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Focus More To Create Patient-Perceived Value of Brand Outcomes

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Healthcare providers, including many drug companies aim to create a beneficial effect on patients with their respective products and services. However, and more importantly, these benefits need to be such that recipients are able to sense, feel, and perceive as they expect – or may often go much beyond their expectations.

In this endeavor, when the perceived value of health care offerings exceeds the perceived cost of the products or services, the beneficiaries get naturally delighted. Conversely, when the perceived cost of the product weighs more than the perceived benefits, especially when it is incurred in lieu of some other essential living expenses, the patients accept the benefits grudgingly – without having any choice, or alternatives. The situation often fuels growing healthcare activism, across the globe and more involving expensive patented products.

Such expectations of many customers have increases manifold during Covid-19 pandemic, as many studies highlight. Thus, creating a win-win situation while aiming for a beneficial effect on patients, would call for in-depth understanding of the complex changes in the value delivery process. This is critical for all in the health care environment, and particularly the pharma marketers.

In today’s article, I shall dwell on some recent developments in this area, beginning with the basic need for in-depth understanding of the complex changes in the value delivery process. This process flows from ascertaining what have and have not changed in pharma industry’s new normal. The core intent is to find an answer to the key question: Should markers now need to focus much more on creating patient-perceived value of brand outcomes to business excellence?

Understanding complex changes in the value delivery process:

In today’s scenario – amid expressive customers, to get to know the needs, wants and expectations of the target audience, pharma marketers would need to listen to them carefully, and capture the same as they are – in an organized way. In-depth analysis of the data, thus captured, would help marketers chart a cutting-edge strategic pathway – converting data into actionable insights, in pursuit of excellence.

Covid-19 pandemic expanded digital media use even by older age group: 

Many studies have shown, since the onset of Covid-19 pandemic, the use of digital media for various purposes, including health care products ad services, has increased among older age groups, more than ever before.

One such April 2021 Press Release of AARP Research was captioned, ‘Tech Usage Among Older Adults Skyrockets During Pandemic.’ It reported, technology enabled older adults, to better weather – the isolation of the pandemic, started using digital platforms and social media, from ordering groceries to telehealth visits to connecting with loved ones.

More specifically, in the present context, the study found, among others - ‘50+ use of smartphones increased dramatically. For instance, use for ordering groceries grew from 6% to 24%; use of personal health increased from 28% to 40% for activities like telehealth visits, ordering prescriptions, or making appointments; use of health and fitness information increased 25% to 44%; and use of financial transactions increased 37% to 53%.’

Another AARP publication on September 2021 was captioned: ‘Personal Tech and the Pandemic: Older Adults Are Upgrading for a Better Online Experience.’ It also articulated: ‘Texting, email, social media, and video chatting have become commonplace as the COVID-19 pandemic has forced people to remain home, separated from friends and family. More than 80% of those 50-plus said they use technology in some form to stay connected, many on a daily basis.’

I hasten to add that the above study, although was conducted in the United States, the overall trend is expected to be similar in India – of course, with varying numbers. Be that as it may, the new opportunity of listening to customers from their reach, use, interactions, and conversations through digital channels, and sieving out relevant information from the same, needs to be adequately leveraged.

This space could provide high-quality data, when used in a structured manner, for in-depth understanding of the pandemic-triggered changes in customer dynamics. No wonder, why some major pharma players’ greater focus on listening intently to healthcare customers’ conversation is assuming increasing criticality, today. This process would also help immensely while delivering value of affordable access to contemporary innovative drugs.

Increasing criticality of affordable access to contemporary innovative drugs:

Alongside the pre-Covid 19 ailments, new disease complications in the pandemic – or, now, in endemic-prone areas, would enhance manifold the criticality of the value of access to innovative drugs – for all to be up and running. This area, was well articulated in a similar context in the article, published in the Pharmaceutical Executive on September 20, 2021.

The authors reiterated, ‘Patient affordability and access enablement, along with health system sustainability and affordability, are critical factors that impact current patient access to these innovations as well as sustained future access to new innovations.’

Many pharma companies, who have both resources and knowledge to develop and supply new and innovative medicines at scale, are already talking about it, even in the new normal. But, they would now need to walk the talk with a greater sense of inclusivity that can be seen and felt by all. Let me cite a very recent example in this area from the Covid-19 perspective.

A recent example in this area from Covid-19 perspective:

An encouraging recent development about affordable access to innovative drugs was reported by The New York Times on October 27, 2021. It reported: ‘Merck has granted a royalty-free license for its promising Covid-19 pill to a United Nations-backed nonprofit in a deal that would allow the drug to be manufactured and sold cheaply in the poorest nations, where vaccines for the coronavirus are in devastatingly short supply.’

More, such examples, also involving treatment in other critical disease areas, would have a salutary effect, even on the public image of the concerned pharma innovators. The ball seems to have started rolling in this direction, as evident from the key findings of the ‘2021 Access to Medicine Index’.

‘2021 Access to Medicine Index’ elucidates the point:

The ‘2021 Access to Medicine Index’, published by the Access to Medicine Foundation, on January 26, 2021, reiterates the increasing criticality of affordable access to contemporary innovative drugs. It adds, with the resources and the knowledge to develop and supply new medicines at scale, pharma players have a responsibility to ensure these are made available to people regardless of their socioeconomic standing.

The key findings of the report include the following:

  • Eight companies adopt processes to systematically address access to medicine for all new products
  • Less than half of key products are covered by pharma companies’ access strategies in poorer countries.
  • R&D for COVID-19 has increased, yet another pandemic risk goes unaddressed.

In sync with other experts, the report further emphasizes, ‘Pharmaceutical companies have the power to address affordability by refining their access strategies; and the ability to strengthen supply chains and support healthcare infrastructures. Considering their size, resources, pipelines, portfolios and global reach, these companies have a critical role to play in improving access to medicines.’

Why affordable access to innovative drugs is more critical in India:

The much-deliberated issue of why affordable access to innovative drugs is so critical in India, was aptly analyzed in an article, published by Brookings on March 03, 2020. The backdrop of the discussion was the W.H.O data on global health expenditures that compares out-of-pocket expenditure (OOPE) as a proportion of current health expenditure.

It revealed, India does much worse in comparison to the world average of OOPE. This was 65% for India versus the world average of around 20%, in 2016, with a similar scenario as compared to other Asian countries.  It specified, Thailand and China have reduced the proportion of OOPE over time, while Sri Lanka and Bangladesh witnessed an increase over time.

Conclusion:

The current healthcare spectrum of possibilities to address these issues haven’t changed significantly, since then. Interestingly, this is despite the increasing need of innovative drugs that’s keeping pace with the complexity in the health care environment since the onset of Covid-19 pandemic.

Thus, the criticality of affordable access to contemporary innovative drugs in the new normal, deserves an out of the box solution. Even today, OOPE continues to remain very high in India, and mostly for outdoor patient treatments. Thus, it is imperative that pharma marketers should focus more to create greater patient-perceived (not self-perceived) value of brand outcomes, in an innovative way – for business excellence in the new normal.

By: Tapan J. Ray    

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

More Challenges For Brand Launch Success In The New Normal

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The drug manufacturers’ life blood to drive business growth has always been successful new product launch. However, this task has always remained a tough challenge to crack, since last so many years for various reasons. According to McKinsey & Company: “About two-thirds of drug launches don’t meet expectations. Improving that record requires pharmaceutical companies to recognize the world has changed and adjust their marketing accordingly.” Several research studies have been carried out by now to gain actionable insight on this issue.

Existing challenges for successful drug launch got further amplified, as Covid-19 pandemic added a novel dimension in this space. It involves disruptive changes in many facets of customers’ new product-value expectations. Similar changes are witnessed in the product value delivery process, doctor-patient engagement, content development and delivery platforms, among others. This article will explore this area from successful new product launch perspective, in the days ahead.

Dismal outcome of many new drug launches – more for primary care:

According to a recent study, published by L.E.K Consulting on December 18, 2020: ‘About half of all products launched over the past 15 years have underperformed pre-launch consensus forecasts by more than 20%.’ This is quite in line with what McKinsey & Company found in 2014, as quoted in the beginning of this article.

However, in a relative yardstick, the primary care market has been the most vulnerable, which continues even during the ongoing pandemic. For example, according to an April 2020 Evaluate Vantage analysis, ‘Covid-19 adds a new danger to drug launches.’ The study emphasized, new drug launches, especially those targeting the primary care market, are particularly vulnerable as the pandemic continues. The key reason being, besides widespread disruptions in the health care system, sales teams will be physically unable to reach frontline physicians, as much as, and also the way they could do the same in the old normal. The studies underscore that a strong launch is critical to achieving maximum commercial potential, despite odds.

Some pivotal factors demand a greater focus than ever before:

After in-depth analysis of various studies in this area, some pivotal marketing factors appeared critical to me, in order to reduce success uncertainty while launching new products.

Alongside, unbreachable and agile supply chain alternatives also assumed a never before-frontline-importance in the new normal, unlike pre-Covid days. Another recent study, titled ‘Competitiveness During Covid-19 Pandemic: New Product Development and Supply Chain Agility’, published by ResearchGate in October 2020, vindicated the point.

As the title indicates, the above study examined the effect of new product development and supply chain agility to gain competitiveness during the Covid-19 pandemic and probably beyond. Thus, while developing and launching new products in the new normal, some pivotal factors, such as the following, appeared critical to me, in order to reduce success-uncertainty while launching new products:

  • Early planning for launch with a robust market access strategy, better sales forecasting with stretch goals – supported by state-of-the art forecasting tools and relevant learnings from the past.
  • Gaining actionable insight on changing customer needs, market dynamics and competitive threats in the new normal – by generating credible and contemporary data and leveraging the power of analytics – to offer differentiated stakeholder value.
  • Driving home patient-centric coeval product values that will delight customers – through flawless execution of stakeholder engagement strategies.
  • Working out virtual, innovative, personalized and impactful alternatives to some critical launch related physical events, such as, conferences, seminars, webinars and the likes, for doctors and other customers.
  • Developing creative and contemporary content and other marketing assets for significant online or omnichannel presence of new brands – supported by video clips and other tools, aiming at the target audience.
  • Differentiating the launch product clearly from those of the nearest competitors, where a focus on price-value relationship of the brand – from the patients’ perspective, could play a game changing role. As McKinsey & Company also highlighted, launching an undifferentiated product in an unestablished disease area carries a greater risk of failure.
  • Creating a robust and agile supply chain to navigate through unexpected market changes – as all experienced recently.

Delivering ‘patient-centric’ real value of the brand together, is critical:

Interestingly, L.E.K Consulting has also emphasized in its recent study that to drive and effectively deliver ‘patient-centric’ real value of new products, it is imperative for drug companies to execute the launch process flawlessly.

To make it happen on the ground – at the moment of truth, careful selection of a team of self-motivated people is necessary. This needs to be followed by intense training in all aspects of the specific launch, including effective use of modern digital tools and platforms – and above all – by creating a ‘can do’ team spirit to deliver the deliverables.

This requirement has been epitomized in the recent article, titled ‘Beyond the Storm: Launch excellence in the new normal,’ published by McKinsey & Company. Therein, the authors articulated, ‘Intangible though it may sound, great launches have a different feel from normal launches. There is a real sense that – we’re all in this together.’

Pharma’s current way of using digital platforms doesn’t satisfy many doctors: 

Over the last one year, as the pandemic brought all human activities virtually to a grinding halt, there has been a significant shift towards digital tools and online platforms, including in the way medical practitioners interact with drug companies. As recent surveys indicate, pharma customers don’t seem to be quite satisfied with the way many pharma players are currently making use of this technology.

This is happening even with those doctors who are open to virtual engagement and in favor of remote patient consultations. The issue needs to be resolved soon, particularly for new product launch successfully – using digital platforms, as reported in recent surveys.

The survey reports retraining of ‘sales reps to become digital orchestrators’:

One such recent survey, conducted by Indegene, which was also reported by Fierce Pharma on February 01, 2021, digital dissatisfaction of doctors with pharma companies, has jumped during the pandemic. The rates of dissatisfaction with pharma digital interactions, across media channels, ranged from 23% to almost 50% of physicians. Some of the key findings of the study include:

  • 49% of physicians are not happy with pharma’s social media engagements – perceived as less sophisticated when compared to expectations set by consumer companies.
  • Pharma is far from providing a satisfactory digital experience, as compared to other industries. The current dissatisfaction level where a higher percentage of doctors were dissatisfied, include marketing emails – 46%, telephone sales calls with sales reps – 42% and both webinars and websites – each at 39%.
  • In-person meetings dropped from 78% to 15% during the pandemic, but even now only 48% of doctors surveyed expect in-person engagements to continue in the post-COVID world.
  • Attendance at medical conferences also dropped from 66% to only 16% during the shutdowns and travel restrictions, but only 50% of HCPs now expect to resume in-person congresses after it’s safe to hold them.
  • The number of physicians engaged in remote sales visits increased from 11% to 47% during the pandemic, probably because there weren’t other alternatives available. Interestingly, one-third of physicians still plan to continue with virtual sales meetings even after the pandemic.
  • Most stakeholders are realizing, this is going to be the new normal, with senior pharma leadership also saying, ‘it’s never going to be the same as before.’
  • About 5 of the top 15 global pharma players are retraining their sales reps to become “digital orchestrators” and working to help them create clear and comprehensive digital communications for doctors.

Speedy resolution of these issues is likely making a substantial difference in improving pharma-to-physician interactions, particularly during new drug launches, in the days ahead.

Conclusion:

Success uncertainties in new product launches have always been a cause of concern for the drug industry, especially after having invested a substantial resource towards innovation and clinical developments. Interestingly, pharma players were mostly following ‘stick to the knitting’ dogma, as it were, in their launch planning. Despite the availability of sophisticated digital tools and analytics over the last several years, particularly in generating and accurate analysis of contemporary and credible data to gain insights, not much had changed radically. Suddenly Covid pandemic disrupted most market traditions, business processes, and the general belief on decision makers’ ‘gut feelings’ on customer behavior, market dynamics. Besides, the mindset of ‘doing better that what you have been always doing’, prevailed in many cases. In India, market research for most companies remained within the ambit of syndicated retail and prescription audit, despite frequent grumbling of many marketers on some critical findings of these reports.

The last one year has created more challenges in this area, although with a silver lining. A large number of drug companies have now stepped into the area of digital marketing – in varying degree, scale and resource deployment. This shift is expected to help reduce launch success uncertainties of new drugs. It will again, depend on how effectively the technology is leveraged by the cerebral power of astute markers.

Another article on pharma product launch, published by McKinsey & Company on December 15, 2020, also vindicated this point. It underlined: ‘As pharmaceutical companies reshape their commercial model to prepare for the uncertainties ahead, personalization and digital enablement will be crucial to launch success in the new environment.’

Amid these, as some surveys highlight, many doctors are not satisfied with the way digital technology is being currently used by pharma companies – to interact with them and cater to their information needs. With these ‘teething troubles’ being properly and promptly addressed, many drug companies, I reckon, will be able to remarkably reduce success uncertainties of new drug launches in the new normal.

By: Tapan J. Ray     

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

 

Coronavirus Outbreak: Drug Shortage, Treatment And Unease – A Review

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The Coronavirus outbreak has reached a “decisive point” and has “pandemic potential”, said the Director General of the World Health Organization (W.H.O), reportedly, on February 27, 2020, urging governments to act swiftly and aggressively to contain the virus. He further added, “We are actually in a very delicate situation in which the outbreak can go in any direction based on how we handle it.” Alerting all, he appealed, “this is not a time for fear. This is a time for taking action to prevent infection and save lives now.”

As on March 08, 2020 – 106,211 coronavirus cases (view by country) were reported globally, with 3,600 deaths and 60,197 patients recovered. Thus, the most relevant question now is the level of preparedness of each country, to prevent a possible epidemic, which may even strike at a humongous scale. This will be relevant for both, the countries already infected with a coronavirus – in a varying degree, as well as, those who are still out of it.

From the drug industry perspective, equally pertinent will be to assess on an ongoing basis its impact on the medical product supply-chain and further intensifying ongoing efforts to find the ‘magic bullet’ – an effective remedy, partly addressing the unease of all, on this score. In this article, I shall try to ferret out the current status on these points, based on available and contemporary data.

The impact assessment has commenced:

While on the current impact assessment, I shall restrict my discussion on the largest pharma and biological market of the world – the United States (US) and of course, our own – India, starting with the former. On February 14, 2020, the US released a statement of the Commissioner of Food and Drugs Administration titled, ‘FDA’s Actions in Response to 2019 Novel Coronavirus at Home and Abroad.’ Highlighting the proactive actions of the regulatory agency, the statement recorded:

“We are keenly aware that the outbreak will likely impact the medical product supply chain, including potential disruptions to supply or shortages of critical medical products in the U.S. We are not waiting for drug and device manufacturers to report shortages to us—we are proactively reaching out to manufacturers as part of our vigilant and forward-leaning approach to identifying potential disruptions or shortages.” Adding further, he revealed that the US-FDA is in touch with regulators globally and has added resources to quickly spot “potential disruptions or shortages.”

Whereas in India, the Chemicals and Fertilizers Ministry has also announced: “The Government of India is closely monitoring the supply of APIs/intermediates/Key starting materials (KSMs) which are imported from China and the effect of the outbreak of a novel coronavirus in China on their supply.”

The current status:

As this is an ongoing emergency exercise, on February 27, 2020, by another statement, the US-FDA reported the first shortage of a drug, without naming it, due to the COVID-19 outbreak. It identified about 20 other Active Pharmaceutical Ingredients (APIs) or finished drug formulations, which they source only from China. Since January 24, the US-FDA has, reportedly, been in touch with more than 180 manufacturers of human drugs to monitor the situation and take appropriate measures wherever necessary. However, the prices of some key ingredients have already started increasing.

Back home, on March 03, 2020, Reuters reported, the Indian Government has asked the Directorate General of Foreign Trade (DGFT) to restrict export of 26 APIs and other formulations, including Paracetamol, amid the recent coronavirus outbreak. Interestingly, these 26 active pharmaceutical ingredients (APIs) and medicines account for 10 percent of all Indian pharmaceutical exports and includes several antibiotics, such as tinidazole and erythromycin, the hormone progesterone and Vitamin B12, among others, as the report indicated.

It is unclear, though, how this restriction would impact the availability of these medicines in the countries that import from India, especially formulations, and also China. For example, in the United States, Indian imports, reportedly accounted for 24 percent of medicines and 31 percent of medicinal ingredients in 2018, according to the U.S. Food and Drug Administration. Be that as it may, it still remains a reality that China accounted for 67.56 per cent of India’s total imports of bulk drugs and drug intermediates at USD 2,405.42 million in 2018-19.

Prior to this import ban, a report of February 17, 2020 had flagged that paracetamol prices have shot up by 40 percent in the country, while the cost of azithromycin, an antibiotic used for treating a variety of bacterial infections, has risen by 70 percent. The Chairman of Zydus Cadila also expects: “The pharma industry could face shortages in finished drug formulations starting April if supplies aren’t restored by the first week of the next month,” as the news item highlighted.

No significant drug shortages reported, just yet:

From the above details, it appears, no significant drug shortages have been reported due to Coronavirus epidemics in China – not just yet. Moreover, the Minister of Chemicals and Fertilizers has also assured: ‘No shortage of drug ingredients for next 3 months.’ He further added: ‘All initiatives are being taken to ensure there is no impact of the disease in India.’

However, on March 03, 2020, W.H.O, reportedly has warned of a global shortage and price gouging for protective equipment to fight the fast-spreading coronavirus and asked companies and governments to increase production by 40 percent as the death toll from the respiratory illness mounted. Moody’s Investors Service also predicted, coronavirus outbreak may increase demand, but poses a risk of supply chain disruptions, especially for APIs and components for medical devices sourced from China.

In view of these cautionary notes, especially the health care and regulatory authorities, should continue keeping the eye on the ball. More importantly, commensurate and prompt interventions of the Government, based on real-time drug supply-chain monitoring, along with the trend of the disease spread, will play a critical role to tide over this crisis.

In search of the ‘Magic Bullet’: 

Encouragingly, on February 16, 2020, the National Medical Products Administration of China has approved the use of Favilavir, an anti-viral drug, for the treatment for coronavirus. The drug has reportedly shown efficacy in treating the disease with minimal side effects in a clinical trial involving 70 patients. The clinical trial is being conducted in Shenzhen, Guangdong province. Formerly known as Fapilavir, Favilavir was developed by Zhejiang Hisun Pharmaceutical of China. A large number of other promising R&D initiatives are being undertaken, in tandem, by brilliant scientific minds and entities to find an effective treatment for this viral disease. To give a feel of it, let me cite just a few examples, both global and local, as below.

Pfizer Inc. has announced that it has identified certain antiviral compounds, which were already in development, with potential to treat coronavirus-affected people. The company is currently engaged in screening the compounds. It is planning to initiate clinical studies on these compounds by year-end, following any positive results expected by this month end.

Several large and small pharma/biotech are now engaged in developing a vaccine or a treatment. Gilead has, reportedly, initiated two phase III studies in February 2020, to evaluate its antiviral candidate – remdesivir, as a treatment for Covid -19. Takeda is also exploring the potential to repurpose marketed products and molecules to potentially treat COVID-19, besides developing a plasma-derived therapy for the same. Pipeline candidates of other companies are in earlier stages of development, as reported.

Whereas in India, Serum Institute of India (SIL) is collaborating with Codagenix, a US-based biopharmaceutical company, to develop a coronavirus cure using a vaccine strain similar to the original virus. The vaccine is currently in the pre-clinical testing phase, while human trials are expected to commence in the next six months. SII is expected to launch the vaccine in the market by early 2022.

Zydus Cadila, as well, has launched a fast-tracked program to develop a vaccine for the novel coronavirus, adopting a two-pronged approach, a DNA based vaccine and a live attenuated recombinant measles virus vectored vaccine to combat the virus. These initiatives seem to be a medium to long-term shots – laudable, nonetheless. 

Current off-label drug treatment for coronavirus:

Some of the drugs, reportedly, being used in China to treat coronavirus include, AbbVie’s HIV drug, Kaletra and Roche’s arthritis drug – Tocilizumab (Actemra). However, none of these drug treatments have been authorized yet by drug regulators, to treat patients with coronavirus infection.

According to the Reuters report of March 04, 2020, China’s the National Health Commission, in its latest version of online treatment guidelines, has indicated Roche’s Tocilizumab for coronavirus patients who show serious lung damage and elevated level of a protein called Interleukin 6, which could indicate inflammation or immunological diseases.

However, there is no clinical trial evidence just yet that the drug will be effective on coronavirus patients and it has also not received approval from China’s National Medical Product Administration for use in coronavirus infections. Nonetheless, Chinese researchers recently registered a 3-month clinical trial for Actemra on 188 coronavirus patients. According to China’s clinical trials registration database, the period of trial is shown from February 10 to May 10. 

Is coronavirus becoming a community transmitted infection?

Even while grappling with an increasing number of COVID-19 positive patients, the Indian Government is showing a brave front, as it should. However, it has also confirmed “some cases of community transmission.” This unwelcome trend makes India the part of a small group of countries, including China, Japan, Italy and South Korea, where community transmission of the virus has taken place. This is a cause of an additional concern.

Although, there has been no significant drug shortages reported yet, shortages of  hand sanitizers,recommended for frequent use by the W.H.O and other competent bodies, as they can, reportedly kill Covid-19. Similarly, N95 masks useful to prevent the spread of the disease, have also disappeared, adding more fuel to fire, if not creating a panic-like situation, for many.

Conclusion:

Most global drug players with a business focus on branded – patented drugs, are not expected to fight with the supply disruptions. As reported, ‘Several top drugmakers – including Pfizer, Johnson & Johnson, Bayer, Merck KGaA and Roche—recently confirmed to FiercePharma that they have stock policies in place to minimize the impact.”

But, for the generic drug industry the disruption in the supply chain may have a snowballing effect. For example, as the March 03, 2020 edition of the New York Times (NYT) reported – supply chain disruption in sourcing some APIs from China is being felt most acutely in India, as the Government decided to stop exporting 26 drugs, most of them antibiotics, without explicit government permission. The same article also highlighted the possible multiplier effect of this development with its observation: “That’s a problem for the rest of the world, which relies on India’s drug makers for much of its supply of generic drugs. India exported about $19 billions of drugs last year and accounted for about one-fifth of the world’s exports of generics by volume”, it added.

As on date, there is no known cure for coronavirus infection. The magic-bullet has yet to be found out. However, over 80 clinical trials has, reportedly, been launched to test coronavirus treatments. This includes, repurposing older drugs, as well. Recently, only Favilavir, an anti-viral drug, has been approved for treatment for coronavirus by the National Medical Products Administration of China.

Coming back to the unease of many in India, the country’s perennial shortages of doctors, paramedical staff, hospital beds, adequate quarantine facility for a large number of patients and fragile public healthcare delivery system, still pose a humongous challenge in this crisis. More so, when just in the last week, U.S. intelligence sources, reportedly, told Reuters that ‘India’s available countermeasures and the potential for the virus to spread its dense population was a focus of serious concern.’

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.

For Patient-Centricity: Emerging a C-Suite Role

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Regardless of skepticism of many, the formidable power of physicians to take all treatment decisions for patients, is gradually getting moderated, globally. Although, its pace may vary from country to country. An increasing number of more informed patients are carving out a greater role for themselves in this important process.

The central focus for brand demand generation can no longer remain just on the doctors. This is because, as I wrote this in my article, published in this Blog on July 06, 2015: “Slowly but steadily the process of taking treatment decisions for the patients is undergoing a metamorphosis, where well informed patients no longer want to play just a passive role. These patients want the doctors to take a final decision on their treatment only after meaningful interactions with them.” Besides a broad prescription pattern, this includes the medicines that they will consume, including meaningful details on product cost against the benefits to be accrued.

The age-old practice of doing a little bit on patient education or compliance, are grossly inadequate in an evolving new scenario. The good news is, many pharma companies have started realizing that appropriate engagement with patients to deliver what they want and more, can lead to better financial performance.

Consequently, the ball game for prescription demand generation is showing early signs of a change – somewhat radical in nature. To spearhead this unavoidable metamorphosis for the organization, there surfaced a brand-new role of a CxO – The Chief Patient Officers (CPO).

This new senior management position is expected to direct organizational focus on patients. Understand their concerns, needs, wants and goals, particularly in the disease areas where the company represents. And finally, give shape to new multichannel well-coordinated platforms of patient engagement, for better commercial returns. In this article, I shall try to explore how this transformation pans out, if at all.

The direction is right, but patients must feel the change:

As I said before, some pharma players have started accepting the reality. The crucial need for an organization to become ‘Patients-Centric’ can’t be wished away anymore. For example, a 2015 “Industry Healthcheck” survey where 1600 pharma executives participated, found that 85 percent of respondents agreed that ‘Patient-Centricity’ is the best route to improve profitability, in the fast changing business environment.

It is perhaps well understood that the pharma industry has arrived at this point due to increasing access of the general population to easily available, all-kind of information on the cyber space, including health care. The enabling facility has already prompted many patients evaluating various treatment options for a disease, including choice of drugs and their cost.

As a result, pharma companies felt the necessity to have a new leader who will give a new perspective and direction in creating a new value for the organization, for a sustainable progress. This involves charting a comprehensive pathway to gradually shift the entire company focus on ‘patients for products’, and not on ‘products for patients.’

According to reports, a few global pharma majors, such as Merck and Sanofi already have their CPO in place, but patients are yet to feel any difference on the ground even for these companies, as many say.

What exactly is ‘Patient-Centricity?’ – Two perspectives:

It won’t be a bad idea to get to know two different perspectives on what ‘Patient-Centricity’ exactly is – one from a CPO and the other from patient groups, as follows:

A. 3 three pillars of ‘Patient-Centricity’ from the CPO perspective:

To get a ringside perspective to this question from the industry, let me quote from the first CPO - Anne C. Beal appointed in a top-10 pharma – Sanofi, on March 31, 2014, though the CPO position is in existence, since 2012.

On December 2014, at the 11th annual Patient Summit USA conference, Anne Beal, reportedly deliberated on the three pillars of her company’s patient-centric strategy, which I shall describe, as follows:

  • Utilizing patients’ input to get a better sense of their needs in order to design and deliver solutions that help fulfill them.
  • Engaging and supporting patients to ensure the solutions that the company delivers help enhance their lives and improve outcomes.
  • Involving with the company employees and supporting them to create an engaged community and patient-centric culture.

B. 9 attributes of ‘Patient-Centricity’ from the patients’ perspective:

‘Patient View’ – a UK-based research, publishing, and consultancy group, arrived at the ‘9 Key Attributes’ of ‘Patient-Centricity’. This is based on the analysis of feedbacks (2016-17) from 2,000 patient groups worldwide, 50+ different medical specialties in 100+ countries. The critical attributes of the same that patients want to see in a drug company can be summarized, as follows:

  • Demonstrate integrity and authenticity through all company actions.
  • Understand all the issues that patients face ‘beyond the pill’ and help in dealing with them.
  • Transparency in drug pricing policy, research, results, funding relationship.
  • Ensure that all patients are included in access strategies, regardless of the returns to the company.
  • Products to provide quantifiable value to patients.
  • Reliable supply and comprehensive patient safeguard.
  • Provide quality product information – Consistent, current, balanced and usable.
  • Patient group relation – good intention, effective governance, communication and training.
  • Ensure patients are engaged and their opinions are sought at each stage of R&D.

On a broader canvas, the two perspectives on ‘Patient-Centricity’ – one from the CPO and the other from the patients’ groups, do have some important similarities. Nevertheless, I reckon, the CPOs would still need to cover more ground to match patients’ expectations from a ‘Patient-Centric’ pharma company. 

Claimants of ‘patient-centric’ focus are many, but few deliver consistently:

Quite expectedly, there are many claimants for a ‘patient-centric’ organizational focus. Interestingly, few actually deliver consistently. This was vindicated in the article – ‘How patient-centric is the pharma industry’, published by PDD - a design and innovation consultancy firm on June 06, 2016.

The paper indicates both the up and downside of pharma company claims on ‘Patient-Centricity.’ The upside is that the hype has influenced, at least, some drug players to openly talk about the need to shift the company focus more on patients. A few have initiated some tangible action, as well. Whereas, the downside of it is the lack of consistency in the enthusiasm of ‘patient-centric’ actions by these companies. To illustrate the point, let me quote the following two examples from the article:

  • In the 2013 survey on ‘Patient-Centricity’ by the research firm ‘Patient View’, ViiV Healthcare (the GSK & Pfizer joint venture focused on HIV therapies), Gilead, AbbVie, Menarini and Janssen occupied the top 5 spots.
  • However, in the ‘eyeforpharma Barcelona Awards 2016 ’ that too focuses on ‘Patient-Centricity’, none of these companies featured in the “Most Valuable Patient Initiative or Service” category. Whereas, Sanofi took the top spot, and Merck, Roche, Novartis and TEVA were the remaining nominees.

The criteria of the two selection processes, apparently being similar, this is interesting. More so, when the ‘patient-centric’ focus of an organization is an ongoing strategy, with a ‘top priority’ tag attached to it.

Be that as it may, that some serious efforts being made by a few companies in this area, can’t be brushed aside, either, regardless of the fact that the CPO position came into existence, since 2012. It flagged, at that time, the criticality of ‘Patient-Centricity’ in the pharmaceutical business and possibly, sent a signal to pharma players for a course correction, in this direction, soon enough.

Conclusion:

In an interview, published in December 2016 issue of McKinsey Quarterly, LEO Pharma’s president and CEO, Gitte Aabo, aptly summarized the process of ‘Patient-Centricity’, as follows:

“Patient-Centricity means being deeply entrenched in the patient’s needs, not just thinking about how to develop new products and new features. It means reaching out to patients and considering treatments that will help them in whatever situation they find themselves in.”

However, since long, most drug manufacturers are apparently solely driven by commercial considerations, both for new drug discovery and also in generic product development. Subsequent marketing strategies are obviously an integral component of the same organizational thought leadership and value chain. Several examples from the current status of the R&D pipeline for multi-drug resistant antibiotics, or what is happening even with the generic drug pricing in many countries, including the United States, will vindicate this point.

That said, a mild wind of change on the sails of traditional pharma mindset seems to be slowly catching up, as some CPOs position themselves in the saddle. Hopefully, this will  ultimately make patients the centerpiece of pharma business. Can more of this kind of actions be construed as signals for imbibing ‘Patient-Centricity’ by the drug companies? Will its impact be visible and felt by all – in real life, soon?

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.

Evolving Scenario of Non-Personal Promotion in Pharma Marketing

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In the Indian pharmaceutical industry, ‘Non-Personal Promotion (NPP)’ is gradually expected to assume much greater strategic importance than what it is today, if at all, in the overall strategic marketing ball game.

This process would get hastened as and when the Department of Pharmaceuticals (DoP) decides to ‘walk the talk’ with mandatory implementation requirement of its ‘Uniform Code of Pharmaceutical Marketing Practices (UCPMP)’, with necessary teeth built into it for proper enforcement. Thereafter, pharma sales and marketing process would possibly not remain quite the same.

In that scenario, dolling out ‘Freebies’ of various kinds and values to the customers, that has been happening over a long period of time, would attract penal consequences as would be defined by the Government.

This, in turn, is expected to create virtually a level playing field for all the pharma players in the brand marketing warfare, irrespective of how deep their pockets are. Consequently, without any lucrative incentives to offer to the important doctors, Medical Representatives (MRs) in general, in my view, would find access to busy important doctors becoming increasingly tougher, and much less productive.

Not just an imagination:

This is not totally an imaginary situation, as it has already started happening elsewhere.

Stringent legal and regulatory measures are now being put in place, both for the pharmaceutical companies and also for the doctors, in various developed markets of the world to minimize alleged marketing malpractices.

In tandem, following noteworthy developments are taking place more frequently than ever before:

  • A large number of high value penalties are being regularly levied by the judiciary and/or regulatory authorities of various countries to many big name global pharma players for alleged marketing malpractices.
  • Some measurable changes are taking place in the area of ‘access to busy medical practitioners’ by the MRs, more in those countries.

A recent study:

According to a recent study of 2015 by ZS Associates, published in ‘AccessMonitor™ 2015’, MRs’ access to important prescribers are declining steadily over the last 6 to 7 years. This study was based on analysis of ‘Call Reports’ of 70 percent of all US pharma companies’ MRs. The report reviewed in great detail how often over 400,000 physicians and other prescribers meet with MRs who visit their offices.

The decrease in MR access to prescribers from 2008 to 2015 was captured as follows:

Year MR Access to Prescribers (%)
2015 47
2014 51
2013 55
2008 80

Source: ‘AccessMonitor™ 2015

This trend is indeed striking. It won’t be much difficult either to ascribe a plausible reason to it, when viewed in perspectives of increasingly tough pharma sales and marketing environment in the US.

Over a period of time, stringent laws and regulations, both for the prescribers and also for the pharma players, are being strictly enforced.  The ‘cause and effect’ of the overall development can possibly be drawn, when one finds in the above report that throughout the US, more than half of all doctors are voluntarily “access restricted” in varying degree, as on date.

Most impacted specialty area:

Coming to restricted access to doctors in medical specialty areas, oncology was highlighted in the ZS Associates report among the most restrictive specialties. This is evident from its analysis that today around 73 percent of the cancer specialists restrict MR access, where around 75 percent of them were “MR-friendly” as recently as 2010.

With this increasing south bound trend of “access restricted” doctors over the past decade, at least in the US, and with a strong likelihood of its continuity in the future too, the pressure on getting cost-effective per MR productivity keeps mounting commensurately. Hence, the search for newer and effective NPP platforms of modern times is also becoming more relevant to generate desirable prescription output from the important busy medical practitioners.

Any viable alternative? 

Although virtually unthinkable today, it would be interesting to watch, whether viable alternatives to pharma MRs emerge in the near future to overcome this critical barrier. As necessity is the mother of all inventions, pharma companies are expected to find out soon, how best to respond in this challenging situation for business excellence.

More interestingly, India being a low-cost thriving ground for technological solutions of critical problems of many types, I would be curious to watch how do the pharma players synergize with ‘Information Technology (IT)’ sector to pre-empt similar fall-out in India, as and when it happens.

Non-Personal Promotion: 

In these circumstances, the question arises, when productive personal access to busy doctors through MRs becomes a real issue, what are other effective strategic measures pharma marketers can choose from, for fruitful engagement with those doctors?

Relevant Non-Personal Promotion (NPP), yet personalized, has the potential to create a favorable brand experience and image in the overall brand-building process, leading to increased prescription generation. Application of various high to low tech-based NPP tools is more feasible today than ever before, especially when the use of smart phones, tablet PCs and iPads are becoming so common within the busy medical practitioners.

Major benefits:

There are, at least, the following four key benefits that NPP in pharma marketing could offer:

  • Companies can proactively get engaged with even those doctors who would not prefer visits by MRs or those visits are failing to yield the desired results, as before.
  • Personalized, flexible, persuasive, interactive and cost efficient brand or disease related communication can be made available to even extremely busy doctors, at any time of their choice. This is quite unlike personal ‘one on one’ meetings with MRs, that are now taking place usually during or around the busy working hours.
  • Helps create a positive impression in the doctors’ minds that their busy schedules with patients are valued and not disturbed, respecting their wish and desire for the same.
  • Built-in provisions to encourage the doctors requesting for more specific information online, would enhance the possibility of ongoing customer interactions for productive long term engagement.

Based on all these, it appears to me, creative use of modern technology based NPP tools show a great potential to create a ‘leap-frog’ effect in augmenting the pharma brand-equity in all situation, especially during restricted access to all those heavy prescribers, who matter the most.

From message ‘Push’ to information ‘Pull’:

One of the fundamental differences between Personal-Promotion (PP) of pharma brands through MRs and Non-Personal Promotion (NNP) of the same, is a major shift from ‘Push’ messaging to the modern day trend of information ‘Pull’.

In the era of Internet and different types of ‘Web Search’, people want to ‘Pull’ only the information that they want, and at a time of their personal choice, if not in a jiffy. In this context, broader utilization of especially digital medium based NPP with navigational tools, would be of great relevance.

Any specific request coming from the target doctors in response to personalized e-mails or other direct communications may be delivered through the MRs. This would help creating an important and additional opportunity to strengthen the relationship between the prescribers and the pharma companies.

A good NPP strategy, therefore, needs to be crafted by creating a platform for ongoing engagement with the prescribers, primarily through information ‘Pull’, rather than making it just another part of any specific promotional campaign through message ‘Push’.

The segments to initially concentrate upon:

Till mandatory UCPMP comes into force with stringent compliance requirements, and in tandem MCI guidelines for the doctors acquire necessary teeth, Indian pharma industry, at least, can start warming up with NPP.

A sharper focus on NPP, as I see it, is required in the following pharma marketing situation, at least as a key supporting strategy:

  • Extremely busy doctors, who do not want to meet the MRs
  • Important doctors, who are not too attentive during brand communication
  • Potential heavy prescribers, who do not prefer interaction with MRs during meetings, with poor engagement level
  • For promotion of important ‘mature brands’ or ‘cash cows’ to free MRs’ time to focus on newer products

NPP and “Cash Cows”

NPP could be very relevant for ‘Mature Brands’ or the ‘Cash Cows’, especially for those pharma players having a large number of such brands and at the same time are also introducing new products. This situation is not very uncommon in the Indian pharma industry, either.

With such ‘mature brands’, the MRs have already done a superb job, who are now required to concentrate on making ‘Stars’ with other new products.

It would, therefore, be more meaningful to opt for a lower cost engagement with NPP for these brands, at least for the busy doctors, across multiple channels. Consequently, this strategy would further boost the margins of mature brands, sans deployment of a large number of more expensive MRs.

Platforms to explore:

The emerging situation offers a never before opportunity to use many interesting channels and interactive platforms for flexible and effective tech-based customer engagements. These can be used both for the doctors and also for the patients’ engagement initiatives. Exploration of platforms, such as, custom made health apps, social media, WhatsApp, e-mails and messengers using smartphones and mobile handsets, has already been initiated by some pharma players, though in bits and pieces.

Trapped in an ‘Archaic Strategy Cocoon’?

I wrote an article on the above subject in this blog dated June 17, 2013 titled, “Pharma Marketing in India: 10 Chain Events to Catalyze a Paradigm Shift”

In that article, I mentioned that over a long period of time, Indian pharmaceutical industry seems to have trapped itself in a difficult to explain ‘Archaic Strategy Cocoon’. No holds bar sales promotion activities, with very little of cerebral strategic marketing, continue to dominate the ball game of hitting the month-end numbers, even today.

It is about time to come out of this cocoon and prepare for the future, proactively, boldly, creatively and squarely. This will require a strategic long term vision to be implemented in an orderly, time-bound and phased manner to effectively convert all these challenges into high growth business opportunities.

Conclusion:

Like many others, I too believe that ‘face to face’ meetings still remain the most effective method for MRs’ brand detailing to doctors. It may remain so, at least, for some more time.

Nonetheless, in the gradually changing sales and marketing environment, pharma players, I reckon, should no longer rely on the personal visits alone. Instead, they should start exploring multi-channel, mostly tech-based, interactive and personalized NPP as effective augmentation, if not alternatives, for customer engagement to achieve the business goals.

In an environment thus created, it appears, the same or even a lesser number of MRs would be able to effectively orchestrate a large number of communication channels, facilitated by simple yet high technology online platforms.

All NPP channels and platforms would need to be designed and used as preferred by the busy medical practitioners and at any time of their choice, which could even be outside the usual working hours for a MR. In a transparent and mostly online sales and marketing monitoring process, physical supervision and guidance of, at least, the front line managers may also become irrelevant, as we move on.

In India, most pharmaceutical players are attuned to similar genre of promotional strategy-mix, predominantly through MRs, for all types of doctors and specialties, though the message may vary from one specialty to the other. A large number of companies also don’t seem to have organized research-based credible data. These are mainly on, what types of engagement platforms – personal or non-personal – and at what time, each busy prescriber would prefer for product information access and sharing.

Pharma sales marketing environment is slowly but steadily undergoing a metamorphosis, all over the world. This change is very unlikely to spare India, ultimately. The evolving paradigm of mostly high-tech driven and extremely user-friendly NPP in pharma marketing, has the potential to reap rich harvest. The early adopters, making adequate provisions for scaling up, are likely to gain a cutting edge competitive advantage to excel in business performance.

Scalable and creative use of NPP has a ‘Zing Factor’ too. Nonetheless, pharma marketing strategies have been too much tradition bound, by choice. By and large, most of what are being followed today reflect high attachment to past practices, with some tweaking here or there…tech-based or otherwise.

Well before it becomes a compelling strategic option, as the looming pharma marketing environment unfolds with the UCPMP becoming mandatory for all, would the Indian pharma companies come out of the ‘Archaic Cocoon’ to proactively embrace NPP with required zest and zeal?

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.

The ‘TINA Factor’: A Hotspot for Patented Drugs

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An article published in a global business magazine on December 5, 2013 mentioned that Marijn Dekkers, the CEO of Bayer AG reportedly has said at the Financial Times Global Pharmaceutical & Biotech Conference held this month that:

“Bayer didn’t develop its cancer drug, Nexavar (sorafenib) for India but for Western Patients that can afford it.”

The head honcho deserves kudos for revealing his mind upfront, while inviting two quick questions, as follows:

  • If that is so, why did Bayer launch Nexavar in India?
  • Did Bayer have any other alternative or choice for not doing so, other than negotiating for a ‘Voluntary License’?

As Bayer already had decided against any ‘Voluntary License’ for Nexavar in India, the simple answer to both the questions is : There Is No Alternative (TINA). And…that’s my ‘TINA Factor’, now a hotspot for patented drugs in India.

I shall dwell on it below, just in a short while.

Bellicose stance for high drug prices and more stringent patent regime:

Everybody acknowledges, beyond even an iota of doubt, that the contribution of the global pharmaceutical industry in the ongoing fight of mankind against diseases of all kinds, is commendable and exemplary.

However, over a period of time, as the low hanging fruits of pharma R&D are in the process of getting all plucked, raw commerce mainly driven by likes of “The Wall Street” quarterly expectations, have started overriding public health considerations involving a large section of the society, across the world, including India.

In this evolving scenario, healthcare has to be extended to almost everybody in the society by the respective Governments in power with strong support from the pharma industry. Instead, to utter dismay of many, the later seems to have opted for a bellicose stance.  Their lobby groups appear to be power playing with all might in the corridors of power, to make the product patent regime of faster growing emerging markets more and more stringent, restricting smooth entry of affordable generic or biosimilar drugs increasingly difficult.

Underlying reasons for Big Pharma’s near obsession to have in place an ever stringent patent regime, defying all public health interest particularly of the developing countries, I reckon, are mainly three-fold:

  • Grant of product patent for any innovation irrespective of triviality
  • To have absolute pricing freedom for patented drugs for unlimited profits
  • To enjoy and extend product monopoly status as long as possible

Probably, to camouflage these intents, the reasons for high prices of patented drugs are attributed to the over-used buzz-words – fostering and re-investing in innovation, which is more often underscored as frightfully expensive.

Fair enough, in that case, let the high cost of R&D be appropriately quantified involving independent  experts and made known to public. It will then not be like a jig saw puzzle for people to understand the real intent or the truth behind high drug prices. Thereafter, practical solutions need be fleshed-out putting the bright brains and minds together to make new medicines affordable to patients, across the world.

Most probably, that is not to happen, unless a legally binding system of disclosure of expenses is made mandatory for R&D, just as the ‘Physician Payment Sunshine Act’ of the United States demands public disclosure of gifts and payments made to doctors by the pharma players and allied businesses.

On the contrary, incessant efforts by vested interests still continue to keep the patented drug prices beyond the reach of common man. The following are just some very recent examples:

Another ‘defiant move’ in drug pricing:

In another recent development, US-FDA on December 6, 2013 approved Sovaldi (sofosbuvir) of Gilead Sciences Inc. This new drug is reported to be a cure for chronic infection with hepatitis C virus, without co-administration of interferon.

According to the report of July 2013 of the World Health Organization (WHO), about 150 million people are chronically infected with hepatitis C virus, and more than 350, 000 people die every year from hepatitis C- related liver diseases, across the world.

Most interestingly, Gilead Sciences have reportedly decided to keep the price of Sovaldi at a staggering US$ 1,000 (Rs. 62,000) -a-day for one tablet to be continued for 12 weeks. Thus the cost of a three month course of treatment with Sovaldi would be a mind boggling sum of US$ 84,000 (Rs.L 5.21), just for one patient.

It is worth noting that the above price/table of Sovaldi, as decided by Gilead Sciences, has started culminating into a storm of protest, almost immediately, even in the United States (US). The biggest drug benefits manager in that country – Express Scripts Holding Co. in a decisive move to drive down spending on the medicines, reportedly plans to start a price war when Sovaldi comes to market next year or early in 2015 wearing a price tag of US$ 1,000 a pill.

Further, on this seemingly defiant pricing strategy, that too for a life saving drug affecting patients belonging to all strata of the society, ‘Doctors Without Borders’ have reportedly commented: “Using patents to block affordable versions of sofosbuvir and pricing this drug out of reach of the most vulnerable groups who need it most is simply putting profits before people’s lives.”

Brewing a fresh initiative for more stringent high drug price regime:

To foist stricter pharmaceutical patent regime, making access to affordable drugs for the world’s poor increasingly challenging, an initiative is reportedly brewing afresh led by the United States (US).

Ministers of Trade from 12 countries initiated a discussion on December 6, 2013 at Singapore to meet the US deadline of forging a deal on the proposed ‘Trans-Pacific-Partnership (TPP)’ before the end of 2013.

These twelve countries – Australia Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, USA and Vietnam, contributing 40 percent of the world economy, are expected to hammer out the TPP deal first, though other countries may hitch on thereafter.

However, after 4 days of intense negotiation, the US-led TPP talks ended on December 10, 2013, without beating into shape any deal. These countries would reportedly meet again on January 2014, in contrast to earlier plan.

The global human right groups like ‘Medicins Sans Frontieres (MSF)’ and ‘Doctors Without Borders’ have reportedly commented, “The ‘Data Protection’ period will prevent drug regulatory agencies in TPP signatory countries from referencing data needed to approve lower-cost generic versions of a protected drug, delaying competition that would lead to cheaper prices”.

In a poll commissioned by ‘Avaaz’ – a global advocacy group, reportedly 62 percent of Americans, 63 percent of Australians, 70 percent of New Zealanders, and of 75 percent Chileans opposed limiting access to generic medicines through the patent proposal in TPP.

Quite expectedly, the powerful US pharma lobby group ‘Pharmaceutical Research and Manufacturers of America (PhRMA)’ said, “It was necessary for companies to recover investments and conduct further research into new cures”.

Breath of fresh air:

The good news is that some prudent developments are also seen around in the midst of a monopolistic drug pricing scenario, offering a breath of fresh air. Some countries around the world, including an important payor in the Unites States, National Institute for Health and Care Excellence (NICE) of UK which assesses the value of drugs for NHS use, and even ‘National Development and Reform Commission (NDRC)’ of China, have now started taking note and proactive measures in different ways on monopolistic high drug prices.

A recent report highlighted that ‘National Development and Reform Commission (NDRC)’ of China would examine and regulate the price-related monopolistic practices of six industries operating in the country, including pharmaceuticals and would crack down wherever they find excessively high prices. 

Can India insulate itself from pricing onslaught?

Despite growing global pressure against ‘putting profits before people’s lives’, one may arguably expect more such initiatives spearheaded by Big Pharma to make the patent regime, of especially the emerging markets, more stringent in the years ahead.

That said, ‘The TINA Factor’, which I shall now dwell upon, would probably help reinforcing the protective shield of Indian patent regime against foreseeable assaults with strategies quite similar to as cited above, denying access to new life saving drugs to most of the general population of the country.

‘The TINA Factor’ and three ‘Alternatives’ available to MNCs:

Since enactment of patient-friendly patent laws by the Parliament of India effective January 1, 2005, many global pharma companies and their lobby groups have been continuously expressing immense displeasure and strong anger in many ways for obvious reasons, just as the CEO of Bayer AG did recently.

There are, of course, a few exceptions, such as Sir Andrew Witty, the global CEO of GlaxoSmithKline (GSK), who has been publicly expressing balanced views on this subject in several occasions, so far.

Being driven by anger and possibly desperation any MNC may wish to choose one of the following three ‘Alternatives’ available to them:

Alternative 1: Do not apply for the product patent in India at all.

‘The TINA Factor’: In that case the product will be made available in a platter for the generic players to copy.

Alternative 2: Obtaining the relevant patent from the Indian Patent Office (IPO), do not launch the patented product in India.

‘The TINA Factor’: After three years from the date of grant of patent, as per the statute, the said product could become a candidate for CL on the ground that the patented invention has not been worked in India.

Alternative 3: Launch the product only at the international price.

‘The TINA Factor’: If any patented new product is not available to patients at a ‘reasonably affordable price’ or ‘reasonable requirements’ of patients with respect to the patented invention are not satisfied, again according to statutes, interested parties are free to apply for CL to the IPO, following the steps as specified in the Act. Moreover, the Government itself may issue CL in national emergencies or ‘extreme urgency’ for non-commercial use.

Considering the ‘TINA Factor’, it appears, if the new products do not conform to the ‘Indian Patents Act’ and are NOT launched with ‘reasonably affordable prices’ or ‘reasonable requirements’ of patients are NOT met with these new drugs, the possibility of their legal generic entry at much lower prices is rather high in India. CL granted by the IPO for Bayer’s Nexavar to NATCO vindicates this point.

Summing-up effects of the ‘TINA Factor’:

Many would now reckon that the ‘TINA Factor’, being a hotspot for patented drugs in India, has the potential for getting adopted by many other countries in not too distant future. Two of its palpable effects, as felt in the country so far, may be summed-up as follows:

  • It leaves no option to any MNC, other than launching their new products in India, especially after obtaining  relevant patents from the IPO.
  • It also squashes apprehensions of many that discontented Big Pharma would be able stop launching patented new products in India, depriving a large number of patients of the country.

Conclusion:

‘The TINA Factor’, thus created by the lawmakers, is expected to remain undiluted, unless commensurate changes are made in the Indian Patents Act.

Not withstanding the reported anger expressed by the CEO of Bayer AG or recently reported ‘absurd pricing’ of Sovaldi, or even for that matter, fresh attempts that are now being made to cobble together a TPP deal, patented new products would continue to be launched in India, as they will receive marketing approval from the Drug Controller General of India (DCGI).

Any possibility of dilution of the ‘TINA Factor’ seems remote now, though powerful overseas pharma lobby groups are investing heavily for a change to take place in various ways.

It also does not seem likely, at least in the near to mid-term, that India would be a party to its ‘Patents Act’ diluting any ‘Free Trade Agreement’ or remain unmoved with high drug prices like, US$ 1000/tablet for life saving drugs like sofosbuvir, more so, if those are considered essential medicines in the country.

Come 2014, it appears improbable that any new Union Government would be able to garner enough numbers in the Parliament to amend Indian Patents Act, buckling under pressure of powerful lobby groups, directly or indirectly, and daring to ignore public sentiment on this sensitive issue. 

Considering all these, the point to ponder now:

While abhorring pro-patients ‘Patents Act’ of India, can the Big Pharma come out with any viable alternative today for NOT launching their life saving patented new drugs in the country with the ‘TINA Factor’ prevailing?

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.

 

Humongous Pharma Corruption: China Ups The Ante…and India?

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In the ‘pharma bribery’ related scandal in China, many postulated that the Chinese Government has cracked down selectively on Multinational Corporations (MNCs) to extend unfair business advantages for its local players.

Media reports of September 2013 indicate that in all probability the intent of the Chinese Government is not to spare homegrown corruption in this area. The country appears to be taking tough measures against both global and local perpetrators of such criminal acts, which have spread their vicious tentacles deep into the booming Chinese pharmaceutical industry.

The report names the following domestic companies:

  • Sino Biopharmaceutical Ltd has set up a team to investigate allegations broadcast on the state television that its majority-owned subsidiary had paid for illegal overseas trips for doctors to Thailand and Taiwan.
  • Privately held Gan & Lee Pharmaceuticals investigating allegations of spending around US$ 130.75 million to bribe doctors to promote their pharmaceutical products over five years.

More MNCs under investigation:

At the same time, international media are reporting names of more and more big global pharma players allegedly involved in this humongous scam, as follows:

  • In July 2013, the British drug maker GlaxoSmithKline (GSK) was allegedly involved in around US$ 490 million deceptive travel and meeting expenses as well as trade in sexual favors. Chinese authorities detained four senior executives of GSK in China to further investigate into this matter.
  • In the same month Chinese police reportedly visited the Shanghai office of another British pharmaceutical major AstraZeneca for investigation related to this scam.
  • In August 2013, Sanofi of France reportedly said that it would cooperate with a review of its business in China after a whistle-blower’s allegations that the company paid about US$ 276,000 in bribes to 503 doctors in the country.
  • Again in August 2013, a former employee of the Swiss pharmaceutical major Novartis has reportedly claimed that her manager urged her to offer ‘kickback’ to doctors to increase use of the cancer drug Sandostatin LAR. She had about US$ 105,000 budget for payments to doctors who prescribed at least 5 doses, aiming for 50 doses in all. She filed the compensation claim of US $817,000 after resigning from the company.
  • In the same month, another whistleblower has reportedly made bribery allegations involving Eli Lilly of the United States and US$ 4.9 million in purported kickbacks to Chinese doctors.
  • In September 2013, media reports indicated that the Chinese authorities are investigating the German pharma major – Bayer over a “potential case of unfair competition”.
  • Another very recent report of September 17, 2013 states, Alcon Eye Care division of Novartis is investigating allegation of fabricated clinical trials to bribe doctors. The report says Alcon outsourced the trials to a third-party research company, which in turn compensated doctors with “research payments”. It is claimed by the whistleblower that Alcon used funds earmarked for “patient experience surveys” on lens implants to bribe doctors at more than 200 hospitals. One doctor received about US$ 7,300, for studying 150 patients. Alcon allegedly spent more than US$ 230,000, on such studies last year.

This list of pharmaceutical companies involved in alleged serious malpractices to boost their sales and profits in China is probably not exhaustive.

However, only time will unravel whether this juggernaut of scams will keep moving unabated despite all high voltage actions, bulldozing patients’ interest.

Crack down on food companies too:

Crack down of the Chinese Government on alleged malpractices has reportedly extended to milk products’ companies too.

Again in August 2013, Mead Johnson Nutrition and Danone were among six dairy companies ordered to pay a combined 669 million Yuan by the Chinese Government for price fixing of their products.

Global industry lobby has a different view point:

In an interview with the BBC, an expert from APCO Worldwide, considered as the giant of the lobbying industry said:

“China’s behavior was very worrisome for foreign companies. They don’t know what’s hitting them right now. The government is resorting to its traditional “toolbox” of coercive methods, including shaming and ordering people to confess that they’ve done wrong so that your penalties can be minimized. They’re just treating foreign companies the way they’ve treated their own for many years, and this is the way the Party does things.”

He continued, “What may be going on is they’re telling foreign companies and they’re telling private companies here: Behave yourself; remember we’re the Party, we’re in charge.”

This is seemingly an interesting way of pooh-poohing serious allegations of bribery and other malpractices by the pharmaceutical companies in China without even waiting for the results of the pending enquiry.

However, such comments coming from an industry lobbying organization or any Public Relations (PR) Agency is not uncommon. That’s their business.

Possible reasons for crack down:

Experts opine that China has a high drug price problem. This is vindicated by the fact that while most developed nations of the world spend not more than 10-12 percent of their healthcare budget on medicines, in China it exceeds 40 percent. This huge disparity is believed to have prompted Beijing’s crackdown on the industry, especially the MNCs that dominate the Chinese pharmaceutical industry with newer drugs. The powerful National Development and Reform Commission (NDRC) of China has already said that it is examining pricing by 60 local and international pharmaceutical companies.

Some other reports point out, low basic salary of the doctors at the 13,500 public hospitals in China, who are the key purchasers of drugs, is the root cause of corruption in the Chinese healthcare industry.

According to McKinsey with estimated healthcare spending of China nearly tripling to US$1 trillion by 2020 from $357 billion in 2011, the country is increasingly attracting pharma and medical equipment companies from all over the world in a very large number.

The fall out:

A recent media report indicates that Chines crackdown on the widespread pharma bribery scandal in the country is quite adversely affecting the sales of both global and local players, as many doctors in the Chinese hospitals are now refusing to see medical representatives for fear of being caught up in this large scam.

Drug expenditure is even more for healthcare in India:

Several studies indicate that Out Of Pocket Expenditure towards Healthcare in India is one of the highest in the world and ranges from 71 to 80%.

According to a 2012 study of IMS Consulting Group, drugs are the biggest expenditure in the total Out Of Pocket (OOP) spend on healthcare as follows:

Items Outpatient/ outside Hospital (%) Inpatient/ Hospitalization (%)
Medicines 63 43
Consultation/Surgery - 23
Diagnostics 17 16
Minor surgeries 01 -
Private Consultation 14 -
Room Charge - 14
Others 05 04

Despite these facts, India has remained virtually inactive in this critical area so far, unlike China, except some sporadic price control measures like, Drug Price Control Order (DPCO 2013) for essential drugs (NLEM 2011), which covers around 18% of the total pharmaceutical market in India.

Universal Healthcare (UHC): A possible answer?

Another interesting study titled, ‘The Cost of Universal Health Care in India: A Model Based Estimate’ concludes as follows:

The estimated cost of UHC delivery through the existing mix of public and private health institutions would be INR 1713 (USD 38) per person per annum in India. This cost would be 24% higher, if branded drugs are used. Extrapolation of these costs to entire country indicates that Indian government needs to spend 3.8% of the GDP for universalizing health care services, although in total (public+private) India spent around 4.2% of its GDP on healthcare (2010) at 11% CAGR from 2001 to 2010 period.

Moreover, important issues such as delivery strategy for ensuring quality, reducing inequities in access, and managing the growth of health care demand need be explored.

Thus, it appears, even UHC will be 24% more expensive after a public spend of staggering 3.8% of the GDP towards healthcare, if branded drugs are used, which attract huge avoidable marketing expenditures, as we have seen in the Chinese pharma industry scandal.

High marketing costs making drugs dearer?

A recent article, captioned “But Don’t Drug Companies Spend More on Marketing?” vindicates the point, though the drug companies spend substantial money on R&D, they spend even more on their marketing related activities, legally or otherwise.

Analyzing six global pharma and biotech majors, the author highlights that SG&A (Sales, General & Administrative) and R&D expenses vary quite a lot from company to company. However, in this particular analysis the range was as follows:

SG&A: 23% to 34%
R&D: 12.5% to 24%

SG&A expenses typically include advertising, promotion, marketing and executive salaries. The author says that most companies do not show the break up of the ‘S’ part separately.

In the pharmaceutical sector all over the world, the marketing practices have still remained a very contentious issue despite many attempts of self-regulation by the industry. Incessant media reports on alleged unethical business practices have not slowed down significantly, across the world, even after so many years of self-regulation. This is indeed a critical point to ponder.

Scope and relevance of ‘Corporate Ethical Business Conducts and Values’:

The scope of ‘ethical business conducts and value standards’ of a company should not just be limited to marketing. These should usually encompass the following areas, among many others:

  • The employees, suppliers, customers and other stakeholders
  • Caring for the society and environment
  • Fiduciary responsibilities
  • Business and marketing practices
  • R&D activities, including clinical trials
  • Corporate Governance
  • Corporate espionage

That said, codes of ethical conduct, corporate values and their compliance should not only get limited to the top management, but must get percolated downwards, looking beyond the legal and regulatory boundaries.

Statistics of compliance to codes of business ethics and corporate values are important to know, but perceptible qualitative changes in ethics and value standards of an organization should always be the most important goal to drive any business corporation and the pharmaceutical sector is no exception.

Foreign Corrupt Practices Act (FCPA): A deterrent?

To prevent bribery and corrupt practices, especially in a foreign land, in 1997, along with 33 other countries belonging to the ‘Organization for Economic Co-operation and Development (OECD)’, the United States Congress enacted a law against the bribery of foreign officials, which is known as ‘Foreign Corrupt Practices Act (FCPA)’.

This Act marked the early beginnings of ethical compliance program in the United States and disallows the US companies from paying, offering to pay or authorizing to pay money or anything of value either directly or through third parties or middlemen.

FCPA currently has some impact on the way American companies are required to run their business, especially in the foreign land.

However, looking at the ongoing Chinese story of pharma scams and many other reports of huge sums paid by the global pharmaceutical companies after being found guilty under such Acts in the Europe and USA, it appears, levy of mere fines is not good enough deterrent to stop such (mal)practices in today’s perspective.

China acts against pharma bribery, why not India? 

Like what happened in China, many reports, including from Parliamentary Standing Committee, on alleged pharma malpractices of very significant proportions, which in turn are making drugs dearer to patients, have been coming up in India regularly, since quite sometime.

Keeping these into consideration, abject inertia of the government in taking tough measures in this area is indeed baffling and an important area of concern.

Conclusion:

The need to formulate ‘Codes of Business Ethics & Values’ and more importantly their effective compliance, in letter and spirit, are of increasing relevance in the globalized business environment.

Unfortunately, as an irony, increasingly many companies across the world are reportedly being forced to pay heavy costs and consequences of ‘unethical behavior and business practices’ by the respective governments.

Intense quarterly pressure for expected business performance by stock markets and shareholders, could apparently be the trigger-points for short changing such codes and values.

There is, of course, no global consensus, as yet, on what is ethically and morally acceptable ‘Business Ethics and Values’ uniformly across the world. However, even if these are implemented in country-specific ways, the most challenging obstacle to overcome by the corporates would still remain ‘walking the talk’ and ‘owning responsibility’.

That said, to uphold patients’ interests, China is already giving the perpetrators of the ongoing humongous pharma scam a ‘run for life’, as it were, despite what the industry lobbyists have been laboriously working on for the world to believe. Today, common patients’ in India being in a much worse situation for similar sets of reasons, should the domestic regulators not now wake up from the ‘deep slumber’, up all antennas, effectively act by setting examples and bring the violators to justice?

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.

 

More Glivec Like Deals in China and Mounting Global Challenges: Innovators poised Joining Biosimilar Bandwagon

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Pressure from the emerging markets on pricing of patented products is mounting fast. This time the country involved is China.

Recently, the Health Minister of China who stepped down last month after a seven-year stint in the top health job reportedly commented that western drugmakers will require to give hefty subsidies and forgo significant amount of profit on expensive cancer drugs, if they want access to huge market of China. He further voiced as follows:

“If the cost (of patented drugs) is too high, maybe only a few percent of patients can benefit. If we can arrange an appropriate, acceptable, affordable price, then you can have a huge market.”

‘Glivec deal’ in China: 

In the same report, it was indicated that in China Novartis ultimately agreed to donate three doses of its leukemia drug Glivec for every one sold to the government.

It is expected that many more such deals will take place in China.

The situation to get more challenging in the emerging markets: 

Many experts believe that due to high cost of patented drugs, especially biologics, negotiating hefty discounts with the Governments may be the best alternative for the innovator companies to avoid any possibilities of Compulsory Licensing (CL), like what happened to Bayer’s cancer drug Nexavar in India.

An opportunity in biosimilar drugs: 

Biologic drugs came to the international market slightly more than three decades ago, in 1980s. Growing at a scorching pace, the value turnover of these products exceeded US$ 138 billion in 2010 (IMS Health).

Launch of biologics like, Recombinant Insulin, Human Growth Hormone (HGH), Alteplase, Erythropoietin (EPOs), Granulocyte Colony Stimulating Factors (G-CSFs) and Monoclonal Antibodies (MAbs) kept fueling the market growth further.

Patent expiry of a number of biologic drugs over a period of next five years, especially in areas like, various types of cancer, diabetes and rheumatoid arthritis, besides many others, will help opening a huge window of opportunity for the global biosimilar players, including from India, to reap a rich harvest.

Global innovators joining the bandwagon: 

After a dream-run with high priced patented drugs for a reasonably long time, now stung by the current reality in various developed and emerging markets and factoring-in the width/depth/robustness of their own research pipeline, many global players have started taking a hard look at the emerging opportunities offered by biosimilar drugs.

Moreover, high price of original biologic drugs, cost containment pressure by various Governments, encouragement of generic prescriptions, large number of such drugs going off patent and growing demand of their low cost alternatives across the world, are making biosimilar market more and more lucrative from the global business perspective to all interested players, including from India.

According to Bloomberg Industries (2013), during the next six years biologic drugs with a total annual sales turnover of US$ 47 billion in 2012, will go off patent.

Sniffing opportunities for business growth, as stated above, many hard-nosed large research-based global pharmaceutical companies, currently fighting a challenging battle also in the ground of a tougher ‘patent cliff’, have started venturing into the biosimilar market, that too in a mega scale.

Some of them have already initiated developing biosimilar versions of blockbuster biologics, as reported below:

Originator Product Indication Biosimilar development by:
Roche/Genentech Rituxan Rheumatoid arthritis Boehringer Ingelheim
Roche/Genentech Herceptin, Rituxan Breast Cancer, Rheumatoid arthritis Pfizer
Roche/Genentech Rituxan Non-Hodgkin’s lymphoma Novartis
Johnson & Johnson Remicade Rheumatoid arthritis Hospira

Source: Bloomberg BusinessWeek

Thus, I reckon, continuous quest for development of cost-effective alternatives to high-priced biologic medicines would keep on propelling the growth of biosimilar drugs, across the world.

Glivec maker Novartis fought a court battle to launch the first ‘Biosimilar drug’ in America: 

In mid-2006, US FDA approved its first ‘biosimilar drug’-Omnitrope of Sandoz, the generic arm of the Glivec maker Novartis, following a Court directive. Omnitrope is a copycat version of Pfizer’s human growth hormone Genotropin. Interestingly, Novartis had also taken the US FDA to court for keeping its regulatory approval pending for a while in the absence of a well-defined regulatory pathway for ‘biosimilar drugs’ in the USA at that time.

More interestingly, having received the US-FDA approval, the CEO of Sandoz (Novartis) had then commented as follows:

“The FDA’s approval is a breakthrough in our goal of making high-quality and cost-effective follow-on biotechnology medicines like, Omnitrope available for healthcare providers and patients worldwide”.

Biosimilar market started shaping-up:

Internationally most known companies in the biosimilar drugs space are Teva, Stada, Hospira and Sandoz. Other large research based global innovator pharmaceutical companies, which so far have expressed interest in the field of biosimilar drugs, are Pfizer, Astra Zeneca, Merck and Eli Lilly.

Following are examples of some biosimilar drug related initiatives of the global players as the market started developing:

  • Merck announced its entry into the biosimilar drugs business on February 12, 2009 with its acquisition of Insmed’s portfolio for US$ 130 million. The company also paid US$ 720 million to Hanwha for rights to its copy of Enbrel of Amgen.
  • Samsung of South Korea has set up a biosimilars joint venture with Quintiles to create a contract manufacturer for biotech drugs.
  • Celltrion and LG Life Sciences have expressed global ambitions in biosimilar drugs.
  • Some leading global innovator biotech companies also like, Biogen Idec and Amgen have reportedly been mulling entry into biosimilar market.

According to Reuter (June 22, 2011), Merck, Sandoz, Teva and Pfizer are expected to emerge stronger in the global biosimilar market, in the years ahead. 

Why is still so low penetration of lower cost biosimilar drugs?

Although at present over 150 different biologic medicines are available globally, just around 11 countries have access to low cost biosimilar drugs, India being one of them. Supporters of biosimilar medicines are indeed swelling as time passes by.

It has been widely reported that the cost of treatment with patented biologic drugs can vary from US$ 100,000 to US$ 300,000 a year. A 2010 review on biosimilar drugs published by the Duke University highlights that biosimilar equivalent of the respective biologics would not only reduce the cost of treatment, but would also improve access to such drugs significantly for the patients across the globe. (Source: Chow, S. and Liu, J. 2010, Statistical assessment of biosimilar products, Journal of Biopharmaceutical Statistics 20.1:10-30)

Now with the entry of global pharma majors, the biosimilar market is expected to get further heated up and develop at a much faster pace with artificial barriers created by vested interests, if any, being removed.

Recent removal of regulatory hurdles for the marketing approval of such drugs in the US  will indeed be the key growth driver.

Other growth drivers:

According to a study (2011) conducted by Global Industry Analysts Inc., besides recent establishment of the above regulatory guidelines for biosimilars in the US, the key growth drivers for global biosimilar market, will be as follows:

▪   Patent expiries of blockbuster biologic drugs

▪   Cost containment measures of various governments

▪   Aging population

▪   Supporting legislation in increasing number of countries

The business potential in India:

The size of biotech industry in India is estimated to be around US$ 4 billion by 2015 with a scorching pace of growth driven by both local and global demands (E&Y Report 2011).

The biosimilar drugs market in India is expected to reach US$ 2 billion in 2014 (source: Evalueserve, April 2010).

Recombinant vaccines, erythropoietin, recombinant insulin, monoclonal antibody, interferon alpha, granulocyte cell stimulating factor like products are now being manufactured by a number of domestic biotech companies like, Biocon, Panacea Biotech, Wockhardt, Emcure, Bharat Biotech, Serum Institute of India and Dr. Reddy’s Laboratories (DRL), besides others.

DRL is the largest biosimilar player in India with an impressive product portfolio. Reditux of DRL is the world’s first Biosimilar monoclonal antibody, which is a copy version of Mabthera/ Rituxan of Roche and costs almost 50 percent less than the original brands.

Some of the Biosimilar products of the Indian Companies are as follows:

Indian Company

Biosimilar Product
Dr Reddy’s Lab Grafeel, Reditux, Cresp
Intas Neukine, Neupeg, Intalfa, Epofit
Shantha Biotech/Merieux Alliance Shanferon,Shankinase,Shanpoietin
Reliance Life Sciences ReliPoietin, ReliGrast, ReliFeron, MIRel
Wockhardt Wepox, Wosulin
Biocon Eripro, Biomab, Nufil, Myokinase, Insugen

(Source: Stellarix Consultancy Services)

The cost of development of Biosimilars in India is around US$ 10-20 million, which is expected to go up, as “Biosimilar Guidelines” are now in place for marketing approval of such products in India.

The ultimate objective of all these Indian companies will be to get regulatory approval of their respective biosimilar products in the US and the EU, either on their own or through collaborative initiatives.

Indian players making rapid strides:

As stated above, biosimilar version of Rituxan (Rituximab) of Roche used in the treatment of Non-Hodgkin’s lymphoma has already been developed by DRL in India. It also has developed Filgastrim of Amgen, which enhances production of white blood cell by the body and markets the product as Grafeel in India.

Similarly Ranbaxy has collaborated with Zenotech Laboratories to manufacture G-CSF.

On the other hand Glenmark reportedly is planning to come out with its first biotech product soon from its biological research establishment located in Switzerland.

Indian pharmaceutical major Cipla reportedly has invested around US$ 60 million in 2010 to acquire stakes of MabPharm in India and BioMab in China and is planning to launch a biosimilar drug in the field of oncology by 2013.

Another large pharmaceutical company of India, Lupin signed a deal with a private specialty life science company NeuClone Pty Ltd of Sydney, Australia for their cell-line technology. Lupin reportedly will use this technology for developing biosimilar drugs in the field of oncology, the first one of which, will reportedly be launched in India by 2013.

The global Market:

In 2011 the turnover of Biologic drugs increased to over US$ 175 billion in the total market of US$ 847 billion. The sale of Biosimilar drugs outside USA exceeded US$ 1 billion.

Six biologic drugs featured in the top 10 best selling global brands in 2012 with Humira of AbbVie emerging as the highest-selling biologics during the year.  Roche remained the top company by sales for biologics with anticancer and monoclonal antibodies.

According to IMS Health report, by 2015, sales of biosimilars are expected to reach between US$ 1.9 – 2.6 billion. The report also states that this market has the potential to be the single fastest-growing biologics sector in the next five years.

Cost of biosimilar development in the developed markets:

The process of developing a biosimilar drug is complex and requires significantly more investment, technical capabilities and clinical trial expertise than any small molecule generic drug. As per industry sources, average product developmental cost ranges between US$ 100 and 250 million in the developed markets, which is several times higher than the same associated with development of small molecule generics, ranging around US$ 1to 4 million.

All these factors create a significant market entry barrier for many smaller players with similar intent but less than adequate wherewithal.

Even higher market entry barrier with ‘second generation’ biosimilar drugs:

Emergence of second generation branded biosimilar products such as PEGylated products and PegIntron (peginterferon alpha), Neulasta (pegfilgrastim) and insulin analogs have the potential to reduce the market size for first generation biosimilar drugs creating significant entry barrier.

Negotiating the entry barriers:

As stated above, the barriers to market entry for biosimilar drugs are, in general, are much higher than any small molecule generic drugs. In various markets within EU, many companies face the challenge of higher development costs for biosimilar drugs due to stringent regulatory requirements and greater lead-time for product development.

Navigating through such tough regulatory environment will demand different type of skill sets, especially for the generic companies not only in areas of clinical trials and pharmacovigilance, but also in manufacturing and marketing. Consequently, the investment needed to take biosimilar drugs from clinical trials to launch in the developed markets will indeed be quite significant.

The future potential:

According to an IMS Health study, the emerging markets will drive biosimilar market growth with significantly more number of patients. The report estimates that over a period of time US will emerge as the number one global biosimilars market.

By 2020, emerging markets and the US are expected to register a turnover of US$11 billion and US$ 25 billion representing a share of 4 percent to 10 percent of the total global biologics market, respectively.

The report estimates that overall penetration of biosimilars within the off-patent biological market will reach up to 50 percent by 2020, assuming a price discount in the range of 20 to 30 percent.

Is 12 years exclusivity in the US a significant entry barrier?

In the US, the innovator companies get 12 years exclusivity for their original biologic drugs from the date of respective marketing approvals by the USFDA.

The BPCI Act clearly specifies that applications for ‘biosimilar drugs’ to the USFDA will not be made effective by the regulator before 12 years from the date of approval of the innovators’ products. In addition, if the original product is for pediatric indications, the 12-years exclusivity may get an extension for another six months.

The key point to note here is, if the USFDA starts its review process for the ‘biosimilar drugs’ only after the ’12 year period’, the innovator companies will effectively get, at least, one additional year of exclusivity over and above the ’12 year period’, keeping applicants for ‘biosimilar drugs’ waiting for that longer.

Conclusion:

As stated above, with around 40 percent cost arbitrage and without compromising on the required stringent international regulatory standards, the domestic ‘biosimilar’ players should be able to establish India as one of the most preferred manufacturing destinations to meet the global requirements for such drugs, just as small molecule generic medicines.

With experience in conforming to stringent US FDA manufacturing standards, having largest number of US FDA approved plants outside USA, India has already acquired a clear advantage in manufacturing high technology chemical based pharmaceutical products in the country. Now with significant improvement in conformance to Good Clinical Practices (GCP) and honed skill sets in the field of biologics, Indian biosimilar players are clearly poised to catapult themselves to even a higher growth trajectory, either on their own or with appropriate collaborative arrangements with the international partners.

Thus, the initiatives of joining the biosimilar bandwagon by the hard-nosed research based global players, I reckon, will ultimately get translated into a win-win advantage for India in the rapidly evolving pharmaceutical space of the world.

Besides, like what they had to do in China, working with the Government to put in place a robust and win-win mechanism of ‘Price Negotiation for Patented Drugs’ in India could augur well for the global players of pharmaceutical and biologic drugs. This mechanism may also help putting forth even a stronger argument against any Government initiative to grant CL on the pricing ground for expensive patented drugs in India.

With all these developments, patients will be the ultimate winners having much greater access to both innovative medicines and biosimilar drugs than what they have today, fetching a huge relief to all right thinking population in the country.

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.