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Pharma Stakeholder Sentiment: Back to Square One?

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Is it fair to push out the core purpose of an important process, or rather a mission, unfairly? Whether we like it or not, it happened that way, over a period of time.

Way back on December 01, 1950, George W. Merck (President and Chairman Merck & Co., Inc.1925-1957), epitomized the core purpose of the drug innovation process. This is something, which apparently was possible only for him to articulate exactly the way he did.

On that day, while addressing the students and the faculty at the Medical College of Virginia, Richmond, George Merck said: “We try to remember that medicine is for the patient. We try never to forget that medicine is for the people. It is not for the profits. The profits follow, and if we have remembered that, they have never failed to appear. The better we have remembered it, the larger they have been.”

To many of us, it may sound more as an altruistic statement, and not really coming from a businessman who wants to excel in the financial performance of the organization. Interestingly, that was not the case, either. Merck removed any possible ambiguity in his statement by stating categorically: “In doing this, it will be as a business­ man associated with that area of the chemical industry which serves chiefly the worlds of medicine and pharmacy.”

In this article, I shall deliberate on whether or not the core purpose of drug innovation, as articulated by George Merck in 1950 has been pushed out of the mind of the stakeholders for good.

Management Guru – Peter Drucker’s similar observation:

It is worthwhile to recapitulate at this stage that around the same time, the Management Guru – Peter Drucker also made a similar observation, which is relevant even today. He said: “Because the purpose of business is to create a customer, the business enterprise has two – and only two basic functions: marketing and innovation. Marketing and innovation produce results; all the rest are costs. Marketing is the distinguishing, unique function of the business.”

Interestingly, when the word ‘customer’ is replaced with ‘patients’, George W. Merck’s iconic statement fits so well even in the realm of business management, including drugs and pharmaceuticals.

Signs of the core purpose of new drug discovery getting pushed out:

The core purpose of new drug innovation in pharma business, as articulated by a top industry pioneer – ‘Medicine is for the patient and not for the profits’, was pushed out eventually, regardless of its reasons. Today’s core purpose of the same process has seemingly become just the opposite of that – ‘Medicine is only for the patient who can afford it – to maximize profit.’

This change in the core purpose was visible in a large number of instances. For example, when the then Bayer CEO Marijn Dekkers reportedly said: ‘Our cancer drug is for rich westerners, not poor Indians.’  However, his exact wordings were “we did not develop this product for the Indian market, let’s be honest. We developed this product for Western patients who can afford this product, quite honestly.” If so,the question that comes up: why then Bayer fought so hard and spent so much of money, efforts and time to keep selling this specific product in India – exclusively?

In any case, this statement from the highest echelon of one of the top global pharma players is a contentious one, especially against George Merck’s articulation, or even Peter Drucker’s for that matter, on the same. By the way, Dekkers made this commentat the Financial Times Global Pharmaceutical & Biotech Conference in December in December 2013.

A wind of change?

The hope for a wind of change flickered when in an interview, Andrew Witty,the erstwhile global CEO of GlaxoSmithKline (GSK), signaled a totally contrasting view of his company. Witty said: “GSK is committed to offering all its new drugs in India at affordable prices.”

Much prior to this, on March 14, 2013 he told a conference on healthcare in London that: “It’s not unrealistic to expect that new innovation ought to be priced at or below, in some cases, the prices that have pre-existed them.” He further expressed: “The pharmaceutical industry should be able to charge less for new drugs in future by passing on efficiencies in research and development to its customers.”

Witty era is also over now. He retired from GSK at the age of around 53 on March 31, 2017. Perhaps his refreshing patient-centric thoughts would also not find any takers within the industry. Nonetheless, in March 2018, the same issue resurfaced in an interesting article, followed by a few other related developments.

Call for socializing drug development?

The issue, which is not just limited to high prices for new patented drugs, is much broader. An interesting article titled, “Developing drugs wasn’t always about profit, and it shouldn’t be now”, was published in Quartz- a news website owned by Atlantic Media, brings to the fore the same key point, yet again. It makes some profound observations, such as socializing drug development. The word ‘socializing’ may not be quite acceptable to many, though. Nevertheless, it raises some critical issues worth pondering over, such as:

  • Faith in the power of money pervades our modern medical system. Pharmaceutical companies aren’t evil (usually). They just choose to make the most profitable drugs, not the drugs of greatest value to society.
  • For example, despite antimicrobial resistance being a global threat, pharma companies have largely abandoned new antibiotic development on the eminently sensible principle that they are money-losers. Promising narrow-spectrum antibiotics – agents that precisely target pathogens and spare “good” bacteria - languish in development limbo because there is no hope that they might churn as much profit as several other drugs.

It’s high time, I reckon, to adequately address the dire need for a reliable supply of the medicines that make a vibrant modern society possible. All stakeholders, including the pharma industry, globally, would require putting their heads together in charting out a clear and time bound pathway for its effective resolution, soon. Otherwise, sheer gravity and the complexity of the situation may prompt the policy makers to move towards ‘socializing drug development,’ much to the dismay of many of us.

Hospitals creating nonprofit generic drug company:

On January 18, 2018, The New York Times (NYT), published an article titled “Fed Up With Drug Companies, Hospitals Decide to Start Their Own,” highlighted a novel initiative to address the prevailing situation, in their own way, without depending on others.

It reported, for many years, several hospital administrations have been expressing frustration when essential drugs like heart medicines have become scarce, or when prices have skyrocketed because investors manipulated the market. Now, about 300 of the country’s largest hospital systems are taking an aggressive step to combat the problem. They plan to go into the drug business themselves, in a move that appears to be the first on this scale.

‘The idea is to directly challenge the host of industry players who have capitalized on certain markets, buying up monopolies of old, off-patent drugs and then sharply raising prices, stoking public outrage’, the article elaborates.

‘Price of medications has soared, so have pharma profits’:

‘Big Pharma is jacking up prices for one reason – because it can,’ says a CNN Article, published on April 04, 2018. The article further emphasizes: “As the price of medications has soared, so have pharmaceutical company profits. Total sales revenue for top brand-name drugs jumped by almost $8.5 billion over the last five years. The Government Accountability Office (GAO) reported that 67% of drug manufacturers boosted their annual profit margins between 2006 and 2015 – with profit margins up to 20% for some companies in certain years.”

It further writes, “Not only have pharmaceutical companies reaped outsized profits from these price hikes, so have their CEOs. According to a USA Today analysis, the median compensation package for biotech and pharmaceutical CEOs in the Standard & Poor’s 500 was 71% higher than the median compensation for S&P 500 executives in all industries in 2015.”

Conclusion:

This is happening the world over. But its degree varies. In those countries where there are drug price regulators, only a small percentage of the total pharma market by value comes under price regulation, the rest of the products enjoy virtually free pricing freedom.

Would this ground situation change on its own any time soon? There is no specific answer to this question, yet. Moreover, there doesn’t seem to be none around in the pharma industry today with the stature and articulated vision like George Merck. He started from the very basic. Drawing the ‘square one’, he clearly defined the core purpose of discovery, manufacturing and marketing of medicines. Today’s pharma industry, by and large, seems to be charting in other newly drawn squares. Maximizing profit is now considered a key objective of achieving the core purpose – and not an outcome of achieving the core purpose of pharma business.

However, there are some very early signs of several stakeholders’ sentiment changing in this regard. Are they moving back to the basic – square one?

From the chronicles of the past several years on this issue, pharma industry does not seem to be on the same page with those stakeholders, just yet. If they do, a humongous health worry of a vast majority of the global population could be effectively addressed, as many believe.

The reverberations of this sentiment, though rather faint, can be felt in many countries, including the United States, and not just in the developing world, such as India.

By: Tapan J. Ray

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

Key Drivers And Long-Term Impact of Pharma M&A in India

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Corporate M&A is increasingly considered an integral part of the organization’s growth strategy for value creation, by a large number of pharma companies, across the world. In tandem, it throws open many other doors of opportunities, such as reduction of business risks and massive corporate restructuring.

In the post globalization era, mostly the large to medium sized Indian players are imbibing this strategy to gain a competitive edge, in the highly crowded generic drug market, not just in India, but also in various other parts of the world. At the same time, it is equally true that there are many other pharma biggies who have moved into the top 10 of the domestic league table in India, following mainly the organic growth path, and are still staying that way.

For example, the league table ranking (MAT October 2017) of the Indian domestic pharma market, published by AIOCD Pharmasofttech AWACS Pvt. Ltd, reflects a similar scenario. It shows, not many local Indian drug players seem to be too aggressive in Merger and Acquisition (M&A) within the country. In fact, among companies featuring in the TOP 10, only around half seems to have not gone for any major domestic M&A. The remaining half pursued a predominantly organic route, for a quantum growth in the Indian market.

In this article, I shall try to fathom, both the critical drivers and the long-term impact of pharma M&A initiatives – both inbound and outbound, with their either origin or destination being in India.

Are the key drivers different?

India is overwhelmingly a branded generic market. So are its key players. Thus, most pharma M&As in India are related to generic drugs.

Thus, unlike research-based global pharma players, where one of the most critical drivers for M&A, is related to new drug innovation to maintain sustained growth of the organization, the drivers for the same in India is somewhat different. Neither are these exactly the same for exports and the domestic market, with occasional overlaps in a few cases, though.

Export markets:

To expand and grow the pharma business in the export markets is obviously the main overall objectives. To attain this, the acquiring companies generally take into consideration some common critical factors, among others. Each of which is carefully assessed while going through the valuation process and arriving at the final deal price for the company to be acquired. A few examples of which are as follows:

  • The span and quality of market access and the future scope for value addition
  • Opportunities for value creation with available generic products, active ANDAs and DMFs
  • A competitive portfolio, especially covering specialty products, novel drug delivery systems and even off-patent biologic drugs
  • Market competitors’ profile
  • Product sourcing alternatives and other available assets

Domestic market:

Similarly, in the domestic market too, there could be several critical drivers. The following, may be cited just as an illustration. There could well be some overlaps here, as well, with those of export markets:

  • Moving up the pharma value chain, e.g., from bulk drug producer to formulation producer with marketing, intending to climb further up
  • A new range and type of the generic product portfolio
  • Expansion of therapeutic and geographic reach
  • Expansion of consumers and customers base
  • Greater reach, depth, efficiency and productivity of the distribution channel
  • Acquiring critical manufacturing and other related tangible and intangible assets

A glimpse at the 2016-17 M&A trend in India:

An E&Y paper titled, “Transactions 2017” says, India continues to enjoy a prominent position in the global generic pharma space, due to many preferred advantages available within the country, such as a large number of USFDA approved sites coupled with low Capex and operating costs. As a result, the pharmaceuticals sector witnessed 51 pharma deals in the year 2016, with an aggregate disclosed deal value of USD4.6 billion.

However, according to Grant Thornton Advisory Pvt. Ltd, there have been around 27 M&A deals in pharma and healthcare sector by Q3 2017, valued at USD719 million. This appears to be way below 54 deals, valued at USD4.7 billion in calendar year 2016.

Cross-border activity dominated the sector:

Highlighting that cross-border activity dominated the sector, the E&Y paper said, “outbound and domestic transactions drove most of the deal activity, with 21 deals each. In terms of the disclosed deal value, outbound and inbound activity stood at USD2.1 billion each. Domestic deal-making was concentrated in smaller value bands with an aggregate deal value of USD342 million, of which USD272 million (4 deals) worth of deals were restructuring deals.”

Inbound and a domestic M&A occupied the center stage:

It is interesting to note that despite initial hiccups, inbound overseas interest in sterile injectable continued, along with a range of different generic formulations. The notable among which, as captured in the above paper, are as follows:

  • China-based Shanghai Fosun Pharmaceutical (Group) Company Limited announced the acquisition of an 86 percent stake in Gland Pharma Limited for up to USD1.26 billion.
  • US-based Baxter International Inc. entered into an agreement to acquire Claris Injectable Limited, a wholly owned subsidiary of Claris Lifesciences Limited, for USD625 million.
  • In November 2017, India’s Torrent Pharmaceuticals acquired more than 120 brands from Unichem Laboratories in India and Nepal, and its manufacturing plant at Sikkim for USD558 million.

Outbound M&A:

Facing continuous pricing and other pressures in the largest pharma market in the world – United States, Indian pharma players sharpened their focus on Europe and other under-penetrated markets, with a wider range of product portfolio. Following are a few examples of recent outbound M&As for the year, done predominantly to serve the above purpose, besides a couple of others with smaller deal values:

  • Intas Pharma, through its wholly owned subsidiary inked an agreement to acquire Actavis UK Limited and Actavis Ireland Limited from Teva Pharmaceutical for an enterprise value of USD767 million.
  • Dr. Reddy’s Laboratories entered into an agreement with Teva Pharmaceutical and an affiliate of Allergan plc to acquire a portfolio of eight ANDAs in the US for USD350 million.
  • Sun Pharma stepped into the Japanese prescription drug market by acquiring 14 brands from Novartis for USD293 million.
  • Lupin also strengthened its position in Japan by acquiring 21 products from Shionogi & Company Limited for USD150 million. In 2017, Lupin also acquired US-based Symbiomix Therapeutics – a privately held company focused on bringing innovative therapies to market for gynecologic infections. The acquisition value stands at USD 150 million.
  • Two other relatively large outbound acquisitions in 2017 were Piramal Enterprises’ acquisition of anti-spasticity and pain management drug portfolio of Mallinckrodt for USD171 million and Aurobindo Pharma’s Generis Farmaceutica USD142.5 million.

Long term business impact of M&A on the merged entity:

So far so good. Nevertheless, a key point to ponder, what is the long-term impact of M&A on the merged entities in India. It may impact several critical areas, such as financial ratios, reputation on drug quality standards or even its impact on employee morale. Sun Pharma’s acquisition of Ranbaxy in 2015 may be an example in this regard. Not too many credible studies are available for Indian pharma companies in this regard, it could be an interesting area for further research, though.

A research paper titled “Post-Merger Performance of Acquiring Firms: A Case Study on Indian Pharmaceutical Industry”, published by the International Journal of Research in Management & Business Studies (IJRMBS), in its July-September 2015 issue, captured an interesting point. It found, that M&As have a significant impact on the merged company performance as compared to the pre-merger period, but the impact is evident more in the immediate year after the merger.

The paper concluded, although the profitability had improved in the merged company as indicated in the financial ratios, like PBIT, Cash Profit margin and Net profit margin, but the improvement in the performance is observed only up to 1 year of the merger. As far as operating performance is concerned the short term positive impact can be observed, but again it lasts up to 1 year only. The overall study results, therefore, indicate the positive impact of merger on the operating and financial performance only in the short run (+1 year).

Is it a mixed bag?

Nevertheless, there are also other studies in this regard, which concluded the favorable impact of M&As on corporate performance. However, those studies adopted certain other parameters of measuring the financial and operational improvements in the merged companies. Some more research findings in this area – ferreted out from literature review and are available in the same issue of IJRMBS), revealing a mixed bag. Let me quote some these findings, starting from the earlier years, as follows:

Kruze, Park and Suzuki (2003): With a sample of 56 mergers of manufacturing companies from the period 1969 to 1997 concluded that the long term operating performance of control firms was positive but insignificant and high correlation existed between pre and post-merger performance.

Beena (2004): Analyzed the pre and post-merger performance of firms belonging to pharma manufacturing industries with samples of 115 acquiring firms between the period 1995 and 2000. For the purpose of analysis four sets of financial ratios were considered and it was tested using t –test. The study showed no improvement in the performance, as compared to the pre-merger period for the sample companies. 

Vanitha. S and Selvam. M (2007): With a sample of 58, to study the impact of merger on the performance in the Indian manufacturing sector from 2000 to 2002, the study concluded, overall financial performance is insignificant for 13 variables.

Pramod Mantravadi and Vidyadhar Reddy (2008): Investigated a sample of 118 cases of mergers in their study. They found, more impact of merger was noticed on the profitability of banking and finance industry, pharmaceutical, textile and electric equipment sector, whereas the significant decline was seen in chemical and Agri-Products sector.

More Indian studies are expected in this interesting area to understand the possible long-term impact of pharma M&A in India.

Conclusion:

Be that as it may, inbound and outbound consolidation and expansion of the Indian pharma industry through M&A will continue. However, this likely to happen at a varying pace, depending upon both the opportunities and constraints for business growth. This will include both in the export and the domestic markets.

Increasingly complex business environment, intense drug pricing pressure in the US, dwindling much differentiated product pipeline, impending patent expiry of blockbuster drugs, will drive the inbound M&A. Whereas, the domestic players would like to spread their wings in search of greater market access, across the world. This process is likely to include a different type of product-mix, including specialty and biologic products, creating some barrier to market entry for many other generic players.

Going forward, the critical drivers for pharma M&A in India, both inbound and outbound, are unlikely to undergo any radical change. Interestingly, available research studies regarding its long-term impact on the companies involved in this process are not yet conclusive. However, many researchers on the subject still believe, especially the financial impact of M&As on the merged entities in India last no more than short to medium term.

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.

Why MNC Pharma Still Moans Over Indian IP Ecosystem?

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Improving patient access to expensive drugs, paving the way for entry of their cheaper generic equivalents, post patent expiry, and avoiding evergreening, is assuming priority a priority focus area in many countries. The United States is no exception, in this area. The Keynote Address of Scott Gottlieb, Commissioner of Food and Drug at the 2018 Food and Drug Law Institute Annual Conference inWashington, DC by, on May 3, 2018, confirms this. Where, in sharp contrast with what the MNC Pharma players and their trade associations propagated, the US-FDA commissioner himself admitted by saying, “Let’s face it. Right now, we don’t have a truly free market when it comes to drug pricing, and in too many cases, that’s driving prices to unaffordable levels for some patients.”

Does US talk differently outside the country?

At least, it appears so to many. For example, in April 2018, the Office of the United States Trade Representative (USTR) released its 2018 Special 301 Report. In this exercise, the USPTO names the country’s trading partners for not adequately protecting and enforcing Intellectual Property (IP) rights or otherwise deny market access to U.S. innovators that rely on the protection of their IP rights.’ Accordingly, U.S. trading partners are asked to address IP-related challenges, with a special focus on the countries identified on the Watch List (WL) and Priority Watch List (PWL).

In 2018, just as the past years, India continues to feature, along with 11 other countries, on the PWL, for the so called longstanding challenges in its IP framework and lack of sufficient measurable improvements that have negatively affected U.S. right holders over the past year.

From Patient access to affordable drugs to Market access for Expensive Drugs: 

Curiously, the USTR Report highlights its concerns not just related to IP, but also on market access barriers for patented drugs and medical devices, irrespective of a country’s socioeconomic compulsion. Nevertheless, comparing it to what the US-FDA Commissioner articulated above, one gets an impression, while the US priority is improving patient access to affordable drugs for Americans, it changes to supporting MNC pharma to improve market access for expensive patented drugs, outside its shores.

Insisting others to improve global IP Index while the same for the US slides:

In the context of the 2018 report, the U.S. Trade Representative, reportedly said, “the ideas and creativity of American entrepreneurs’ fuel economic growth and employ millions of hardworking Americans.” However, on a closer look at the U.S. Chamber of Commerce’s annual Global IP Index for 2018, a contrasting fact surfaces, quite clearly. It shows, America, which once was at the very top of the overall IP Index score, is no longer so – in 2018, the world rank of the US in offering patent protection to innovators, dropped to 12thposition from its 10thglobal ranking in 2017. Does it mean, what the US is asking its trading partners to follow, it is unable to hold its own ground against similar parameters, any longer.

Should IP laws ignore country’s socioeconomic reality? 

MNC Pharma often articulated, it doesn’t generally fall within its areas of concern, and is the Government responsibility. However, an affirmative answer, echoes from many independent sources on this issue. No wonder, some astute and credible voices, such as an article titled “U.S. IP Policy Spins Out of Control in the 2018 Special 301 Report”, published by the Electronic Frontier Foundation on May 01, 2018, termed 2018 Special 301 Report – ‘A Tired, Repetitive Report.’ It reiterates in no ambiguous term: ‘The report maintains the line that there is only one adequate and effective level of IP protection and enforcement that every country should adhere to, regardless of its social and economic circumstances or its international legal obligations.

The ever-expanding MNC Pharma list of concerns on Indian IP laws:

The areas of MNC Pharma concern, related to Indian IP laws, continues to grow even in 2018. The letter dated February 8, 2018 of the Intellectual Property Owners Association, Washington, DC to the USTR, makes these areas rather clear. I shall quote below some major pharma related ones, from this ever-expanding list:

  • Additional Patentability Criteria – section 3 (d): The law makes it difficult for them to secure patent protection for certain types of pharma inventions.
  • TADF (Technology Acquisition and Development Fund)is empowered to request Compulsory Licensing (CL) from the Government:Section 4.4 of India’s National Manufacturing Policy discusses the use of CL to help domestic companies access the latest patented green technology.This helps in situations when a patent holder is unwilling to license, either at all or “at reasonable rates,” or when an invention is not being “worked” within India.
  • India’s National Competition Policyrequires IP owners to grant access to “essential facilities” on “agreed and nondiscriminatory terms” without reservation. They are not comfortable with it.
  • Regulatory Data Protection: The Indian Regulatory Authority relies on test data submitted by originators to another country when granting marketing approval to follow-on pharma products. It discourages them to develop new medicines that could meet unmet medical needs.
  • Requirement of local working of patents: The Controller of Patents is empowered to require patent holders and any licensees to provide details on how the invention is being worked in India. Statements of the Working, (Form 27),must be provided annually.Failure to provide the requested information is punishable by fine or imprisonment. It makes pharma patent holders facing the risk of CL, if they fail to “work” their inventions in India within three years of the respective patent grant.
  • Disclosure of Foreign Filings: Section 8 of India’s Patent Act requires disclosure and regular updates on foreign applications that are substantially “the same or substantially the same invention.” They feel it is irrelevant today.

Pharma MNCs’ self-serving tirade is insensitive to Indian patient interest:

Continuing its tirade against some developed and developing countries, such as India, the US drug manufacturers lobby group – Pharmaceutical Research and Manufacturers of America (PhRMA) has urged the office of the US Trade Representative (USTR) to take immediate action to address serious market access and intellectual property (IP) barriers in 19 overseas markets, including India, reports reported The Pharma Letter on February 28, 2018. It will be interesting to watch and note the level active and passive participation of India based stakeholders of this powerful US lobby group, as well.

Government of India holds its ground… but the saga continues:

India Government’s stand in this regard, including 2018 Special 301 Report, has been well articulated in its report released on January 24, 2018, titled “Intellectual Property Rights Regime in India – An Overview”, released by the Department of Industrial Policy and Promotion Ministry of Commerce and Industry (DIPP). The paper also includes asummary of some of the main recommendations, as captured in the September 2016 Report of the High-Level Panel on Access to Medicines, constituted by the Secretary-General Ban Ki-Moon of the United Nations in November 2015.  Some of these observations are as follows:

  • WTO members must make full use of the TRIPS flexibilities as confirmed by the Doha Declaration to promote access to health technologies when necessary.
  • WTO members should make full use of the policy space available in Article 27 of the TRIPS agreement by adopting and applying rigorous definitions of invention and patentability that are in the interests of public health of the country and its inhabitants. This includes amending laws to curtail the evergreening of patents and awarding patents only when genuine innovation has occurred.
  • Governments should adopt and implement legislation that facilitates the issuance of Compulsory Licenses (CL). The use of CL should be based on the provisions found in the Doha Declaration and the grounds for the issuance left to the discretion of the governments.
  • WTO members should revise the paragraph 6 decision in order to find a solution that enables a swift and expedient export of pharmaceutical products produced under compulsory license.
  • Governments and the private sector must refrain from explicit or implicit threats, tactics or strategies that undermine the right of WTO Members to use TRIPS flexibilities.
  • Governments engaged in bilateral and regional trade and investment treaties should ensure that these agreements do not include provisions that interfere with their obligations to fulfill the rights to health.

The DIPP report includes two important quotes, among several others, as follows:

Joseph Stiglitz, Nobel Prize for Economics (2001) – an American Citizen:

-       “If patent rights are too strong and maintained for too long, they prevent access to knowledge, the most important input in the innovation process. In the US, there is growing recognition that the balance has been too far tilted towards patent protection in general (not just in medicine).”

-       “Greater IP protection for medicines would, we fear, limit access to life-saving drugs and seriously undermine the very capable indigenous generics industry that has been critical for people’s well-being in not only India but other developing countries as well”.

Bernie Sanders, an American Citizen and Senior U.S. Senator:

-      “Access to health care is a human right, and that includes access to safe and affordable prescription drugs. It is time to enact prescription drug policies that work for everyone, not just the CEOs of the pharmaceutical industry.”

-      “Healthcare must be recognized as a right, not a privilege. Every man, woman and child in our country should be able to access the health care they need regardless of their income.”

Conclusion:

Why is then this orchestrated moaning and accompanying pressure for making Indian IP laws more stringent, which apparently continues under the façade of ‘innovation at risk’, which isn’t so – in any case. But, cleverly marketed high priced ‘me too’ drugs with molecular tweaking do impact patient access. So is the practice of delaying off-patent generic drugs entry, surreptitiously. Instead, why not encourage Voluntary Licensing (VL) of patented drugs against a mutually agreed fee, for achieving greater market access to the developing countries, like India?

Whatever intense advocacy is done by the vested interests to change Indian patent laws in favor of MNC pharma, the intense efforts so far, I reckon, have been akin to running on a treadmill – without moving an inch from where they were, since and even prior to 2005. The moaning of MNC Pharma on the Indian IP ecosystem, as I see it, will continue, as no Indian Government will wish to take any risk in this area. It appears irreversible and is likely to remain so, for a long time to come. The time demands from all concerned to be part of the solution, and not continue to be a part of the problem, especially by trying to tamper with the IP ecosystem of 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.

Prescription Digital Therapy Now A Reality

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The pursuit of offering ‘prescription digital therapeutics’ or ‘digiceuticals’ by Big Pharma, to ensure better clinical outcomes for patients, has apparently come to fruition now.

On April 18, 2018, by a media release, Novartis announced that the Sandoz Division of the Company has entered into collaboration with Pear Therapeutics to commercialize and continued development of digital therapeutics, designed to effectively treat disease and improve clinical outcomes for patients.

The collaboration brings on to the table, a synergy between Sandoz expertise in launching and commercializing various disease treatments, with Pear’s leading experience in digital therapeutics design and implementation. This deal has attracted attention of many. Mainly because, any pharma player will, for the first-time, detail a digital therapy treatment directly to the medical profession, and seek their prescription support.

It is worth noting that Pear’s flagship digital therapeutic – reSET is the first USFDA-cleared mobile medical application with both a safety and efficacy label to help treat patients with Substance Use Disorder, in September 2017. According to published reports, several studies have established that it is two-times more effective than conventional in person therapy sessions. Interestingly, the rate of treatment efficacy increases even up to tenfold, in refractory patients.

Just the beginning of a long run: 

The above market launch of a digital therapy by Novartis signals just the beginning of a long run in changing in the disease treatment archetype for better outcomes. Incidentally, prior to this announcement, on March 1, 2018, the same Company had announced, “Novartis and Pear Therapeutics to collaborate on prescription software applications aimed to treat patients with schizophrenia and multiple sclerosis.”

The media release underscored:“Psychiatric and neurodegenerative diseases place a heavy physical, mental and economic burden on patients and their families. With widespread adoption of digital devices, prescription digital therapeutics could potentially play an important role in future treatment models for a range of diseases with high unmet medical need”.

The scope and potential:

An article titled – ‘Digital therapeutics: Preparing for takeoff’,published by McKinsey & Company in February 2018, captures its scope succinctly. It says, “digital therapeutics tend to target conditions that are poorly addressed by the healthcare system today, such as chronic diseases or neurological disorders. In addition, they can often deliver treatment more cheaply than traditional therapy by reducing demands on clinicians’ time.”

A separate McKinsey interview article, titled ‘Exploring the potential of digital therapeutics’, published in the same month, elucidated the potential of digital therapy equally well.  It highlighted:“A digital therapeutic is an intervention based on software as the key ingredient, which has a direct impact on a disease. This is what distinguishes this category from the broader term digital health. We will see digital therapeutics and digital diagnostics integrate into the health system…”

‘Prescription digital therapy’ are not just ‘Fitness and Well-being’ Apps:

Prescription digital therapy are not just to monitor a person’s general fitness level against pre-identified parameters, and overall well-being. Whereas, digital therapeutics help patients to regularly and consistently monitor relevant and tailor-made disease related data - in real-time to detect behavioral, lifestyle and requisite biological changes on a daily basis. However, this is not ‘a so well-realized necessity’ today, especially, in the treatment of certain serious disease conditions, to ensure significantly better clinical outcomes for patients.

Digital therapeutics can ensure making a favorable change in patient behavior, which is not merely as efficient as administering medicines, but could also ensure greater effectiveness than conventional medications. Further, it assists patients to better understand, manage and control several disease conditions, and more importantly, sans any untoward side-effects.

Besides, with digital therapy, the required treatment interventions will reach patients faster than traditional treatment processes. Both the patient request and the medical response for the same can be quickly exchanged, together with relevant data support, through smartphones or other wearable digital interfaces – either in the form of voice or text or both. I shall dwell on this later in the article. Thus, digital therapy may not require patients to meet the doctor every time a need arises.

Moreover, fitness and wellbeing Apps do not require marketing approval from a country’s drug regulator. Mostly because, they help monitoring general and generic fitness parameters, capturing some low-risk changes. Whereas, a custom-made prescription digital therapy would necessarily require such regulatory nod.

In tandem, various studies are also being conducted on wearables, such as an Apple Watch, as an interface. The following are examples of some of these studies:

Digital therapy study with Apple Watch as an interface:

In February 2017, Takeda Pharmaceuticals U.S.A. and Cognition Kit Limited, announced a collaboration to pilot the use of a specially designed app on an Apple Watch wearable to monitor and assess cognitive function in patients with Major Depressive Disorder (MDD).

In November 2017, they presented results from ‘Digital Wearable Technology Study’ in patients with MDD. The observational study involved 30 participants, aged 18-65, with a clinical diagnosis of mild to moderate depression who have been prescribed antidepressant monotherapy for MDD.

The study also evaluated feasibility and participant compliance with measures of mood and cognition on wearable technology; and compared measures of mood and cognition on wearable technology using traditional neuropsychological testing and patient reported outcomes on depression symptoms at 6 weeks. Participants were provided with an Apple Watch on which brief cognitive and mood tests were administered daily.

The researchers observed that patients were compliant with the wearable Apple Watch device on a daily basis to evaluate mood (95 percent) and cognition (96 percent). The study also demonstrated that abbreviated daily assessments delivered through the wearable Apple Watch device corresponded with objective Cambridge Neuropsychological Test Automated Battery (CANTAB) cognitive tests and full-length patient reported outcomes, PHQ-9 and PDQ-D, assessed during weeks 1, 3 and 6. No adverse events were reported in the study.

According to another report, this user interface with Apple’s smart-watch versions 2 and 3 is now being used in a number of studies for chronic conditions, such as Parkinson’s disease – combining biometric data with user input. Again, in February 2017, Johns Hopkins University announced a project to use the smart-watch for research on possible triggers of epileptic seizures.

When used as an interface with prescription digital therapy, the provision of e-SIM and GPS in Apple Watch Series 3, I reckon, would also help patients to immediately communicate with the remote therapy centers using the same device, anytime – as and when the patients want.

Digital therapy initiatives in India:

Initiative on digital therapy has already started rolling in India, as well. Its pace is also quite encouraging. For example, Wellthy Therapeutics is building a patient centric solution for diabetes through digital intervention and management. On February 20, 2018, the Company, reportedly, shared the interim results of an ongoing real-world pilot to evaluate the effectiveness of the Wellthy Diabetes Smartphone App (WD). The results were shared at the 11th International Conference on Advanced Technologies and Treatments for Diabetes (ATTD 2018) in Vienna, Austria.

The data demonstrated how the use of WD improved glycemic control. On completion of 16 weeks, participants showed a reduction in their HbA1c by (-0.61%) on average, with 61.5% of participants having showed significant reduction in their HbA1c with an average of (-1.17%) reduction.

Conclusion:

As indicated in my article titled, ‘Digiceuticals: A Force Multiplier to Contain Chronic Diseases’, published in this blog on October 23, 2017,prescription digital therapies are primarily of two types – one for “medication augmentation” and the other for “medication replacement.”

Be that as it may, prescription digital therapyimproves clinical outcomes for patients by manifold. It also shows potential to take over from traditional treatment with medicines in several serious and virtually crippling ailments, mostly related to human behavior and lifestyle, such as a host of chronic diseases, and without causing any side-effects.

Thus, prescription digital therapy is now a reality. It has come to stay for long – can’t be wished away, any longer.

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.

Organic and Inorganic Growth Strategy For Sustainable Business Excellence

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For an enthusiast, witnessing any organization growing consistently, is indeed exhilarating. This becomes even more interesting at a time when challenges and frequent surprises in the business environment become a new normal. A robust short, medium and long growth strategy turns out to be a necessity for sustaining the business excellence over a long period of time. This is applicable even to the pharma players in India.

The Chief Executive Officer (CEO) of an organization usually assumes the role of chief architect of this strategy, which needs to be subsequently approved by the Board of Directors of the company concerned, collectively. The Board holds the CEO, who ultimately carries the can, accountable to deliver the deliverables in creating the desired shareholder value.

Two basic types of growth strategies:

Based on the CEO’s own experience, and also considering the expectations of the Board of Directors, together with the investors, the CEO opts for either of these two following types of basic growth strategies, or a mix of these two in varying proportions:

  • Organic growth: Growing the business through company’s own pursued activities, or all growth strategies sans Mergers and Acquisitions (M&A) or by any other means not external to the organization.
  • Inorganic growth: Growing the business through M&A or takeovers.

There is nothing fundamentally wrong with either of these two types of basic growth strategies, or their mix in varying proportions. Nevertheless, it is generally believed that with the basic ‘Organic’ growth plan, the companies, or rather their CEOs have a greater degree of sustainable control in various critical areas. These often include, retaining senior management focus on the organizational core strength for sustainable excellence, or even maintaining the organizational culture and people management style, without any possible conflict in these areas.

In this article, I shall explore different aspects of these two basic growth strategies for sustainable business excellence. To illustrate the point better, I shall draw upon examples from two large but contrasting pharma companies. Let me begin this discussion with the following question:

When does a company choose predominantly inorganic growth path?

Its answer has been well articulated in an article of the Harvard Business Review (HBR). It says: “High-growth companies become low growth all the time. Many CEOs accept that as an inevitable sign that their businesses have matured, and so they stop looking internally for big growth. Instead, they become serial acquirers of smaller companies or seek a transformative acquisition of another large business, preferably a high-growth one.”

That said, none can deny that the short to medium term growth of a company following M&A is much faster and its market share and size become much larger than any comparable organizations pursuing the ‘Organic Growth’ path. Thus, more often than not, such initiatives create a ‘domino effect’, especially in the pharma industry, across the world.

Inorganic growth and key management challenges:

The short and medium-term boost in organizational performance post M&A, comes with its complexities in meeting similar expectations of the Company Board, shareholders and the investors, over a long period of time. This is besides all other accompanying issues, such as people related and more importantly in setting the future direction of the company. The cumulative impact of all this, propels the CEO to go all out for a similar buying spree. When it doesn’t materialize, as was expected, both the Board and the CEO are caught in a catch 22 situation. As mentioned earlier, I shall illustrate this point, with the following recent example covering some important areas.

The examples:

“Please don’t go, Ian Read. That’s the message Pfizer’s board of directors has made loud and clear to the almost-65-year-old CEO, who could very well retire with a $15.7 million pension package.” This is what appeared in an international media report on March 16, 2018.

Analyzing the current challenges faced by the company, the media report interpreted the indispensability of Ian Read in an interesting way. It reported: “The pharma giant considers Read the most qualified person to steer the company through a host of challenges, from oncology trial disappointments to investor pressure to make a big acquisition.” Investors are also, reportedly, sending clear signals to the CEO about the tough road ahead.

Thus, Ian Read “who turns 65 in May, also must remain CEO through at least next March and not work for a competitor for a minimum of two years after that to be eligible,” reported Bloomberg on March 16, 2018. It is interesting to note at this point that Mr. Read has been the Chief Executive Officer (CEO) of Pfizer – the world’s largest pharmaceutical company, since 2010.

A different CEO rated as ‘Top Performing’ pharma leader:

Pfizer CEO’s ‘exemplary leadership and vision’, has been captured in the Proxy Statement by the Independent Directors on the Board of the Company. However, Harvard Business Review (HBR) in its 2016 pan-industry ranking of the “best-performing” CEOs in the world, featured Lars Rebien Sorensen – the then outgoing CEO of Novo Nordisk. He topped the list for the second successive year. Sorensen achieved this distinction ‘Mostly, for his role overseeing astonishing returns for shareholders and market capitalization growth.’ All the CEOs were, reportedly, evaluated by HBR on a variety of financial, environmental, social, and governance metrics.

Interestingly, in the 2017 HBR list for the same, when the Novo Nordisk CEO was out of the race, no pharma CEO could achieve this distinction or even a place in the top 10. Pablo Isla of Inditex (Spanish clothing retailer), Martin Sorrell of WPP (PR major in the UK) and Jensen Huang of NVIDIA (American technology company occupied the number 1, 2 and 3 spots, respectively.

Two interesting leadership examples:

I shall not delve into any judgmental interpretations on any aspect of leadership by comparing the Pfizer CEO with his counterpart in Novo Nordisk. Nevertheless, one hard fact cannot be ignored. The accomplishments of Pfizer CEO were evaluated by its own Board and were rated outstanding. Whereas, in case of Novo Nordisk CEO, besides the company’s own Board, his performance evaluation was done by the outside independent experts on the HBR panel.

Was there any difference in their growth strategy?

Possibly yes. There seems to be, at least, one a key difference in the ‘growth strategy’ of these two large pharma players.

  • Novo Nordisk is primarily driven by ‘Organic growth’ with a focused product portfolio on predominantly diabetes disease area, besides hemophilia, growth disorders and obesity. This has been well captured in the company’s statement on February 6, 2017 where it says: “Organic growth enables steady cash returns to shareholders via dividends and share repurchase programs” and is driven by its Insulin portfolio.
  • Whereas, Pfizer, though in earlier days followed an ‘organic’ growth path, subsequently changed to ‘Inorganic Growth’ route. Pfizer’s mega acquisitions, in its quest for faster growth to be the world’s largest pharma player, include Warner Lambert (2000), Pharmacia (2002) and Wyeth (2009). The key purpose of these acquisitions appears to expand into a diversified product portfolio of blockbuster drugs.

Pfizer did contemplate changing course:

In 2010, barely two weeks on the job of CEO, Pfizer Inc., Ian Read indicated breaking up the company into two core businesses. However, after six years of meticulous planning, on September 26, 2016, the company announced: “After an extensive evaluation, the company’s Board of Directors and Executive Leadership Team have determined the company is best positioned to maximize future shareholder value creation in its current structure and will not pursue splitting Pfizer Innovative Health and Pfizer Essential Health into two, separate publicly traded companies at this time.”

Sustained value creation following the same path not easy:

After the decision to operate as one company and consolidate the business pursuing similar ‘Inorganic Growth’ strategy, Pfizer went ahead full throttle to acquire AstraZeneca for USD119 billion. But, on May 19, 2014, AstraZeneca Board rejected it. Again, on April 05, 2017, Reuters reported, “Pfizer Inc. agreed on Tuesday to terminate its $160 billion agreement to acquire Botox maker Allergan Plc, in a major victory to U.S. President Barack Obama’s drive to stop tax-dodging corporate mergers.”

Apparently, the current Pfizer CEO is now expected to finish his unfinished agenda, at least for the short to medium term, as the current blockbuster drugs continue losing the steam.

Conclusion:

It’s a common belief that slowing down of a company’s business performance is a compelling reason for its switch from the ‘Organic’ to ‘Inorganic’ growth strategy. The new CEO of Novo Nordisk – Lars Fruergaard Jorgensen also appears to subscribe to this view. While, reportedly, including negative growth at the low end in constant currencies in its guidance for 2017, Jorgensen apparently, confided that M&A will now be a part of the company’s growth search.

On facing a similar situation, the above HBR article suggested the CEOs to fight the short-term pressures of the business cycle of moving away from the ‘Organic’ growth path. This can be overcome by various means, as good ideas for organic growth can always attract required resources and support.

While choosing an appropriate basic growth strategy for the organization – ‘Organic’ or ‘Inorganic’, the CEO’s focus should be on what is best for sustainable and long-term business performance, without being trapped by the prevailing circumstances. Thus, addressing the internal causative factors, effectively, would likely to be a better idea in resolving the issue of a sustainable business performance. This is regardless of the underlying reasons, such as gradually drying up the new product pipeline while blockbuster drugs are going off patent, or due to several other different reasons.

Nevertheless, in the balance of probability, ‘Organic’ growth strategy appears to be less complex and is fraught with lower business risks and uncertainties. Consequently, it reflects a greater likelihood of sustainable achievements for the CEO, and in tandem, a long-term financial reward for the shareholders, investors, and finally the organization as a whole.

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.

An Interesting Link: Productivity At Work And Employee Fitness (Part 2)

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Part 2: Mental Fitness

As I wrote in my previous article, the complex multi-factorial work-life challenges in today’s Volatile, Uncertain, Complex and Ambiguous (VUCA)) world are virtually unprecedented.

Interestingly, a sizeable part of such challenge is related to a wide variety of internal organizational factors. These often include changes at the senior management level or in the key corporate policies, or the likes. More often, the changing aspirations and outlook of both the younger and even the aging professionals, in the midst of newer complexities of life – not well-understood by the management, invite such a situation.

Taking note of the influencing factors:

Meeting challenges of some of these disruptive changes, many companies are working on the respective influencing factors in various critical areas.

According to an article, titled “Meeting the Challenge of Disruptive Change”, published by the Harvard Business Review (HBR) in its March-April 2000 issue writes: “Our research suggests that three factors affect what an organization can and cannot do: its resources, its processes, and its values.” It then elaborates by saying that the second factor – processes, also means what the company leadership uses to transform resources into products and services of greater worth.

These processes, I reckon, encompass the effective use of various ‘employee engagement’ programs. As a part of which, employee fitness programs are now being encouraged at the corporate level, seriously. I have discussed in my previous article, the ‘Physical Fitness’ aspect of improving employee productivity at work. in this article, I shall dwell on improving the ‘Mental Fitness’ facet of the same.

The area deserving greater attention:

Curiously, not as much attention and care are being taken towards ensuring a robust ‘mental fitness’ level of employees, which is as important, if not more, to achieve the same corporate objectives. A right combination of sharper mind and a healthier body will rather have a synergistic effect in this regard.

Recent data:

The January 18, 2018 article titled, “Now Is The Time For Wellbeing Programs To Focus On Mental Health,” published by the Forbes Magazine presented some interesting facts.

It wrote, employers are increasingly taking greater interest in employee wellbeing. In 2017, the average employer in the United States spent around USD 693 per employee on well-being initiatives per year. This figure is rising around USD100 per year, the author said.

However, the majority of such investment were towards physical health activities, such as installation of gym facilities on site, or giving employees fitness trackers to monitor activity levels. It was less clear, though, whether similar investment extends into mental health programs, as well.

Mental health issues at work higher than physical health conditions:

The October 2017 study titled “Thriving at work“ highlighted that the United Kingdom faces a significant mental health challenge at work. While there are more people at work with mental health conditions than ever before, 300,000 people with a long term mental health problem lose their jobs each year, and at a much higher rate than those with physical health conditions.

Another article appeared in the Indian Journal of Occupational and Environmental Medicine also observed that mental health problems have an impact on employers and businesses directly through negative impact on productivity and profits, as well as an increase in costs to deal with the issue. In addition, they impact employee morale adversely.

Mental health – the Indian scenario:

The World Health Organization recognizes that the impact of mental health problems in the workplace has serious consequences not only for the individual, but also for the productivity of the enterprise, including the developing countries, such as India.

For the country, the National Mental Health Survey 2015-16 also reveals that nearly 15 percent Indian adults need active intervention for one or more mental health issues and one in 20 Indians suffers from depression. Noting this ascending trend in the prevalence of mental disorders, workplace mental health is an essential need for the Indian Corporates to respond to, urgently.

Alongside, a 2016 study by Optum – a leading employee assistance program to many Corporates, with a sample size of 200,000 employees and covering over 30 large employers, unveiled a seemingly astonishing fact. It reported, as high as 46 percent of the workforce in India suffers from some form of stress. The same issue is applicable to the Government employees in India.

Intriguingly, its budgetary allocation to the National Program for Mental Health has been stagnant for the past three years. At ₹ 35 crore, the program, reportedly, received 0.07 percent of India’s 2017-18 health budget.

Mental health continues to be a taboo:

The ‘Thriving at work’ report further said: “Behind this, our analysis shows that around 15% of people at work have symptoms of an existing mental health condition.” “We found that in many workplaces, mental health is still a taboo subject and that opportunities are missed to prevent poor mental health and ensure employees who may be struggling to get the support they need. In many instances, employers simply don’t understand the crucial role they can play, or know where to go for advice and support,” the paper underscored.

As the above Forbes study said, it could also be due to the fact that a large number of employees believe their mental health problems are not affecting their work, so there was no need to tell their boss.

Focus only on merit, ignoring mental health may have a shorter life:

As we see around, many organizations, including large pharma players in India, are increasingly following different systems of recognizing merit to boost employee productivity. One of its visible manifestations gets reflected in the corporate policy of ‘pay for performance’. It fundamentally means: ‘exceed goals to earn more.’ This by all means is one of the very effective tools of not just achieving business excellence, but in fostering a sense of competition within the performers, besides good corporate governance.  In this context, a question often raised is: Does focusing only merit, sans adequate mental health, carry a shorter life for improving employee productivity?

Conclusion:

This process of recognizing merits, focuses mostly on boosting employee productivity, and very rarely on meeting their mental needs, wants, aspirations and outlook. As a result of this single minded corporate focus on professional merits alone, work-stress starts creating additional pressure, over and above the employees’ own family, social and other personal stress factors. It often leads to job burnout – slowly shifting the work productivity in the reverse gear, alongside an adverse impact on the quality of life of individuals.

There are instances when the employees resort to unwanted shortcuts, snowballing the situation, but only when these get detected. There are ample such evidences in the Indian pharma industry, as well. Several global pharma majors, such as GSK have taken some measures in this area. Nonetheless, it needs to go beyond what a large number of these companies display on their wellness initiatives for employees, in the respective websites.

I hope, this well-proven interesting link between employee productivity at work and their mental well-being, will be noted by more and more Indian companies, especially in the pharma sector. This may prompt them to look for a win-win blend between corporate excellence, employees’ merit-based performance and their fitness needs – both physical and mental. That’s, I reckon, is the minimal corporate requirement today, in this area. Once in place, it will keep evolving at a rapid pace, with the collective cerebral inputs of the respective organizations.

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.

 

An Interesting Link: Productivity At Work and Employee Fitness (In 2 Parts)

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Part 1: Physical Fitness

Today’s work environment is much more challenging than ever before. The challenge is undoubtedly multi-factorial. Many of these are external – mostly related to increasing complex, and difficult to fathom uncertainties and surprises in the overall business environment. Nevertheless, its sizeable part keeps generating from within the respective organizations.

These emanate from a wide variety factors, such as changes at the senior management levels or in the key corporate policies of an organization. But more importantly, changing aspirations and outlook of the new generation professionals, in the midst of all complexities of life, often play a catalytic role.

Managing changes in VUCA world:

The Corporate leadership of more and more business organizations, including pharma is fast realizing a hard fact. They are discerning, if the internal challenges are addressed with a systematic short, medium and long-term approaches, it would be possible to navigate through, with a greater degree of success than otherwise, in this Volatile, Uncertain, Complex and Ambiguous (VUCA)) world.

Scientific evidence suggests, encouraging employee fitness in this situation with a comprehensive plan, could considerably help boosting employee productivity to effectively respond to business challenges. I shall discuss this emerging scenario in two successive articles. The Part 1 will dwell on the impact of ‘Physical Fitness’ on employee productivity, and the Part 2 will argue on the relevance of ‘Mental Fitness” in achieving the same.

Working on ‘employee engagement’, including fitness:

To successfully cruise through this tough headwind, many corporate houses are working hard on various ‘employee engagement’ initiatives, to excel in creating the best possible ‘shareholder value’. These cover various hard and soft skills imparted through regular training sessions, in tandem with actively encouraging employee fitness programs at the corporate level, seriously.

There are plenty of reasons for doing so. For example, by keeping the employees away from various non-infectious chronic (NCDs) such as hypertension, diabetes, or enabling them to manage these conditions better, through fitness initiatives, the employers derive some very tangible benefits, as well. These come, over and above offering a sense of wellness to employees – in terms of improvement of per employee productivity.

Proven benefits of fitness initiatives now visible across the world:

To achieve this goal, increasing number of corporate houses around the world of all sizes, are ensuring employee fitness by providing facilities of exercise, even in the workplace.

A Brookings Institute study, titled, ‘Exercise Increases Productivity’ found that ‘regular exercise at work helps increase employees’ happiness and overall productivity in the workplace.’ In a randomized controlled trial, researchers from the University of Georgia concluded that even low to moderate daily exercise can make employees feel more energized within a few weeks. Whereas, the effect of exercise on the mood is immediate.

Another research article, published in the American Journal of Management indicated: ‘If fitness could be increased through some type of fitness program, there would be a noticeable increase in productivity.’

Yet another research publication on the subject commented: “There are clear implications not only for employee wellbeing, but also for competitive advantage and motivation by increasing opportunities for exercising at work.”

Fitness also impacts the way one thinks:

Stating that: ‘Exercise has also been shown to elevate mood, which has serious implications for workplace performance,” the article titled “Regular Exercise Is Part of Your Job”, published by the Harvard Business Review (HBR) on October 03, 2014 discussed another interesting point.

It wrote, when we think about the value of exercise, we tend to focus on the physical benefits, such as lower blood pressure, a healthier heart, a more attractive physique. Besides this fact, there are other compelling evidence suggesting that there is another, more immediate benefit of regular exercise: its impact on the way we think.

Elaborating the point, the author said: Studies indicate that our mental firepower is directly linked to our physical regimen. And nowhere are the implications more relevant than our performance at work, providing the following cognitive benefits into an employee routine at the work place:

  • Improved concentration
  • Sharper memory
  • Faster learning
  • Prolonged mental stamina
  • Enhanced creativity
  • Lower stress

In line with the Brooking Institute study, this article also reiterates that exercise has shown to elevate mood, which has serious implications for workplace performance. On the other hand, feeling irritable is not just an inconvenience. It can directly influence the degree to which one is successful.

Even the results of the Leeds Metropolitan University study show that exercise during regular work hours may boost performance. It also found: “On days when employees visited the gym, their experience at work changed. They reported managing their time more effectively, being more productive, and having smoother interactions with their colleagues. Just as important: They went home feeling more satisfied at the end of the day.”

The most common barrier:

What prevents us from exercising more often? The most common answer to this important question would probably be: ‘I don’t have the time.’ This answer could well be quite legitimate too. However, it also means that fitness programs still assume a low priority to many, despite its scientifically proven work and personal benefits, as the studies indicate.

Conclusion:

Various research studies, including the HBR article, have concluded that the cognitive benefits of exercise resulting significant improvement in employee productivity, can’t be wished away, any longer.  Which is why the research studies establishing the importance of employee fitness to boost their productivity in the workplace, are so compelling.

There is hardly any scope of doubt now that: “Exercise enables us to soak in more information, work more efficiently, and be more productive.”

This scientifically proven narrative now deserves to be practiced at a much wider scale by Indian business organizations. As an effective tool to boost employee productivity, they may wish to increasingly encourage fitness programs at the workplace. Not very strange, though, corporate physical fitness centers – on-site or outsourced, are not too common, just yet, perhaps more within the Indian pharma industry.

When actively encouraged by, particularly the pharma leadership in India, a significant value addition may take place on their ongoing initiatives for improving the much-sought after employee productivity in the workplace, in a win-win way.

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 A ‘Virtuous Cycle’ Through Patient Reach and Care

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As many would know, in the strategic marketing process of any product including patented and generic drugs crafty product differentiation plays a critical role.

This strategic process of creating a competitive edge with unique product differentials is necessary. It helps perceiving a product more attractive to the target audience, against its competitors. When done effectively, the product fetches a greater share of mind for usage, achieving higher levels of top of mind recall, and, of course, a price premium.

In pharma, the traditional brand differentiation revolves around delivering cutting-edge values, skimming through the intrinsic product features and benefits. In India, which is predominantly a branded generic market, the local pharma marketers almost routinely keep trying to toe this line.

As I said before, some of them often vehemently argue in favor of maintaining a status quo in this area. It could probably be due to professional discomfort in venturing out of their respective comfort zones.

In the current pharma marketing environment, especially in India, finding the right answer to a not-so-easy-to-reply question may trigger a disruptive change in the traditional, or virtually routine marketing practices. This is widely considered a prevailing normal of date, and generally includes ‘features and benefits oriented product differentiation.’

In this article, I shall dwell on this important area, picking a thread from this simple, but a difficult-to-answer question.

The question:

This question goes like this: ‘How does a pharma marketer conceptualize product features and benefits oriented differential values, when there are virtually no clinically significant differentials between the competing products?’ There would possibly be no credible answers, justifying this practice.

Are branded generic sales mostly driven by contentious factors?

This query is more relevant in a branded generic market, such as India. Yet, pharma marketers keep following routinely the traditional methods in this area. As many say, actual product sales are driven by mostly by those critical factors, which are contentious and are being fiercely debated within the country, even today.

Pharma needs more extrinsic differentiation rather than intrinsic:

In the midst of an evolving new value expectation of pharma consumers, the market access strategy of the industry marketers must also evolve, keeping at least a step ahead of the former. This would help in delighting the customers, by offering them something meaningful, well before they start expecting the same. Thus, it makes me believe, a time has come to make the extrinsic factors, such as patient experience or delight, the center piece of product differentiation, weaving around its intrinsic qualities.

Many global companies have already started acting in this area – creating a whole new experience of care and relief for the patients, with new marketing models delivering differential product values to the target groups. Similar steps can successfully be taken even where there are no clinically significant differentials between the competing products.

Greater participation of consumers in treatment choices:

The information revolution in the world, mainly empowered by the Internet-based platforms – social or otherwise, is enabling many consumers to be partners in the disease treatment choices along with the doctors. In India too, it has started happening – slowly, but surely.

Those consumers, both in urban and mostly in the rural India, who won’t have any direct access to such information, ‘word of mouth’ enlightenment received from others would have a somewhat compensatory effect. Thus, the patients and their near and dear ones will have multiple treatment choices to choose from. In my view, this situation would gain a critical mass – much faster than what the current trend suggests. There won’t be any surprises, if this change assumes a snowballing effect, with modern technology being the key catalyst.

The current attitude could be counterproductive:

In this dynamic situation, any arrogance or ignorance of pharma marketers nurturing a seemingly ‘perennial’ conviction that ‘Indian pharma market and the patients are different’, could indeed be grossly counterproductive. This group of people seems to form a majority, today.

However, it is great to notice that some young Indian pharma professionals with an agile mindset and cerebral power, are thinking differently. They are not just keenly observing the ‘dots’, but also capturing, connecting and mapping the changing needs of the patients.

Their fingers are always on the pulse – concentrating more on strategizing extrinsic differentiation of products rather than remaining in the cocoon of the intrinsic ones. This quest to create an unchallenged and difficult to match market-space, will be essential in gaining the competitive cutting edge, as we move on.

Creating a virtuous cycle:

The focus of a pharma player in creating an extrinsic product differential edge, in pursuit of delivering the value of unique consumer experience, would in turn help enhancing the company reputation. This would, consequently, add value in creating an extrinsic product differential edge – thus, completing a ‘Virtuous Cycle’. It is generally caused by ‘complex chains of events that reinforce themselves through a feedback loop.’

A study on the ‘Impact of Corporate Reputation on Brand Differentiation’, has also established the ‘influence of company reputation, or what is often referred to as corporate reputation on branding strategy and producing intangible asset for different industries…’ This study is considered a pioneering attempt to measure the impact of corporate reputation on brand differentiation strategy.

Conclusion:

Today, especially in the marketing process of branded generic drugs, Indian marketers keep following a system that creates a sequence of reciprocal cause and effect, in which different elements of this overall activity intensify and aggravate each other, leading inexorably to a worsening of the situation. The Oxford dictionary defines this situation as a ‘Vicious Cycle.’

It’s not quite easy to come out of it, extricating the involved players from caustic remarks and allegations of indulging into contentious sales activities, if not blatant ‘marketing malpractices’. Nevertheless, breaking this mold is a ‘must do’ requirement, as many industry watchers believe.

This is because, if one wants to build a company for sustainable business excellence, it has to follow the principles of a ‘Virtuous Cycle’. Otherwise, it could threaten the very survival of the business, as we have witnessed several such instances in India, involving pharma companies. Several global pharma players are now trying hard to create a ‘Virtuous Cycle’, through well-researched strategic initiatives of patient reach and care.

To face this challenge of change squarely, Indian pharma marketers may also wish to focus on extrinsic differentiation of products, rather than intrinsic ones, as is mostly being done today, routinely. This course correction, I reckon, would play a ‘make or mar’ role in the pharma business, eventually. The passion to create a relatively unchallenged and difficult to match market space around patients, will be essential in gaining the requisite competitive advantage – giving shape to the much desired ‘Virtuous cycle’, as we move on.

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.