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Is Pharma Industry A Late Learner, Always?

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Several upcoming concepts in the pharmaceutical industry are becoming buzzwords today. But, most of these were recommended by stalwarts several decades ago. Interestingly, the prevailing scenario is no different, even related to wide-scale adoption of a number of cutting-edge technologies, to squarely face the ongoing challenge of changing market dynamics. Various studies point out that other industries are making transformative use of these – to be on the same page with their customers, much faster.

Pharma is considered to be a late entrant in the digital space, too. It’s still not quite clear to many, the extent by which ‘Digitalization’ is transforming the way pharma industry functions – aiming at unleashing huge opportunities for value creation – from supply chain to manufacturing – right up to creating a unique customer experience. As this subject was well deliberated in the August 2016 article on McKinsey Digital, I am not going to delve into that area today.

Therefore, the question that comes up: Is pharma industry, in general, a late learner – always, to be in sync with its contemporary customers? For exploring this point, I shall focus mainly on four areas of current hypes in the pharma business, namely - ‘patient empowerment’, ‘patient-centricity’, ‘customer experience’ and ‘E-Patients’.

In this article, I shall dwell on this subject, ferreting out some critical recent findings on the relevance of these not so recent concepts in today’s perspective. Let me start by diving deep into the time capsule.

How old are these concepts?

Industry watchers may know that these are not new concepts, in any way. The relevance of ‘patient empowerment’, ‘patient-centricity’, ‘customer experience’ and ‘E-Patients’ in the drug industry has not unfolded today, neither are these new ideas. The American medical doctor - Thomas William ”Tom” Ferguson (July 8, 1943 – April 14, 2006) was an early advocate for ‘patient empowerment’.

Since 1975: “He urged patients to educate themselves and share knowledge with one another and urged doctors to collaborate with patients rather than command them. Predicting the Internet’s potential for disseminating medical information long before it became a familiar conduit, he was an early proponent of its use, terming laymen who did so – ‘E-Patients‘.”  

Technology follows a concept and not vice versa:

With ‘E-Patient’ terminology, Dr. Thomas Ferguson talked about empowered, engaged, equipped and enabled patients. I reckon, even after close to 45 years, most of the drug industry, is still not quite there – ‘Digitalization’ initiatives notwithstanding. This is because, technology follows a concept and not vice versa.

Why it’s so?

I reckon, this is primarily because, many stakeholders often don’t pay much importance to a critical fact, which is: ‘Patient expectations and needs can differ considerably from the aims and objectives of health care providers, at both the policy and delivery levels,’ and also by many drug companies. Still, most of these entities are yet to lap up this concept.

Is reviving focus on ‘Patient Centricity’ a realistic proposition today?

Several studies in this area have concluded, to be accepted by patients, the patient experience should be the key driver for the development of solutions.’ These include, medicines, devices, information, support programs and even digital apps. Among many others, one such study was published on March 28, 2017, in the SAGE Journals, titled, ‘Patient Centricity and Pharmaceutical Companies: Is It Feasible?’

The basic question of its feasibility would prompt: ‘Would this approach help pharma players to make enough profit with the drugs?’ While addressing this query, the researchers put across the following points that need to be seriously reflected on:

  • Profit is necessary. But, how drug companies make and use business ‘profit’ is more important for long-term business sustainability.
  • It requires a clear vision at the top of creating and delivering ‘customer value’ as patients will perceive, followed by a robust assertion of ‘Patient Centricity’ across the business domains.
  • This will help break out of the cycle of “recover costs of R&D – make a profit – invest in new drugs – make more profit.” The new ball game will be – profit through customer satisfaction – invest in new drugs for greater ‘customer value and more customer satisfaction’
  • Such commitments, in turn, will help generate not just reasonable profit, but credibility with external stakeholders – such as, patients, regulators, media, etc. – creating an invaluable reputation for the organization, as a future growth booster.

Since old practices have continued for very long, virtually unchanged, a legacy factor has now crept into the system, mostly as a retarding force.

A legacy issue to overcome:

As the above research article underscores: ‘Historically, the pharmaceutical industry’s role has been to develop the science and medicines for prevention or treatment of disease.’ Whereas, ‘Patient Centricity’ involves patients as stakeholders in this scientific process. It calls for an innovative mindset, whereby ‘the industry is challenged to engage and collaborate with patients when deciding the best course of action.’ This need is now palpable within the industry, at the long last. 

Palpable needs for a new focus on designing ‘healthcare solutions’:

With the shift in the environment around the industry and its stakeholders, including patients, are feeling the need to ferret out some old classic concepts for a new focus in designing various ‘healthcare solutions.’ For this purpose, as the above research article reiterated, a better understanding of ‘patient experience’ at critical points, in the course of the diagnosis and treatment of the disease, would help designing more effective ‘health care solutions’ for better patient outcomes.

The commercial necessity for better patient outcomes, merits ‘Patient Centricity’ at the core of the pharma business model, which, in turn, calls for a shift in the cultural mindset within the pharmaceutical industry. Such a shift would involve, among others:

  • Redefining the core strategy, organizational structure, processes and capabilities to focus on transparency and value creation for the patient.
  • A change from a disease-centered to a patient-centered strategy, and from a product-led to a patient-led development process.
  • Listening to and partnering with patients, and understanding the patient perspective, rather than simply inserting patient views into the established process.

Therefore, ‘patient-centric’ initiatives of any company should begin with the basic question: how can the company make a difference for patients?

The new realization: Compete better to win, neutralizing healthcare consumerism:

To better compete and win even in the midst of evolving healthcare consumerism, instead of adding fuel to it around the world, including India, a new book – ‘Making the Healthcare Shift: The Transformation to Consumer-Centricity,’ brings some contemporary ideas where, again, many old ideas seems to have been tested with a new perspective.

Interestingly, the content of this book is based on over 60 executive interviews with the biggest names in healthcare and a quantitative research study. Some of these names include leading academic institutions, such as, the Mayo Clinic, USCF Medical Center; big drug companies like Pfizer, Lilly and Novartis. The book reveals, while healthcare organizations have recognized the need to change to ‘Patient Centricity, they often don’t know where or how to begin.

To help healthcare organizations reinvent how even traditional pharma players engage with consumers in the new paradigm, the authors identify five shifts that pharma players can make to better compete and win in this evolving landscape of healthcare consumerism. 

Need to ‘reinvent the wheel’, is more than ever before!

To ascertain the above point, I shall paraphrase just a few – ‘Patient-Centric’ and ‘Customer Experience’ related areas of the book along with my own views to help you to come to your own logical conclusion:

  • To provide a holistic disease treatment solution, keeping the patients engaged along the entire journey in the disease treatment process, pharma players should bring ‘consumer experience’ at the core of the business model. As I also deliberated in this blog that: ‘Enhancing End-To-End Customer Experience’ is, therefore, considered by many astute pharma marketers, as a vital ingredient of pharma brand building exercise. In that article, I articulated, such initiatives should cover, all the ‘’touchpoints’ and ‘episodes.’ Where ‘touchpoints’ are spots of contact or interaction and ‘episodes’ focus on end-to-end design of a specific customer-need for an organization. Aligning management and the front line around the customer experience, is critical.
  • As things stand today, the entire journey through the disease diagnosis and treatment process, in the current healthcare ecosystem, remains fragmented. Mostly because, it involves many ‘touchpoints’ and ‘episodes,’ comprising of different health care entities. Providers’ inefficiencies, of various types, encountered by patients at different points of this journey often lead to their frustration, causing an unpleasant ‘customer experience.’ To achieve this objective, by effectively addressing the aforesaid common denominator for all – ‘Patient-Centricity,’ is of paramount importance. This entails, as stated before, integrated measures for listening to and partnering with patients, alongside, placing patients’ well-being at the core of all healthcare business initiatives. From this perspective, ‘patient-centricity’ based on customer insights,represents a holistic approach to provide the disease management solutions.
  • With rapid advancement in medical science, culminating into several breakthrough innovations, the world has stepped into a new era of disease treatment solution. Increasingly, ‘one size fits all’ type of population-centric treatment, is giving away a sizeable space for a new ‘patient-centric’ variety of the same. Moving towards this direction would necessitate pharma players, along with all health care organizations to acquire a deep insight on patients. The acquired insights must be based on in-depth analysis of a robust and contemporary sets of data, including demography, attitude towards health, treatment needs and preferred options available to the targeted audience.

This brings me back to where I started from. Dr. Thomas William ”Tom” Ferguson and maybe several others, as well, had recommended similar approaches over four and a half decade ago. We did not learn it then. But, while fighting against all odds, as the industry has been facing over some time, some companies are feeling the need of learning it now. Better late than never!

Conclusion:

It has been universally accepted that market dynamics keep changing in all industries, may be faster in some than others. Looking back, one can sense similar ongoing changes both within the pharma industry and the business and social and cultural environments outside, especially related to its stakeholders. When faster, proactive changes take place within the industry than outside, it delights the customers. Similarly, faster changes in the outside environment that industry fails to keep pace with – deliberately or otherwise, will invite strong headwind impeding growth of the business and even denting its reputation. Although, the former one is desirable, the latter prevails in most areas of pharma business. A Working Paper of the Harvard Business School wanted to understand ‘How do organizations learn?’ It found, among others:

  • Performance outcomes can be augmented, if one deliberately focuses on learning from experience accumulated in the past.
  • The competitive advantage of firms critically depends on the skills of individual contributors. Hence, the centrality of individual and organizational learning is a critical factor for competitiveness of any organization.

This brings us to the question, what is a learning organization. From many similar definitions of the same, let me quote the following one, as it is apt, simple and old enough for all to have learned: “A Learning Organization is the term given to a company that facilitates the learning of its members and continuously transforms itself.” (M. Pedler, J. Burgoyne and T. Boydell, 1997)

Keeping today’s deliberation in perspective, one may possibly conclude, quick individual learners, including the organizations, can offer better performance outcomes than late learners. As the pharma business is encountering a strong headwind for quite some time, it is up to the readers making out, what type of learner the industry, in general, is, and more importantly, why it is so?

By: Tapan J. Ray   

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

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

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

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

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

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

Not a solitary finding:

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

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

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

Enhancing customer experience in pharma brand building:

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

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

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

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

Units of ‘customer experience’ management:

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

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

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

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

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

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

Focus areas to create an exemplary customer experience:

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

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

Conclusion:

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

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

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

By: Tapan J. Ray  

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