not sustainable, as these usually go against patients’ health and economic interest.

For a sustainable demand for a pharma brand, pharma companies would need to design a strong ‘brand pull’ in the new paradigm. This would prompt drug companies acquiring deep insights on how to leave a cherishing treatment experience with the patients for the brand. This would, consequently, have a strong-positive rub-off effect on the corporate image, as well. Likewise, a doctor would also like to know, how to create similar patient-experience with his treatment, to draw more of them in the future. This is diametrically opposite to generation of demand for a brand through ‘payment to doctors for prescriptions.’

Pharma marketer’s understanding of behavioral science is necessary:

This is because, it helps to get targeted deep-stick studies done on the way pharma customers, such as doctors and patients, behave. The span of the behavioral study should commence from the onset of a patient’s search for a disease treatment process, right up to when the individual gets an ‘after treatment experience’ – good, bad or average. It is, therefore, necessary for a drug company, to become more patient-centric, rather than self-serving, for achieving the desired goals of pharma business, consistently.

This wisdom would enable pharma marketers developing the following five broad insights for being ‘patient-centric’:

  • Understanding the process of thinking of a type or a group of patients about making their treatment choices. It could often mean not going for any treatment at all, or not adhering to prescribed treatment.
  • What makes patients behave the way they do, while undergoing a treatment?
  • Understanding both mental and physical feelings of patients while suffering from certain disease conditions, for effective engagement with them.
  • What type of holistic treatment experience the patients would value most to cherish.
  • What type of treatment experience the doctors would value most to provide to patients to enhance their practice and professional reputation.

While doing so, pharma marketers would need to clearly harmonize the two areas – one pertaining to doctors, and the other involving patients. This is important for the purpose of a clear focus on a comprehensive brand strategy formulation, based on well-analyzed data.

The key point to note, however – a creative blend of behavioral science with new-age pharma marketing tools can bring a sea change in the business performance of a company, along with providing a delightful treatment experience to patients with its drugs.

Generation of a huge pool of customer behavioral data is the starting point:

The first step of making a patient-centric organization is the generation of a huge pool of data on customer-behavior dynamics. That said, making predictions on the company’s customer behavior for future outcomes of the brand performance, from this data pool, would involve the use data analytics, which for this purpose will be ‘predictive data analytics.’

The use of ‘predictive analytics’ in pharma marketing:

In my article titled, ‘Data: The New Magic Wand For Pharma Business Excellence’, published in this Blog on October 01, 2018, I discussed the importance of well targeted data-based decision-making process, across the pharma functional areas. Taking this idea forward, let me explain here the critical role that ‘predictive data analytics’ can play in acquiring insights of the trend of behavior of the customers, especially patients and doctors.

Simply put, ‘predictive analytics’ is a type of advanced analytics, which are used to get deep insights and making well-informed predictions, based on both past and current data feeds. In pharma, especially for the subject that I am discussing, it pertains to insights on doctor and patient behavior related predictions, encompassing the entire span of a disease treatment process. Skillfully executed, this will strengthen, at least, two critical success factors in the pharma business:

  • Acquiring predictable insights on the targeted customers’ behavioral trend and pattern any given time-frame.
  • With such customer insights making the organization ‘patient-centric’ for more effective engagement with its customers.

Combining the above two points, I can well say, by analyzing a huge pool of data from behavioral-science-based information – ‘predictive analytics’ helps acquire deep insights on predictable customer behavior, with high precision. These are so useful, not just for better engagement with doctors, patients and other stakeholders, but also in making the organization patient-centric, in true sense. Nevertheless, many still question - Is ‘patients centricity’ really feasible in the pharma industry?

Is ‘patient centricity’ really feasible in the pharma industry?

This question was also raised in the 2017 paper titled, “Patient Centricity and Pharmaceutical Companies: Is It Feasible?” -  published in Vol. 51(4) of the Therapeutic Innovation & Regulatory Science (TIRS). The paper captures patient-centricity as integrated measures for listening to and partnering with patients, and placing patients’ well-being at the core of all business initiatives. It represents a holistic approach to the disease management process.

The concept brand-oriented patient-centricity is not too difficult to understand. But, I reckon, the difficulty lies somewhere else. It is to fathom where and how a pharma player can predictably add differentiating value, for those patients who need a right kind of treatment. That’s why, the question of feasibility of ‘patient-centricity’ is being raised.

There is no doubt that such an effort presupposes considerable insights on patients’ behavior, alongside the requisite expertise to predict these, for different time-frames, with a great degree of precision. This not an insurmountable task, either, particularly in today’s paradigm – with state-of-the-art ‘predictive data analytic’ tools. This prompts me to believe, it is very much possible to make a truly patient centric organization, assuming that there will exist a strong will to survive in the business and prosper!

Are ‘predictive data analytics’ different from other analytics?

Yes, the following two key points make ‘predictive data analytics’ quite different from other data analytics:

  • General data analytics usually help acquire insights on the past and present.
  • Whereas, predictive data analytics help looking at near-mid and long-term future, regarding most probable customer behavior pattern and trend, with great accuracy.

Currently, with the ability to generate relevant and real-time big data pool, together with application of machine learning, data-mining and statistical modelling – predictive analytics have the power to help acquire future insights. This insight is totally data-based, sans any gut-feel. Thus, effective use of this process can enable pharma players effectively predict trends and behaviors of doctors and patients for meaningful engagement with them for their chosen brands.

Has potential to create a win-win outcome: 

To ensure a game-changing payback from this process, crafty dovetailing of the following three steps, complementing each other is critical:

  • Generate a huge pool of real-time data on doctors’ and patients’ behavior pattern, for a pre-selected time-frame.
  • With the knowledge of behavioral science, help analyze them with predictive analytics.
  • Understand from the results, the trend of behavioral dynamics of selected customers from the brand perspective.
  • Frame rewarding business strategies to create a win-win situation, involving both – the pharma players and the patients.

Some pharma players are on the ball:

One of the key reasons for imbibing patient-centricity, is the proliferation of ‘me-too’ types of brands – both patented and generics. It has started happening even in the market of high-priced oncology medicines, with not much difference in price between them.

In this situation, predictive data analytic tools can help understand multi-variable relationship between patient’s needs, their interaction with physicians, the oncologist’s prescriptions to them, type of physician-engagement of drug companies and patients’ experience before, during and after the treatment. This is not an easy task, nor all pharma companies have wherewithal of doing this, to gain brand market share, significantly.

With predictive data analytics, many pharma companies are keeping eyes on the ball, using it in different business areas, such as drug discovery. But not many of them, are using this combo-approach to make a patient-centric pharma organization. It is just a matter of time, I reckon, that global pharma will decide to move in this direction – fortified with deep pockets, but with a battered reputation, and facing a hostile pricing environment, across the world.    

Conclusion:

Customer insights, acquired through the crafty application of behavioral science, have immense potential to make sales and marketing decisions more informed, than what it is today. In tandem, it will help create a ‘worth remembering’ treatment experience for the patients with the brand used.

From this perspective, I reckon, skillful application of behavioral science to generate a huge pool of data, and their analysis with ‘predictive analytics’ will go a long way to create a truly ‘patient-centric’ organization.

When executed by a well-integrated expert team of market research, medical affairs and pharma marketing professionals, this new marketing-combo-approach has the potential to fetch a game-changing performance outcome, placing patients at the center of business. The net gain to the organization will be much more than the sum total of what each of these steps can ensue individually – remarkably enhancing corporate reputation, in tandem.

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.

Data: The New ‘Magic Wand’ For Pharma Business Excellence?

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Pharma companies focus more on defending their current practices, rather than doing things differently. A September 24, 2014 article by Bain & Company, titled ‘New Paths to Value Creation in Pharma’, made this observation.

This happens regardless of the credence that leaders who change too early, risk losing attractive cash flows from established business models, and those that move too late risk being disrupted by emerging competitors. However, analyzing the recent history, the authors observed that pharma leaders have more often erred on the side of holding on to old models for too long, leaving room for more aggressive players to disrupt them.

Analysis of the 10 companies in the above study also found: “With their sustained success, these companies refute the widely held assumption that serendipitous innovation is the key to success in pharma.” However, on the ground all 10 of these large global drug companies have prospered despite industry-wide trends such as declining R&D productivity and the demise of the primary care blockbuster model. The authors explained: “This is because they operate in a high-margin environment.”

Starting with this scenario, I shall submit in this article, why the importance of well targeted data-based decision-making process, across the pharma functional areas, is now more than ever before.

Rewriting notes in the business playbook, taking cue from new data:

Having charted in the high margin ambience, Big Pharma exhibit reluctance in recomposing notes in the business playbook, based on a new set of real-life data. This is essential for sustainable success in a fast-changing business, political and social environment. They keep maintaining a strong belief in what they have been believing, regardless of what a large volume of credible data overwhelmingly indicates. Ongoing near unanimity in their collective decision to further intensify expensive advocacy initiatives in the same direction, continues. Other pharma players follow the same course.

This vicious circle continues sans any positive outcome, neither for pharma, nor for the patients. Already dented reputation of the industry gets more dented. In my various articles in this blog, I deliberated on various areas that merit radical overhaul in the pharma business, including patient-centricity and transforming the business through digitalization.

Use of data and analytics leaves room for a huge improvement in pharma: 

Let me express upfront, I am not trying to say, in any way, that pharma companies, in general, are not making investments for customized data generation or in analytics for use in new drug discovery and development, aiming improved process productivity. But, in many other functional areas, such as drug marketing, stakeholder engagement or even in strategic corporate communication for greater effectiveness, usage of scalable data and modern analytics leave much room for improvement.

Quality of data-use – ‘the proof of the pudding is in the eating’: 

As the saying goes, the proof of the pudding is in the eating, let me give a couple of examples on the quality of data-use and their outcomes in the areas under discussion.

Sizeable data clearly establishes the wish of most stakeholders, including patients for transparency in drug pricing, alongside improved access to affordable medicines. However, Big Pharma and their associates trying to swim against the tide keep advocating how the expensive process of drug innovation merits high drug prices. Understandably, negative public perception towards the industry further intensifies. Assuming that data analytics are extensively put to use while developing such communication, can anyone possibly cite such efforts as examples of productive use data?

Similarly, if any pharma company, for example, Sanofi besides many others, claims that it aims at ‘promoting and sustaining ethics and integrity in all our activities’ and has developed a comprehensive body of policies and standards, to provide guidance on a range of challenges specific to pharma industry like anti-bribery. However, in practice, we hear and read, even very recently that ‘Sanofi to pay more than $25 million to resolve corruption charges’ and which is not a solitary instance, either. The question, therefore, surfaces, how can data play any role in the fight against corruption by uncovering, preventing and deterring corruption.

‘How data is changing the fight against corruption:’

There are many published research papers, which established that effective use of data can prevent such corruption, and surely in cases of alleged repeat or multiple offenders in the pharma industry. One such paper titled, ‘How data is changing the fight against corruption,’ published in the OECD Forum Network on February 13, 2018, also reconfirms this point. It says:Data – both big and open – is indeed changing the anti-corruption landscape, by uncovering, preventing and deterring corruption.

Is pharma leveraging the data power for holistic business success?

I am not sure, but available evidences suggest most of them are not – at least, aiming for holistic business success. This is because, in the pharma industry, including Big Pharma, as I wrotein the past, alleged corrupt practices are widespread and continue unabated. This is quite evident from the national and international business magazines and media reports, coming rather frequently. The Transparency International Report titled “Corruption in the pharmaceutical sector – Transparency International 2016”, discusses the raging issue across the various functions of many drug companies.

Besides pharma and biotech R&D, there are many other critical areas, where leveraging data power with expert application of analytics, pharma players can reap rich harvest in terms of sustainable long-term business growth. However, for that there are some prerequisites, like – an open mind, unbiased approach, a mindset to accept reality as they are, and then neutralize the unfavorable ones with cerebral power. Trying to rationalize what is not working makes the situation worse, more complex, creating stronger headwinds.

Many sources of data capturing, still limited usage:

There are many sources of abundant data availability of various kinds, for pharma players. However, targeted data gathering of scale and appropriate analysis of the same, still remain rather limited in pharma. For example, while marketing their brands, numerous drug players in India don’t venture going beyond limited sources for data capturing for broad analysis. Such data may usually include, syndicated retail and prescription audits, besides internal sales and marketing details together with associated expenses or productivity related statistics. Data mining for dip-stick analysis is done seldom, according to industry sources.

Additionally, there are copious others who operate predominantly on ‘gut feeling’ and hearsay, sans any customer related meaningful and real-time data. When we create hype on patient-centricity, and alongside witness the general outcomes of such approaches, it requires no rocket science to fathom how much intelligent data input has gone behind such strategies.

The present system itself generates an enormous amount of real-time data in various areas, though most are not effectively utilized for weighty payoff, especially in pharma. The ongoing process of data generation also includes, drug innovation initiatives, manufacturing, supply-chain, distributor–wholesaler-retailer activities, digital apps and different websites, besides scores of other sources. But, the information, as stated above, apparently, is hardly analyzed through analytics to obtain targeted strategic inputs. Leave aside, intelligent application of the same to scale newer heights of all-round business success.

Data generation for swimming against the tide of public perception:  

Although, it’s not yielding positive results, I understand, pharma keeps spending a lot, both at the company level or through their trade bodies, to rationalize what they want the stakeholders to believe. For example,’ drug price control limits access to drugs’. Various reports to this effect are made public and used for the aggressive advocacy campaigns, though hardly taken seriously by those who matter.

Any price control, I reckon, may not be supported in ordinary circumstances. However, drug price control has definitely helped India to improve access to drugs without impeding any reasonable growth of the industry. That 5 or 10-year CAGR of the drug industry comes in double digit, despite continuation of drug price control regime for the last 48 years, offers a testimony to this fact. It’s a different issue, though, that Indian public health care system remains in shamble, even in the present regime. The lackadaisical attitude of all governments on public health related areas, is held responsible for this failure.

Conclusion:

The bottom-line is, expensive data generation effort, when gets primarily driven by self-serving motives, becomes increasingly counterproductive, as cited above. More informed stakeholders of date, including patients, probably other than the stock markets, want to see pharma players more in sync with the ground realities, and are acting accordingly. Thus, for sustainable business success, saner senses should prevail to generate adequate amounts of credible and targeted data, analyze them properly through analytics and use these with cerebral power to create a win-win situation in the pharma business.

In my view, any comprehensive ‘Decision Support System’ of an organization should go beyond the generation of mammoth internal business-related data. It should be integrated with the same kind of targeted external data of scale, with the use of modern analytics. This needs to happen – both at the macro level – as an organization, and also at the micro level – with its various functions. The corporate illusion of always ‘operating in a high-margin environment’ in pharma, will not guarantee sustainable business success, any longer.

From this perspective, using well-integrated internal and external data as the bedrock of all strategic decisions in pharma, I reckon, would soon prove to be a ‘magic wand,’ as it were, for pharma business 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.