Traditionally, pharmaceutical industry, across the world, is mostly reactive – rather than proactive or predictive in its strategic approach – spanning across all its business domains. A large number of pharma players – both innovators and generic drug makers, formulate their business strategy – generally reacting to competition, changing market dynamics and patient/ doctor /other stakeholder preferences. The same is being witnessed even during Covid-19 pandemic. However, this trend seems to be more prevalent in India – as one looks around.
For example, in R&D – be it a statin drug, proton pump inhibitors and right up to monoclonal antibodies or cancer immunotherapies – after a first-in-class molecule comes, a plethora of ‘me-too’ – but patented molecules soon follow. A comparable trend in the generic drug categories is also all-pervasive, including fixed-dose combinations (FDCs).
Similarly, even in the good old days of sales and marketing, we have seen – after the first product detailing folder was successfully introduced by a leading pharma company in India, how competition lapped the concept up – considering this change as a magic wand for brand demand generation!
In recent days, a similar trend is surfacing for ‘Digitalization’ of pharma business, mostly reacting to the changing practices of key competitors, or involving patients or doctors’ preferences. It gets reflected in other business domains, as well. With this perspective, in this article, I shall deliberate on this area, especially in view of the current situation.
Traditional ‘safe sailing’ is no longer an option:
The Coronavirus pandemic could be a stronger catalytic factor for the drug industry to initiate the much-desired transition from being reactive to predictive in its strategic business approach- faster. Interestingly, way back in June 2007, the PwC Whitepaper titled “Pharma 2020: The vision”, had also articulated: ‘The social, demographic and economic context in which the pharmaceutical industry (Pharma) operates is changing dramatically.’
Some drug players have already opted to transform their organizations in sync with the changes in the operating environment. But, a vast majority of them preferred to stick to the traditional reactive mindset, for a safe sail, as it were. However, this doesn’t seem to be an option, any longer. Be that as it may, there is nothing wrong in being reactive in strategic business practices, although formulating a predictive or proactive growth strategy demands more cerebral prowess and is much different from the reactive ones.
The difference, I reckon, is similar to that of a leader and the followers, with nearly similar impact on overall corporate image and performance, besides a prime-mover advantage of the latter. Nevertheless, there could be a predictive approach even within a reactive approach to competition. To illustrate the point, let me cite an example related to ‘me-too’ – patented-drug development.
Making an overall reactive strategic approach proactive in nature:
Among several examples of making a reactive strategic approach – proactive in nature with innovative goals, let me quote a very recent one. For decades, drug companies have been selling ‘me too’ but patented drugs, at prices similar to the original and ‘first-in-class’ drugs, which are successful and enjoying a market monopoly.
Moving away from this trend, a startup drug maker, reportedly, wants to disrupt the traditional pharma industry practices by delivering what most patients and healthcare stakeholders want. It has set a novel goal of becoming patient-centric in its offering by making innovative drugs available at affordable prices. The startup wants to achieve this objective ‘by changing long-held industry practices for developing, pricing, and selling slightly different versions of costly brand-name drugs.’
Accordingly, with a proactive or predictive approach within an overall ‘reactive’ trend, it wants to create a unique niche for itself. The entity ‘will focus on developing “me too” drugs, which imitate the biological functions of existing drugs, but use distinct molecular structures so they don’t infringe on existing drug patents.’
Evolving a new demand of value-based health care system:
During disruptive changes and uncertainties in the business environment, such as what is being experienced today, gaining actionable insight on how these changes will call for new strategies to excel, would require a predictive mindset. This is of critical importance, particularly when a new demand for a value-based health care system is fast unfolding. This subject was well deliberated also in the book – ‘Healthcare Disrupted: Next Generation Business Models and Strategies.’
About six years back what the authors of this book predicted, seems to be a reality today. They had said: The concept of “value” rules the day, undoubtedly. The transition from the old ‘fee-for-service’ to ‘fee for value’, is game changing. On the same subject, another article - Focus on Value 1: The “Tsunami of Change”, published in the ‘eye for pharma’ on March 22, 2026, quoted the authors of this book – explaining the scenario lucidly.
They said, today’s health care system is largely reactionary, as the health services react to the persistence of consumers, their phone calls, queuing for services, waiting in the waiting room and calls to healthcare insurers. Whereas, ‘tomorrow’s system would prompt the health care providers to answer a seemingly simple question: how will they become relevant to a customer group?
Even six years down the line, especially in the current global pandemic situation with an evolving demand of a value-based health care system, this concept remains so relevant, possibly more than ever before. That said, an unforeseen and unprecedented situation could also force a pharma player – already moving on a predictive strategic path, to choose a reactive path – mostly for survival and progress of business.
When a company moves into a ‘reactive’ path from a ‘predictive’ one:
Such instances are infrequent. But a major event like Covid -19 may give rise to such a situation. For example, in the Pharma and Biopharma R&D space, it happened and is still happening. As ‘Evaluate Vantage Covid-19 Report’ of April 16, 2020 highlighted, as follows:
‘Anyone thinking that 2020 might travel down a predictable path for the biopharma sector was swiftly disabused of this view in the opening weeks of the year. The Coronavirus pandemic has changed the focus for almost every drug developer, whether they are working on potential treatments or trying to keep their businesses on track – or both.’ Good or bad, this is the reality today.
However, many of these organizations are unlikely to jettison their well-thought out ‘predictive’ pathway and are expected to soon find ways to move back to it. Thus, the question that one may pose, how does a company move into a predictive pathway from a reactive one? And particularly considering, if Covid-19 pandemic has caused some irreversible changes, or even – a long-term change in the business environment.
Getting back to predictive strategic path from a reactive one:
This issue was also covered in the article – ‘Three Proactive Response Strategies to COVID-19 Business Challenges,’ published in the MIT Sloan Management Review, on April 17, 2020. It wrote, as organizations move from a reactive to a proactive approach to dealing with COVID-19, they should ask themselves the following three questions:
- Can we offer a version of our products and/or services through an online channel? Going online is the closest equivalent to low-hanging fruit in the current environment.
- Can we use our existing infrastructure to produce products and/or offer services that are in demand? Many organizations have allocated infrastructure to produce goods and services to support the fight against COVID-19, but some strategic companies would think beyond the crisis to future changes in consumer needs.
- How can we rapidly increase our capacity to produce and distribute on-demand products and/or services? Turning to partnerships with other companies can boost capacity in a crunch situation, such as today.
The need for collaboration, in such extraordinary situation, has also been underscored by the European Pharmaceutical Review. It pointed out - how academia, government and the pharmaceutical industry can work together to potentially ‘repurpose drugs’ for the treatment of COVID-19. This is another example of formulating a predictive growth strategy to create a win-win situation, while being in the midst of a reactive one.
Conclusion:
Meanwhile, despite national Lockdowns at a very early stage on March 24, 2020, India has now climbed up to occupy the fourth highest position in terms of the number of Coronavirus infected cases. Continuing the steep ascending trend, as on June 14, 2020 morning, the recorded Coronavirus cases in the country reached 321,616 with 9,199 deaths.
During the current global pandemic of a humongous scale, drug companies are trying to respond to rapid challenges across their business operations, right from planned R&D programs to effectively maintaining supply chain, including manufacturing activities. If the current COVID-19 pandemic lasts for medium/long term, there could also be significant delays in the execution of various other ongoing projects/programs. This was the analysis of Deloitte in a paper, titled, ‘COVID-19 response for Pharma companies – Respond. Recover. Thrive’
While the full impact of the Coronavirus pandemic is still unknown, adopting a predictive strategy in the prevailing overall reactive environment, is expected to yield a significantly better business performance. As I said earlier, the core difference between adopting a ‘predictive’ and a ‘reactive’ business pathway, under the circumstances, is akin to the difference between a leader and a follower.
Unlocking the value innovation in all areas of pharma business is the name of the game, for excellence. Leveraging Artificial Intelligence (AI) based contemporary ‘predictive’ tools will help pharma players break the new ground, even in such trying times. Coming from this perspective, a ‘predictive’ strategy rather than a ‘reactive’ one, apparently, is the demand of time – where we all are in – today.
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.