Tag Archives: marketing

Are Indian patients victims of “unnecessary tests and procedures, rewards for referrals and irrational use of drugs?” A perspective

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Since quite some time, serious concerns have been expressed by the media, government and the civil society at large about the means adopted by the pharmaceutical industry in general to get their respective brands prescribed by the doctors and why do some of the doctors prescribe what they prescribe to the patients out of multiple available choices.
The MCI Guidelines:
Being concerned mainly by the media outcry, the Medical Council of India (MCI), a year ago, amended their related guidelines for the doctor, clearly articulating what they can and cannot do during their interaction and transaction with the pharmaceutical and related industries.
The Ministry of Health believes that these guidelines, if strictly enforced, would severely limit what the doctors can receive from the pharmaceutical companies in terms of free gifts of wide ranging financial values, entertainments, free visits to exotic locations under various commercial reasons, lavish lunch and dinner etc. in exchange of prescribing specific brands of the concerned companies more…more…and more.
“The Lancet” report:
Let me now combine this scenario with a recent report on India dated January 11, 2011, published in ‘The Lancet’, which states in a similar, though not the same context, as follows:
1. “Reported problems (which patients face while getting treated at a private doctor’s clinic) include unnecessary tests and procedures, rewards for referrals, lack of quality standards and irrational use of injection and drugs. Since no national regulations exist for provider standards and treatment protocols for healthcare, over diagnosis, over treatment and maltreatment are common.”
2. “Most people accessed private providers for outpatient care – 78% in rural areas and 81% in urban areas.”
3. “India’s private expenditure of nearly 80% of total expenditure on health was much higher than that in China, Sri Lanka and Thailand.”
Considering the above three critical issues of India, as reported by ‘The Lancet’, the need to follow a transparent code of pharmaceutical marketing practices by the entire pharmaceutical industry is of utmost importance. Recently amended MCI guidelines for the doctors are welcome steps in the right direction.
Are patients just the pawns?
In the absence of all these, the patients of all socio-economic strata will continue to be exploited as pawns by some unscrupulous healthcare players to satisfy their raw greed for making fast bucks at the cost of the intense agony of the ailing patients and their near and dear ones.
As stated earlier, this phenomenon is not new at all. Over a period of time, many stakeholders of the pharmaceutical industry and the public at large have been raising the issue of physicians being influenced in their prescription decisions by various types of payments made to them by the pharmaceutical companies. Such types of significant and seemingly avoidable expenditures, presumed to be considered by the respective companies as a part of their ‘marketing costs’, are believed to be included in the maximum retail price (MRP) of medicines, making them more expensive to the patients.
On the other hand, most physicians believe that free entertainment, gifts, their travel costs and seminar sponsorships in no way influence their prescription decision for the patients.
This is not a just India specific issue. Some skeptics believe that it has now become an all pervasive global scandal.
Self-regulation by the industry is most desirable:
To address this issue effectively, some national and international pharmaceutical associations have come out with their own codes of ethical marketing practices along with appropriate stakeholder grievance redressal mechanism, effectively.
Despite all these, it is an undeniable fact that overall perceptual image of the pharmaceutical industry in this respect to the stakeholders, in general, is not as good as it should have been.
The Government intervened in India:
Being alarmed by various media reports on the alleged pharmaceutical marketing (mal) practices in the country, the Department of Pharmaceutical (DoP) had advised the pharmaceutical industry to develop an ‘Uniform Code of Marketing Practices (UCMP)’, which will be applicable to the entire pharmaceutical industry in India.
It has been reported that the said UCMP with its stakeholder grievance redressal mechanism in a transparent procedural format, was submitted to the government by the major pharmaceutical industry associations in India. However, because of dissent of some section of the industry, the UCMP has not received the ‘green signal’ of the government, as yet. It was expected that all stakeholders will help maintaining the sanctity of the UCMP to address this sensitive global and local issue, effectively.
An emerging trend of public disclosure:
Around third quarter of 2008, in an industry first step, Eli Lilly announced its intent of full disclosure of payments that the company made to the physicians for various commercial reasons. Eli Lilly indicated disclosure of payments of more than US $500 to the physicians for advice and speaking at the seminars. Over a period of time, the company indicated that it will expand such disclosure to include other forms of payments to the physicians like gifts, various entertainment and travel.
Eli Lilly was soon followed in this direction by global pharmaceutical majors like, Merck and GlaxoSmithKline (GSK).
However, in India, such instances have not been reported, as yet.
Skepticism with voluntary disclosure:
Some are still skeptical about announcements of such ‘voluntary disclosure of payment to the physicians’ by the global pharmaceutical majors to bring in better transparency in the functioning of the industry.

This section of people believes, there are hundreds and thousands of other pharmaceutical companies, who will not follow such precedence of voluntary disclosure in the absence of any properly enforced regulation.
Conclusion:
In all the countries and India is no exception, pharmaceutical companies, by and large, try to follow the legal ways and means to maximize turnover of their respective brands. Many follow transparent and admirable stringent self-regulations, stipulated either by themselves or by their industry associations.
‘Self-regulation with pharmaceutical marketing practices’ and ‘voluntary disclosure of payment to the physicians’ by some leading global pharmaceutical companies are laudable steps to address this vexing issue. However, the moot question still remains, are all these good enough for the entire industry?
It is about time that all players in the healthcare space realize, in case these voluntary measures of the industry and the guidelines of the regulators like MCI, do not work effectively for any reason, there will be no other option but for the government to step in with iron hand and ‘fool proof’ regulations.
The popular dictum, especially, used in the healthcare industry, “all these are for the patients’ interest” should not be allowed to be misused or abused, any further, by some unscrupulous elements and greedy profiteers, to squeeze out even the last drop of financial resource from the long exploited population of ailing patients of India.

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.

Social Media – an evolving new-age powerful communication tool for the Pharmaceutical Industry, both global and local

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David Edelman in his article titled, “Branding in the Digital Age:You’re Spending your Money in All the Wrong Places”, published in the ‘Harvard Business Review’  dated December 2010, commented the following:

“Consumers today connect with brands in fundamentally new ways, often through media channels that are beyond manufacturers’ and retailers control. That means traditional marketing strategies must be redesigned to accord with how brand relationships have changed.”

I reckon, broadly, this is applicable to the Pharmaceutical Industry, as well, in the current scenario.

Today, we all are witnessing that the opportunities to share information within the communities and groups with effective use of social media like ‘Twitter’, ‘YouTube’, ‘Facebook’, ‘Linked-in’, blogs etc. are increasing by manifold, every passing day, with amazing speed. A very significant number of internet users across the world, are now quite actively taking part through social media in various areas of their interest.

The social networking site ‘Facebook’ claimed a few months back that it has connected over 400 million users all over the world and over 9.6 million users just in India with 20 million Indians using Internet every day. It is also interesting to note that each day about 68.5% of online population in the country visits social networking sites.

With 80% of the internet users currently searching for medical, health and product related information through cyber media, the importance of these powerful channels to engage interested stakeholders and groups in a meaningful dialogue on relevant products, services and issues, has increased by manifold. The pharmaceutical industry can no longer afford to ignore or even remain indifferent to this emerging trend.

Many global pharmaceutical majors having realized the future potential of cyber connectivity, have already started experimenting with social media, which are indeed outstanding byproducts of a disruptive innovation of the millennium, called ‘Internet’. In not too distant future, the pharmaceutical players are also expected to make the best use of social media not only to promote their products and services, but also to fulfill their obligation towards corporate social responsibilities.

The new-age marketing tool:

With more and more doctors not giving adequate time and even showing reluctance to meet the medical representatives and the important hospitals following suit, the global pharmaceutical companies are now in search of new and even more effective marketing tools.

To get the marketing communications across, to important target audiences, many of them have started experimenting, quite seriously, with the digital world. Effective networking media like ‘Facebook’ , ‘YouTube’, ‘MySpace’ and ‘Twitter’ are showing promises to become powerful online pharmaceutical marketing tools.

Global pharmaceutical companies have already started ‘testing the water’:

Examples of global pharmaceutical giants who have already started using this new age media for pharmaceutical marketing, in varying scale, are as follows:

1. Bayer uses ‘Facebook’ page to promote its Aspirin for women. For young people of the UK, suffering from diabetes, the company has also come out with an online blood glucose monitoring system.

2. Merck is using ‘Facebook’ to promote its cervical cancer vaccine, Gardasil

3. GlaxoSmithKline is using ‘YouTube’ for ‘restless-legs syndrome’ awareness film. The popularity of this video spot perhaps has prompted the company to come out with its own ‘YouTube’ channel last year with a name, ‘GSKvision’.

4. AstraZeneca is also using ‘YouTube’ for a program called ‘My Asthma Story’ related to their anti-asthma drug Symbicort.

5. Johnson & Johnson’s ‘You Tube’ channel has now over 90 videos

6. Novartis is using the social media dedicated to Chronic Myeloid Leukemia (CML) to connect to healthcare professionals, patients groups and even individual patients.

7. Recent report of Pfizer’s new RSS feed and the plan for a unique ‘Pfacebook’ site for internal communication perhaps is an important step towards this direction. The company has also been reported to have teamed up with Private Access to create a social networking website to bring clinical researchers and the patients together.

8. Boehringer Ingelheim has also started using the ‘Twitter’ since 2008

The reasons for using the social media as a marketing tool:

Social media like, ‘Facebook’, ‘Twitter’, ‘YouTube’ etc. provide a very important platform towards patients’ outreach efforts of the pharmaceutical companies exactly in a format, which will be preferred by the target group.

With the help of new-age social media these companies are now joining communities to begin a dialogue with them. It has been reported that some of these companies have already created un-branded sites like, silenceyourrooster.com or iwalkbecause.org, to foster relationship with patients’ group through online activity, the contents of which have been generated by the users themselves of the respective social medium. With the help of click-through links these sites lead to the branded sites of the concerned companies.

As reported by TNS Media Intelligence, internet media spending of the global pharmaceutical companies increased by 36% to US$137 million, in 2008, which is significantly higher than their spending in Television advertisements.

Why is the entry in the new-age social media so slow?

Pharmaceutical companies are currently delving into marketing through cyber media with a very cautious approach, though the new social media will become more central to many global marketing strategies in not too distant future. The cautious approach by the pharmaceutical companies is primarily due to evolving regulatory requirements in this new space

In the USA, very recently the FDA cautioned the major players in the industry to refrain them from publishing any misleading communication through social media. This is primarily because of absence of any published guidelines for online pharmaceutical marketing. How to use this powerful social media for maximum marketing and other benefits will indeed be quite a challenging task, at this stage. Many pharmaceutical companies are, therefore, slow to use the social media to the fullest extent.

Not only in India, even in the developed countries like, the USA, there are no specific regulatory guidelines to promote pharmaceutical brands or create brand awareness through these media. This scenario holds good for most of the countries of the world, including Europe, Japan. Thus, in this much uncharted territory, as there are not enough foot-steps follow, the pharmaceutical companies are currently just ‘testing the water’. Most probably to fathom how far regulatory authorities will allow them to explore with this new media.

Effective use of social media is expected to be financially attractive:

Low costs associated with creating internet promotional inputs will make social media quite attractive to pharmaceutical and bio-pharma companies, not only as an effective marketing tool, but also in their other outreach program for the stakeholders. Various types of social media are expected to be significantly cost-effective in creating and executing successful pharmaceutical brand awareness and brand marketing campaigns, aiming at well-defined and the specific target groups.

Use of social media in India:

In India though the social media are currently growing at around 35% annually, their overall utilization as an important marketing tool has remained rather limited, thus far, with practically no significant usage by the Indian pharmaceutical industry. I reckon, it is about time that the important pharmaceutical players in the country start creating their own network of loyalists and engage them with this important communication tool to meaningful dialogues, involving their respective brands and/or services and related issues.

‘Proof of the pudding is in the eating’:

A recent report indicates that in 2007, well reputed computer maker Dell’s ‘Twitter’ activity brought in US$ half-million in new business to the company.

Thus the innovative use of the new-age social cyber-media promises immense potential to open a goldmine of opportunities for the global pharmaceutical industry.

Conclusion:

I reckon, the use of social media as an effective business communication tool, will start growing at a scorching pace in India, shortly.

Some large and even Small and Medium Enterprises (SMEs) have just initiated appropriate processes towards ‘Social Media Optimization’ involving their respective brands and related services. This is primarily aimed at improving awareness and increasing market share through significantly higher share of voice and more intense customer engagement.

With rapid increase in the numbers of such initiatives, there will probably be a sea change in the way stakeholder engagement plans are worked out by the industry in general and the pharmaceutical industry in particular, ushering a new dawn in the communication space of the business.

At the same time, we should realize that in this new ball game customers will really be the king and the quality of innovative usage of all powerful social media could well draw the decisive line between business communication success and failure.

By Tapan Ray

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

Envisaging a paradigm shift in strategic marketing of pharmaceutical in India

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PricewaterhouseCoopers (PwC) recommended, about three years ago, in mid-2007 that for sustainable business performance the research-based global pharmaceutical companies should move a part of their significant expenditure from marketing to research. They also recommended that the drug prices should be related to incremental efficacy that the products would provide.

The report titled ‘Pharma 2020: The Vision’ commented that the business model of the global pharmaceutical companies is “economically unsustainable and operationally incapable of acting quickly enough to produce the types of innovative treatments demanded by global markets.”

Undergoing a paradigm shift:

As we witness, the global pharmaceutical industry is undergoing a paradigm shift. More drugs are going off patent than what the innovator companies can replace with the new products. The research is undoubtedly failing to deliver.

At the same time, the business growth in the developed markets of the world has been declining over a period of time. The growth in the top two pharmaceutical markets of the world viz, USA and Japan had gone negative. IMS predicted in their recent ‘CEO Conclave’ in Mumbai that low growth trends in these markets will continue even beyond 2013.

In the same conclave IMS predicted that within ‘Pharmerging’ markets, China is expected to record highest CAGR growth of over 25%, followed by India and Turkey around 12-14% each. With such a scorching pace of growth China is expected to become third largest pharmaceutical market in the world in 2013 with India holding its 2008 ranking of no. 13.

Global pharmaceutical ‘Marketing Expenditure’ is increasing:

The publication titled “The Cost of Pushing Pills: A New Estimate of Pharmaceutical Promotion Expenditures in the United States” co-authored by Marc-André Gagnon and Joel Lexchin estimated from the data collected from the industry and doctors during 2004 that the U.S. pharmaceutical industry spent 24.4% of the sales turnover on promotion, versus 13.4% for research and development. This was as a percentage of US domestic sales of US$ 235.4 billion in that year.

The researchers used 2004 as the comparison year, as this appears to be the latest year in which information was available from both IMS Health and CAM Group, the two international market research companies that provide the marketing and sales data together with those of consulting services. IMS obtains its data from pharmaceutical companies, while CAM obtains its data from the doctors. This study appeared in the January 3, 2008 issue of PLoS Medicine, an online journal published by the Public Library of Science.

The above findings though highlight that the US pharmaceutical industry is overall marketing-driven, also argues strongly in favor of a shift away from this direction.

Another publication named, the ‘Triangle Business Journal’ reported the findings from another study of ‘Cutting Edge Information’, a pharmaceutical research company based in Durham, North Carolina, USA. This survey reported, “the companies marketing the six blockbuster (turnover US $ 1 billion in the first year) drugs it studied spent an average of $238.5 million to market each product.”

The “Pharmabiz” of April 2, 2007 also reported, “The study of top 15 global pharma giants revealed that the marketing expenditure as percentage of total sales of these companies worked out to 30.5 as against the R&D expenses as a percentage of total sales of 15.1.”

Such high marketing expenditure is not sustainable in the long run – alternatives being explored:

As reported by IMS Health, in 2009 though the global pharmaceutical market recorded a turnover of US $ 837 billion with a growth rate of around 6.4% compared to 11.8% in 2001, the moot question remains, whether such type of marketing expenditure is sustainable during the era when the “patent cliff’ is pushing the global pharmaceutical industry to the brink.

This situation gets further aggravated when IMS Health reports, as the world’s 10 top selling prescription drugs go off patent, it will be difficult to replace them in terms of single-product value turnover. These brands are as follows:

- Lipitor, US$13.5 billion (Pfizer)

- Plavix, US$7.3 billion (sanofi-aventis)

- Nexium, US$7.2 billion (AstraZeneca)

- Seretide/Advair, US$7.1 billion (GlaxoSmithKline)

- Enbrel, US$5.3 billion (Amgen and Pfizer)

- Zyprexa, US$5 billion (Eli Lilly)

- Risperdal, US$4.9 billion (Johnson & Johnson)

- Seroquel, US$4.6 billion (AstraZeneca)

- Singulair, US$4.5 billion (Merck)

- Aranesp, US$4.4 billion (Amgen)

The business focus is now on the emerging markets like, India:

Thus the business focus of the global pharmaceutical majors are now on the key emerging markets, like India not only with their patented products, but more importantly by having a robust fast growing branded generic portfolio to more than offset the loss of revenue and profit from the blockbusters, as they go off patent.

Publicly expressed expectations of some Governments of the emerging markets:

Governments of some of these emerging markets expect local benefits out of the evolving growth opportunities of the global pharmaceutical companies from their respective countries. Various reports indicate that there could be following two key issues in these markets:

• Local manufacturing of products
• Pricing

Local manufacturing:

Out of these emerging markets, Indonesia has clearly spelt out its intention by specifying that the pharmaceutical companies marketing their products in Indonesia will need to establish local manufacturing facilities. The new rule is directed towards local job creation.

The Health Minister of Indonesia had commented, “If they want to get licenses (to sell their products) they have to invest here also, not just take advantage of the Indonesian market.” The Minister further added, “They can’t just operate like a retailer here, with an office that’s three meters by three, and make billions of rupiah. That’s not fair.” It has been reported that India and China may ultimately come out with similar requirements for their respective countries.

U.S. Chamber of Commerce has registered a strong protest in this matter with the President of Indonesia and has urged a reversal of this decision. However, the country appears to have taken a firm stand in this matter. This is evident when in response to the report that some global pharmaceutical companies have threatened withdrawal of their business from Indonesia because of this reason, the Health Minister retorted, “If they want to go away, go ahead.”

Pricing:

Anticipating such moves in the emerging markets, some global companies like, GlaxoSmithKline (GSK) and MSD have already started implemeting differential pricing strategies for their patented products in the emerging markets like India.

Some visionary global CEOs like, Andrew witty of GSK strongly believes that such differential pricing will enable more patients in the emerging markets to afford his company’s products. Consequently the increased sales volume will not only offset the sales value loss but will also create a substantial goodwill for the company in these markets, over a period of time.

Quoting Andrew Witty the ‘Wall Street Journal’ (WSJ) reported that in Philippines, GSK had reduced the price of 28 products by 30% to 50%. In other emerging markets of Asia including India, Malaysia and Thailand the company has reduced the prices of Cervarix, its cervical cancer vaccine, substantially.

India has also witnessed such differential pricing strategy by other innovator companies for their patented products in the country.

Prescribing four new key strategic changes in the new paradigm:

In the new paradigm, almost in tandem, four new key strategic changes, in my view, will gradually unfold in the Indian pharmaceutical market. These are as follows:

1. An integrated approach towards disease prevention will emerge as equally important as treating the diseases.

2. A shift from just product marketing to marketing of a bundle of value added comprehensive disease management processes along with the product will be the order of the day.

3. Over the counter (OTC) medicines, especially those originated from natural products to treat common and less serious illness, will curve out a sizable share of the market, as appropriate regulations are expected to be put in place adequately supported by AYUSH.

4. Most importantly, the country will move towards an integrated and robust healthcare financing system, as already articulated just in the last month by Mr. Montek Singh Ahluwalia, Deputy Chairman of the Planning Commission of India, which will usher in the following changes:

- Doctors will no longer be the sole decision makers for prescribing drugs to the patients and the way they will treat the common diseases. Ministry of Health/ Healthcare providers/ Medical insurance companies will start playing a key role in these areas by providing to the doctors well thought out treatment guidelines.

- For a significant proportion of the products that the pharmaceutical companies will sell, tough price negotiation with the healthcare providers/ medical insurance companies will be inevitable.

- Health Technology Assessment (HTA) or outcome based pricing will gradually play an important role in pricing a healthcare product.

- This could well mean lesser role of the Medical Representatives in the demand generation process for the pharmaceutical products, which could possibly have a positive impact on the cost of marketing and sales promotion, incurred by the respective pharmaceutical companies.

Conclusion:

With all these changes within the Indian pharmaceutical industry, it may not be easy for the local players to adapt to the new paradigm sooner and compete with the global players on equal footing, even in the branded generic space. In my view, those Indian Pharmaceutical companies, who are already global players in their own right and relatively well versed with the nuances of this new ball game, will have a significant competitive edge over other domestic players. The global-local companies, in my view, will offer a tough competition to the local-global players, especially, in the branded generic space and at the same time will be able to bring down their marketing expenses significantly.

So far as other domestic players are concerned, the fast changing environment could throw a new challenge to many of them, accelerating the consolidation process within the Indian pharmaceutical industry.

We all should be well aware, just as today’s pharmaceutical business dynamics in India are not replica of what these were in the yesteryears, tomorrow’s pharmaceutical business dynamics of the country will not be a replica of what these are today.

By Tapan Ray

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

Create, Deliver and Realize maximum value from a new product launch with an innovative Supply Chain Management system

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Like in many other industries, effective supply-chain management (SCM) in the pharmaceutical industry involves a systematic process, spanning from procurement of raw, packaging and other related materials, converting those materials into finished goods stock keeping units (SKUs), inventory management of both raw and packaging material, as well as finished goods and finally the distribution of these SKUs to wholesalers/ stockists/ distributors, C&F Agents.Now a days, with intense cost containment pressure all around, effective SCM is gaining a critical importance in the overall business process of the pharmaceutical companies. Besides all these, SCM also plays a very important role in maintaining regulatory compliance and help preserving product quality and safety standards.Key deliverables of a good SCM system:

The key deliverables of a good SCM system are to ensure availability to the customers:

Of RIGHT Product
At RIGHT Time
In RIGHT Quantity
At RIGHT Place
At RIGHT Price and
Of RIGHT Quality

However, in this article, I shall not dwell on these well known and basic parameters. Instead I shall deliberate on three other very important aspects of the supply chain management for your consideration:

1. What will a great SCM system mean?
2. What is the emerging role of SCM system in launching a new product
3. Innovation and measuring SCM effectiveness

1. What will a great SCM system mean?

In my opinion this will cover three important points:

- The SCM system should have an excellent feel of demand fluctuations and its robust measurement system.
- The cost of running an efficient SCM system should be kept at its minimum.
- The SCM structure should always be without any organizational flab.

I repeat, to be effective, a good SCM System must always be demand driven. Customer demand must be ascertained and quantified first and only then company specific supply chain requirements to be worked out and not the other way.

Various research studies confirm that there are certain common qualities for the demand-driven companies, namely:

- Reaction time to gauge and respond to the customer needs and demand is very quick
- A robust IT infrastructure is in place to facilitate delivery of the key Supply Chain
deliverables

SCM helps in value creation, value delivery and the value realization process:

As we know that value creation is the first step for a demand driven organization, followed by value delivery and value realization.

Pfizer Inc ranked high towards these efforts with Lipitor. If by any chance Lipitor gets out of stock, doctors usually do not switch over to other statins; the patient may possibly come back to the Pharmacy next day and hope he/she will get Lipitor. Such type of value creation for the product had made Lipitor over US$14 billion brand today despite the presence of other newer statins in the market and a very efficient SCM system of Pfizer Inc.

In an ideal scenario there should be an overlap between product management, demand management and the SCM systems.

Need for interaction between SCM and Product Development/Management Teams:

In my view, some sort of close interaction between the Supply Chain with Product Development and Management teams is very important for any innovative company to succeed in the market place. This I reckon will be unavoidable in not so distant future. Currently there could be some such link, as mentioned above, existing in some organization, but certainly not what it ought to be.

A robust IT system is a major requirement:

A robust IT system is a major requirement for such interaction process between Product Management, Demand Management and the SCM. Those companies, which will be unwilling to invest in a robust and rapidly scalable IT infrastructure that provides process integrity, transaction reliability, data visibility and intelligence for decision making may find it difficult to implement such an important business process.

2. The role of SCM System in launching a New Product:

In the twenty first century, as we all are aware that quality of innovation determines the sharpness of the competitive edge of any company in the marketplace. This aspect of competitiveness will be increasingly more and more important. Unfortunately, despite having this cutting edge many highly innovative companies have been experiencing great problems while launching their innovative new products in the market.

As we have seen from the recent media reports, two examples indeed stand out:

- Delays in the launch of Airbus 380 wiped off five billion euros of the value of its parent
company.
- Another important example was the enormous problem that Sony faced to make adequate
number of Play Station 3 consoles for the holiday season.

These illustrations indicate that conceptualizing, developing and finally launching new products is becoming increasingly more and more difficult. It is now widely believed that the key issue is inadequate understanding of the critical role that the supply chain plays in the innovative process of an organization.

SCM – a key success factor for a new product launch:

In most of the companies, the world over, the marketing team decides on the product launch decisions. Fortunately now we have started understanding though gradually but surely that the success of a new product launch very heavily dependent on effective co-ordination on all aspects of the supply chain from design to sourcing to manufacturing to distribution.

Therefore, in order to succeed with a new product launch, concerned company will need to ensure that Product development, Sales and Marketing, operations planning and supply chain work very closely together as a coherent team. Such co-ordination between these functions is now an absolute imperative. Close co-ordination even within the various activities of SCM systems play a critical role on the quality and nature of an innovative product or services and thereafter for an effective logistic support to the finished new products.

3. Innovation and measuring SCM effectiveness:

Quality of innovative ideas implemented in various levels of the SCM process along with the operational excellence will determine the ultimate effectiveness of a SCM system of a company.

Operational excellence is usually measured through the effectiveness of various parameters set for the same like. These parameters may include order fill rate, cost of the SCM process followed and the speed that it adds right from the material procurement process to the delivery of required SKU’s right up to the retail chemists.

Similarly effectiveness of innovative steps taken in the SCM process is measured by many on parameters like, the return on new product development and the speed of launch.

Conclusion:

To make a new product launch successful, companies will increasingly require to work out not only an effective process for launch, but will also need to ensure that marketing, finance, operations and SCM with innovative steps built into it, work very closely together to help create, deliver and realize both tangible and intangible value of a new product, most effectively, to contribute significantly to the stakeholders’ value.

By Tapan Ray

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

MCI has been dissolved but the guidelines to doctors must remain, carefully sanitizing the ambiguities within the process

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The recent developments within the MCI are indeed very disturbing and were definitely avoidable, if appropriate checks and balances were in place within the system. Even after the immediate ‘damage control measures’ by the Government, I reckon, the stigma on the credibility of MCI, may continue to haunt the institution, for a reasonably long time. The steps taken by the government, so far, are definitely necessary.

The new board appointed by the Ministry of Health, we expect, will work out an appropriate policy framework not only to restore the credibility of MCI, but also to put in place enough measures to prevent repetition of blatant misuse of power by the vested interests, in future.

The other side of it:

In today’s India, blatant commercialization of the noble healthcare services has reached its nadir, as it were, sacrificing the ethics and etiquettes both in medical and pharmaceutical marketing practices at the altar of unlimited greed. As a result of fast degradation of ethical standards and most of the noble values supposed to be deeply rooted in the healthcare space, the patients in general are losing faith and trust both on the medical profession and the pharmaceutical industry, by and large. Health related multifaceted compulsions do not allow them, either to avoid such a situation or even raise a strong voice of protest.

Growing discontentment – a stark reality:

Growing discontentment of the patients in the critical area of both private and public healthcare in the country, is being regularly and very rightly highlighted by the media to encourage or rather pressurize all concerned to arrest this moral and ethical decay and reverse the evil trend, without further delay, with some tangible regulatory measures.

It was a laudable move by the MCI, the current fiasco not withstanding:

In such a prevailing situation, recent steps taken by the ‘Medical Council of India (MCI)’ deserves kudos from all corners. It is now up to the medical profession to properly abide by the new regulations on their professional conduct, etiquette and ethics. The pharmaceutical industry of India should also be a party towards conformance of such regulations, may be albeit indirectly.

No room for ambiguity:

The amended MCI regulations, no doubt, are aimed at improving the ethical standards in the medical profession and are expected to achieve the desired objectives. However, in many places the guidelines lack absolute clarity.

Ambiguity, if any, in the MCI regulations, should be addressed through appropriate amendments, in case such action is considered necessary by the experts group and the Ministry of Health. Till then all concerned must ensure its strict compliance… for patients’ sake. The amended MCI regulations are only for the doctors and their professional bodies. Thus it is up to the practicing doctors to religiously follow these regulations without forgetting the ‘Hippocrates oath’ that they had taken while accepting their professional degree to serve the ailing patients.

If these regulations are implemented properly, the medical profession, I reckon, could win back their past glory and the trust of the patients, as their will be much lesser possibility for the patients to get financially squeezed by some unscrupulous elements in this predominantly noble profession.

A concern:

Although the new MCI regulations are steps in the right direction, the pharmaceutical industry, by and large, does have an apprehension that very important and informative ‘continuing medical education (CME)’, which in turn could help the patients immensely, may get adversely impacted with this new regulation; so are the areas involving medical/clinical research and trials.

What is happening in the global pharmaceutical industry?

Just like in India, a public debate has started since quite some time in the US, as well, on allegedly huge sum of money being paid by the pharmaceutical companies to the physicians on various items including free drug samples, professional advice, speaking in seminars, reimbursement of their traveling and entertainment expenses etc. All these, many believe, are done to adversely influence their rational prescription decisions for the patients.

USA:

In the USA ‘The Pharmaceutical Research and Manufacturers of America (PhRMA)’ has recently revised their code of marketing practices as follows:

• “Prohibits distribution of non-educational items (such as pens, mugs and other “reminder” objects typically adorned with a company or product logo) to healthcare providers and their staff. The Code acknowledges that such items, even though of minimal value, “may foster misperceptions that company interactions with healthcare professionals are not based on informing them about medical and scientific issues.”

• Prohibits company sales representatives from providing restaurant meals to healthcare professionals, but allows them to provide occasional meals in healthcare professionals’ offices in conjunction with informational presentations. The Code also reaffirms and strengthens previous statements that companies should not provide any entertainment or recreational benefits to healthcare professionals.

• Includes new provisions that require companies to ensure that their representatives are sufficiently trained about applicable laws, regulations and industry codes of practice – including this Code – that govern interactions with healthcare professionals. Companies are also asked to assess their representatives periodically and to take appropriate action if they fail to comply with relevant standards of conduct.

• Provides that each company will state its intentions to abide by the Code and that company CEOs and Compliance Officers will certify each year that they have processes in place to comply, a process patterned after the concept of Sarbanes-Oxley compliance mechanisms. Companies also are encouraged to get external verification periodically that they have processes in place to foster compliance with the Code. PhRMA will post on its Web site a list of all companies that announce their pledge to follow the Code, contact information for company compliance officers, and information about the companies’ annual certifications of compliance.

• Other additions to the Code include more detailed standards regarding the independence of continuing medical education (CME); principles on the responsible use of non-patient identified prescriber data; and additional guidance for speaking and consulting arrangements with healthcare professionals, including disclosure requirements for healthcare providers who are members of committees that set formularies or develop clinical practice guidelines and who also serve as speakers or consultants for a pharmaceutical company.

• Other changes to the Code include, PhRMA’s recent acceptance of the revised Physician Payments Sunshine Act in the Senate.”

Raging ongoing debate on the financial relationship between industry and the medical profession:

As the financial relationship between the pharmaceutical companies and the physicians are getting increasingly dragged into the public debate, it appears that there is a good possibility of making disclosure of all such payments made to the physicians by the pharmaceutical companies’, like the proposed Physician Payments Sunshine Act in the USA, mandatory in many other countries, probably even in India.

Exemplary voluntary measures taken by large global pharmaceutical majors:

Eli Lilly, the first pharmaceutical company to announce such disclosure voluntarily around September 2008, has already uploaded its physician payment details on its website. US pharmaceutical major Merck has also followed suit and so are Pfizer and GSK. However, the effective date of their first disclosure details is not yet known.

Meanwhile, Cleveland Clinic and the medical school of the University of Pennsylvania, US are also in the process of disclosing details of payments made by the Pharmaceutical companies to their research personnel and the physicians. Similarly in the U.K the Royal College of Physicians has been recently reported to have called for a ban on gifts to the physicians and support to medical training, by the pharmaceutical companies. Very recently the states like Minnesota, New York and New Jersey in the US disclosed their intent to bring in somewhat MCI like regulations for the practicing physicians of those states.

Transparency is the key for drug industry relationships – Australia sets another example:

The Australian Competition and Consumer Commission (ACCC) has decided to grant authorization for five years to Medicines Australia’s 16th edition of its Code of Conduct. The Code sets standards for the marketing and promotion of prescription pharmaceutical products in Australia.

The Code provides, among other things, a standard to address potential conflicts of interest from unrestricted relationships between pharmaceutical companies and healthcare professionals, which may harm consumers, for example through inappropriate prescribing by healthcare professionals.

The Code prohibits pharmaceutical companies from providing entertainment and extravagant hospitality to healthcare professionals, with the requirement that all benefits provided by companies successfully withstand public and professional scrutiny.

“The requirement for public disclosure was imposed by the ACCC as a condition of authorization of the previous version of Medicines Australia’s Code and was confirmed on appeal by the Australian Competition Tribunal.” Edition 16 of the Code fully incorporates the public reporting requirements.

Conclusion:

Currently in the US, both in Senate and the House of Congress two draft bills on ‘The Physician Payment Sunshine Act’ are pending. It appears quite likely that Obama Administration, with the help of this new law, will make the disclosure of payments to physicians by the pharmaceutical companies mandatory.

If President Obama’s administration takes such regulatory steps, will India prefer to remain much behind? The new amended MCI regulations together with such disclosure by the pharmaceutical companies, if and when it comes, could make the financial transactional relationship between the physicians and the pharmaceutical industry squeaky clean and totally transparent.

By Tapan Ray

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

Differentiating Seven ‘Ps’ of Marketing-Mix for Health Food Products – A strategic overview

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As estimated by Nicholas Hall the health food products market in India is currently around U.S.$ 1.3 Billion with a huge marketing potential. However, the marketing-mix for such groups of health food products will need to be crafted in an innovative way and carefully tailored to suit the need of individual brands, by an astute marketer.
Definition of Health Food Products:In my view, the health food products are those, which have a favorable impact on human health, their physical performance or state of mind. Such products include various types of food substances, dietary supplements with medical benefits and are used mostly for the prevention of various types of diseases.

The global market:

The global market for health food products is projected to be around U.S.$ 190 Billion by 2010 with a CAGR of 6.1% during 2000 – 2010. In 2007 its market size was reported to be U.S.$ 166 Billion.

Categories of health food products:

Before we delve into the space of marketing-mix, let me try to categorize these products under the following six categories:

• Functional Foods:

- These are dietary components, which provide health benefits beyond basic nutrition, like
isabgool or psyllium husk, whey proteins, bran or oats

• Medicinal Foods:

- These are functional foods with more medicinal value, for e.g. cranberry juice, anti-diabetic/anti-obesity health
bars with added medication etc.

• Nutraceuticals:

- This category comprises of substances which are foods or part of a food with usually preventive health benefits
like vitamins, minerals, gingko biloba, coenzyme Q10, carnitine, ginseng, garlic, tulsi, kalmegh, brahmi, saffron,
ashwagandha, green tea, karela powder etc.

• Phytochemcials:

- These products are like lycopene found in tomatoes or flavanoids in fruits. Such substances usually do not
possess any nutritive value but offer some disease preventive properties.

• Ayurvedic and Herbal Medicines:

- These are derived from plants and are used as such or in form of extracts and possess disease preventive
properties.

• Other health related products are like sports nutrition and various types of organic foods.

Key Drivers:

In my view following are the four key drivers of the health food products market in India:

• Consumer awareness:
- Increasing consumer health consciousness will increase the popularity of health food products

• Changing lifestyle:
- Incidence of lifestyle diseases like hypertension, diabetes, obesity, cardiovascular diseases has been
increasing with fast changing consumer lifestyle. Moreover, increasing cost of serious medical treatment is
also encouraging people to go for preventive health care.

• Ageing population:
- Ageing population in India is expected to contribute significantly to increase the demand for health foods
supplements and functional foods to address various types age related health conditions.

• New scientific evidence of various health foods:
- Ongoing scientific research studies to establish health benefits of various food substances and dietary
supplements will help expanding the ambit health food products at a faster speed.

Key challenges for Herbal Food Products:

Herbal products taken from two or more different sources may not necessarily have the same potency, leading to concerns of batch to batch product quality variations in terms of efficacy, which depends on the potency of the material used.

Differentiating the marketing-mix:

For health food products, instead of conventional four Ps of marketing, one will need to consider the following seven Ps:

1. Product :

Health food products will need to have the following:

• Scientifically documented health benefits
• Innovative product development targeting different consumer segments
• Clear brand differentiation
-Without this ‘Horlicks Vs Viva’ story is expected to be repeated more often than in the past with enlightened consumer base.
• Reasonable standardization

2. Place:

Innovative use of this ‘P’ will play a critical role in the success of any health food product.

The following distribution outlets for the health food products are important:

• Kirana / Grocery stores
• Supermarkets

However, equally important is the availability of these products in pharmacies as many consumers will perceive these products as important as medicines and may enquire at the pharmacy outlets for their availability.

• Multi Level Marketing (MLM)
- MLM can be used innovatively for health food products marketing, as is being done currently by Amway, Herbal Life etc.

3. Price:

Price of a health food product like many other products is a function of values that the brand will offer and will also depend on:

• Differential brand features and benefits
• Product life cycle

However, pressure on margin for health food products will be more due to:
• Strong bargaining power of distributors’ chain / supermarket stores, unlike pharmaceutical products where retail and wholesale margin is fixed in India
• High promotional expenditure due to usage of both mass media and relatively intensive personal selling.

4. Promotion :

For health food promotion following common tools just like any consumer product marketing will help:

• Advertising through mass media
• Point of Purchase Promotion (POP)
• Sampling

In addition, following campaigns may prove to be highly beneficial for such products:

• Awareness campaign for usefulness of disease prevention measures
• Medical promotion
- This will be important especially for health food products designed for children where the parents usually seek a doctor’s opinion about the product benefits. Doctors may not necessarily prescribe the product but their ‘yes’ or ‘no’ answer in reply to parents’ questions on the product may prompt whether the parents will continue with this product for the child or not.

Other types of promotion for health food products may be the following:

• Multi level marketing
• Promotion in schools, sports clubs etc.
• Telemarketing of brand services
- These are especially important for health food products meant for children. In such cases, a telemarketing cell consisting of trained nurses or dieticians, will enquire about the progress of the child with the product and give various advices to the mothers for the child, as required by them. Such types of telemarketing services through specialists will help adding a premium image to the brand to indirectly boost up the sales.
• Internet / social forums
- These tools can also be innovatively used for health food brand promotion.

5. People :

For health food products marketing, people with the following skill sets have been found immensely beneficial:

• Sales person with additional training inputs on concerned health related subjects
• Telemarketing of services with people having nursing or a dietician’s background

6. Process :

- All other ‘P’s’ may work with absolute efficiency, but if the marketing process remains inefficient, the branding exercise may be adversely impacted. Thus following areas need to concentrated upon with equal zest:

• Process efficiency
• Process speed
• Process innovation
• Efficiency of IT interface within the marketing process

7. Physical Evidence :

Now a day’s individual enlightened consumer usually wants to know the ability of the manufacturer and the environment in which a product is manufactured, along with the quality of services that is delivered for the brand. Hence, while considering the marketing-mix for health food products the ‘P’ of ‘physical evidence’ is expected to play an increasingly important role.

Conclusion:

It is therefore of immense importance for the marketers to consider the differentiated marketing-mix of seven ‘Ps’ for health food products in their branding exercise.

By Tapan Ray

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

To restore patients’ confidence MCI has amended its regulations… to strengthen it further will the government consider an Indian version of ‘Physician Payment Sunshine Act’?

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In today’s India, blatant commercialization of the noble healthcare services has reached its nadir, as it were, sacrificing the ethics and etiquettes both in medical and pharmaceutical marketing practices at the altar of unlimited greed. As a result of fast degradation of ethical standards and most of the noble values supposed to be deeply rooted in the healthcare space, the patients in general are losing faith and trust both on the medical profession and the pharmaceutical industry, by and large. Health related multifaceted compulsions do not allow them, either to avoid such a situation or even raise a strong voice of protest.

Growing discontentment – a stark reality:

Growing discontentment of the patients in the critical area of both private and public healthcare in the country, is being regularly and very rightly highlighted by the media to encourage or rather pressurize all concerned to arrest this moral and ethical decay and reverse the evil trend, without further delay, with some tangible regulatory measures.

A laudable move by the MCI:

In such a situation, recent steps taken by the ‘Medical Council of India (MCI)’ deserves kudos from all corners. It is now up to the medical profession to properly abide by the new regulations on their professional conduct, etiquette and ethics. The pharmaceutical industry of India should also be a party towards conformance of such regulations, may be albeit indirectly.

No room for ambiguity:

Ambiguity, if any, in the MCI regulations, which has been recently announced in the official gazette, may be addressed through appropriate amendments, in case such action is considered necessary by the experts group and the Ministry of Health. Till then all concerned must ensure its strict compliance… for patients’ sake. The amended MCI regulations are only for the doctors and their professional bodies. Thus it is up to the practicing doctors to religiously follow these regulations without forgetting the ‘Hippocrates oath’ that they had taken while accepting their professional degree to serve the ailing patients. If these regulations are implemented properly, the medical profession, I reckon, could win back their past glory and the trust of the patients, as their will be much lesser possibility for the patients to get financially squeezed by some unscrupulous elements in this predominantly noble profession.

What is happening in the global pharmaceutical industry?

Just like in India, a public debate has started since quite some time in the US, as well, on allegedly huge sum of money being paid by the pharmaceutical companies to the physicians on various items including free drug samples, professional advice, speaking in seminars, reimbursement of their traveling and entertainment expenses etc. All these, many believe, are done to adversely influence their rational prescription decisions for the patients.

Raging ongoing debate on the financial relationship between industry and the medical profession:

As the financial relationship between the pharmaceutical companies and the physicians are getting increasingly dragged into the public debate, it appears that there is a good possibility of making disclosure of all such payments made to the physicians by the pharmaceutical companies’ mandatory by the Obama administration, as a part of the new US healthcare reform process.

Exemplary voluntary measures taken by large global pharmaceutical majors:

Eli Lilly, the first pharmaceutical company to announce such disclosure voluntarily around September 2008, has already uploaded its physician payment details on its website. US pharmaceutical major Merck has also followed suit and so are Pfizer and GSK. However, the effective date of their first disclosure details is not yet known. Meanwhile, Cleveland Clinic and the medical school of the University of Pennsylvania, US are also in the process of disclosing details of payments made by the Pharmaceutical companies to their research personnel and the physicians. Similarly in the U.K the Royal College of Physicians has been recently reported to have called for a ban on gifts to the physicians and support to medical training, by the pharmaceutical companies. Very recently the states like Minnesota, New York and New Jersey in the US disclosed their intent to bring in somewhat MCI like regulations for the practicing physicians of those states.

Conclusion:

Currently in the US, both in Senate and the House of Congress two draft bills on ‘The Physician Payment Sunshine Act’ are pending. It appears quite likely that Obama Administration, with the help of this new law, will make the disclosure of payments to physicians by the pharmaceutical companies mandatory. If President Obama’s administration takes such regulatory steps, will India prefer to remain much behind? The new MCI regulations together with such disclosure by the pharmaceutical companies, if and when it comes, could make the financial transactional relationship between the physicians and the pharmaceutical industry squeaky clean and totally transparent.

By Tapan Ray

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

Amendment of ‘Professional Conduct, Etiquette and Ethics’ Regulations for the Doctors by the MCI could dramatically change the Pharmaceutical Marketing Practices in India, hereafter.

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As reported in the media, the notification of the Medical Council of India (MCI) dated December 10, 2009 amending the “Indian Medical Council (Professional Conduct, Etiquette and Ethics), Regulations 2002″ has been welcomed by the medical profession.
Areas of stricter regulations:

The notification specifies stricter regulations for doctors in the following areas, in their relationship with the ‘pharmaceutical and allied health sector industry’:

1. Gifts
2. Travel facilities
3. Hospitality
4. Cash or Monetary grants
5. Medical Research
6. Maintaining Professional Autonomy
7. Affiliation
8. Endorsement

These guidelines have come into force with effect from December 14, 2009.

Possible implications:

With this new and amended regulation, the MCI has almost imposed a ban on the doctors from receiving gifts of any kind, in addition to hospitality and travel facilities from the pharmaceutical and allied health sector industries in India.

Moreover, for all research projects funded by the pharmaceutical industry and undertaken by the medical profession, prior approval from the appropriate authorities for the same will be essential, in addition to the ethics committee.

Although maintaining a cordial and professional relationship between the pharmaceutical industry and the doctors is very important, such relationship now should no way compromise the professional autonomy of the medical profession and a medical institution, directly or indirectly.

It also appears that the common practices of participating in private, routine and more of brand marketing oriented clinical trials could possibly be jettisoned as a pharmaceutical strategy input.

The new MCI regulations is much stricter:

Since the new amended regulations of the MCI are much stricter than the existing codes of marketing practices of the pharmaceutical industry associations, there could be an emerging disconnect between these two practices till such time a clearer picture emerges after due deliberations by all concerned, in this matter.

It is also interesting to note, how would the pre December 14, 2009 commitments for the post December 14, 2009 period, of both the medical profession and the industry related to such regulated practices, be handled by the MCI, in future.

Conclusion:

Be that as it may, the new ball game of pharmaceutical marketing strategies and practices will no longer be driven by more of a ‘deep pocket’ syndrome and less of ‘cerebral power’, by all concerned.

If this happens, I shall not be surprised to witness a dramatic change in the prescription share of various companies in the next 3 to 5 years thereby impacting the ranking of these companies in the Indian pharmaceutical industry league table.

Thus, the name of the game in the pharmaceutical marketing space, in not too distant future, will be “generation and effective implementation of innovative ideas”.

By Tapan Ray

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