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Being Eclectic – A Pharma Leadership Quality In The New Normal

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It’s no-brainer that since the onset of Covid pandemic, digitalization initiative of many pharma companies in critical facets of business operations, has reached a new high. The process is now fast accelerating with the adoption of avant-garde ideas, and scalable digital tools and platforms. Some of these initiatives may be incremental in nature, but several others possess game changing potential in delivering business outcomes.

This period of transformation is also an opportune time for pharma leadership to be more eclectic, while working out strategies to gain business momentum – outpacing the competition. As is being revealed, strategic inputs from a diverse range of sources – often from totally different areas, to meet fast changing customer needs and expectations, would immensely help in the new normal.

In this article, I shall argue on the need of being eclectic for pharma leadership to gain competitive edge, especially in the trying times. I shall elaborate this point with the example of an eclectic idea – Gamification. If used where it ought to be, eclectic ideas may help organizations to successfully navigate through unprecedented disruptions, especially, caused by Covid pandemic, in various critical areas of pharma business.

Gamification – an eclectic strategic tool for pharma:

Gamification – an eclectic strategic tool, ‘incentivizes people’s engagement and activities to drive results with game-like mechanics.’ Various companies, across the industries, are leveraging this technique for greater effectiveness in different business domains. This includes, driving employee motivation for sustainable performance excellence.

I discussed ‘Gamification in Pharma’ in this blog – about a year before the onset of the pandemic. However, its potential is being increasingly realized with virtual engagement becoming more common during Covid pandemic. Several drug companies are now imbibing Gamification techniques to offer greater value in several areas of business. These include, among others, chronic disease management, adherence to the prescribed dosage regimen, and also for training and development.

The core purpose and value: 

The core purpose of Gamification is to effectively engage with both internal and external customers of an organization, with clearly captured details of their changing needs and expectations in the new normal. Game mechanics are basically the rules and rewards that build the foundation of game play. Game dynamics involve a set of emotions, behaviors and desires found in game mechanics that help foster engagement and motivate participants.

The broad process of Gamification entails integration of game mechanics on various existing platforms. These include, a website, online community, learning tools - providing target audiences with proactive directives and feedback through game mechanics that lead to the accomplishments of business goals and objectives.

According to BI Worldwide - a global engagement agency, ‘Gamification is about driving engagement to influence business results.’ When people participate and engage with gamification initiatives, they learn the best way to interact with the business, its products, services and in thereby in the brand building process.

It further says, the business value of Gamification doesn’t end with the participant. Engagement with game mechanics provides insightful data that can help influence marketing campaigns, platform utilization and performance goals. Every employee or customer interaction gives a better sense of where a participant is spending their time and what activities drive interest.

Application of ‘Gamification’ in pharma is a decade old now:

Gamification isn’t totally a new concept in the pharma industry. It was successfully tried by some pharma majors, at least, about a decade ago. Let me give below just a couple of examples from that period to get a feel of it:

Way back in 2011, Pfizer created the Back in Play game for European patients, to boost knowledge of ankylosing spondylitis, a disease that causes inflammation in the spine and pelvis joints. Interestingly, the game delivered a simple healthcare message to a notoriously difficult to reach audience 38 million times.

In 2012, Boehringer Ingelheim launched its pharma game – ‘Syrum’ on Facebook platform. This particular initiative is considered as an evolution in the pharma industry’s use of the social media platform. It gave the Company a new tool to educate and expand the knowledge of the general public about the challenges of its business. It also helped to improve disease awareness, besides allowing the company to conduct its market research.

Besides these two, other interesting Gamification initiatives taken around that period include, Zec Attack (Novartis), Silence Your Rooster (Sanofi).

Its potential in pharma marketing – and what to avoid:

Applying game mechanics to healthcare marketing could also help ensure that patients are activated, educated, and engaged throughout the duration of their care, driving both – business performance and patient outcomes. This observation was made in an article on ‘Gamification’, published in the Pharmaceutical Executive on February 28, 2019. Another article titled, ‘Gamification is Serious Business’ also reiterates, ‘Research and case studies from both the academic and healthcare space bring forth ample evidence that games can improve patient compliance and healthcare outcomes.’

However, if any pharma marketer enters into the gamification arena with greater focus on the desired outcome than on patient goals, or the games themselves don’t excite, engage, and motivate the users, the efforts may not succeed.

Gamified e-learning helps during Covid pandemic:

An interesting study on ‘The Impact of COVID-19 on Learning,’ conducted by find courses, noted some interesting points. A few of which, are as follows:

  • Covid pandemic is fueling an unprecedented interest and opportunity for many people to acquire more job knowledge and skills, mainly to protect their future in uncertain times.
  • In tandem, people’s priorities when it comes to learning are also changing. Health-safety being at the forefront of many learners’ minds, they prefer mostly online courses, or heavily reduced classroom sizes - to maintain social distancing.

It has also been noted that many such learners often find virtual learning programs uninteresting and lackluster. Sensing this issue, many organizations, which include some pharma companies, are now using Gamification to augment learning effectiveness and build greater team harmony. Let me illustrate this point with an example from the pharma industry during the ongoing pandemic.

It’s more relevant in the new normal:

On June 04, 2021, Fierce Pharma featured an article on Pharma companies’ getting into gaming to boost retention, recall – and fun. There, it quoted a top official of the global pharma major AbbVie, who said: “Gamification has become more important and more impactful in the virtual environment.”  The honcho further said: “The pandemic showed we need this now more than ever. – It’s given an extra push to what has always been core to what we do, which is retention and recall in a fun and engaging manner.”

The report elaborates, AbbVie Canada uses gamification to onboard new reps, district managers and brand managers as well as for national sales meetings. Instead of studying or reading up, AbbVie asks employees to do the advance work through gamification tasks and then follows with more tasks after the meetings to boost retention and recall.

The Global Healthcare Gamification Market Report 2021-2027, also vindicates this point. As it reported, utilization of new healthcare gamification applications based on mobile tablets and laptops, witnessed a good growth during Covid pandemic. It reported, ‘Healthcare Gamification Market’ is expected to reach US$35,982.7 million in 2027 from US$ 3,072.5 million in 2019 with an estimated CAGR of 36.2% from 2020-2027.

Gamification is now being used by pharma in India, as well:

Abbott India is using elements of gamification in its customer services through a: care program. As the company Press Release says: ‘This new healthcare service is designed with games, quizzes and recognition programs to support patients, doctors and pharmacists throughout the entire healthcare journey, from awareness and prevention to motivation to get and stay healthy.’

In India, since quite some time, many well-known non-pharma companies are successfully using gamification for employee engagement and hiring.

Conclusion:

Unprecedented disruptions caused by Covid pandemic have considerably impacted the business operations of virtually every industry in India – just as other nations, across the globe. Since the onset of the pandemic, non-covid related medical centers, fitness institutions or gyms remained shut. Getting F2F – in clinic or hospital care, especially for non-Covid patients were also challenging for several reasons, with virtual care being the only options for many.

Interestingly, with most interactions and engagements – including learning, training and development programs going virtual, ‘Gamification’ initiatives started gathering wind on the sail, in some of those areas. This happened mainly because, organizations, institutions and people were driven to look for digital and app-based solutions for all needs and necessities, for a sustainable progress in an uncertain future.

An article on gamification, published in the PharmaPhorum on March 21, 2021, reiterated the same. It said, “Gamification” – adding game-like elements into non-game or real-world settings – has become a popular concept in the pharmaceutical, healthcare, and event industries, especially as virtual engagement becomes more common during COVID-19.’

With diverse applications and approaches, Gamification is quickly becoming a promising tool in various areas of pharma service and operations. These include, patient adherence, chronic disease management, preventive medicine, rehabilitation, besides better customer engagement, medical education, training, hiring and more.

From this perspective, in my view, pharma leadership now needs to more eclectic, and try using methods and approaches, such as, ‘Gamification’ – drawn from various other disciplines, in pursuit of excellence in the new normal.

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.

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

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

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

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

Two opposing views:

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

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

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

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

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

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

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

Pharma marketers need to be eclectic:

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

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

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

Let me deliberate briefly on each of the above two.

The importance of establishing ‘emotional connects’ with customers:

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

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

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

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

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

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

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

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

When applied in the pharma perspective:

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

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

The name of the new game:

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

Developing a unique ‘Customer Value’ model:

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

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

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

Conclusion:

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

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

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

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

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

By: Tapan J. Ray   

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

 

Pharma R&D: Chasing A Rainbow To Replicate The Past

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Would future be always a replica of the past?

If the response is yes, the efforts of many global pharma players to replicate the successful Research and Development (R&D) models of long gone by days, would continue to be a grand success. The new drug pipeline would remain rich and sustainable. R&D costs would be increasingly more productive, with the rapid and more frequent churning out of blockbuster drugs, in various therapy areas.

However, an affirmative response to this question, if any, has to be necessarily supported by relevant credible data from independent sources.

Additionally, yet another equally critical query would surface. Why then the prices of newer innovative drugs have started going through the roof, with the rapid escalation of R&D expenses?

Thus, there is a need to ponder whether the continued hard effort by many large innovator companies in this direction is yielding the desired results or not.

In this article, I shall try to dwell on this issue with the most recent data available with us.

A new research report:                

A new research report of the Deloitte Center for Health Solutions titled, “Measuring the return from pharmaceutical innovation 2015: Transforming R&D returns in uncertain times” states that the R&D returns of major life sciences industry groups have fallen to their lowest point in 2015, since 2010. The report tracked and reviewed the estimated returns of 12 leading global life sciences companies.

Some of the data presented in this report would give an idea about the magnitude of current challenges in this space. Nevertheless, there could be a few rare and sporadic green shoots, which can also be cited to claim a revival in this area.

I am quoting below some key pharma R&D trends, for the period starting from 2010 to 2015, as illustrated in the Deloitte report:                      

A. Declining R&D productivity: 

Year R&D return (%)
2010 10.1
2011 7.6
2012 7.3
2013 4.8
2014 5.5
2015 4.2

B. Increasing drug development cost with decreasing estimated sales:

During 2010 to 2015 period, the average peak sales estimate per drug has fallen by 50 percent from US$ 816 million to US$416 million per year, while the development costs per drug, during the same period increased by 33 percent, from US$ 1.188 billion to US$ 1.576 billion.

C.  Smaller Companies showing better R&D productivity:

Between 2013-2015, relatively smaller companies showed better R&D productivity as follows:

  • Big companies: 5 percent
  • Mid to large cap companies: 17 percent

D. External innovation becoming increasingly more important:             

Again, mid to large cap companies opting for more external innovation are showing a higher proportion of late stage pipeline value, as below:

  • Big companies: 54 percent
  • Mid to large cap companies: 79 percent
A fear of failure?

The Deloitte report throws some light on the general stakeholders’ concerns about the exorbitantly high price fixation for innovative new drugs by the concerned companies, together with consequential macroeconomic pressures.

One of the key suggestions made in this report, is to increase the focus on reduction of R&D costs, while accelerating the new drug development timelines. I shall broach upon this point briefly just in a short while.

However, the stark reality today, the hard efforts still being made by many large global drug companies to almost replicate the old paradigm of highly productive pharma R&D, though with some tweaking here or there, are not yielding expected results. The return on R&D investments is sharply going south, as the new drug prices rocketing towards north.

Is it happening due to a paralyzing fear of failure, that moving out of the known and the traditional sphere of the new drug discovery models could impact the stock markets adversely, making the concerned CEOs operational environment too hot to bear?

Be that as it may, without venturing into the uncharted frontiers of the new drug discovery models, would it at all be possible to bring out such drugs at a reasonable affordable price to the patients, ever?

I have deliberated before, in this blog, some of the possible eclectic ways in this area, including in one of my very recent articles on January 4, 2016 titled, “2015: Pharma Industry Achieved Some, Could Achieve Some More”.

New innovative drugs evaluated over priced: 

Here, I would not quote the prices of Sovaldi and its ilk, which are known to many. I intend to give examples of just two other new drugs that have triggered significant interest as potential advances for the care of patients in two common disease areas, namely, asthma and diabetes. These two drugs are GlaxoSmithKline’s Nucala® (Mepolizumab) for Asthma and Novo Nordisk’s Tresiba® (Insulin Degludec) for Diabetes.

According a December 21, 2015 report of the ‘Institute for Clinical and Economic Review (ICER)’ of the United States:

“The annual price of mepolizumab would need to be discounted 63-76% to be better aligned with value to patients and the health system, while insulin degludec would need to be discounted less than 10% to do so.”

Thus, there has been a growing mismatch between the value that new innovative drugs, in general, offers to the patients and the price that the innovator companies fix for such drugs. This trend, if continues, would significantly limit patients’ access to new drugs, as the pharma players keep chasing disproportionately high profitability to increase their shareholder value.

External sourcing of R&D may not make new drugs affordable:

Taking a cue from the highly successful strategy of Gilead, especially what it has done with Sovaldi and Harvoni, if other major global pharma players’ also try to enrich their late stage new drug molecule pipeline from external sources, would that effectively resolve the core issue? 

In my view, this could possibly be one of the ways to contain R&D expenses and with much lesser risk, as suggested in the Deloitte report. However, I doubt, whether the same would effectively help bringing down the prices of newer innovative drugs, in tandem.

This is primarily because of the following contemporary example, that we now have with us.

Although the active compound that is used to manufacture Sovaldi, or for that matter even Harvoni, is not Gilead’s in-house discovery, the prices of these drugs have already gone through the roof. 

It is altogether a different matter that robust patent laws along with the Government vigilance on obnoxious drug pricing is gradually increasing in various countries. Some developed and developing markets of the world, including the Unites States and the United Kingdom, either already have or are now mulling for an effective counter check to irresponsible drug pricing, primarily by putting the ‘innovation’ bogey right at the very front.

In India, prompted by its robust patent law and to avoid any possibility of Compulsory Licensing (CL), Gilead ultimately decided to give Voluntary Licenses (CL) for Sovaldi to several Indian drug companies. These pharma players will manufacture the drug in India and market it in the country at a much lesser price.

A new cooperative effort for cancer drugs:

On January 11 2016, ‘The New York Times’ reported the formation of ‘National Immunotherapy Coalition (NIC)’. This is a cooperative effort by some leading global pharma companies to speed up the testing of new types of cancer drugs that harness the body’s immune system to battle tumors. The NIC will try to rapidly test various combinations of such drugs.

This is important, as many researchers believe that combinations of two or more drugs that engage different parts of the immune system might be effective for more patients than a single drug.

On the face of it, this initiative appears to be a step in the right direction and could make the cancer drugs more affordable to patients. However, only future will tell us whether it happens that way or not.

Conclusion:

Nevertheless, the bottom line is, to make the new innovative drugs available at an affordable price to patients, along with strict vigilance by the government bodies, the old and a traditional ball game of drug discovery has to change.

This would necessarily require fresh eyes, inquiring minds and high IQ brains that can bring forth at least significant eclectic changes, if not a disruptive innovation, in the new drug discovery and development process, across the world.

Otherwise, and especially when the low-hanging fruits of drug discovery have already been plucked, if the major global pharma players continue striving to replicate the grand old path of new drug discovery, the efforts could very likely be, and quite akin to, chasing a rainbow.

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.

Leading Through The Challenge Of Change: Is Pharma Leadership Too Archaic?

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A recent major global survey titled “Testing The Health Of The Pharmaceutical Industry” has revealed that a sizable majority of executives polled, though believe the sector is in good shape, are concerned of its reputation. Interestingly, 73 percent of respondents believe that pharma companies should become “Genuine Healthcare Providers”.

From many other reports, as well, one gets to know that the overall image of the global pharmaceutical industry, despite the high profile personas being on the saddle, is currently as good or as bad as the same of, say, Tobacco or Alcoholic beverages sectors. Lamentably, the common perception is that the industry is hugely self-serving, problem making, largely exploitative and mostly surreptitious in its dealings.

This perception prevails, despite the fact that pharma industry exists to help mankind fighting against diseases continuously, thus improving the quality of life, quite unlike the other two industries, as indicated above.

Media reports on ignoble acts of this otherwise noble industry keep coming in tidal waves regularly and unabated, from many parts of the world, the latest being the alleged mega bribery scandal involving the large global majors in China, besides many others.

While industry leadership is generally smooth articulators, ‘Talking the Talk’ and ‘Walking the Walk’ slogans in the frontiers of ethics, values and shared goals of many of these much reported companies, are probably used to run expensive global ‘Public Relations (PR)’ campaigns, lobbying and advocacy initiatives in the corridors of power.

What then could possibly be the reason of such perception gap that this great industry is allowing to increase, over a long period of time? Could it be that pharma collective leadership has not been able to adequately adapt itself with the demands of changing healthcare environment and the needs of various nations in this space, across the globe? Is the leadership, therefore, too archaic?

Is Pharma leadership too archaic?

In this context, an interesting article titled, “Healthcare Leadership Must Shift From Cottage Industry To Big Business”, published in one of the latest issues of Forbes, though deals with issues pertaining to the ‘Healthcare Industry’ in America, nevertheless makes some interesting observations, which are relevant to India as well, just as many other countries of the world.

It states that the ‘Healthcare Leadership’ has not kept up with the industry’s evolution to big business over the past 25-30 years – nor does it possess the required change management competencies to effectively lead and rapidly turn-around an adaptive healthcare business model.

As a result, unlike many other knowledge industries, pharma sector is still struggling hard to convert the tough environmental challenges into bright business opportunities.

Inward looking leadership?

From the available details, it appears that today, mostly inward looking pharma leadership tends to ignore the serious voices demanding access to medicines, especially for dreaded diseases, such as, Cancer. Instead of engaging with the stakeholders in search of a win-win solution, global pharma leadership apparently tries to unleash yet another barrage of mundane and arrogant arguments highlighting the importance of ‘Drug Innovation’ and hyping how expensive it is. The leaders do it either themselves or mostly through their own funded trade associations.

In tandem and unhesitatingly, the leadership and/or their lobbyists reportedly exert all types of pressures even to get the relevant laws of sovereign countries amended or framed to further their business interests. The leadership continues to demonstrate its insensitivity to the concerns of a vast majority of patients, other stakeholders and their respective governments, further reinforcing its self-serving image.

Does anyone really talk against ‘Drug Innovation’?

The moot question, therefore, is: Why is this hype? Who on earth really talks against drug innovation? None, I reckon. On the contrary, drug innovation is considered by all as absolutely fundamental in the continuous combat of mankind against a galore of ailments. It should certainly be encouraged, protected and rewarded all the way, following a win-win pathway for providing access to these innovative drugs for all. There is no question about and no qualms on it.

Insensitive comments do matter:

Insensitive comments from the leadership further widens the perception gap. Let me give two examples:

I. Recently while justifying the price of US$ 1000/tab of the Hepatitis C drug Sovaldi of Gilead, the CEO of Sanofi reportedly highlighted, “Unprecedented innovation comes at a price.” This is of course true, but at what price…US$ 1000/tablet? If this comment is not insensitive and outrageous, does it at least not smack of arrogance?

II. Another such insensitivity was expressed through reported proclamation in public of the Global CEO of Bayer, not so long ago, which clarified that: “Bayer didn’t develop its cancer drug, Nexavar (sorafenib) for India but for Western Patients that can afford it.” Incidentally, the above comment came from the same Bayer whose research chemists synthesized Prontosil, the first antibiotic, in 1932, more than a decade before penicillin became commercially available. Prontosil and subsequent “Sulfa” drugs – the first chemicals used to treat bacterial infections, ushered in a new era for medicine, saving millions of lives of patients globally. At that time, the then Bayer CEO probably did not say that Prontosil was developed “just for the Western Patients that can afford it.”

‘Inclusive Innovation’ for greater access:

Any innovation has to have an impact on life or life-style, depending on its type. Each innovation has a target group and to be meaningful, this group has to have access to the innovative product.

So far as drugs and pharmaceuticals are concerned, the target group for innovation is predominantly the human beings at large. Thus, to make the drug innovation meaningful, the new medicines should be made accessible to all patients across the globe, with social equity, as per the healthcare environment of each country. This underscores the point that drug innovations would have to be inclusive to make meaningful impacts on lives.

New age pharma leadership should find out ways through stakeholder engagement that innovative drugs are made accessible to majority of the patients and not just to a privileged few…fixing a price tag such as US$ 1000/tab for Sovaldi, Sanofi CEO’s above comment notwithstanding.

Leadership lessons to learn from other industries:

Traditional pharma leadership has still got a lot to learn from other industries too. For example, to speed up development of electric cars by all manufacturers, the Co-Founder and Chief Executive Officer Elon Musk of Tesla Motors has reportedly decided to share its patents under ‘Open Source’ sharing of technologies with all others. Elon Musk further reiterated:

“If we clear a path to the creation of compelling electric vehicles, but then lay Intellectual property (IP) landmines behind us to inhibit others, we are acting in a manner contrary to that goal.”

In the important ‘green’ automobile space, this is indeed a gutsy and exemplary decision to underscore Tesla Motor’s concern on global warming.

Why such type of leadership is so rare in the global pharma world? Besides some tokenisms, why the global pharma leaders are not taking similar large scale initiatives for drug innovation, especially in the areas of dreaded and difficult diseases, such as, Cancer, Alzheimer’s, Multiple Sclerosis and Metabolic disorders, just to name a few?

Finding cost-effective ways for even ‘Unprecedented’ drug innovation:

Taking a lesson from the Tesla example and also from my earlier blog post, ‘Open Source’ model of drug discovery, would be quite appropriate in the current scenario not just to promote more innovative and intensive approaches in the drug discovery process, but also to improve profit.

According to available reports, one of the key advantages of the ‘Open Source’ model would be substantial reduction of cost even for ‘Unprecedented’ innovations, besides minimizing the high cost of failures of several R&D projects. These, coupled with significant savings in time, would immensely reduce ‘mind-to-market’ span of innovative drugs in various disease areas, making these medicines accessible to many more patients and the innovation inclusive.

Indian Pharma – promoter driven leadership:

Back home in India, fast growing India Pharma businesses predominantly consist of generic drugs and are family owned. A 2011 study conducted by ‘ASK Investment Managers’ reported, “Family Owned Businesses (FOB)” account for 60 percent of market cap among the top 500 companies in India and comprise 17 percent of the IT Industry, 10 percent of refineries, 7 percent of automobiles and 6 percent of telecom, in the country. In the domestic pharmaceutical sector, almost hundred percent of the companies are currently family owned and run, barring a few loss making Public Sector Units (PSUs).

As most of these companies started showing significant growth only after 1970, we usually see the first or second-generation entrepreneurs in these family run businesses, where the owners are also the business leaders, irrespective of size and scale of operations.

However, it is unlikely that the pharma business owners in India would be willing, just yet, to go for a regime change by hiring professional leaders at the helm of a business, like what the IT giant Infosys announced the week last or Cipla did sometime back. Nevertheless, they all should, at least, attune themselves with the mindset of the new age pharma leaders to reap a rich harvest out of the opportunities, at times veiled as threats.

New leadership to be ethically grounded and engage everyone:

Unlike what is happening with the current pharma leadership today, the new age leadership needs to be ethically grounded and engage all stakeholders effectively in a transparent manner with impeccable governance.

Quoting Dr. Michael Soman, President/Chief Medical Executive of Group Health Physicians, the above Forbes article states that in the new age healthcare leadership model, the leader may not have to have all of the answers to all the problems, but he would always have a clear vision of where we wants to lead the company to.

This new leadership should create a glorious future of the pharma industry together with all other stakeholders by asking: “How can we all be part of healthcare solutions?”

Conclusion:

Unfortunately, despite so much of good work done by the pharmaceutical industry in various fields across the world, including in India, the general public perception on the leadership of the pharma world, is still very negative for various reasons. Pharma industry also knows it well.

Thus, around the close of 2007, the Chairman of Eli Lilly reportedly said publicly what many industry observers have been saying privately for some time. He said: “I think the industry is doomed, if we don’t change”.

The available statistics also paints a grim picture of the traditional big pharma business model going from blockbuster to bust with the mindset of the leadership, by and large, remaining unchanged, barring some cosmetic touch-ups here or there.

The old business model – sprawling organizations, enormous capital investments, and spiraling costs, underwritten by a steady stream of multibillion blockbuster products – is simply a pipe dream today.

Has anything much changed even thereafter? May be not. Thus, to meet the new challenge of change in the healthcare space, doesn’t the new age pharma leadership still look too archaic, at least, in its mindset and governance pattern?

Is it, therefore, not high time for them to come out of the ‘Ostrich Mode’ collectively, face the demanding environmental needs squarely as they are, try to be a part of healthcare solutions of a nation in a win-win way and avoid being perceived as a part of the problem?

Effective leadership learning process has always been eclectic, borrowing ideas and experiences from other disciplines. In case of pharma, it could well be from other knowledge industries, such as, Information Technology (IT), Telecommunications etc. But change it must. Not just for business growth creating shareholders’ value, but for long-term survival too, basking in glory.

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.