In the matured markets of the world pharmaceutical marketing is quite different in many respect as compared to India. Besides doctors, different sets of customer groups like, healthcare providers, patient advocacy groups, pharmacy benefit managers, clinical assessment authorities play various critical roles for use and consumption of branded or generic pharmaceutical products and related healthcare services.
Quite in contrast, even today, individual doctors have continued to remain almost the sole target customers for the pharmaceutical players in India. This is mainly because, by and large, they are the only decision makers for usage of medicines and other healthcare facilities for most of the patients in the country.
Heralding a new paradigm:
As indicated above, though the current pharmaceutical marketing strategies continue to revolve mostly around the doctors, a distinct change, albeit slowly though, is now anticipated within the pharmaceutical marketing space in India.
Gradual emergence of healthcare providers with medical insurance and other related products, patient advocacy groups and standard treatment guidelines, just to name a few, are expected to facilitate heralding a new paradigm in the strategy dynamics of the Indian Pharmaceuticals Market (IPM) in the coming years. These changes will not be incremental in any way, but disruptive and radical in nature, as they will fully evolve.
This process of transformation, mainly driven by Government policy reform measures like, ‘Universal Health Coverage (UHC)’, ‘Free distribution of medicines’, mandatory prescriptions in generic names, could make the current pharmaceutical business strategy models of majority of companies irrelevant and obsolete, in not too distant future.
It is worth noting that the Government will spend around Rs.14,000 Crores (US$ 2.60 billion, approximately) from the year 2014 to 2017 just on medicine purchases at highly negotiated/discounted prices for free distribution to all through Government hospitals and dispensaries.
10 Chain events envisaged:
In the evolving scenario, following chain events, taking place almost in tandem, in my view, will gradually usher in a new pharmaceutical marketing paradigm in India:
1. In addition to ‘Universal Health Coverage’, there will be a rapid increase in the number of other healthcare providers with innovative, tailor-made and value added schemes for various strata of the society.
2. This will trigger emergence of very powerful groups of negotiators for adopting treatment guidelines, pharmaceutical products usage and other healthcare related services.
3. These groups will have the wherewithal to strongly and significantly influence the doctors in their prescription and other treatment choices.
4. A significant proportion of the products that the pharmaceutical companies will market, a tough price negotiation with the healthcare providers/ medical insurance companies will be inevitable.
5. Consequently, doctors will no longer be the sole decision makers for prescribing drugs and also the way they will treat the common diseases.
6. Pharmaco-economics or Health Technology Assessment (HTA) or outcome based pricing will gradually play an important role in pricing a healthcare products. Drug Price Control Order (DPCO 2013) has already signaled to this direction for a class of products.
7. An integrated approach towards disease prevention will emerge as equally important as treating diseases.
8. A shift from just product marketing to marketing a bundle of value added comprehensive disease management processes along with the product would be the order of the day.
9. More regulatory control measures on pharmaceutical sales and marketing are expected to be put in place by the Government to prevent alleged widespread sales and marketing malpractices in the country.
10. Over the counter (OTC) medicines, especially those originated from natural products to treat common and less serious illnesses, will carve out a sizable share of the market, as appropriate regulations would be put in place, adequately supported by AYUSH. This will be fueled by overall increase in general health awareness of the population.
Trapped in an ‘Archaic Strategy Cocoon’:
Over a long period of time, Indian pharmaceutical industry seems to have trapped itself in a difficult to explain ‘Archaic Strategy Cocoon’. No holds bar sales promotion activities, with very little of marketing, continue to dominate the ball game of hitting the month-end numbers, even today.
It is high time to come out of this cocoon and confront the ‘writing on the wall’ upfront, if not try to hasten the process of the evolving changes, boldly and squarely. This will require a strategic long term vision to be implemented in an orderly way to effectively convert all these challenges into possible high growth business opportunities.
A differentiated composite value delivery system:
Moreover, in today’s post product patent regime in the country, product pipelines of the domestic Indian companies with new ‘copycat’ versions of patented products have almost dwindled into nothing, making price competition in the market place even more ‘cut throat’.
In such type of changing environment, all pharmaceutical companies will be under tremendous pressure to create and deliver additional, well differentiated and composite value offerings, beyond physical products, to attract more patients, doctors, healthcare providers and others, in and around related disease areas, for business excellence.
Thus, ability to create and effectively deliver well-differentiated composite value offerings, along with the physical products, will separate men from the boys in the high growth pharmaceutical market of India, in the long run.
This could also possibly create an ‘Alibaba Effect’ for the successful ones in search of pots of gold in the pharmaceutical space of India.
New leadership and managerial skill set requirements:
In the new environment, required skill sets for both the leaders and the managers of Indian pharmaceutical companies will be quite different from what they are today. This will not happen overnight though, but surely will unfold gradually.
Leaders and managers with knowledge in just one functional area like, R&D, manufacturing, marketing, regulatory, finance are unlikely to be successful without a broad-based knowledge in the new paradigm. To really understand and handle new types and groups of customers, they will need to break the operational silos and be proficient in other key areas of business too.
These professionals will require ensuring:
• Multi-functional expertise by rotating right people across the key functional areas, as far as possible, even with a stretch.
• Ability to fathom and correctly interpret patients’ clinical benefits against cost incurred to achieve the targeted clinical outcomes, especially in areas of new products.
• Insight into the trend of thought pattern of healthcare providers and other customers or influencers groups.
• Speed in decision-making and delivery…more importantly ability to take ‘first time right’ decisions, which can make or mar an important initiative or a commercial deal.
IPM growing fast, can grow even faster:
India is now one of fastest growing emerging pharmaceutical markets of the world with 3rd global ranking in the volume of production and 13th in value terms. Domestic turnover of the industry is over US$ 13.1 billion in 2012 (IMS) representing around 1 percent of the global pharmaceutical industry turnover of US$ 956 billion (IMS 2011).
Since 1970, Indian pharmaceutical Industry has rapidly evolved from almost a non-entity to meeting around 20 percent of the global requirements of high quality and low cost generic medicines.
Financial reforms in the health insurance sector and more public investments (2.5% of the GDP) in the healthcare space during the 12th Five Year Plan Period will have significant catalytic effect to further boost the growth of the industry.
Stringent regulations and guidelines of the Government in various areas of pharmaceutical business in India are expected to be in place soon. Ability to ensure system-based rigid organizational compliance to those changing business demands in a sustainable way. will determine the degree of success for the pharma players in India.
One such area, out of many others, is the professional interaction of the Medical Representatives with the doctors and other customer groups.
Require a ‘National Regulatory Standard’ for Medical Representatives in India:
Medical Representatives (MRs) currently form the bedrock of business success, especially for the pharmaceutical industry in India. The Job of MRs is a tough and high voltage one, laced with moments of both elation and frustration, while generating prescription demand for selected products in an assigned business territory.
Though educational qualifications, relevant product and disease knowledge, professional conduct and ethical standards vary widely among them, they are usually friendly, mostly wearing a smile even while working in an environment of long and flexible working hours.
There is a huge challenge in India to strike a right balance between the level and quality of sales pitch generated for a brand by the MRs, at times even without being armed with required scientific knowledge and following professional conduct/ ethical standards, while doing their job.
Straying from the right course:
A recent media report highlighted that ‘Indian subsidiary of a Swiss pharma major has run into trouble with some executives allegedly found to be inflating and presenting fabricated sales data for an anti-diabetic drug.’
The report also indicated that officials from mid-management ranks to sales representatives were allegedly involved in those unethical practices. The company has responded to this incidence by saying that the matter is still under investigation.
It is critical for the MRs not just to understand scientific details of the products, their mode of action in disease conditions, precautions and side effects, but also to have a thorough training on how to ‘walk the line’, in order to be fair to the job and be successful.
As MRs are not just salesmen, they must always be properly educated in their respective fields and given opportunities to constantly hone their knowledge and skills to remain competitive. The role of MRs is expected to remain important even in the changing scenario, though with additional specialized skill sets.
Unfortunately, India still does not have a ‘National Code of Conduct or Regulatory Standards’ applicable to the MRs.
Only the clause 4 of ‘The Magic Remedies (Objectionable Advertisement) Act, 1954’ deals with misleading advertisements. It is about time to formulate not only a ‘National Code on Pharmaceutical Marketing Practices’, but also a mandatory ‘Accreditation program’ and transparent qualifying criteria for the MRs for the entire pharmaceutical industry in India, just like many other countries of the world.
‘Central Drugs Standard Control Organization (CDSCO)’ of the Ministry of Health and Family Welfare of the Government of India in its website lists the “Laws Pertaining to Manufacture and Sale of Drugs in India”. However, it does not specify any regulation for the MRs nor does it recommend any standard of qualification and training for them, which is so critical for all concerned.
There are currently no comprehensive national standards for educational qualification, knowledge, ethics and professional conduct for the MRs. In the absence of all these, it is difficult to fathom, whether they are receiving right and uniform inputs to appropriately interact with the medical profession and others in a manner that will benefit the patients and at the same remain within the boundary of professional ethics and conduct.
Thus, a ‘National Regulatory Standard’ for MRs, I reckon, is absolutely necessary in India… sooner the better.
Global pharmaceutical players:
Facing a huge patent cliff, global pharmaceutical companies are now fast gaining expertise in the ball game of generic pharmaceuticals, especially in the developing markets of the world.
In the emerging markets like India, where branded generic business dominates, global pharmaceutical players seem to be increasingly finding it lucrative enough for a sustainable all round business growth.
However, to outpace competition, they too will need to capture the changing dynamics of the market and strategize accordingly without moaning much about the business environment in the country.
On the other hand, if majority of Indian pharmaceutical companies, who are not yet used to handling such changes, are caught unaware of this evolving scenario, the tsunami of changes, as they will come, could spell a commercial disaster, endangering even very survival of their business.
During ensuing phase of transition in India, pharmaceutical companies would require to:
• Clearly identify, acquire and continuously hone the new skill sets to effectively manage the evolving challenge of change.
• Get engaged, having clarity in the strategic content and intent, with the existing public/private healthcare providers and health insurance companies like, Mediclaim, ICICI Lombard, large corporate hospital chains, retail chain chemists and others, proactively.
• Drive the change, instead of waiting for the change to take place.
• Ensure that appropriate balance is maintained between different types of marketing strategies with innovative ways and means.
It may not be easy for the local Indian players to adapt to the new paradigm sooner and compete with the global players on equal footing, even in the branded generic space, with strategies not innovative enough and lacking required cutting edges.
In my view, those Indian Pharmaceutical companies, who are already global players in their own rights and relatively well versed with the nuances of this new ball game in other markets, will have a significant competitive edge over most other domestic players.
If it happens, the global-local companies will offer a tough competition to the local-global players, especially, in the branded generic space with greater cost efficiency.
So far as other domestic players are concerned, the fast changing environment could throw a new challenge to many, accelerating the consolidation process further within the Indian pharmaceutical industry.
As the new paradigm will herald, catalyzed by the above 10 chain events, there will be a metamorphosis in the way pharmaceutical marketing is practiced in India. A well-differentiated composite value delivery system would then, in all probability, be the name of the winning game.
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.