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Time For Predictive Rather Than Reactive Pharma Strategy

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Traditionally, pharmaceutical industry, across the world, is mostly reactive – rather than proactive or predictive in its strategic approach – spanning across all its business domains. A large number of pharma players – both innovators and generic drug makers, formulate their business strategy – generally reacting to competition, changing market dynamics and patient/ doctor /other stakeholder preferences. The same is being witnessed even during Covid-19 pandemic. However, this trend seems to be more prevalent in India – as one looks around.

For example, in R&D – be it a statin drug, proton pump inhibitors and right up to monoclonal antibodies or cancer immunotherapies – after a first-in-class molecule comes, a plethora of ‘me-too’ – but patented molecules soon follow. A comparable trend in the generic drug categories is also all-pervasive, including fixed-dose combinations (FDCs).

Similarly, even in the good old days of sales and marketing, we have seen – after the first product detailing folder was successfully introduced by a leading pharma company in India, how competition lapped the concept up – considering this change as a magic wand for brand demand generation!

In recent days, a similar trend is surfacing for ‘Digitalization’ of pharma business, mostly reacting to the changing practices of key competitors, or involving patients or doctors’ preferences. It gets reflected in other business domains, as well. With this perspective, in this article, I shall deliberate on this area, especially in view of the current situation.

Traditional ‘safe sailing’ is no longer an option:

The Coronavirus pandemic could be a stronger catalytic factor for the drug industry to initiate the much-desired transition from being reactive to predictive in its strategic business approach- faster. Interestingly, way back in June 2007, the PwC Whitepaper titled “Pharma 2020: The vision”, had also articulated: ‘The social, demographic and economic context in which the pharmaceutical industry (Pharma) operates is changing dramatically.’

Some drug players have already opted to transform their organizations in sync with the changes in the operating environment. But, a vast majority of them preferred to stick to the traditional reactive mindset, for a safe sail, as it were. However, this doesn’t seem to be an option, any longer. Be that as it may, there is nothing wrong in being reactive in strategic business practices, although formulating a predictive or proactive growth strategy demands more cerebral prowess and is much different from the reactive ones.

The difference, I reckon, is similar to that of a leader and the followers, with nearly similar impact on overall corporate image and performance, besides a prime-mover advantage of the latter. Nevertheless, there could be a predictive approach even within a reactive approach to competition. To illustrate the point, let me cite an example related to ‘me-too’ – patented-drug development.

Making an overall reactive strategic approach proactive in nature: 

Among several examples of making a reactive strategic approach – proactive in nature with innovative goals, let me quote a very recent one. For decades, drug companies have been selling ‘me too’ but patented drugs, at prices similar to the original and ‘first-in-class’ drugs, which are successful and enjoying a market monopoly.

Moving away from this trend, a startup drug maker, reportedly, wants to disrupt the traditional pharma industry practices by delivering what most patients and healthcare stakeholders want. It has set a novel goal of becoming patient-centric in its offering by making innovative drugs available at affordable prices. The startup wants to achieve this objective ‘by changing long-held industry practices for developing, pricing, and selling slightly different versions of costly brand-name drugs.’

Accordingly, with a proactive or predictive approach within an overall ‘reactive’ trend, it wants to create a unique niche for itself. The entity ‘will focus on developing “me too” drugs, which imitate the biological functions of existing drugs, but use distinct molecular structures so they don’t infringe on existing drug patents.’

Evolving a new demand of value-based health care system:

During disruptive changes and uncertainties in the business environment, such as what is being experienced today, gaining actionable insight on how these changes will call for new strategies to excel, would require a predictive mindset. This is of critical importance, particularly when a new demand for a value-based health care system is fast unfolding. This subject was well deliberated also in the book – ‘Healthcare Disrupted: Next Generation Business Models and Strategies.’

About six years back what the authors of this book predicted, seems to be a reality today. They had said: The concept of “value” rules the day, undoubtedly. The transition from the old ‘fee-for-service’ to ‘fee for value’, is game changing. On the same subject, another article - Focus on Value 1: The “Tsunami of Change”, published in the ‘eye for pharma’ on March 22, 2026, quoted the authors of this book – explaining the scenario lucidly.

They said, today’s health care system is largely reactionary, as the health services react to the persistence of consumers, their phone calls, queuing for services, waiting in the waiting room and calls to healthcare insurers. Whereas, ‘tomorrow’s system would prompt the health care providers to answer a seemingly simple question: how will they become relevant to a customer group?

Even six years down the line, especially in the current global pandemic situation with an evolving demand of a value-based health care system, this concept remains so relevant, possibly more than ever before. That said, an unforeseen and unprecedented situation could also force a pharma player – already moving on a predictive strategic path, to choose a reactive path – mostly for survival and progress of business.

When a company moves into a ‘reactive’ path from a ‘predictive’ one:

Such instances are infrequent. But a major event like Covid -19 may give rise to such a situation. For example, in the Pharma and Biopharma R&D space, it happened and is still happening. As ‘Evaluate Vantage Covid-19 Report’ of April 16, 2020 highlighted, as follows:

‘Anyone thinking that 2020 might travel down a predictable path for the biopharma sector was swiftly disabused of this view in the opening weeks of the year. The Coronavirus pandemic has changed the focus for almost every drug developer, whether they are working on potential treatments or trying to keep their businesses on track – or both.’ Good or bad, this is the reality today.

However, many of these organizations are unlikely to jettison their well-thought out ‘predictive’ pathway and are expected to soon find ways to move back to it. Thus, the question that one may pose, how does a company move into a predictive pathway from a reactive one? And particularly considering, if Covid-19 pandemic has caused some irreversible changes, or even – a long-term change in the business environment.

Getting back to predictive strategic path from a reactive one:

This issue was also covered in the article – ‘Three Proactive Response Strategies to COVID-19 Business Challenges,’ published in the MIT Sloan Management Review, on April 17, 2020. It wrote, as organizations move from a reactive to a proactive approach to dealing with COVID-19, they should ask themselves the following three questions:

  • Can we offer a version of our products and/or services through an online channel? Going online is the closest equivalent to low-hanging fruit in the current environment.
  • Can we use our existing infrastructure to produce products and/or offer services that are in demand?  Many organizations have allocated infrastructure to produce goods and services to support the fight against COVID-19, but some strategic companies would think beyond the crisis to future changes in consumer needs.
  • How can we rapidly increase our capacity to produce and distribute on-demand products and/or services?  Turning to partnerships with other companies can boost capacity in a crunch situation, such as today.

The need for collaboration, in such extraordinary situation, has also been underscored by the European Pharmaceutical Review. It pointed out - how academia, government and the pharmaceutical industry can work together to potentially ‘repurpose drugs’ for the treatment of COVID-19. This is another example of formulating a predictive growth strategy to create a win-win situation, while being in the midst of a reactive one.

Conclusion:

Meanwhile, despite national Lockdowns at a very early stage on March 24, 2020, India has now climbed up to occupy the fourth highest position in terms of the number of Coronavirus infected cases. Continuing the steep ascending trend, as on June 14, 2020 morning, the recorded Coronavirus cases in the country reached 321,616 with 9,199 deaths.

During the current global pandemic of a humongous scale, drug companies are trying to respond to rapid challenges across their business operations, right from planned R&D programs to effectively maintaining supply chain, including manufacturing activities. If the current COVID-19 pandemic lasts for medium/long term, there could also be significant delays in the execution of various other ongoing projects/programs. This was the analysis of Deloitte in a paper, titled, ‘COVID-19 response for Pharma companies – Respond. Recover. Thrive’

While the full impact of the Coronavirus pandemic is still unknown, adopting a predictive strategy in the prevailing overall reactive environment, is expected to yield a significantly better business performance. As I said earlier, the core difference between adopting a ‘predictive’ and a ‘reactive’ business pathway, under the circumstances, is akin to the difference between a leader and a follower.

Unlocking the value innovation in all areas of pharma business is the name of the game, for excellence. Leveraging Artificial Intelligence (AI) based contemporary ‘predictive’ tools will help pharma players break the new ground, even in such trying times. Coming from this perspective, a ‘predictive’ strategy rather than a ‘reactive’ one, apparently, is the demand of time – where we all are in – today.

By: Tapan J. Ray

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

Creating Satisfied Patients Begins With Developing Satisfied Employees

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‘The core issue in health care is the value of health care delivered,’ wrote Michael Porter in a paper titled, ‘Value-Based Health Care Delivery,’ published by the Institute of Strategy & Competitiveness of Harvard Business School (ISC-HBS) on January 15, 2014.

Building on this concept, EY in its 2018 edition of ‘New horizons: Executive insights on the future of health’ articulated: ‘Value-driven care means delivering the best clinical outcomes with optimized costs, while delivering a satisfying experience for patients and providers.’

Creating a ‘satisfying patient experience’ – or ‘satisfied patients’ for its brands, being the ultimate objective of a drug company, I shall add an interesting dimension to it, in this article. And that is: Will it necessitate creating satisfying employees within the organization to achieve this goal? To build a right perspective in this direction, let me begin with the core concept of Michael Porter on this subject. This starts with – what is generally regarded as ultimate ‘value’ to patients, in healthcare delivery?

Defining ultimate ‘value’ in health care delivery:

Porter defined this ‘value’ as ‘patient health outcomes per dollar spent’. He also made some key assertions in this context, which I am summarizing below:

  • Delivering high and improving value is the fundamental purposeof health care.
  • Value is the only goal that can unite the interestsof all system participants.
  • Creating positive-sum competition on value for patients is fundamental to health care reform in every country.

Are these assertions attainable?

To create ‘Value-Based Health Care Delivery (VBH),’ the people would also need a ‘Value-Based Pharma Industry (VBP)’, delivering ‘Value-Based Medicine (VBM)’, for all. The three key principles for any VBM are considered as follows:

  • Thoroughly selected values must be based on the best research evidence available and applied as treatment options. 
  • Values for patients are converted into measurable utility values to facilitate the integration.
  • The cost-utility level expected from selecting a particular treatment option is the basis for decision-making.

In other words, the whole purpose of offering a VBM is to provide cost effective, science-based healthcare that incorporates patient values. Nonetheless, effective implementation of both VBH and VBM would entail a radically different leadership mindset, with quite a different set of success requirements, both globally and locally.

To drive home this point, let me illustrate just the third point of the Porter’s model of VBH, as quoted above. This clearly articulates: ‘Creating positive-sum competition on value for patients is fundamental to health care reform in every country.’ But the current reality of ‘competition’ in the drug industry is far from what it should be, as evident from one of the Brookings studies.

How competitive is the pharma industry to reduce cost of health care?

The Brookings paper titled, ‘Enabling competition in pharmaceutical markets,’ published on May 02, 2017 shares its research findings on the subject, which in a broader context include the following points:

  • Over the years, industry participants have managed to disable many of the competitive mechanisms and create niches in which drugs can be sold with little to no competition.
  • When manufacturers can earn high profits by lobbying for regulations that weaken competition, or by developing mechanisms to sidestep competition – the system no longer incentivizes the invention of valuable drugs – incentivizes firms to locate regulatory niches where they are safe from competition on the merits with rivals.
  • But, health care system performs well when competitive forces are strong, yielding low prices for consumers, as well as innovation that they value.
  • Weak competitive forces often lead to a lack of market discipline with high drug prices and are more damaging to in the pharma consumers than some other sectors.
  • Without strong competitive conditions, healthcare expenditure will continue to grow, inviting public demand for drug price regulation through legislation.

These findings provide enough reasons to ponder how to overcome the barrier of ‘Creating positive-sum competition on value for patients’ to move towards VBH.

The good news is, VBH concept was soon put to use:

The good news is, soon after publication of Michael Porter’s paper – ‘Value-Based Health Care Delivery’ by (ISC-HBS) on January 15, 2014, it was put to practice by the American College of Cardiology (ACC).The article titled, ‘A New Era of Value-Driven Pharmaceuticals’, published by Health Standards on May 21, 2014, reported it.

The article wrote, at the end of March, the American College of Cardiology (ACC) and the American Heart Association (AHA) issued a joint statement saying they “will begin to include value assessments when developing guidelines and performance measures (for pharmaceuticals), in recognition of accelerating health care costs and the need for care to be of value to patients.”

The authors pondered, ‘are we entering a new era of value-based medications or value-driven pharma?’ There are several such reports. For example, another article titled, ‘Value-based healthcare’, published by the ‘Centre for Evidence-Based Medicine (CEBM)’ observed, value-based healthcare has emerged as a field of its own – feet firmly founded in ‘Evidence-based Medicine’ or ‘Value-Based-Medicine.

VBH concept is slowly gaining acceptance:

EY in its 2018 edition of ‘New horizons: Executive insights on the future of health’ also reiterated this point. The paper mentioned, ‘the trends of reducing costs and improving outcomes show no sign of receding, and new models for delivering health care are only adding pressure to traditional brick and mortar facilities.’ It further highlighted, some pharma companies have started systematically reviewing the business processes, procedure and patient interface within the organization to identify and eliminate waste and inefficiency.

But, still a lot of ground to cover:

In this regard, EY Health Advisory Survey 2017 came out with several interesting findings based on the responses of 700 qualified healthcare professionals. One such finding is, although high importance is attributed to creating both – a good ‘patient experience’ and a meaningful ‘patient engagement’, but a lot less is done on the ground. This was supported by the following data:

  • 93 percent of respondents reported, they are undertaking ‘patient experience’ initiative that year, but only 26 percent of them selected patient access or satisfaction as one of the top three for the same.
  • Although 81 percent of the professionals said ‘patient engagement’ is considerably important to them, but most of the top initiatives undertaken by their organizations don’t directly involve soliciting and analyzing patients’ needs and wants.

‘Employees satisfaction’ a prerequisite for ‘patient satisfaction’:

The same EY Health Advisory Survey 2017, found many respondents articulating that ‘employee satisfaction’ is a prerequisite to ‘patient satisfaction’. However, its importance gets diluted whiling translating the same into reality, as vindicated by the following finding:

  • 51 percent of respondents believe that employee satisfaction in health care drives patient satisfaction, but only 35 percent said that their organizations have already initiatives underway to create more positive work and environment. Interestingly, only 10 percent of them have undertaken any employee satisfaction survey soliciting employee input.

It is quite apparent from this situation that leaders of respective organizations don’t walk the talk, especially in this critical area. Harmonization of ‘patient satisfaction’ as a critical success factor for delivering VBH, with the core business value of the company, is not taking place. A deep-rooted belief that success in developing mostly transactional and partly emotional relationship with the heavy prescribers is the only ‘magic wand’ for business success in pharma. Thus, the old habits die hard, even today.

Conclusion:

Despite several barriers in its way, for a long-term survival in business, hopefully, many pharma companies would willy-nilly move towards delivering ‘value-based health care’ through ‘value-based medicine.’ This would necessitate having a clear goal to create an increasing number of satisfied patients for the brands. There are ample evidences today that ‘employee satisfaction’ is a basic prerequisite to ‘patient satisfaction’, where many drug companies are lagging behind, significantly.

Only the movers and shakers in the senior leadership of pharma industry can break this status-quo. It may be initiated with – example-setting activities, which should enable giving shape to developing a set of standard operating procedure – culminating into the culture and value for the organization.

Nurturing humane approach to employee commitment for creating satisfied employees is the primary step of this important initiative. Then, encouraging their active participation – willingly, to bring patients at the center stage of pharma business, should be the ongoing process.  It’s, therefore, imperative to note - the goal of creating ‘satisfied patients’, should always begin with developing ‘satisfied employees.’

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.