Category Archives: Pharma

Do Consumers Perceive Pharma Industry Innovative?

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One of the world’s richest and most powerful American pharma associations, having an equally strong indirect global presence, apparently, expects all concerned to give an emphatic affirmative answer to the above question.

Vindication of this thought gets reflected in the self-description of the association claiming, it “represents the country’s leading innovative biopharmaceutical research companies. Our members are devoted to discovering and developing medicines that enable patients to live longer, healthier and more productive lives. New medicines are an integral part of the health care system, providing doctors and patients with safe and effective treatment options, and improving quality of life.”

Nearer home, the reverberations of the same could be felt when Novartis lost the Glivec patent case in the Supreme Court of India. At that time, the Wall Street Journal quoted Eric Althoff – a spokesman of Novartis saying, “If innovation is rewarded, there is a clear business case to move forward. If it isn’t rewarded and protected, there isn’t.”

In sync with this self-belief, all pharma trade associations, located across the world, intensely lobbying for the ‘research-based’ global drug companies, together with their individual members, also expect the stakeholders to believe, as if, innovation is the middle name of the pharma industry. This process continues unabated, though, is expensive, and costing millions of dollars every year.

This core intent of doing so, may well be a statement of fact to some, and a contentious one to many, for various reasons. Be that as it may, as the proof of the pudding lies in eating, it is worth ferreting out how successful these efforts have been with the consumers of pharma products. Do they generally buy this concept, and if not, why?

In this article, I shall try to explore the overall scenario in this area.

A recent study:

A recent study results released on June 12, 2017, based on a survey on this issue, and that too conducted in the homeland of pharma innovation – America, brings to the fore a startling fact. In the absence of any other, better and more credible recent study, I shall draw upon some relevant facts from this report.

Klick Health Health – reportedly one of the world’s largest independent health marketing and commercialization agency headquartered in Toronto, Ontario, conducted this survey. As the agency reports, this is an online omnibus survey, conducted between May 19 and May 21, 2017 among 1,012 randomly selected American adults. The margin of error is +/- 3.1 percent. To ensure that the findings are representative of the entire adult population of America, the results have been statistically weighted according to education, age, gender, region, and ethnicity. Discrepancies in or between totals are due to rounding, the report says.

Consumer perception on pharma innovation:

Some of the major findings on consumers’ perception regarding the innovativeness of the pharma industry, are as follows:

  • Consumers do not believe that healthcare-related industries are particularly innovative today.
  • Only 17 percent of consumers polled perceive pharmaceuticals & biotech, health & wellness, and hospital sectors as the most innovative, ranking in the 4th place after consumer electronics (72 percent), telecommunications (87 percent), and media & entertainment (90 percent).
  • Among health-related industries, respondents ranked health & wellness first in terms of the industry that should be the most innovative (17 percent), quickly followed by pharmaceuticals & biotech (14 percent), and hospitals (9 percent) trailing behind the top 5.

Some other interesting findings:

On innovation and technology, general consumer perceptions are as follows:

  • 91 percent of consumers believe that innovation will positively impact health care over the next five years.
  • 90 percent of respondents say that technology will have a positive impact on their health in the future.
  • 70 percent believe that technology will have the biggest impact in helping them personally manage their own health.nology
  • Top five technologies predicted to have the biggest impact on people’s health in next five years:

-       Health and fitness wearables (21 percent)

-       Robotics (15 percent)

-       3D printing (10 percent)

-       Smart home devices (9 percent)

-       Artificial intelligence (9 percent)

  • The survey reflects a shift in the consumer mindset from being passive recipients of healthcare to more active and autonomous individuals who appear eager to try more creative and innovative approaches to managing their health.

Another study reflects a similar perception:

Similar negative perception gets reflected in the January 17, 2017 Harris Poll, which reported only nine percent of American consumers believe that pharma and biotechnology drug makers put patients over profits.

January 17, 2017 Harris Poll, while comparing consumers’ perception among different entities in the health care space, found that only insurers have an overall worse reputation than the pharmaceutical industry.

An important area worth exploring:

When consumers do not perceive the pharma industry as innovative as the sector wishes to be, what could possibly be its reasons? While that could be a part of another discussion, it is worth exploring another important area in this article – Do the majority of global pharma CEOs have desired background to lead innovation?

Do the majority of global pharma CEOs have desired background to lead innovation?

This is yet another interesting question. A research article titled “Many CEOs Aren’t Breakthrough Innovators (and That’s OK)”, published in the Harvard Business Review on September 04, 2015 discussed this issue, well-supported by some interesting research data, while coming to a logical conclusion.

The authors indicated that they looked at the background and performance data of 297 CEOs leading the largest companies in three different industries which are widely regarded as innovative: pharmaceuticals, high-tech, and fashion retail. The data captured a 20-year period, from 1995 to 2014 (and includes both current and former CEOs).

The study highlighted, though innovation is widely regarded as important to long-term business performance, CEOs of big pharmaceutical companies, are more likely to have a background as company lawyers, salespeople, or finance managers than in medicine or pharma R&D.

A direct comparison of the same, with the other two industries in the study, which are also widely regarded as innovative, vindicates the above point, as illustrated in the following table:

CEO Background

Pharma   (%)    (85 CEOs)

High-tech (%)     (137 CEOs)

Fashion Retail (%)      (75 CEOs)
Specialist background to lead innovation

26

61

60
Industry experience in other management function, e.g. Sales, Production

48

33

29
Background in support functions, e.g. Finance, Legal

26

6

11

In this study, the researchers found that, for pharmaceutical industry CEOs, there is a statistically significant relationship between a CEO’s specialist background and the firm’s performance. A specialist background to lead innovation is worth a 4 percent better shareholder return every year for 20 years, compared to other pharma CEOs in their sample.

Innovations are mostly ‘me-too’, so is the consumer perception:

As the above article reiterates, shorter patent lives of prescription drugs mean companies must continually look for not just any new drugs to fill their pipelines, but more often with breakthrough ones, which are significantly better than what’s already on the market.

Further, the article titled “How to Revive Breakthrough Innovation in the Pharmaceutical Industry”, which is linked to publications on ResearchGate, also indicates, over more than two decades, therapeutics discoveries of pharmaceutical companies more often than not yielded compounds that are only marginally better than existing therapies, rather than breakthrough molecules.

This could well be another contributing factor in the general ‘not so positive’ consumer perception about the global pharma industry, today.

Conclusion:

There may not be a hell of a lot of argument on the fact that the drug industry has a consumer perception problem today. Even the August 2016 Gallup Poll rated pharma as one of the worst industries in the current times.

Is the collective internal effort of continuously trying to associate innovation with the global pharma industry, the right answer for the same? May be, may well be not, though, the global drug industry is incessantly trying to project, as if ‘innovation’ is its middle name, as it were.

Is it working? The obvious answer is available from various recent research studies, as enumerated above. Still, in January 2017, reportedly to rescue the image of its member companies, the Pharmaceutical Research and Manufacturers of America, unveiled a campaign,  again basically focusing on innovation, called “Go Boldly.” It reportedly tries to communicate that the pharma industry develops life-saving medicines, and that they help keep medical costs down, because new medicines often reduce hospital stays and chronic illnesses. Is the campaign cost intensive? – Of course, yes. Is it productive? – possibly not. But who cares?

Be that as it may, today’s health care consumers perceive the global pharma industry neither as innovative nor caring, despite all its efforts. Thus, there is an important need for the pharma players to effectively bridge this perception gap in different and more innovative ways.

However, all that one can witness today, is the global pharma industry charting the same beaten path, yet again – with no further innovation in its communication – neither in content nor in its delivery platforms. That said, only time will be able to tell, whether similar efforts, renewed again and again, can reverse the consumer perception on pharma – making it seen as highly innovative and a caring industry for all.

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.

 

Managing Pharma Investors’ Expectations When The Chips Are Down

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Triggered by several critical factors, over a relatively short period of time, a downward spiral is visible with most Indian Pharma stocks, with a significant erosion in market capitalization of many large players in the country.

A set of important factors has been fueling this current downturn since around the last four years. These include, issues related to serious regulatory non-compliance with US-FDA and other foreign drug regulators, pricing pressure both in the domestic and the overseas markets, including the United States, delayed approval of several new generic drugs in the number-one pharma market of the world, for various reasons. Initial rollout period of GST expected to commence on July 1, 2017, may also prompt some major readjustments in the distribution setting of many pharma organizations. This has been further compounded with the wholesalers’ and retailers’ demand for compensation for any losses on input credit arising out of this critical reform.

As eroding market cap generally leads to commensurately lower market valuation of a company, it adversely impacts company’s many business growth related activities, which encompasses attracting low cost – high value investments, and M&A related activities, besides many others. Consequently, this negative swing has alarmed many investors, making them more demanding on company performance – uninterrupted, almost at any cost, as it were.

Not much headroom for necessary course correction:

Unrelenting expectations of this nature from the investors, inclusive of activist shareholders, to continue driving the business growth engine up the steep slope of ever increasing return on investment, is not expected to die down, anytime soon.

They may not be willing to leave enough headroom for the respective pharma management teams to realign their growth path with the changing and challenging needs of time, if it adversely impacts business even in the short-term. Nonetheless, if it is not allowed, the tailspin is likely to continue, as has been happening since, at least, the last couple of years, pushing the business at a dangerous level of sustainability.

Such demand of the investors and shareholders, irrespective of the gravity of the situation where their respective companies are in, may not be too uncommon, even in the global arena. However, many experts are now raising a key question in this area. In this article, I shall try to look at this issue, not just from the investors’ perspective, but also from what the concerned pharma players can and should do in this area, sooner the better.

A pertinent question needs to be addressed:

This important and relevant question is: what is the accountability of the investors, if their pressure for performance when the company is at a crossroad of this nature, causes a long-term irreparable damage to the business?

The very issue has been discussed immaculately in an article titled, “The Error at The Heart of Corporate Leadership”, published in the May-June 2017 issue of the Harvard Business Review.

The paper reiterates that attributing ownership of the corporation to its investors involves a challenging problem of accountability. This is because, ‘shareholders or private investors have no legal duty to protect or serve the companies whose shares they own and are shielded by the doctrine of limited liability from legal responsibility for those companies’ debts and misdeeds.’ Moreover, they are both physically and psychologically distant from the activities of the companies they invest in, and may generally buy and sell these shares without restrictions.

Nevertheless, such strong and ever increasing demands put the top pharma managers under increasing pressure to deliver faster and more predictable returns, regardless of the headwind that the business is facing. The issue becomes more complex when temporary-holders of large blocks of shares intervene to reconstitute a company’s board, change its management, or restructure its finances to drive up the share price, only to sell out and move on to another target, without ever having to answer for their intervention’s impact on the company or other parties, the article highlights.

Export business – the pain points:

“Pharma stocks take a beating on renewed US FDA scrutiny” – flashed the headline of a recent media report of June 12, 2017. As I see it, in the export business, especially in the top pharma market in the world, there appears to be a strong possibility of further worsening the business environment, especially for the Indian drug exporters.

Wave after wave of US-FDA import bans involving many India made drug formulations and Active Pharmaceutical Ingredients (API), since over last four years, have significantly affected the short-term export sales of the domestic pharma exporters. Alongside, these have seriously dented the image of the Indian pharma players, collectively, which encompasses the critical area of regulatory compliance – to offer well-documented safe and effective drugs, as required by the regulator, for the patients in the United States.

The situation gets messier with media headlines, such as, one from Bloomberg’s on January 24, 2017, conveying to the world community – “Document Shredding at Night Raises FDA Eyebrows During India Visit.”

Besides current drug pricing pressure, President Donald Trump’s election pledge for local manufacturing of products consumed in the United States, for more job creation in the country, sends another possible storm signal in this area. This is serious too, as Indian generic drug producers cater to around 40 percent of the total generic drug consumption in America.

Overcoming the odds in export business:

While taking corrective and effective measures for a sustainable long-term business performance, doing the same things more intensely that precipitated the current crisis, would be counterproductive.

Improving the situation, would also call for a strong preparedness for launching new generic products at a regular interval. However, in tandem, there is a crying need for the concerned pharma companies to take a pause, and conclude, a well-structured and expert-guided corporate introspection and brainstorming process, on priority. This will help them to arrive at a set of actionable strategic plans to effectively address each of the pain points, in a meticulous and time-bound manner.

Investors must necessarily be taken on board by opening appropriate communication channels, accordingly. This is to enable them to understand and accept the reasons for a short-term pain for a sustainable long-term gain. The tangible results of corrective measures should subsequently unfold to all concerned, with minor course corrections on-the-run, wherever necessary.

Domestic business – the pain points:

This is again another complex issue, which is often manifested through pressure on drug prices. The blame for such a situation, though originates from somewhere else, generally falls on the Government and the drug price regulator, for obvious reasons. It has a palpable boomerang effect, that is brought out by various research studies, and captured in consumers and the expert opinion, such as one that was published by the Washington Post on June 14, 2017 with the title, “The pharmaceutical industry puts profits above people.”

In the United States, where the drug pricing pressure is widely believed to have primarily originated from the escalating cost containment pressure of the Government and the key health care providers – triggered by a dangerous drug-pricing trend. Whereas in India, in addition to the latter that is related to non-schedule branded generic drugs, it is mostly related high out of pocket expenses on drugs, attempts to dodge various drug price regulations, and ignoring several ethical marketing practices related issues. The net outcome of all this is growing trust deficit on the pharma industry, in general.

Let me illustrate this point with a very contemporary example.  On May 18, 2017, Reuters reported, “India’s drug pricing regulator has demanded explanations from 65 domestic and global drug makers for selling new forms of essential diabetes and antibiotic drugs without its approval.” Interestingly, these companies reportedly include many big names, such as, Abbott Laboratories, Sanofi, Novartis and Indian firms such as Sun Pharmaceutical Industries and Lupin.

According to a circular of the National Pharmaceutical Pricing Authority (NPPA) of May 17, 2017, the above companies have allegedly launched formulations by altering an essential drug formulation with strength/dosage other than as specified in the Drug Price Control Order (DPCO) 2013 or combination with another drug not under price control, without even applying for price approval from NPPA as required. NPPA also doesn’t seem to be sure, whether such Fixed Dose Combinations (FDC) are rational or irrational and have the approval of the Central Drug Standard Control Organization (CDSCO).

If so, it’s indeed a sad development and a sorry state of affair, especially for those companies, which do some chest-thumping on ethics and compliance, often browbeating many Indian players, especially on USFDA related issues, besides pharma marketing practices.

As on date, Union Ministry of Health has banned several hundreds of such FDCs – on the ground of being irrational, launched without proper regulatory approval, lacking in therapeutic efficacy and safety profile, which may even cause harm to patients. March 11, 2016 notification of CDSCO banned 296 irrational FDCs.

However, many pharma players have succeeded in obtaining stay orders against almost all such regulatory bans from various High Courts. Nevertheless, the good news is, from July 2017, the Supreme Court is expected to hear all these cases, collectively. There could be another possible downturn in the market, if the Government wins the case.

Overcoming the odds in domestic business:

In these specific areas, there doesn’t seem to be any other option left to satisfy the long-term interest of the investors, other than addressing the ethics, values and compliance issues of the company on the ground, head on. It doesn’t really matter, what is displayed on the subject in their respective websites. Thus, in this area too, there is a crying need for a well-structured and expert-guided corporate introspection and brainstorming process to disrupt the status quo from its very root.

The above process would help the pharma players to arrive at a set of actionable strategic plans to effectively address the ethics and compliance issues in all the pain points – regulatory, marketing or financial, in a meticulous and time-bound manner. Alongside, all the stakeholders, including the investors, to be taken on board through customized content and the engagement platforms, to put the companies back into the long-term growth trajectory.

In conclusion:

Investors are very important, but if they aren’t an integral part of the corporate management team, should not try to overwhelm the business management process, especially for any short term financial gain. Attributing such authority to investors, involves a challenging problem of accountability for action, as they can get in or out of their investments at any time they choose to do so.

However, it’s also one of the key responsibilities of the management to listen to them, seriously. Take them on board by appropriately explaining to them in every critical situation, the broad strategic direction that the company would follow in pursuit of excellence. Thereafter, demonstrable outcome of all management action against the top operational goals, should be placed before them at a periodic interval, on an ongoing basis.

This process, if carried out with absolute transparency, integrity and seriousness, could help the Indian pharma players getting enough breathing space from the investors, for making the right operational interventions, before it’s too late.

Earlier this year, stepping down of former CEO of GSK – Andrew Witty, was reported to be due to pressure from investors for below par sales and profit in the past three years, besides a few other reasons. Another recent report of June 15, 2017 on “rebel investors looking to remake the board of Mylan” would possibly reinforce this point, further.

Outside the pharma industry, such a situation is not uncommon now, even in India. Besides, what happened recently in Tata Sons,  the June 14, 2017 media headline highlighting “Infosys flags ‘activist shareholder’ as risk factor”, vindicates the same point, yet again.

Thus, managing pharma investors’ expectations through a process of continuous engagement with them, effectively, especially when the chips are down, as it is today, is so critical for the long-term success and sustainability of pharma business.  Maintaining the status quo any further, would possibly make a high-flying pharma player to experience the strong gravitational pull, uncontrolled, with its its serious but avoidable consequences.

By: Tapan J. Ray

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

The Relevance of Content Marketing In Pharma

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“Nearly half of pharma industry may come under price control” – was the headline of a media report of June 7, 2017. Although, National Pharmaceutical Pricing Authority (NPPA) has apparently denied any such move, the fact is that the number of drugs coming under price control is steadily creeping up, ever since the Drugs Price Control Order 2013 came into force. If this trend continues, the gross profit margin of most of the branded generic manufacturers will also keep getting significantly squeezed, with a varying degree, though.

Coupled with drug pricing pressure in the United States, USFDA import bans from several manufacturing plants in India and dwindling number of new generic drugs ready for US launch, the market capitalization of many publicly listed pharma companies, may go further south. An important example of this situation was cited by Bloomberg, with reasons, in its report of June 07, 2017 carrying a headline “Pharma Woes Axe $14 Billion From Wealth of Once-Richest Indian.”

However, the overall setting is not so distressing for all Indian drug manufacturers, for different reasons. The June 08, 2017 headline of another  business news daily stating – “Cadila Healthcare overtakes Lupin as second most valuable pharma company in India,” vindicates the point. The promoter of this company reportedly said, ‘the company expects to receive 40 product approvals in the US in the current financial year.’

Be that as it may, added to these pain points of many pharma players in the country, Prime Minster Narendra Modi’s recent hint on framing rules for doctors to prescribe generic drugs, invites yet another wave of worries for the branded generic drugs players in India, regardless of a solid socioeconomic reason for the same.

Keeping these developments in perspective, collectively, the headwind faced by the Indian pharma industry, regardless of the underlying reasons, is indeed a tough one to navigate through, unscathed. Consequently, the stellar aggregate net profit growth of 41.3 percent in 2016 over 2015, as reported by the 2016 Dun & Bradstreet publication titled, “India’s Leading Pharmaceutical Companies 2016”, could possibly be rather challenging to maintain. Let me hasten to add that a much slower rise in the sector’s largest expense head – ‘raw material expenses’, also helped to achieve this enviable profit growth in 2016, as the report elaborated.

In this article, I shall try to fathom the depth this issue, and the possible way forward.

Areas of laudable contribution by the pharma industry:

For several decades, the pharmaceutical industry has been playing a leading role, not just in offering new innovative drugs, but their cheaper generic equivalents also, as those go off-patent, incessantly, to save and improve the quality millions of lives, across the world. The success of the drug industry is fundamentally driven by innovation – both in the discovery of new molecules and treatments, as well as in coming out with new cost efficient processes to significantly improve patients’ access to innovative drugs, post patent expiry.

Two areas requiring greater focus:

In tandem with these laudable initiatives, two disturbing trends are gathering momentum. One such trend is inadequate understanding of the grave fall out of not meeting with important stakeholders’ expectation on product pricing. As a result, various Governments and other health care payers are coming down heavily on pharma players to make drug prices affordable for the patients.

And the second one is, an intriguing apathy to be innovative in engaging with each stakeholder to take them on board. This can be done by communicating transparently, an easy-to-understand way and a customized way, the major benefits the individual players have been providing to facilitate various public health care initiatives. An apparent disinterest in this area continues, despite the snowballing effect of adverse public perception, and increasing trust deficit.

The core factors driving the trends:

These two trends are generally driven by two core factors – one is external, and the other internal. The external one is related to the general socioeconomic environment, and the internal one is intimately related to strategic business game plans of individual pharma companies.

The discussion will get more complex, if one wants to know whether the traditional pharma business models have a catalytic effect on the seemingly hostile business environment. As I have discussed several times in this blog, what the pharma players can possibly do in the pricing area, I shall not go into that subject yet again.

Nevertheless, what the pharma companies can do in the second area, to achieve their key strategic business goals, is quite different from what most of them are doing or not doing, till date. As we see around, many pharma players, especially the Indian branded generic companies remain engaged predominantly with the doctors, in the form of product detailing, or through Continuing Medical Education (CME) events, or the likes of these.

Today’s newer kind of strategic intervention calls for expert inputs. This is essential to create credible-research-based innovative content, and deliver the same with absolute precision through tailor-made platforms, for effective engagement with each stakeholder. It goes without saying, this should be done in a way that ordinary citizens or netizens can easily relate to.

Relevance of ‘Content Marketing’:

As the traditional pharma marketing is becoming progressively less and less effective, the need for a comprehensive content marketing model is becoming critical for the Indian pharma industry, more than ever before. In this model, useful content will be at the core of pharma marketing

According to the Content Marketing Institute (CMI): ‘Content Marketing is a strategic marketing approach focused on creating and distributing valuable, relevant, and consistent content to attract and retain a clearly defined audience – and, ultimately, to drive profitable customer action.’

It is possible to make the demand of a medical product, or a caring corporate image, more sustainable through content marketing, as compared to the traditional ones where individual product detailing and CMEs become the centerpieces of marketing strategy.

Why is it so important for pharma now?

According to a Pew Research Study, “One in three American adults have gone online to figure out a medical condition.”

Similarly, PwC Health Research Institute’s consumer survey of 1,060 US adults highlights, about one-third of consumers are using the social space as a natural habitat for discussions on health. More than 80 percent of individuals aged between18 and 24 would likely to share health-related information through social media, while nearly 90 percent of individuals would engage in health-related activities, or trust information found via social media. Around 45 percent of consumers said information from social media would affect their decisions to seek a second opinion.

In India too, increasing number of doctors and patient populations are ferreting information that they require from cyberspace, including different expert websites, online, and immediately when they require those.

Doctors are searching for detail information on different drugs, about their manufacturers, new treatment processes, and required data on clinical trials. Similarly, patients are searching for information in various other areas, such as, different aspects of the diseases that they or their near or dear ones are suffering from, and their effective modes of treatment with cost data, by getting connected online with related patient groups or communities. Even when engaging with the doctors, they often want to cross verify the outcome of discussion with the information available on the Internet. So do the doctors with the information provided by the pharma companies in person.

For example, one such popular website, among many others, is The Mayo Clinic’s Sharing blog designed for the Mayo Clinic community, and includes the following area:

  • Sharing experience of patient communities
  • Specialist doctors discussing new treatments, contemporary innovation in the health care space and patient care
  • Medical researchers and specialist doctors sharing their research experiences
  • Discussion on future health care and wellness by the professionals at Mayo Clinic
  • Students sharing their experience and perspectives in various areas

Driven by the current digital wave, and the word of mouth publicity to the benefits derived by the doctors and patients through such process, an ever-increasing number of the population is expected to do the same, in the years ahead.

Thus, a huge marketing opportunity in this much unexplored area awaits the Indian pharma players to establish an emotional connect with the stakeholders, including the doctors and patients, by providing all relevant information that they are web-searching for.

Needs specialization:

Unlike traditional pharma marketing, content marketing is a highly-specialized area – especially for the generation of requisite meaningful and quality data, getting the relevant insight through analytics for innovative message creation.

Moreover, as the current public image of pharma players, in general, is not very encouraging, it may be a good idea to work on various trust building activities. These may include videos on patients narrating their stories or a research experience, and infographics. Thereafter, its delivery through best suited communication platforms, across the marketing channels, followed by constant evaluation of the quality impact generated, will be critical.

Content marketing initiative in pharma should ideally start on a pilot scale and curated to enhance stakeholder engagement level, as necessary, before scaling it up to a national or a global level, as the situation would call for.

A few examples:

Some global pharma players have initiated great work in the space of content marketing. These are aimed at mostly to increase the awareness level and educate patients, doctors, and caregivers in some important and carefully crafted areas. A few examples are as follows:

  • Actually She Can (Allergan): on contraception options
  • Set Your Sights (Novartis): on vision conditions that a person may not have been previously aware of
  • Living Like You (Novartis): on coping with Multiple Sclerosis at its different stages
  • Arthritis.com (Pfizer): provides information about rheumatoid arthritis and osteoarthritis
  • Quitter’s Circle (Pfizer and American Lung Association): provides resource for those who want to quit smoking and their supporters.

Conclusion:

The most predictable part in the pharma business environment is its unpredictability. What is happening today with various large and seemingly invincible players of the recent past, is indeed jaw dropping. Some experts had predicted that the ultimate outcome of getting fixated into mostly traditional business practices in a rapidly changing socioeconomic setting and technology focused environment, could seriously challenge the long-term sustainability of a business.

The major adverse impact on the Indian pharma sector’s overall business performance is primarily driven primarily by the product pricing pressure and USFDA import bans on product quality parameters. Many believe, both these are intimately related to the current business practices of the industry, in general, leading to increasing trust deficits between the pharma companies and the Government, including the public.

The growth engine of the pharma industry is innovation, which would always remain so. Interestingly, in marketing areas no much innovation is noticed. Continuous and effective engagement with all stakeholders is critical now, not just for brand promotion, but also on corporate mission, vision and values, giving solid examples of how the company is making steady progress in those areas. This would help establish credibility in their eyes and take them on board to create a powerful and trustworthy voice for effective brand engagements, as well. It will also encourage the pharma players to ‘walk the talk’, in the real world, always.

The opportunities that a comprehensive content marketing strategy could offer to pharma companies to move in this direction, are phenomenal. It helps to get emotionally connected with all stakeholders, by providing relevant information, including those they are web-searching for, in a more innovative and informative format.

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.

Is The Global Generic Drug Market Slowing Down?

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Driven by a strong environmental headwind, both within and outside the country, several pharma companies in India have recently started raising a red flag on their future earning guidance for the stock market, though citing quite different reasons altogether. Quoting the following two recent examples, I shall illustrate this point:

“For decades, the generic drug business has followed a simple model for growth: wait for a chemical medicine to go off patent, then copy it. But 2018 promises to be one of the industry’s last big bumper crops, with $27.8 billion worth of therapies losing protection. The following year’s haul drops by almost two thirds, and the year after it shrinks even further” – reported the May 27, 2017 article in Bloomberg titled, ‘Pharma Heir Seeks a New Holy Grail as Generic Drugs Run Dry,” quoting the promoter of Glenmark.

Another May 27, 2017 article by Reuters also quoted similar business sentiment, though for a much different reason, of the world’s fifth-largest generic drug maker – Sun Pharma, following similar concerns of Dr. Reddy’s Laboratories Ltd and Lupin Ltd. Here, the promoter of Sun Pharma said, “We may even have a single digit decline in consolidated revenue for full-year 2018 versus full-year 2017.”

These red flags, though signal different reasons, prompt some fundamental questions: Is the global generic drug market, especially the US, slowing down? If so, what then is the real reason of the anticipated business slow-down of large Indian pharma players? Is it due to lesser number of patented products going off-patent in the future years, or is it due to pricing pressure in various countries, including the US, or a combination of several other factors alongside? In this article, I shall deliberate on this emerging concern.

Global generic drug market – the past trend:

Several favorable environmental factors have been fueling the growth of generic drug prescriptions across the world, and the trend continues going north. Currently, the growth of generic drug prescriptions is outpacing the same for the patented ones. According to the April 2017 research study titled “Generic Drugs Market: Global Industry Trends, Manufacturing Process, Share, Size, Growth, Opportunity and Forecast 2017-2022”, published by IMARC, the global generic drug market was valued at around US$ 228.8 Billion in 2016, growing at a CAGR of around 9 percent during 2010-2016.

This trend has been well captured in numbers, from various different angles, in the September 2016 report of Evaluate Pharma, as follows:

Global trend of prescription generic drug sales (2008-2015) 

Year 2008 2009 2010 2011 2012 2013 2014 2015
Global Rx Drug Sales (2008-15) (US$ Billion) 650 663 687 729 717 724 749 742
Growth per Year (%) +2.0 +3.5 +6.1 (1.6) +0.9 +3.5 (1.0)
Rx Generics Drug Sales (US $Billion) 53 53 59 65 66 69 74 73
Generics as % of Total Rx Drugs 8.2 8.0 8.6 9.0 9.2 9.5 9.9 9.9
% Market at risk to patent expiry or available for new generic drugs entry 3.0 4.0 4.0 5.0 7.0 4.0 5.0 6.0

(Table 1: Adapted from the report ‘World Preview 2016, Outlook to 2022’ of EvaluatePharma, September 2016)

The Table 1 shows, while the overall global sales growth of prescription drugs faltered during 2012-15 period, mainly due to after effects of patent expiry of several blockbuster drugs, the general trend of generic drug sales continued to ascend. As we shall see below, the projected trend in the succeeding years is not much different, either.

Global generic drug market – present, and projected future trend:

The global generic drug market is currently growing at a faster pace than the patented drugs, and this overall trend is likely to remain so in future too, as we shall find below.

Globally, North America, and particularly the US, is the largest market for generic drugs. According to the QuintilesIMS 2016 report, generic drugs saved patients and the US health care system US$227 billion in 2015. Although around 89 percent of the total prescriptions in the US are for generic drugs, these constitute just 27 percent of total spending for medicines. In other words, the share of patented drugs, though, just around 11 percent of total prescriptions, contribute 73 percent of the total prescription drug costs.

Backed by the support of Governments for similar reasons, Europe is, and will continue to register impressive growth in this area. Similarly, in Latin America, Brazil is the largest market for generic drugs, contributing 23 percent and 25 percent of the country’s pharma sector by value and by volume, respectively, in 2015.

Major growth drivers to remain the same:

The following major factors would continue to drive the growth of the global generic drug market:

  • Patent expiration of innovative drugs
  • Increasing aging population
  • Healthcare cost containment pressure, including out of pocket drug expenditure
  • Government initiatives for the use of low cost generic drugs to treat chronic diseases
  • Despite high price competition more leading companies are taking interest in generic drugs especially in emerging markets

India – a major global player for generic drugs:

India and China dominated the generic drug market in the Asia pacific region. India is the largest exporter of the generic drug formulations. A large number of drug manufacturing plants belonging to several Indian players have obtained regulatory approval from the overseas regulators, such as, US-FDA, MHRA-UK, TGA-Australia and MCC-South Africa. Consequently, around 50 percent of the total annual turnover of many large domestic Indian drug manufacturers comes from exports.  The top global players in the generic drug market include Teva Pharmaceuticals, Novartis AG, Mylan, Abbott, Actavis Pharma and India’s own Sun Pharma.

No significant change in the future market trend is envisaged:

When I compare the same factors that fueled the growth of global prescription generic drug market in the past years (2008-2015) with the following year (2016), and the research-based projections from 2017-2022, no significant change in the market trend is visible.

Global trend of prescription generic drug sales (2015 – 2022)

Year 2015 2016 2017 2018 2019 2020 2021 2022
Global Rx Drug Sales (2015-22) (US$ Billion) 742 778 822 873 931 996 1060 1121
Growth per Year (%) (-1.0) +4.8 +5.7 +6.2 +6.6 +7.0 +6.5 +5.7
Rx Generics Drug Sales (US $Billion) 73 80 86 92 97 103 109 115
Generics as % of Total Rx Drugs 9.9 10.3 10.5 10.5 10.4 10.4 10.3 10.3
% Market at risk to patent expiry or available for new generic drugs entry 6.0 6.0 4.0 4.0 4.0 2.0 2.0 5.0

(Table 2: Adapted from the report ‘World Preview 2016, Outlook to 2022’ of EvaluatePharma, September 2016)

The Table 2 shows, the overall global sales growth trend of prescription drugs appears a shade better in 2008-15 period, even with the after effects of patent expiry (Table 1), as compared to 2016-22. The scope for entry of new generic drugs goes below 4 percent of the total prescription drug market only in two years – 2020 and 2021. Thus, any serious concern only on this count for a long-term growth impediment of the global generic drug market, post 2018, doesn’t seem to be based on a solid ground, and is a contentious one. Moreover, the sales trend of prescription generic drugs as a percentage of the total value of all prescription drugs, hovers around 10 percent in this statistical projection, which is again a shade better than around 9 percent of the past comparable years.

What triggered the major pricing pressure?

With its over 40 percent of the total pharmaceutical produce, predominantly generic drug formulations, being exported around the world, India has become one of the fastest growing global manufacturing hubs for medicinal products. According to Pharmaceutical Export Promotion Council of India (Pharmexcil), United States (US) is the largest market for the India’s pharma exports, followed by the United Kingdom (UK), South Africa, Russia, Nigeria, Brazil and Germany.

Since long, the largest pharma market in the world – the US, has been the Eldorado of pharma business across the globe, mostly driven by the unfettered freedom of continuously charging a hefty price premium in the country. Thus far, it has been an incredible dream run, all the way, even for many large, medium and small generic drug exporters from India.

However, ongoing activities of many large drug companies, dominated by allegedly blatant self-serving interests, have now given rise to a strong general demand on the Governments in different countries, including the US, to initiate robust remedial measures, soon. The telltale signs of which indicate that this no holds barred pricing freedom may not be available to pharma, even in the US, any longer.

Self-inflicted injury?

The situation where several major Indian generic companies are in today, appears akin to an avoidable self-inflicted injury, basically falling in the following two important areas. Nonetheless, even after the healing process gets over, the scar mark would remain for some more time, till the business becomes as usual. Hopefully, it will happen sooner than expected, provided truly ‘out of box’ corrective measures are taken, and followed up with a military precision.

Huge price hikes:

According to the Reuters report of September 11, 2016, US Department of Justice sent summons to the US arm of Sun Pharma – Taro Pharmaceutical Industries Inc. and its two senior executives seeking information on generic drug prices. In 2010, Sun Pharma acquired a controlling stake in Taro Pharmaceutical Industries.

On September 14, 2016, quoting a September 8, 2016 research done by the brokerage firm IIFL, ‘The Economic Times’ also reported that several large Indian generic drug manufacturers, such as, Sun Pharma, Dr. Reddy’s, Lupin, Aurobindo and Glenmark have hiked the prices of some of their drugs between 150 percent and 800 percent in the US. These apparently avoidable incidents fuel more apprehensions in the prevailing scenario. As I wrote in this Blog on September 12, 2016, the subject of price increases even for generic drugs reverberated during the last Presidential campaign in the US, as well.

Serious compromise with product quality standards:

Apprehensions on dubious quality standards of many drugs manufactured in India have now assumed a gigantic dimension with import bans of many India made generic drugs by foreign drug regulators, such as US-FDA, EMA and MHRA. Today, even smaller countries are questioning the Indian drug quality to protect their patients’ health interest. This critical issue has started gaining momentum since 2013, after Ranbaxy pleaded guilty and paid a hefty fine of US$ 500 million for falsifying clinical data and distributing allegedly ‘adulterated medicines’ in the United States.

Thereafter, it’s a history. The names of who’s who of Indian drug manufacturers started appearing in the US-FDA and other overseas drug regulators’ import ban list, not just for failing to conform to their quality standards, but also for willful non-compliance with major cGMP requirements, besides widely reported incidents of data fudging and falsification of other drug quality related documents.

Global murmurs on generic drug quality among doctors:

There are reported murmurs both among the US and the Indian doctors on the generic drug quality standards, but for different drug types and categories.

According to the Reuters article published on March 18, 2014, titled “Unease grows among US doctors over Indian drug quality”, many US doctors expressed serious concerns about the quality of generic drugs supplied by Indian manufacturers. This followed the ‘import bans’ by the USFDA and a flurry of huge Indian drug recalls there. Such concerns are so serious, as India supplies about 40 percent of generic and over-the-counter drugs used in the United States, making it the second-biggest generic drug supplier after Canada.

While the doctors in the US raise overall quality concerns on the products manufactured by the large Indian branded generic companies, Indian doctors are quite at ease with the branded generics. They generally raise quality concerns only on generic drugs without any brand names.

Thus, a lurking fear keeps lingering, as many feel that Indian drug manufacturing quality related issues may not necessarily be confined only to exports in the developed world, such as, the United States, European Union or Canada. There is no reason to vouch for either, that such gross violations are not taking place with the medicines consumed by patients in India, or in the poorer nations of Africa and other similar markets.

In conclusion:

Sun Pharma has publicly expressed its concern that pricing pressure in the US may adversely impact its business in 2018. There doesn’t seem to be any major surprise on this statement, as many believe it was likely to happen, though for a different reason, since when the global media reported in September 2015: “FDA revokes approval for Sun Pharma’s seizure drug over compliance issues.”

As investors are raising concerns, the following comment by the Co-Chairman and Chief Executive of Dr. Reddy’s Laboratories, reported by ‘Financial Express’ on August 24, 2015, well captures the vulnerability of Indian generic drug business in this area: “The U.S. market is so big that there is no equivalent alternative. We just have to get stronger in the U.S., resolve our issues, build a pipeline and be more innovative to drive growth.”

Inadequate remedial measures could unleash this pressure to reach a dangerous threshold, impacting sustainable performance of the concerned companies. On the other hand, adequate remedial action, both strategic and operational, could lead to significant cost escalation, with no space available for its neutralization through price increases, gradually squeezing the margin. It will be a tight rope walk for many in the coming years.

As research reports indicate, the global generic drug market is not and will not be slowing down in the long term, not even in India. There may be some temporary ups and downs in the market due to pricing pressure, and the number of novel products going off-patent in some years. Nevertheless, the traditional business models being followed by some large companies may retard their respective business growth, considerably.

The pricing pressure is a real one. However, from the Indian perspective, I reckon, it’s primarily a self-inflicted injury, just as the other major one – the drug import bans on the ground of serious compromise with product quality standards. Many Indian generic drug players don’t believe so, and probably would never will, publicly.

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.

Rebalancing Skill Sets In Pharma Sales And Marketing

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A disturbing trend against much needed more job creation across the world, has been well captured in a May 2016 MIT article. It concluded through several complex mathematical models that: “As more tasks performed by labor are being automated, concerns that these new technologies will make labor redundant have intensified.”

However, despite well-hyped concerns in this area, ongoing rapid advancement of technology and other related innovation haven’t yet caused any alarming level of unemployment anywhere in the world, nor it possibly will. Several instances of gradual reduction in the number of routine and traditional jobs due to such automation, are generally related to a lesser level of hard skill sets. As we shall see below, many industries require doing so in the modern times, for long term sustainability of business.

In tandem, promising high tech jobs requiring state or the art hard skill sets are getting created too, though are fewer in number. Nevertheless, the number of brilliant startups has increased by manifolds, during the same period. This change is inevitable, mostly in any science and technology driven industry, e.g., banking sector, where most of human operated bank tellers have made way to ATM machines.

A recent vindication:

Vindicating this point, as it were, on May 18, 2017, Reuters reported that Swiss pharma major Novartis, as a part of its “ongoing global transformation” initiative launched last year to create a unified operating model, will cut around 500 traditional and routine jobs in Switzerland, and add 350 in high-tech areas. Immediately thereafter, for similar reasons, the company announced the elimination of another 250 jobs in the United States.

Jobs are important to all for a living. Any job loss, irrespective of the nature of business compulsion, is indeed unfortunate. That said, whether we like it or not, such evolving trends are the stark realities, and expected to continue or even accelerate in the years ahead for higher growth in productivity, especially involving the routine and traditional tasks.

Pharma industry, though a science-based one, loss of routine and traditional jobs due to technological advancement is fortunately still much less as compared to other similar industries. This is primarily due to the continuation of the traditional business models in the pharma sector, requiring a huge number of human intervention, which call for a different balance of soft and hard skill sets.

However, crystal gazing the future, it appears quite likely that there will be a strong need to rebalancing the required soft and hard skills in the drug industry. The contour of my discussion in this article will be on pharma sales and marketing. 

Skill – the ability to do something well:

The Oxford dictionary defines ‘skill’ as ‘the ability to do something well’. Similarly, the term ‘ability’ has been defined by it as ‘possession of the means’. Thus, ‘skill’ means ‘possession of the means to do something well’. It is an absolute must in all professions, including pharma sales and marketing.

Skills broadly fall into two categories – hard and soft skills. Hard skills involve specific knowledge and teachable abilities that can be defined and measured and are usually quantifiable.

Hard skills are individual proficiency in various scientific, technical, mathematical and even some artistic areas of creation, besides other related ones. In pharma sales and marketing arena of the near future, these include, among others, robust scientific knowledge-base to understand various aspects of drug molecules, content creation with astute market understanding, data generation and analysis through state of art analytics and research, software programing, digital savviness and social media expertise. Many of these skills are related to the Intelligent Quotient of an individual.

Soft skills, on the other hand, are less tangible and quantifiable, such as etiquette or personality development; work ethics, getting along with people, ability to listen patiently, overcoming objections, persuading others and a deep sense of accountability. Many of these skills are usually related to emotional intelligence of an individual.

Which one is more important?

Both hard or soft skills are useful, valuable and important. However, the mix of these two skills for high performance of any individual professional will generally depend on success requirements of a job in a specific macro business environment.

That said, it is important to note that most of the hard skills are taught and learnt mostly before a person’s entry into science, technology or various other craft or design based jobs. The related hard skills are essential for getting selected for specialized jobs. Whereas, softer skills are usually learned on the job, and through experience by all those who want to grow in the profession.

In this context, it may not be a bad idea for all pharma sales and marketing professionals to take a hard look at our own current soft and hard skill sets again, against rapidly changing demands of the business environment. Regardless of where we are now, it will be worth writing down on a piece of paper the type of each of these two skills, in order of their strengths, that we individually possess, which are good enough for achieving sustainable excellence in business performance and personal career progression. It may provide a broad sketch of where we stand today in the VUCA world.

The years ahead for pharma won’t be quite the same:

A strong wind of change has already started signaling that the years ahead for the pharma industry, won’t be quite the same as the bygone years nor like what it is today. Some, industry professionals have picked up this cue, while many are still in pursuit of replicating the traditional past with some digital tweaking here and there, whatever may be the reasons.

The current mix of skill sets of the sales and marketing professionals, quite perceptibly, tilts more towards sharpening the softer skills of the employees, as the traditional pharma business models prompt so.

Future need – rebalancing the skill sets:

To be a successful in the days ahead, pharma companies would need to dive deep into the cyberspace – just to be on the same wavelength with its important stakeholders, including, the Government.

Looking around, one witnesses many patients going digital at a faster pace than ever before. They enjoy the cyberspace while embracing the new ways of living life, such as – communicating digitally, chatting in WhatsApp sharing patient’s experience, interacting with online patient communities, and preferring data mining to know more about anything of interest. These activities also get them a sense of the differential advantages of various health care products, services and their cost, before or while consulting doctors and deciding what they can afford.

Similarly, many medical professionals are also not depending solely on the company representatives now to get relevant details on any medicinal product, device or services. Besides frequent interaction with their peer groups, they get such detail information from various websites run by independent, and credible expert groups.

Thus, one of the common arena for pharma stakeholder engagement and interaction would soon be the enigmatic Cyberspace. As the changing days come nearer, there is likely to be greater emphasis on the acquisition of talent having specialized hard skills in this area of sales and marketing.

This emerging scenario prompts rebalancing the mix of soft and hard skill sets with much greater care, and hire young sales and marketing professionals, accordingly to give shape to it. This process should commence now, as the present makes way for the future. This is so important because, the current trend of tweaking with many digital tools and devices mostly as interfaces, or for complementing in-person product detailing or for better field management, or even to draw up marketing and sales plans, may not yield the desired business results any longer, even for survival, as we move on.

Becoming digital natives?

According to the 2015 A.T. Kearney Report titled, “Time for Pharma to Dive into Digital”, pharma sales and marketing professionals must also become digital natives, providing content that is both up-to- date and appropriate for multiple digital channels. Moreover, they will have to be familiar with advanced analytics to monitor and measure actual consumption pattern, besides capturing in real time a huge sample of relevant data for deeper customer insights.

The new normal:

One of the biggest challenges would be in the approach to content development and management. Creating an interactive detailing toolbox for truly responsive customer engagement, requires a good deal of thought and quite complex coding. This would necessitate centralization of marketing content production, which is traditionally decentralized in many sales and marketing organizations. Similarly, the major focus of the sales force will shift from maximizing physician-call rates, to becoming a team of digital communication specialists, and coordinators who would ensure that the right channels are used at the right time.

As the November 2016 Accenture Report titled, ‘The Rebirth of The Pharmaceutical Sales Force’ underscores, the most successful pharmaceutical sales teams in the future will be those willing to define and servicing customers in new ways… and will use digital advances to change the conversation, and position themselves as committed to helping physicians improve health outcomes.

This expected change, I reckon, will put in place a new normal for pharma sales and marketing success in the years ahead.

In conclusion:

Young aspirants wanting to make a career in the pharma industry, may wish to take note of this evolving trend of inevitable changes. They may wish to get well-considered views on the same of a couple of experts’ having no conflict of interest, for a careful and independent personal assessment. These budding strivers should realize that the final actionable decision on developing requisite hard and soft skill sets for a successful take off in their respective working lives, should preferably be taken only by themselves, and none else.

An August 2015 article of McKinsey & Company titled, “The road to digital success in pharma” articulates that the pharma companies, though can play a central role in the digital revolution of healthcare, are running hard to keep pace with changes brought about by digital technology. But soon there may not be any other option left for achieving business excellence.

While the nation is taking strides to transform itself into ‘Digital India’, the pharma companies operating in the country can’t possibly afford to remain far behind. Willy-nilly, they will soon need to realign their business processes accordingly, as there may not be any further scope for individual pharma players to operate within the same old cocoon of tradition bound activities, and still survive.

To meet the new and tougher demands for excellence in pharma sales and marketing, the urgent need of the changing time lies squarely outside the box. To usher in a requisite transformation in the current business model, it calls for a series of well-calibrated, much researched, and bold steps – skillfully rebalancing the crucial soft and hard skill sets, achievable within a realistic and self-determined timeframe.

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.

Indian Pharma To Stay Ahead of The Technology Curve

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In the ever-changing business environment, many industrial sectors have now started leveraging different cutting-edge technological platforms to improve overall strategic and operational effectiveness, keeping a sharp focus on better stakeholder engagement for greater customer satisfaction.

These companies have accepted the inevitability of a paradigm shift in the algorithm of the traditional business process. It has dawned on them that it may not be possible to be in the pole position by tweaking the existing process with multiple incremental changes – a time is just right now to take a quantum leap in this direction. Placing the company ahead of the technology curve to acquire the critical X-factor in outperforming the competition is going to be the new mantra. This is likely to happen even in the sales and marketing domains, much sooner than one can possibly imagine, as the marketplace becomes increasingly tougher.

Moving closer to this direction, Artificial Intelligence (AI) based digital tools, I reckon, is likely to be one of the key game changers. The term AI was coined in 1956 by John McCarthy at the Massachusetts Institute of Technology (MIT) and is usually defined as the science of making computers do things that require intelligence when done by humans. AI helps to ferret out critical answers to many real-life issues and gain a competitive edge in business management, by creating and then effectively analyzing a huge pool of real life data.

AI is the fulcrum of business operations for several leading companies of the world, such as, Apple, Amazon and Uber. It has already started replacing human intelligence in a number key business operations in various industries. As a widely-known Indian business leader recently said, anything that can go digital will go digital. This wave is unstoppable in this modern era.

In this article, I shall restrict the scope of discussion to the application of AI in pharma sales and marketing.

A recent illustration from India:

The application of AI via a digital tool, called Chatbot – the short form of ‘Chat Robot’, is one of the ways in this direction. It is a complex computer program that simulates human conversation, or chat, through auditory or textual methods. Various industries have now started developing the Chatbot dialog application systems for a specialized purpose of human communication, including a variety of customer interaction, information acquisition and providing a range of customized services to the target group.

To illustrate the above point, let me draw upon a recent example from the banking sector of India. On March 05, 2017, a leading bank in India announced the launch of an AI-driven Chatbot named Eva, coined from the words Electronic Virtual Assistant (EVA), to add more value to their services for greater customer satisfaction.

According to reports, Eva is India’s first AI driven banking Chatbot that can answer millions of customer queries on its own, across multiple channels, immediately. It assimilates knowledge from thousands of sources and provide answers in a simple to understand language format in under 0.4 seconds. This is a good example of taking a quantum leap in improving operational efficiency by delighting the new generation of customers. “Within the first few days of its launch, Eva has answered over 100,000 queries from thousands of customers from 17 countries across the globe” – the bank reportedly claimed.

To do routine services more efficiently with a customer-centric approach, this AI-based  Bank OnChat combines a disruptive technology platform for a human-like conversation, powered by AI, and the Bank’s deep domain expertise and long acquired insight of banking related customers. Earlier this year, for a similar customer-oriented initiative using AI and Robotics technologies, the same bank launched an interactive  humanoid called Intelligent Robotic Assistant or IRA.

Although, these are just illustrations in the Indian context, an important question that surfaces: if these can happen in the banking industry, why not in the pharma sector of India?

Resisting changes versus finding innovative means to overcome challenges:

Coming back to the pharma industry, we all are aware that this knowledge sector, over the last four and a half decades in India, has been navigating through umpteen challenges, none of which has been easy, by any measure.

Nevertheless, as compared to the past, I notice a palpable difference today. Significantly more number of shrill voices with fierce resistance to changes are now outnumbering the out of box mindset, desire and efforts to still thrive, by overcoming those critical challenges. Since the formative years of the Indian pharma industry, it has been successfully overcoming the challenges of change, which are unavoidable though.

Such kind of indomitable ‘animal spirit’ within many leaders of the Indian pharma industry, created today’s national pharma behemoths like, Sun Pharma, Lupin, Cadila, Dr. Reddy’s, Alkem and many others. They are thriving despite continuation of immensely challenging business environment and tough socioeconomic demand in the country. By the way, the second richest person in India is from the Indian pharma industry and grew from a scratch, during this very period.

Making creative changes help, moaning doesn’t:

While facing the newer sets of challenges today, many industry greenhorns, I reckon, need to spend more quality time to effectively overcome these turbulences – provided of course they possess the requisite mindset, knowledge and other wherewithal.

Acquiring new insight through modern technological platforms, such as AI, will pay a rich dividend. Better customer engagement and relationship management with new genres of AI tools, furnishing stimulating and modern web-based content with personalized access, would help achieve the desired strategic goals in the changing paradigm – but just moaning won’t, surely.

A few global pharma players are now fathoming the scope and depth of this area, most others are still not sure about its usefulness for customer engagement and interactions, and commensurate real-life data requirements for AI related analytics.

A predictable pattern of a series of unpredictable challenges and developments:

According to Eularis, integrating AI based analytics with a pharma product offerings can provide substantial benefits including, among others, the following:

  • Identification of both tangible and intangible enhanced value proposition
  • Enhanced competitor differentiation
  • Optimal resource allocation for maximum market share gain, revenue and profit
  • Ability to see which levers to pull to maximize growth
  • Customizing sales and marketing messaging for greater customer engagement
  • Automation of sales and marketing messages and channels.

In my view, while moving in this direction, AI based analytics are now far more reliable than any human analysis of the humongous volume of different kinds of data. Doing so is sometimes beyond the capacity of any conventional computers that a marketing professional generally uses for this purpose. The prime requirement, therefore, is not just huge volume of data per se, but good quality of a decent volume of data, that a state of the art analytics would be able to meaningfully deliver to meet specific requirements of pharma marketers for creating a cutting-edge marketing strategy.

This will be an absolute necessity in the complexity of an evolving new paradigm in the cyberspace. In a similar context, as I wrote even earlier, any such technology-driven changes would usually follow a predictable pattern of a series of unpredictable challenges and developments in the business environment, which has already commenced in the pharma industry.

The Market:

According to an April 2013 article, published by the McKinsey  Global Institute, applying big-data strategies to better inform decision making could generate up to US$100 billion in value annually only across the US health care system, by optimizing innovation, improving the efficiency of research and clinical trials, and building new tools for physicians, consumers, insurers, and regulators to meeting the promise of more individualized approaches.

Mandatory generic prescriptions won’t make pharma marketing less important:

Even if the much talked about mandatory prescription in generic names comes to fruition, the new paradigm won’t make pharma marketing less important. This would, however, be more about providing patient-centric, credible and tangible disease management or treatment solutions or both, rather than just selling a drug giving a trade name to it.

Thus, the need for interaction with physicians by the pharma players, besides some additional new target groups, would continue to remain important. Nonetheless, the message – mostly its form, substantive content, the targeting process and the usage of various tools for delivery of the same, would undergo substantive modifications. These changes would generally be prompted by fresh thinking, together with a fresh pair of eyes and mind, in the prevailing business environment, at any given point of time, well supported by data and tested with state of art analytics. The depth and gravity of environmental changes may also hasten the process of digital transformation of pharma sales and marketing, in various ways.

Those who are still trying harder to milk the traditional prescription demand generation process to the extent possible, despite its lesser and lesser yield, would need to introspect now, if they are able to. The time, and the prevailing pharma business environment probably demands jettisoning the conventional mindset faster, and search for the best-suited and most innovative modern tools to hit the bull’s eye. The young pharma professionals with a ‘can do’ spirit to effectively navigate through the strong headwind, are likely to emerge as early winners – provided of course their seniors and diehard ‘trainers’ don’t block their required elbow space.

‘Virtual Representatives’:

Deploying ‘Virtual Representatives (VR)’, well- supported by analytics for key target customers that QuintilesIMS is recommending, could be one among several other important examples in this area. VRs are appropriately equipped to take any doctor’s call online, for any product or related information, at any time the physicians find convenient – during or after their busy practicing hours.

The ‘push-pull’ balance between the doctors and the pharma players for such engagements can also be appropriately configured, and that too at a fraction of the current cost incurred to for similar purpose. This process and the technology used will be quite close to Chatbot, that has recently been introduced by an Indian bank, as illustrated above.

In conclusion:

Despite the rapidly changing business environment, pressing socioeconomic demands and a national dream for ‘Digital India’, the pharma industry hasn’t demonstrated any significant appetite for a change in the process of doing the business in the country. Individual players, by and large, have remained mostly consistent in strictly adhering to much tried processes and tools, though in their multiple permutations and combinations, especially in the domain of sales and marketing.

Other industries, like banking – also facing different types of tough challenges, are making efforts to stay ahead of the technology curve for operational excellence and greater consumer satisfaction. Fast scaling up of digital applications, such as Chatbots, Humanoids and the likes, vindicate this point.

Notwithstanding the availability of a large gamut of cutting-edge technological platforms, such as those based on AI, most players within the pharma industry continue to be rather slow in adopting these important and innovative resources. Could it be due to dearth of requisite talent, especially in pharma sales and marketing leadership within the industry? Well, many may argue so – some may also feel otherwise. Nevertheless, finding the right answer for a slow response of pharma in this domain still remains elusive.

That said, amid a gradually shifting paradigm, Indian pharma companies may wish to consider imbibing innovative technological interventions, such as, AI-based digital applications in sales and marketing. This has a great potential to successfully sail through many uncertainties, not just the latest one. It would also help changing the traditional ball game with a flexible, multitasking and contemporary one – right from conceptualizing – to charting out a customer-centric sales and marketing strategy – and then its immaculate execution, catapulting the company to a new and fascinating growth orbit altogether. Thus, staying ahead of the technology curve by the Indian pharma players, assumes critical importance for a long-term business sustainability, more than ever before.

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.

Is The Department of Pharmaceuticals On The Same Page As The Prime Minister?

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“The open secret is that pharmaceutical companies throw all manners of inducements on doctors to prescribe their medicines. The victim of their misdemeanors is the unsuspecting patient. Mr. Modi clearly wants to break this self-serving chain” – highlighted a media report on April 20, 2017.

“Prime Minister Modi wants to end the unholy doctor-drug industry nexus” – echoed another media headline on the same day.

In a step towards this direction for the benefits of patients, the PM hinted at making prescriptions in generic names of drugs mandatory through a legal framework. There could be many challenges ahead to achieve this objective, but the fact remains just the same. A study published in a well-acclaimed medical journal, even after the PM’s much talked about pledge, re-establishes the adverse impact of this alleged nexus through a bioequivalarge research study.

In this article, I shall not go into the details of what the PM had said in this regard and the impact of the same on patients, pharma companies, different types of service providers to the branded-generic business, and the Indian Pharma Market (IPM), as I have already done that. Neither shall I focus here on the action expected from the Union Ministry of Health, as they have, at least, amended the statute making the bioequivalence studies mandatory, though several other action steps need to follow. Today, I shall deliberate only on one question: Is the department of pharma on the same page with the PM on effectively addressing the alleged ‘doctor-drug industry nexus’?

A recent study:

The following very recent study elegantly highlighted the criticality of snapping this unholy link, as many believe, for the patients’ sake.

The May 2, 2017 JAMA editorial titled, “Reconsidering Physician – Pharmaceutical Industry Relationships” articulated, physicians need to balance the risk and benefits of treatments, especially when inputs come from companies whose interests may conflict directly with those of patients. Drug costs, though revenue to their respective manufacturers, are high out of pocket expenditure to patients, many of whom seriously struggle to afford their medical treatment.

The above editorial comment was based on an ‘Original Investigation’ study titled, “Association Between Academic Medical Center Pharmaceutical Detailing Policies and Physician Prescribing”, published on the same day in the same esteemed journal.

This large study was aimed at measuring the outcome of an effort by some Academic Medical Centers (AMCs) in the United States to regulate physicians’ conflict of interest in this area. These AMCs enacted policies restricting pharmaceutical representatives’ visits to physicians for product detailing, between 2006 and 2012. Accordingly, the paper analyzed the association between detailing policies enacted at these AMCs and the physicians’ prescribing of actively detailed and not detailed drugs. This study included 16,121, 483 prescriptions, written between January 2006 and June 2012, by 2126 attending physicians, at the 19 intervention group AMCs, and by 24, 593 matched control group physicians.

The authors concluded with a fresh reaffirmation that the implementation of policies at AMCs, which restricted product detailing by the respective company medial representatives, between 2006 and 2012, was associated with a modest but statistically significant reduction in prescribing of detailed drugs across 6 of 8 major drug classes.

Significant cost reduction, with important economic implications:

It’s worth noting, the patients did not suffer at all, in any way, with such restrictions, on the contrary were probably benefitted with this policy, though individual pharma player’s sales revenue might have been adversely impacted.

Quoting the researchers, a Public Release of May 2, 2017 titled, “Restricting sales visits from pharmaceutical reps associated with changes in physician prescribing” also reiterates: The reduction in the prescribing of detailed drugs and the increase in the prescribing of non-detailed drugs potentially represent a large reduction in costs, with important economic implications.

Why aren’t the erring players brought to justice in India?

Instances of serious marketing malpractices of several pharma companies in India are also being widely reported from time to time, both by the international and national media, including expressions of serious concern in the Parliament, and a reported Public Interest Litigation (PIL) pending in the Supreme Court.

Any instances of levying massive fines, or other punitive measures taken by any competent Indian authority for such delinquency by many pharma companies operating in the country, have not been reported, just yet, in my view. This is because, India doesn’t have in place any specific regulatory mechanism with built-in legal teeth that would deter, detect, investigate and take exemplary punitive actions against the erring players, wherever justifiable.

Is the department of pharma on the same page as the PM?

Much before this recent development, the Department Related Parliamentary Standing Committee on Health and Family Welfare in its 58th Report, placed before the Parliament on May 08, 2012, strongly indicted the Department of Pharmaceuticals (DoP) for not taking any tangible action in this regard. The committee observed that the DoP should take immediate action in making the ‘Uniform Code of Pharmaceutical Marketing Practices (UCPMP)’ mandatory to contain ‘huge promotional costs and the resultant add-on impact on medicine prices’.

It has just been reported, soon after the Prime Minister’s hint for a legal framework mandating doctors to prescribe in generic names, 73 percent doctors surveyed across the country opposed the PM’s initiative, raising concerns about the quality of all non-branded generic drugs. The report further stokes the apprehension of a concerted effort by this alleged nexus to further strengthen the make-believe perception, sans requisite credible favorable evidence, that branded-generics as a category is superior in quality to non-branded generics, which is not the fact.

Unfortunately, nothing substantive has yet happened on the ground regarding this issue, except the announcement of voluntary implementation of the DoP’s ‘Uniform Code of Pharmaceutical Marketing Practices (UCPMP)’, effective January 1, 2015 for six months for its assessment. Thereafter, the date extension process on the voluntary implementation of the UCPMP has become a routine exercise for the DoP on various pretexts, such as continuing discussion with the pharma trade associations and other stakeholders or to give legal teeth into it with penal provisions.

This situation prompts an important question: Is the DoP on the same page with the PM to contain, if not eliminate, the alleged unholy doctor-drug industry nexus?

Scope of mandatory UCPMP goes beyond prescriptions with generic names:

The scope of several intricate types of marketing malpractices, goes well-beyond influencing prescriptions for brand name drugs, due to various reasons. Hence, what Prime Minister Modi recently hinted at is not an alternative or a replacement for UCPMP, which will fall within a legal framework and be applicable to all the concerned players. Although, there could possibly be some degree of overlap with the prescriptions in generic names, mainly from the perspective of protecting patients’ health interest, the scope of both these initiatives is mutually exclusive, in many respects.

This would also encourage, especially the millennial generation, for innovative strategic thinking to work out cutting edge pharma marketing game plans with active patient engagement, while charting the uncharted frontiers, despite prescriptions in generic names, as and when it comes, if at all. As a result, new warhorses with proven cerebral power and agility would get newer opportunities to hold the leash and occupy the center stage in the pharma marketing warfare.

But…the indefinite wait continues:

Although the DoP apparently maintains a radio-silence on this important issue, a media report of February 26, 2017 indicates that the department will ‘soon’ issue an order making UCPMP mandatory for the drug manufacturing industry, bringing all doctors, chemists, hospitals and states in its ambit, and a blanket ban on expensive freebies such as cruise or vacation tickets. Intriguingly, no one seems to know how ‘soon’ would this ‘soon’ be – hence, the agony of an indefinite wait for justice continues.

Conclusion:

For the last three and a half decades, ‘Code of Pharmaceutical Marketing Practices’, prepared by various global pharma trade associations and many large global pharma companies individually, has come into existence for ‘strictest’ voluntary adherence. These are being relentlessly propagated by them as a panacea for all marketing malpractices in the drug industry.

Squeaky clean ‘pharma marketing codes for voluntary practices’ can be seen well placed in the websites of almost all large global pharma players and their trade associations. Although, its concept and intent are both commendable, a regular flow of media reports on such malpractices raises a relevant question: Do the votaries, sponsors and creators of these codes “walk the talk”?

If yes, why then mind boggling sums in billions of dollars are being paid as settlement fees by a large number of global pharma companies for alleged colossal marketing malpractices in different countries of the world.

This scenario prompts many stakeholders believe, though over-hyped by the global pharma industry, ‘Voluntary Practices’ alone of Pharma Marketing Code’, has never worked anywhere in the world. Thus, India needs a legally binding UCPMP for all concerned.

Prime Minister Modi has hinted at an effective pathway to mitigate this malevolent nexus for the benefit of patients. Understandably, that way can’t be construed as an exhaustive one, nor a cure-all. A slew of other effective steps should follow from different Government authorities, in tandem. The Union Ministry of Health has, at least, taken a related measure falling in their space. Nevertheless, an intriguing apathy of the DoP, as it were, in this area would encourage many to ponder: Is this important Government department on the same page as the PM in containing the alleged ‘doctor – pharma industry nexus?’

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.

 

Generic Drug Quality: Cacophony Masks An Important Note, Creates A Pariah

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In the ongoing debate between branded-generics and generic drugs without brand names, the concern about drug quality is occupying the center stage, with the former generally being painted in white, and the later in black – with no shades of gray in-between. Interestingly, many large domestic companies manufacture and sell both these genres of generic medicines, and the marketing approval process of both is no different, in a relative yardstick. The degree of difficulty in testing their quality standards, across the country, is no different, either.

On February 25, 2017, even the USFDA, reportedly, raised concerns, for the first time, on the quality and efficacy of medicines, in general, being sold within India. The news report further highlighted: ‘Over the past two years, many domestic majors, including Sun Pharma, Dr. Reddy’s, Cipla and Zydus Cadila have faced regulatory ire over quality of medicines exported from here and sold in the US and other overseas markets’.

It is undeniable, if prescriptions in generic names are made mandatory, there could be direct job losses within the industry, just as loss of significant business clientele of many professional service providers for branded generic business, directly or indirectly. Its net impact needs to be factored-in too, while taking a final decision on this subject.

Lack of enough credible scientific data establishing superiority of branded-generics over their non-branded equivalents are also striking, so are few instances of doctors filing Pharmacovigilance reports with the DCGI on the inferior quality of non-branded generic drugs. Neither is the most competent body in this area – the Central Drugs Standard Control Organization (CDSCO), has concurred with any such claims, so far. Without these, the whole debate based on seemingly over the top claims of superiority of branded generics as a class, is based no more than a matter of conjecture.

I discussed most of these points in one of my earlier articles published in this blog on April 24, 2017. Thus, in this article, I shall focus mostly on an important generic-drug-quality related amendment, very recently made in the Drugs and Cosmetics Act of India, which hasn’t received as much attention as it deserves. This finer note in the drug regulatory playbook, in fact, got nearly masked in the high-decibel cacophony of arguments and counterarguments on Prime Minister Modi’s recent hint on making prescriptions in generic drug names mandatory.

The core issue remains the same, both for non-branded and branded generics:

In the marketing approval process of any branded generic or a non-branded generic drug, Bioequivalence (BE) studies hold immense scientific importance. It ascertains whether the generic equivalent possesses similar efficacy and safety profile as the original molecule for interchangeability. Which is why, in most countries, including Europe and the United States, BE testing is mandatory for approval of any generic drug. Even the large buyers of these drugs, such as the World Health Organization, buy only those generics with proven BE.

Nonetheless, like many other nations, in India, as well, the marketing approval standards for all generic drugs, with or without a brand name, are exactly the same. However, this approval process gets alarmingly relaxed, for both these generic types, with the passage of time, which is the core issue.

New drug definition in India:

According to section 122-E of Drugs and Cosmetics Rules, 1945 (D&C Rules) new drugs will include unapproved drugs, modified or new claims, such as, indications, dosage forms (including sustained release dosage form) and route of administration of already approved drugs and combination of two or more drugs. A new drug shall continue to be considered as new for a period of four years from the date of its first approval or its inclusion in the Indian Pharmacopoeia, whichever is earlier.

BE studies necessary only for ‘New Drugs’:

For all such new drugs and their Fixed Dose Combinations (FDC), including those which are not covered by a patent, if introduced for the first time in India, would necessarily require its applicant to submit the marketing approval documents well-supported by phase III clinical trial data, which includes BE studies against the original molecules. BE of a drug product is achieved if its extent and rate of absorption do not show statistically significant differences from those of the reference product when administered at the same molar dose.

After the 4-year period BE tests not necessary:

Interestingly, after the 4-year period, D&C rules allow subsequent manufacturers of similar drugs to generally rely on the data generated by other pharma companies to obtain marketing approvals for their drugs. In other words, after this 4-year period, manufacturers of branded or non-branded generic drugs are not required to establish comparable safety and efficacy of their formulations with the original molecule through BE and other studies. It is worth noting here, unlike India, BE tests are mandatory for approval of all generic drugs at any time, in most countries across the world.

How would a doctor select only those branded-generics with BE studies?

As there isn’t any easy way to know and identify, both by the doctors and also the patients, which branded or non-branded generics were introduced without BE studies, both these categories pose equal risks to patients – not just the cheaper generic drugs sans brand names.

Changes recommended:

This laxity in the regulatory framework in India did create a lot of uneasiness about the quality of branded and non-branded generic medicines approved by the drug regulators and sold in the country. Responding to this issue, Professor Ranjit Roy Chowdhury Committee Report recommended in July 2013 to make BE and bio­availability studies mandatory for all types of generic drugs, even after the 4-year period.

Cacophony masks an important note:

The good news is, on April 3, 2017, by a Gazette Notification, Indian Government enacted amendments to the Drug and Cosmetics Act (1940) requiring mandatory BE studies for marketing approval of all generic drugs even beyond the 4-year period of the ‘new drug’ definition. It says, “The applicant shall submit the result of bioequivalence study referred to in Schedule Y, along with the application for the grant of a license of the oral dosage form of drugs specified under category II and category IV of the biopharmaceutical classification system.”

Biopharmaceutics Classification System:

The Biopharmaceutics Classification System (BCS) is a scientific framework to differentiate the drug formulations based on their aqueous solubility and intestinal permeability, and mainly depends on two factors:

  • How well the drug dissolves in the stomach and intestinal fluids (drug solubility)
  • How readily the drug passes through the intestinal wall into the blood flow (drug permeability)

The BCS was introduced by Gordon L. Amidon in 1995 to classify drugs into the four categories based on these parameters, as follows:

  • Class I: High Solubility – High Permeability
  • Class II: Low Solubility – High Permeability
  • Class III: High Solubility – Low Permeability
  • Class IV: Low Solubility – Low Permeability

CDSCO still needs to find the right answer to a key question:

Interestingly, this so important note in the regulatory playbook of India got masked in the high-voltage cacophony on branded and non-branded-generics. However, CDSCO would still require finding out the right answer to a key question: how would a doctor or a patient possibly know on which branded and non-branded generic drugs BE tests were not carried out, before the above amendment came into force.

Reported data on substandard drugs in India:

Quoting CDSCO data, the September-October 2015 issue of the ‘Indian Journal of Endocrinology and Metabolism’ summarized that ‘during the years 2011-2014, the regional laboratories tested samples at 91 percent of the installed capacity, but their overall detection rate of sub-standard drugs were only 3.6 percent’. Many have expressed doubts about these numbers though, nevertheless, these are Government data, and don’t fall in the realm of any conjecture.

In any case, the Union Ministry of Health doesn’t seem to concur that the issue of substandard drugs in India, that includes both the branded and non-branded generics, has assumed a public health menace in India or even alarming.

No qualms on value added branding of generic drugs, but fix the loophole for all:

It is understandable, when generic drugs are branded for tangible value-added product differentiation even within the identical or the same drug molecules. There are no qualms on such branding per se, though it comes at a high cost.

Marketing approval requirements being the same for all branded and non-branded generic drugs with the same pitfalls of no mandatory BE-testing requirement after the 4-year period, branding should add commensurate tangible value. Otherwise, why should most patients pay a significantly extra amount for heavily promoted branded-generics? Is it to help the pharma companies fighting with each other to increase their respective pies of revenue and profit on an essential commodity? Instead, stakeholders should now focus on easy detection of all those branded and non-branded generic drug formulations that avoided mandatory BE studies, prior to April 3, 2017.

In conclusion:

Despite CDSCO’s statistical data on substandard drugs, the general concern regarding the efficacy and safety of medicines manufactured in India is often raised both inside the country, as well as by some well-respected overseas drug regulators. Curiously, when raising the same concern CDSCO banned hundreds of branded FDCs, as these drugs came to the market without carrying out required scientific tests due to some major lacunae in the regulatory system, there was a huge protest in the country raised by almost the same people, as business interests prevailed over patients’ health interest.

Interestingly, displaying a sharp contradiction in today’s cacophony, patients’ health interest has been put in the forefront to protect business interests, especially when the CDSCO has raised no such concern, whatsoever.

The reverberating claims on superior drug quality for branded-generics as a class, over their cheaper non-branded equivalents, with the former generally being painted in white, and the later in black – with no shades of gray in-between, as I said before, is based mostly on conjecture rather than enough hard facts. Thus, the question comes up, who is responsible for ensuring drug efficacy and safety for the patients in India – CDSCO or non-fact based claims being raised mostly by those who have a direct or indirect financial interest in branded-generic business?

Keeping this in perspective, it is indeed intriguing, why such an important regulatory step of April 3, 2017 requiring mandatory BE studies for marketing approval of all generic drugs, even after the 4-year period, is getting masked in the cacophony, mostly favoring the branded-generics as a category. However, it’s no-brainer to understand that this din would continue, projecting all generic drugs sans brand names – a pariah!

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.