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Disruptive Impact of AI on Pharma Sales And Marketing

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Artificial Intelligence (AI) that refers to the ability of machines to perform cognitive tasks like thinking, perceiving, learning, problem solving and decision making, is poised to disrupt our world. Initially conceived as a technology that could mimic human intelligence, AI has evolved in ways that far exceed its original conception. This was articulated in the June 2018 Discussion Paper, titled ‘National Strategy for Artificial Intelligence’ of NITI Aayog, India.

The paper further highlights: With intelligent machines enabling high-level cognitive processes like thinking, perceiving, learning, problem solving and decision making, coupled with advances in data collection and aggregation, analytics and computer processing power, AI’s capability has dramatically expanded. So is its game-changing utility in a growing number of fields to enhance productivity – dramatically.

I also expressed this need in my article, “Indian Pharma To Stay Ahead of The Technology Curve,” published in this Blog on May 22, 2017. Nevertheless, despite galloping progress of AI, a kind of ‘Ostrich Syndrome’ still prevails in some sections of the industry. This attitude, if continues, may catch many drug companies off-guard, with serious repercussions on business. In this article, I shall focus on the possible impact of AI on pharma business, specifically on pharma sales and marketing, instead of being prescriptive in my deliberation.

A disruptive impact on pharma value-chain:

Currently, only a few drug companies have embraced AI-driven technologies to transform pharma value-chain elements, across functional areas of the organization. However, in the next few years, effective adaptation of AI, in the true sense, will be the key success factors for any player – nurturing a burning desire to succeed, consistently. This was, again, an important conclusion of the 2019 FICCI Report titled, ‘Use of Artificial Intelligence and Advanced Analytics in pharmaceuticals.’

While explaining its rationale, the report emphasizes – catalyzed by an exciting range of new, disruptive technologies a paradigm shift is taking place, challenging the status quo with the traditional pharma business model. AI is in the process of disrupting this status quo, especially in the following two areas:

  • Increasing stakeholder pressure to reduce costs and demonstrate greater value of drugs,
  • Evolving swing from treatment to prevention, and patient-centric treatments.

Prompts a critical need to re-imagine the future:

These inevitable shifts prompt a critical need to re-imagine the future, for each drug manufacturer. However, the good news is, some of them, predominantly the global ones, have started making sizeable investments on AI. On a deeper scrutiny, the FICCI paper finds that applications of AI are mostly taking place in the new drug discovery and the supply chain area.

Besides individual company initiatives in the R&D area, important collaborative arrangements on AI with academia, have also been announced, such as, ‘Machine Learning for Pharmaceutical Discovery and Synthesis Consortium (MLPDS). This is a collaboration between the pharma/ biotech industries and the departments of Chemical Engineering, Chemistry, and Computer Science at the Massachusetts Institute of Technology (MIT).

MLPDS is expected to facilitate the design of useful software for the automation of small molecule discovery and synthesis. As on July 02, 2019, reportedly, ‘33 Pharma Companies Using Artificial Intelligence in Drug Discovery.’That said,let me hasten to add that some companies are also testing the water, with all seriousness, in pharma sales and marketing functions. So, the AI wave is fast catching up, driving the drug industry to chart uncharted frontiers. In this scenario, would there be any scope of survival for laggards?

Should it happen faster in pharma sales and marketing, as well?

In my view, the answer is an emphatic ‘Yes.’ This is primarily because, the disruptive impact of AI won’t be any less in pharma sales and marketing. It will, therefore, be prudent for these professionals, not just to understand how AI works in their respective functions, but also the ways to effectively use various AI platforms and applications, to transform the traditional processes, fundamentally.

Moreover, when stakeholders, including patients, doctors, hospitals, health insurance companies and even governments, are directly or indirectly using a host of AI-enabled tools and applications for better outcomes, does pharma have any other option?

Areas in which the impact could be transformative:

The recent publication titled, ‘Boosting Pharmaceutical Sales and Marketing with Artificial Intelligence’ of ZS, analyzed this issue quite well. It emphasized, those functions in the drug industry where there exists a significant reliance on human functions, such as expertise and reasoning, the impact of AI can be transformative.

Sales and marketing are two such focus areas, besides other functions. Companies that use AI to orchestrate a cohesive customer experience, will drive stronger differentiation, better customer access and higher sales impact, the report highlighted. Thus, creating specific opportunities and requisite empowerment, are necessary for deserving people, to foster machine learning and human integration in sales and marketing. This, in turn, will help them gain insight into how to unleash the power and value of AI for achieving business excellence.

Some early adopters of AI in sales and marketing:

Recent reports indicate that some global pharma majors have started using AI in sales and marketing. Let me illustrate this point with two examples – Pfizer and Novartis.

In May 2017, Pfizer Australia, reportedly, adopted AI-powered digital analyst tool for sales and marketing decision making.This ‘What-if Simulator’, allows Pfizer to test and optimize a range of scenarios based on internal and external data sets. It helps simulate the impact of sales and marketing strategies, investigate assumptions and hypothesis difficult to test in the real world, and compare the outcome of various what-if scenarios in order to understand what’s contributing to business results. According to Pfizer, ‘the software will also help to understand deterministic and non-deterministic factors presented in its business operations, as well as see how variables within different questions impact one another’.

Another recent media report titled, ‘Novartis puts AI on the job to help reps say the right things to the right doctors,’ appeared in Fierce Pharma on January 09, 2019. It also confirms the keen interest of pharma in this area. Called “virtual assistant,”this application helps salespeople to make sure when they visit a specific doctor that they are talking about exactly what that doctor is absolutely interested in. “When you turn up at the right time with the right things to say, they’re more interested and put more value in it, and our people like the fact that AI is running in the background helping them plan their day,” Novartis official further elaborated.

Accept the dictum – ‘there is always enough room for improvement’:

Following this dictum, is the starting point for pharma marketers to seriously accept AI as a game changer in this industry, regardless of how successful the company is – in doing what they do, following the traditional business models. The core purpose of a drug company is to make sure that patients get what they want, in those disease areas where the company represents.

If a brand strategy is prepared based on research data collected a few months back, there could probably be a flaw in your strategy. This is because any recent offering to patients by a competitor, may have considerably changed what the patients want now. If a strategy is not based on virtually real-time information on what exactly the customers are looking for now, the result could be far from satisfactory.

The elements which are critical in creating ‘great brands,’ were nicely captured in the May 13, 2019 issue of Customer THINK on ‘AI in Digital Marketing.’ It articulated, ‘Great brands will be those that can think creatively, design effectively, and execute flawlessly to deliver seamless experiences woven together by machines and humans.  Using this approach, marketers and their marketing machines will stay gainfully employed.’ Thus, creative application of AI by astute pharma marketers will help achieving this goal.

Will AI ultimately replace pharma sales and marketing people?

This is a lurking fear in the minds of many. A related article appeared in the pharmaphorum on July 02, 2019, also wrote about a similar apprehension. The paper is titled, ‘Will AI make pharma marketers obsolete?’ It said: ‘Artificial intelligence, is sometimes seen as either a panacea or a destroyer – the fix for all humanity’s problems, or the apocalyptic scourge that will turn on us.’

I too reckon, AI can never replace people in pharma sales and marketing operations. This is because, there are two distinct elements in both these functions. One, the creative power of a professional that creates, develops, hones, and executes new ideas, strategies. It even decides how effectively AI can be used. The second element is the technological power behind AI. This can carry out a host of different very important, but routine and repetitive tasks – with a great amount of precision and virtually flawless. As the key sales and marketing professionals will need both, the AI can’t completelyreplace people in these two critical operational areas.

Some uses of AI in sales and marketing:

Eularis, in its ‘Blog, Comment & Insight’ of January 15, 2018, deliberated on this area. Just to give a feel of possible use of AI in different very important, but routine and repetitive tasks – with a great amount of precision, I am summarizing some of those points, as follows:

  • ‘Identification and Mapping’ of’ Key Opinion Leader (and up-and-coming Key Opinion Leader), which is constantly changing. Alongside, it can help scan and analyze all relevant journal articles, coming out each week, besides the same for ongoing clinical trials in the chosen field – flagging how changes and new additions can impact the KOL database.
  • Disease specific patient identification and physician targeting, especially in rare disease areas.
  • Helps identify individual preferences for content, channels and timing of information, that leads to allowing personalization at scale, and ensuring every customer is receiving what they want, when they want, and in the channel they want.
  • Facilitates utilizing the power of big data, AI tools and apps to identify which patients will cease adherence and how this can be addressed, thereby minimizing the loss of business for non-adherence.
  • Helps create custom messaging for sales reps to use for individual physicians based on what that physician needs at that particular moment in time.

Conclusion:

Use of AI-based technology in the pharma industry, basically means automated algorithms with the capability to perform all those tasks that are now being done mostly with heavy dependence on human intelligence. Thus, its possible use spans across almost all functional domains – from drug discovery, clinical development, supply chain and right up to sales and marketing.

Although, it is still challenging to figure out to what extent AI will transform the industry, one gets a strong signal that it is not just another ‘buzz word’ or a new kid on the block. The technology is surely spreading its roots across the health care space, pharma being an integral part of it. Which is why, according to ‘Executive Insight’ (Volume XX, Issue 60) of  L.E.K. Consulting, ‘all of the largest 10 pharmaceutical companies are investing in AI, and developments in applications are occurring across the spectrum of pharma business.’

In fine, to fathom the disruptive impact of AI on pharma business, I shall conclude by quoting from March 18, 2019issue of Healthcare Weekly. After a thorough analysis, the paper acknowledged thatAI is already redefining biotech and pharma. It concluded by stating, ‘ten years from now, pharma will simply look at artificial intelligence as a basic, every day, technology. The only question is how long pharma executive will wait till they jump on the wagon and leverage AI to improve their operational efficiency, outcomes and profits.’

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.

Focus On Patient Compliance To Boost Pharma Sales…And More…

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One high-impact area in the healthcare space that often finds its place in the backseat is – patient noncompliance. A term that is commonly used in regard to ‘a patient who does not take a prescribed medication or follow a prescribed course of treatment.’ It comes with a steep price, for causing serious adverse impact not just on human health and health system, but also in the pharma business. Intriguingly, such incidents are still not scientifically monitored enough and vigorously acted upon, both globally and locally.

The World Health Organization (W.H.O) has also flagged it as a huge problem, as it reports, 10 percent to 25 percent of hospital and nursing home admissions result from patient noncompliance. Furthermore, about 50 percent of prescriptions filled for chronic diseases are not taken correctly, with 40 percent of patients not adhering to the treatment regimen.

In this article, just after giving a flavor to its financial cost to patients, I shall dwell mostly on its impact on the pharma players, as overcoming this important problem doesn’t generally fall in the area of strategic focus for most of them. Finally, I shall explore how drug manufacturers can translate this problem into an opportunity – as the third growth driver for business, creating a win-win situation for all.

Economic and health impact on patients:

Noncompliant patients suffering from both acute and chronic ailments, pay a heavy price, not just in terms of longer suffering arising out of complications, but also incurring significantly more health expenditure for treatment of the same diseases. According to IMS Institute for Healthcare Informatics, on average, less than 40 percent of patients around the world are fully complying with their treatment instructions.

Even in the Indian context, the problem is no different. Let me illustrate the point with the example of a chronic disease, such as Asthma. The article published on June 26, 2018 in ‘Lung India’ – the official publication of Indian Chest Society reported: “The mean annual direct costs among compliant and non-compliant patients were ₹14, 401 and ₹24, 407, respectively. Percentage of hospitalization was less among the compliant group (6 percent) when compared with noncompliant group (17 percent).”

The study concluded, asthma is not only associated with patient-specific impairment, but also creates a significant economic burden for the family and society. The major contributors to the burden are the medication cost and hospital admissions. Patient compliance with prescribed drugs can help keep asthma under control, thereby decreasing the economic burden and emergency hospital admissions – avoiding the economic risk from ill health with high out of pocket payments.  Productivity loss is another under-appreciated source of economic loss contributing to indirect cost. The rising costs of investigations, interventions, and treatment of chronic diseases further complicate the problem.

Economic impact on pharma business:

According to November 16, 2016 report, published by Capgemini and HealthPrize Technologies, globally, annual pharmaceutical revenue losses had increased from USD 564 billion in 2012 to USD 637 billion due to non-adherence to medications for chronic conditions. This works out to 59 percent of the USD 1.1 trillion in total global pharmaceutical revenue in 2015.

The report highlights, besides medication nonadherence being a serious global health issue that needs to be addressed immediately, it also happens to be a critical business issue for pharmaceutical companies. Thus, it is the only area of their business where a sharp strategic focus “can generate significant top – and bottom-line growth, improve outcomes, and create substantial savings for the healthcare system – all at the same time.”

Major reasons for patient noncompliance:

Several reasons are commonly attributed to patient-noncompliance to medicines, such as:

  • Lack of knowledge of its health and economic impact
  • Importance of completing the full-course of the drug and dosage regimen for long-term remission, following immediate relief
  • Untoward side-effects and other inconvenience
  • Forgetting therapy because of preoccupation
  • Financial inability to complete the prescribed treatment regimen due to the high cost of drugs.

Nevertheless, the 9th Edition of Global Research Report by Capgemini Consulting underscores that reality is more complex. Patient adherence initiatives, if any, when undertaken, even by pharma companies, often lack a thorough understanding of the root causes of discontinuing treatment and failure to effectively engage patients with a holistic approach to the issue. It also emphasizes: “Individual tactics are tried by different brands and then discontinued as budgets and priorities shift, before their impact is known. Successes are seldom pulled through and expanded across the organization.”

Using it as the third major growth drivers for pharma:

The two primary factors that drug manufacturers are leveraging to boost growth of the organization are:

A.  New product introduction – gradually extending to line extensions and new indications. One such illustration is the cholesterol-fighting drugLipitor of Pfizer. The lifetime sales of this brand as of the end third quarter 2017 generated a stunning USD 150.1 billion of business for the company. Incidentally, Lipitor patent expired in 2011. There are many similar examples, including Humira of AbbVie.

B.  Regular and hefty price increases for already marketed products, for various reasons, but almost regularly. According to this 2019 report, percentage price increases, on a huge base, of some of the world’s top pharma brands were as follows:

  • AbbVie: Humira, a blockbuster drug with USD 15 billion in sales in the first 9 months of 2018: +6.2%
  • Allergan: Many of its brand-name drugs, including dry-eye medication Restasis: +9.5%
  • Biogen: Multiple sclerosis drug Tecfidera: + 6%
  • Bristol-Myers Squibb: Eliquis, a drug that prevents blood clots and is on pace for USD 6 billion in sales in 2018: + 6%
  • Eli Lilly: Type 2 diabetes medication Jardiance: + 6%

Many studies have captured the importance of regular price increase, as a key pharma strategy, not only to drive the internal growth, but also to keep their investors, as well as, the stock market on the right side. There are examples that for some of the top global pharma players, this strategy was directly responsible for 100 percent of earnings-per-share growth in 2016, and more than 20 percent of the revenue made in the first three quarters of 2018.

On the other hand, some top analysts’ findings highlight that drug companies serious strategic focus just on the issue of patient noncompliance with novel tactical measures, could fetch as much as a 30 percent increase in annual earnings per share for many players, even in India.

This brings up to the point – can strategic focus to minimize patient’s non-compliance, supported by adequate resources, be the third growth driver for drug companies?

Can focus on patient noncompliance be the third growth driver for pharma?

For a moment, leaving aside the above two primary growth drivers, if we look at the estimates, as quoted above, well over 50 percent to 60 percent of a brand’s potential sales is wasted due to patient noncompliance. Isn’t it huge? Can this be ignored? Obviously not. Instead, why not pharma converts this problem into an opportunity, with a sharp strategic focus, leveraging technology.

Translating this potential opportunity into reality is neither very easy nor is every company’s cup of tea. But the reward for the winners is indeed phenomenal. To chart on this frontier, one of the toughest barriers, besides a winner’s mindset, is getting access to credible and meaningful patient-data, for various reasons. On the other hand, it isn’t an insurmountable problem, either – especially, with today’s rapidly progressing technology.

Some companies have started the long march:

According to the review article, published in the New England Journal of Medicine: ‘The ability of physicians, to recognize non-adherence is poor, and interventions to improve adherence have had mixed results. Furthermore, successful interventions generally are substantially complex and costly.’

Realizing that it as a potential opportunity – disguised as a problem, several pharma players have started thinking about exploring this not much charted territory, confirm reports coming from different countries of the world. To give an illustration, November 22, 2016 edition of Fierce Pharma reported: ‘Pharma companies have more recently joined the conversation with partnerships and programs that include adherence aims.’

It is generally believed today that rapid ascendency of modern technology, and its strong influence on people, will help create a new awareness of its current adverse impact both on patients and the drug companies.

What else could be done in a much wider scale?

Digital interventions, such as smartphone apps, are becoming an increasingly common way to support medication adherence and self-management of chronic conditions. In this regard, the May 14, 2018 study titled, ‘Smartphone apps for improving medication adherence in hypertension: patients’ perspectives’, published in the journal of Patient Preference and Adherence, concluded as follows:

‘These data showed that patients can identify the benefits of a medication reminder and recognize that self-monitoring their blood pressure could be empowering, in terms of their understanding of the condition and interactions with their general practitioners.’ But some loose knots are still to be tightened.

Tightening the loose knots:

Having leveraged the state of the part digital technologies to tighten the loose knots in this area,a host of AI-enabled smartphone health and diagnostic apps, capturing patient compliance details, especially in chronic disease areas, are fast coming up. Most of these are being developed by large, small and medium sized non-pharma pure tech companies, including startups. For example, according to reports: ‘With the release of the Apple Health Record and Apple Watch with a single-lead ECG, it’s evident that Apple has officially entered the healthcare space.’

A good number of these apps have received even the US-FDA approval, such as: MyDose Coach - a reliable dose calculating app for type 2 diabetic patients who take insulin once-daily in concert with physician guided insulin recommendations. Or, GoSpiro – a home spirometer, to measure air output from the lungs for COPD patients and connects wirelessly to provide hospital-quality data regarding breathing.

That many non-pharma entities are trying to create a space for themselves in a high-tech, but non-drug treatment segment within the pharma space, has prompted, several drug manufacturers to rewrite their marketing playbook, incorporating this ‘new notation’.

It’s real now…for some:

As the above Fierce Pharma article reported: ‘Pharma companies have more recently joined the conversation with partnerships and programs that include adherence aims; efforts from Verily and Sanofi and IBM and Novo Nordisk have recently made the news.’Further, on November 07, 2018, in another report it brings to the fore that Geisinger Health System has developed mobile apps to manage asthma with AstraZeneca, and a wearable app to manage pain with Purdue. It also joined forces with Merck to develop tools for patients and caregivers to improve care coordination and medication adherence.

Moreover, on February 09, 2019, Japanese drug major Astellas and WiserCare - a company that develops healthcare decision support solutions, announced a collaboration that includes improving patient adherence to care plans, and improve the overall care experience.

In tandem, concern on patients’ data privacy, may also now be addressed, possibly by making use of blockchain or similar technology for such initiatives, as I discussed earlier in this blog.

Conclusion:

‘Acquiring new customers is important, but retaining them accelerates profitable growth,’ is the theme of an article, published in Forbes on June 08, 2016. Therefore, just as any other business, this dictum applies to the pharma industry, as well, especially in context of patient noncompliance to medicines, with a clear strategic focus to minimize its impact on performance.

The major reasons for patient noncompliance ranges from ignorance of its adverse impact on health to side effects, forgetfulness and right up to inability to afford full-course of the prescribed drug treatment. Despite its continuity over decades, adversely impacting patients, health system and the pharma players, it won’t be prudent to infer that no attempt was being made in the past, to address this critical issue. Nevertheless, those measures have not worked, for many reasons, as we see today from various research studies in this area, even in the Indian context.

Once again, intervention of technology to make patients compliant to medicine, is showing promise for following it up more vigorously. That some global drug majors are entering into collaborative arrangements with non-pharma, technology companies of various sizes, sends a signal of the emergence of a third major growth driver for pharma, as discussed above.

This issue is so important, especially considering that the low hanging fruits of R&D have mostly been plucked, just as regular hefty increases of drug prices are meeting with tough resistance, squarely. In this scenario, a robust strategic focus on patient compliance would not only boost pharma sales but would also reduce the disease burden of a large section of people significantly. This will benefit all and harm – none.

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 Hype of Digitalization in Pharma Marketing

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Having access to the fountain of knowledge residing in the cyberspace, fueled by word of mouth information and aided by social media, patients’ behavior is fast changing globally. Its degree may vary. But the change is real. The good news is – in a digital world of today, people are talking about ‘digitalization’ to rejuvenate per dollar productivity even in the pharma business, while navigating through a strong environmental headwind.

But, the bad news seems to be, that many pharma players, especially in India, can’t possibly quite fathom, just yet, the profound impact of the changing customer profile. With the hype of ‘digital marketing’ and associated cacophony, most of them seem to be focusing on automation of various processes with digital tools, rather than a customer-centric pan-organization digitalization of business. In this article, I shall dwell on the relevance of such intervention in the pharma marketing model, including the processes, before it’s too late for an organization.

The reality – profile of pharma consumers is changing:

It is well documented today that the profile of pharma consumers is changing. There are several studies in this area. For example, the McKenzie paper of November 2014, titled “A digital prescription for pharma companies,” penned some important observations in this regard, as follows:

  • Consumers in the healthcare sector are becoming more informed, empowered, and demanding.
  • The vast majority of connected patients using an array of digital tools, to take control of their health and the health care services they access and buy.
  • Over 70 percent of patients who are online in the United States use the Internet to find healthcare information, and around 40 percent of people who diagnosed their condition through online research had it confirmed by a physician.
  • Patients equip themselves with information about product safety, efficacy, cost comparison, quality indicators from websites and online communities.
  • The more healthcare data become digitally accessible, the more patients will use it to weigh—and potentially reject—expensive health care treatments, as is particularly true in the United States.
  • These patients are demanding more information, so they can apply the same cost-benefit analysis and research techniques they use to purchase cars or phones when they purchase health care.
  • They are also making more informed, rational choices about where they put their money.
  • If pharma companies do not join the digital dialogue and influence the conversation, they will lose an opportunity to shape it, and they may be put on the defensive trying to refute the statements made by those that do take part.

In this evolving scenario, the expectations of pharma customers even in India, are also changing. It may not be as fast as in the United States, but certainly can’t be ignored in any way, for long term business success. Thus, I reckon, it would be futile to keep the basic process of business as tradition-bound as it has always been, of course, with some interesting tweaking here or there.

When everybody talks about digital intervention, what it is really?

To effect this desired change, all concerned are now talking about ‘digitalization’. It has already become a buzz word and is often considered as a ‘magic wand’ by many enthusiasts. There is nothing wrong in this hype, provided this process is properly understood. I tried to explain it in my article, published in this Blog on January 2018. Are we missing wood for the tree? Let me start with the current ‘digitalization’ focus of pharma marketing in this area, particularly in India – as I see it.

Where’s the current focus on ‘digitalization’ in pharma marketing?

Generally, the pharma marketing focus broadly covers two different categories:

A. Push marketing 

B. Pull marketing

A. Push marketing: 

In my view, ‘push marketing’ involves targeting physicians through Medical Representatives and other means, including several contentious ones. These ensure that the doctors “push” the identified pharma brands of the company while writing prescriptions for patients. Some experts call it an ‘inside out’ and brand focused strategy of the industry players to drive sales.

Many companies are taking major digital steps to introduce automation in this area, which are not transformative, but incremental and aimed at improving productivity. Such drive encompasses many areas of a pharma organization, including the field staff related functions. For example, replacing usage of paper-based items, such as detailing folders or reporting material, with algorithm-based digital tablet devices. These reforms help answer customer questions promptly, besides almost real-time entry of accurate doctors’ call related data into a remote computer server for continuous analysis and feedback.

Automation of such types may free enough time of the field staff for greater customer contacts in different ways, but may not be considered as digitalization of the organization. Moreover, these are not transformative in nature either, as the overall process of doing business remains the same.

Nonetheless, process automation and its re-engineering add significant, but incremental value to the business, as the organization continues to maintain similar ‘inside-out’ focus on brands. The re-engineered processes also become faster and more accurate to help improve productivity. However, patients’ knowledge-base, needs, demands, values and aspiration keep changing fast, which just process automation can’t leverage to excel in business.

B. Pull marketing: 

Unlike ‘push marketing’, ‘pull marketing’ targeting pharma consumers who are increasingly becoming more informed and want to get involved in their treatment decision making process, including selection of a drug. The evolving trend suggests, to succeed in business, pharma players would require focusing more on patients, using various digital tools and platforms of engagement, in different ways.

To make this process meaningful, it is essential for a drug company to venture into mapping the patient’s journey from end-to-end for a specific disease or a set of diseases. This means capturing real-life data right from the time patients feel the need for a medical intervention, through the search for the right treatment, to effective disease management or cure, including follow-up, if any. Thus, mapping this arduous and complex odyssey would demand application of state-of-the-art digital tools.

Thereafter, equally sophisticated measures structured on digital platforms and formulated accordingly, require to be and implemented on the ground. It then becomes the ground-rock to transform the company’s focus – ‘through brands to patients’ to – ‘through patients to brands.’ Dovetailing this new marketing concept to a pan-organization initiative will call for new insight and wherewithal of the right kind.

When implemented by the right kind of people, this approach will encouragepatients to “pull” the demand of the selected brands, as they participate along with doctors in the drug selection part of the entire treatment process. The informed patients won’t hesitate posing questions to doctors – why ‘this’ drug is being prescribed and why not ‘that’ drug?’ The doctor would require responding with convincing answers in that situation. Some experts have termed this process as – an ‘outside in’ strategy.

Difference in impact – one ‘Incremental’, the other ‘transformative’:

It’s important to reiterate that the impact of digitalization for an ‘inside-out push strategy’, is generally incremental. Whereas, the same for ‘outside-in pull strategy’ is expected to be transformative in nature, not just in the business performance, but also the way pharma business is viewed and conducted as on date, especially in India.

Conclusion:

As I understand, process automation may be based on digital platforms and even with the application of Artificial Intelligence (AI) or robotics, the overall business process remains unchanged. It brings greater efficiency in the same business processes, improving employee productivity, and usually adds incremental success to brand performance.

Whereas, digitalization helps create a new way of achieving excellence – gaining a new insight for the business. This happens, first through generation, and then detail analysis of an enormous amount of relevant customer-centric data. Effective interpretation and use of the same, help transform the business – giving shape to new business processes for organizational distinction.

Simply speaking, automation improves the business efficiency with its key focus on ‘pushing brand prescription demand’, as much as possible. Whereas, digitalization aims at business transformation for a long-term organizational effectiveness. It creates a new purpose for business based on changing customer profile, across the organization. A sharp focus on delivering research-based and well-targeted customer values help ‘pulling brand prescription demand’, the decision of which is often jointly taken by the doctors and the patients or will happen that way even in India, sooner than later.

In this perspective, what we see in pharma marketing, generally in India, is automation of various types, of course, by using digital tools, platforms and even AI, in some cases. There isn’t anything wrong in that. But, digitization would call for much more. First, the core organizational focus to shift from being ‘brand-centric’ to ‘customer-centric’ for financial achievements, and then effectively delivering customer values through each ‘company-brand-customer interface’ and beyond that. This is essential for sustainable excellence of pharma players in the digital age.

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.

Blockchain: A Game Changer For Safe Medicines

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‘Your medicine box may have fake drugs’ was the March 18, 2018 headline of a popular pan Indian news daily. Just the year before, the 2017 report of the World Health Organization (WHO), also flagged that around 10.5 percent of all medicines in low-and middle-income countries, including India are substandard or fake. Even prior to this, another news headline of February 15, 2016 highlighted: ‘1 In 7 Indian Drugs Revealed As Substandard.’ These reports paint a scary situation for consumers of medicine in India, especially when the same incidence is just around one percent in the high-income countries of the world. Nevertheless, getting into a protracted discussion to prove the veracity of this issue, may not yield much, either. Some may even term these as efforts to ‘sensationalizing’ the situation.

That said, the good news is, the Government Think Tank Niti Aayog and also the Drug Technical Advisory Board (DTAB) of India,are reportedly contemplating to combat this menace with cutting-edge technology. In this article, I shall dwell on this threat, starting with its profound impact, not just on human health, but also on the economic and the socioeconomic space of India.

Why is it so important?

The most obvious fallout of this hazard is of course borne by the consuming patient.  The other two critical impact areas has also been well captured by the World Health Organization (WHO) in its 2017 study, titled ‘A study on the public health and socioeconomic impact of substandard and falsified medical products’. I am summarizing those 3 key impact areas hereunder:

A. Health impact: 

  • Adverse effects (for example, toxicity or lack of efficacy) from incorrect active ingredients
  • Failure to cure or prevent future disease, increasing mortality, morbidity and the prevalence of disease
  • Progression of antimicrobial resistance and drug-resistant infections, loss of confidence in health care professionals, health programs and health systems

B. Economic impact:

  • Increased out-of-pocket and health system spending on health care
  • Economic loss for patients, their families, health systems and manufacturers (and other actors in the supply chain) of quality medical products
  • Waste of human effort and financial outlay across the health system, further straining resources, staff and infrastructure
  • Increased burden for health care professionals, national medicine regulatory authorities, law enforcement and criminal justice systems.

C. Socioeconomic impact:

  • Lost income due to prolonged illness or death
  • Lost productivity costs to patients and households when seeking additional medical care, the effects of which are felt by businesses and the wider economy
  • Lack of social mobility and increased poverty

What the Government contemplates in India? 

According to the April 09, 2018 news report, “Indian policy think tank Niti Aayog is working to put the entire inventory of drugs made and consumed in the country on blockchain with an intent to crack down on counterfeit and spurious drugs, according to two government sources. The government wants to complete a proof of concept (PoC) solution by the year-end and begin implementation in 2019.”

On May 16, 2018, DTAB reportedly deliberated and approved a Track and Trace mechanism to address this issue. The proposal is a stand-alone measure to combat fake or counterfeit drugs covering 300 pharma products. However, it does not intend to cover the entire drug supply chain integrity with Blockchain technology, in a comprehensive manner.

According to the above report, this particular approach involves asking the pharma manufacturers to print a unique 14-digit alphanumeric code on the package of the drug. While buying any medicine, the individual can inquire via a text message, whether the drug bearing that code is genuine or not.

I wrote an article in this Blog on the use Blockchain by pharma players, on January 22, 2018. You may wish to refer that to know more about it in context of the pharma industry.

Recent Blockchain initiatives by global pharma majors:

Some global pharma layers have already covered some ground with Blockchain, especially in this area.On September 21, 2017, an article titled ‘Big Pharma Turns to Blockchain to Track Meds’, published in Fortune, presented some interesting facts. It indicated: to stop a flow of fake, spurious or counterfeit medicines entering the supply chain and reaching patientshow the pharma industry appears to be on the verge of resolving this long-time problem with the intervention of one of the most modern technology – Blockchain.

A group of companies, including Genentech and Pfizer has announced the MediLedger Project for creating blockchain tools to manage pharmaceutical supply chains. The group, has completed a successful pilot program to track medicines, where all concerned – from drug manufacturers to wholesalers to hospitals and retailers will be recording drug deliveries on a blockchain. This would ensure that, at each step of the distribution process, a network of computers will vouch for the ‘provenance and authenticity’ of a drug shipment—making it virtually impossible for counterfeiters to introduce fake drugs – the article highlighted.

Quoting domain experts, the authors underscored the key difference between current practices in this area and managing supply chain through Blockchain technology. At present, most companies use various software to manage the supply chain. However, these usually consist of a mishmash of different databases. ‘The introduction of a Blockchain system, in which each participant controls a node on the network, and transactions require a consensus, is thus a significant leap forward’ – the experts noted.

On scaling up, if this project achieves the intended goals, it would possibly be a game changer for the pharma companies in addressing the counterfeit or fake drug menace, effectively.

How will Blockchain combat fake or counterfeit drugs?

In India, there are basically four constituents in the pharma supply chain: source of procurement of various ingredients – manufacturers – C&F Agents – wholesalers – retailers, besides hospitals and dispensaries. To avoid counterfeit or fake/spurious drugs in a comprehensive way, it is critical for these constituents to see and share relevant data based on a modern and tamper-proof technology platform. Unfortunately, the current practices mostly fail to address this serious threat in a holistic way.

Experts envisage Blockchain delivering a superior value in this area, as it has the potential to cover end-to-end supply chain network of a pharma business. A November 14, 2017 article appeared in a Harvard Business School publication of Technology and Operations Management (TOM) explains its rationale very well. The paper is titled “Can blockchain help solve the problem of counterfeit drugs?”

In the context of a supply chain it says, blockchain can be used to track the flow of goods and services between businesses and even across borders. At each step of the distribution process, a network of computers can unmistakably indicate the provenance and authenticity of a shipment, making it harder or counterfeiters to introduce fake drugs. The key advantage of this technological process is that

it is virtually impossible for malicious actors to alter the event logs. Another advantage is speed: should a shipment be disrupted or go missing, the data stored on the common ledger would provide a rapid way for all parties trace it, and determine who handled the shipment last, the author elaborates.

Common anti-counterfeit-measures:

In many countries, including India, drug regulators are focusing on putting in place various anti-counterfeit measures, such as, ‘track and trace’ and ‘mass serialization.’ In some nations these mandatory in nature. At present, the most common process, globally, is to have machine-readable codes carrying a serial number featuring on each and every pack of medicines. Many anti-counterfeit solution providers call these in various different names, to position themselves on a marketing high ground. Other such measures include, forensic markers, cloud-based supply chain data repositories are also being talked about.

So far so good, but the current reality continues to remain scary for patients, probably more in India. Each year ‘tens of thousands dying from $30 billion fake drug trade,’ – reported Reuters just recently – on November 28, 2017. As reported by IntelligentHQ on November 3, 2016, ‘studies have shown that the pharmaceutical industry still struggles on two main counts: interoperability between all the participants, from the manufacturer to the dispenser and data management, to better integrate the serialization systems. Being able to avoid drug counterfeiting is just one of the reasons for which it is so critical to successfully track products down the supply chain.’

Conclusion:

Ensuring safety and security of the pharma supply chain – from sourcing to manufacturing to logistics to retail chemist and ultimately to the final consumer, is now possible with the application of Blockchain. In fact, this process has already been developed, and tried in many continents of the world, including Africa (video).

Thus, in my view, for an effective anti-counterfeiting system to work or even a substandard drug ingredient going into any original final product that ultimately will be consumed by patients, the most important requirement is to ensureend-to-end supply chain visibility and integrity.Any stand-alone anti-counterfeit measure can’t possibly provide such holistic solution.

Just to emphasize on this point – what happens, if anything goes wrong during sourcing of ingredients, or during the manufacturing of the original drug? The drug in question, although could be substandard, can’t be termed counterfeit. Hence, any standalone anti-counterfeit mechanism will obviously indicate ‘all is well’ for the patients to consume this original medicine – before the product is ultimately recalled, if and when the defect is detected by other means.

From this perspective, the application of Blockchain technology covering end-to-end supply chain network has the wherewithal of being a game changer – offering safe medicines to patients.

By: Tapan J. Ray

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

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

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

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

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

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

Are the key drivers different?

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

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

Export markets:

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

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

Domestic market:

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

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

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

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

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

Cross-border activity dominated the sector:

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

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

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

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

Outbound M&A:

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

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

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

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

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

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

Is it a mixed bag?

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

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

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

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

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

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

Conclusion:

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

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

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

By: Tapan J. Ray  

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

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

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Part 1: Physical Fitness

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

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

Managing changes in VUCA world:

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

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

Working on ‘employee engagement’, including fitness:

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

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

Proven benefits of fitness initiatives now visible across the world:

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

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

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

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

Fitness also impacts the way one thinks:

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

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

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

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

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

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

The most common barrier:

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

Conclusion:

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

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

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

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

By: Tapan J. Ray 

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

‘Fake Drugs Kill More People Each Year Than Terrorism In The Last 40 years’

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In this article, I shall deliberate on ‘fake medicines’ that we may at times land up into buying, without any inkling that instead of curing or managing the ailments, these products can push us into serious health hazards, quite contrary to what we and our doctors hope for.

One may term these substances as ‘Counterfeit’, ‘Fake’, ‘Spurious’ or ‘Sub-standard’ drugs, or in whatever other names one may wish to. The bottom-line is that such products in the guise of drugs could precipitate very serious and life-threatening health crisis for patients. This mindless game has already become both a global and local health menace, though in varying degrees and parameters in different countries.

According to INTERPOL, large sums of money are involved with these transnational criminal enterprises. Fake drug makers, who run this deadly trade undercover, use sophisticated tools and technologies and are well equipped to operate stealthily.

Deploying requisite wherewithal, this growing threat to public health and safety needs to be addressed expeditiously by all concerned and in tandem. Curbing this menace would call for great concerted focus in approach and execution of a fool-proof strategy with military precision.

At this stage, I reckon, we should not clutter the subject by mixing it up with other commercial considerations, such as Intellectual Property (IP) related matter, for which appropriate laws and mechanisms are already in place.

CBI underscores veracity of the problem:

Under the above backdrop, a Central Bureau of Investigation (CBI) Press Release dated June 24, 2015 announced that the First Indo-French Workshop on “Combating Counterfeit Medicine” for Police Officers, Investigators and other officers was held on 23 and 24 June 2015 in New Delhi.

The event was organized in collaboration with the French Embassy; Institute of Research Against Counterfeit Medicines, France; Central Office Against Environmental & Public Health Violations, France and Central Fight Against Harm to the Environment And Public Health (OCLAESP) and was hosted by the CBI. Mr. Anil Sinha, Director, CBI inaugurated the workshop.

‘Fake Drugs Kill More People Each Year than Terrorism’:

In his inaugural address, Mr. Sinha made a startling revelation, when he said, according to an estimate of INTERPOL; fake medicines kill more people in a year than those who have died in the past 40 years as a result of terrorism.

Just a few years ago, INTERPOL reportedly estimated that while more than 65,000 people were killed in over 40 years in transnational terrorist incidents, the estimates of deaths caused by fake medicines range from tens of thousands to hundreds of thousands annually.

Quoting Ronald Noble, the erstwhile Secretary General of INTERPOL another report says, “40 years of terrorism has killed about 65,000 people, while 200,000 people died from the use of counterfeit drugs last year alone, and that’s just in China.”

Both crime and big money are involved in this life-threatening menace. Citing an example the CBI Director said, ‘One illicit online pharmacy network, which was dismantled by US authorities in 2011, managed to earn USD 55 million during two years of operations’.

In India, we have already read about the raids conducted by Mumbai FDA in April 2015 on similar unauthorized online pharmacies in the country. Following this development, the Drug Controller General of India has announced his yet another good intent to look into this issue with the help of a trade organization.

I shall also discuss, very briefly though, about problems associated with online pharmacies related to fake drugs, the world over.

More problems in the developing nations:

The CBI Director also articulated in his address, “Though the ramification of this menace is worldwide, it is more pronounced in developing and under developed nations.”

Sometime back in 2006, a study published by the then International Medical Products Anti-Counterfeiting Task Force (IMPACT) indicated that in countries like, the USA, EU, Japan, Australia, Canada and New Zealand, the problem is less than 1 percent. On the other hand, in the developing nations like parts of Asia, Latin America and Africa more than 30 percent of the medicines are counterfeits.

The above ‘Task Force’ also reported as follows:

“Indian pharmaceutical companies have suggested that in India’s major cities, one in five strips of medicines sold is a fake. They claim a loss in revenue of between 4 percent and 5 percent annually. The industry also estimates that spurious drugs have grown from 10 percent to 20 percent of the total market.”

‘Fake Drugs’ are more in countries with weak regulatory enforcement:

It has been observed that the issue of fake drugs is more common in those countries, where the regulatory enforcement mechanism is weak. India, I reckon, is one such country.

Interestingly, the Ministry of Health in India does not even recognize that fake Drugs are a growing menace in the country. This is vindicated by its latest report of 2009 on this subject.

The above report titled, “Report on Countrywide Survey for Spurious Drugs”, published by CDSCO on behalf of Directorate General of Health Services, Ministry of Health & Family Welfare, Government of India in 2009, concluded as follows:

“In view of above observations and data obtained from the manufacturers, after physical verification of all the drug samples and subsequent chemical analysis report on the representative of samples taken at random, it may be concluded that:

(i)             The extent of spurious drug in retail pharmacy is much below the projections made by various media, WHO, SEARO, and other studies i.e. only 0.046 % (11 samples out of 24,136 samples).

(ii)           Extents of substandard drugs among the branded items are only 0.1 % {Out of two thousand nine hundred seventy six (2976) unsuspected samples, 03 samples do not conform to claim with respect to Assay on chemical analysis}”

It is an irony that the drug regulators in India mostly keep demonstrating an ‘Ostrich Syndrome’ – refusing to acknowledge this menace that is blatantly obvious. They apparently believe that no health hazards due to prevalence of fake drugs exist in the country.

On the other side – many worrying reports:

Though the Government of India tends to wash its hands off on the very existence of this menace with the survey reports as above, following are just a few examples from other reports raising concerns on this critical issue in India:

  • A July 2014 ASSOCHAM report titled, “Fake and Counterfeit Drugs In India –Booming Biz” states that fake drugs constitute US$ 4.25 billion of the total US$ 14-17 billion of domestic pharmaceutical market. If the fake drugs market grows at the current rate of 25 percent, it will cross US$ 10 billion mark by 2017.
  • A May 2012 study published in ‘The Lancet’ reported that over one in three anti-malarial drugs sold in southeast Asia are fake while a third of samples in sub-Saharan Africa failed chemical testing for containing too much or too little of the active ingredient, potentially encouraging drug resistance. Around 7 percent of the drugs tested in India was found to be of poor quality with many being fake. India reportedly records 1.5 million cases of malaria every year.
  • A February 2012 report of ‘The National Initiative against Piracy and Counterfeiting’ of FICCI highlighted that the share of fake/counterfeit medicines is estimated at 15- 20 percent of the total Indian pharmaceutical market.
  • A 2011/12 report of the US Customs and Border Protection highlighted: “India and Pakistan both made it to top 10 source countries this year due to seizures of counterfeit pharmaceuticals. Pharma seizures accounted for 86 percent of the value of IPR seizures from India and 85 percent of the value of IPR seizures from Pakistan.”

DCGI intends to justify his moot point yet again:

In view of all these worrying reports and amid concerns around the quality of medicines being manufactured in India, in January 2015, the Drug Controller General of India (DCGI) proposed carrying out a nation-wide survey using methodology prepared by the Indian Statistical Institute, Hyderabad to assess the prevalence of fake and substandard drugs.

In the 2015 survey, around 42,000 locally made drug samples would be drawn from across the country throughout the rest of this year, which would include 15 therapeutic categories of drugs featuring in the National List of Essential Medicines (NLEM), 2011.

As I mentioned before, according to the DCGI this survey would “tell the world that our drugs are of quality”.

I discussed a similar issue titled, ‘Are We Taking Safe And Effective Medicines‘ in this Blog on November 13, 2013.

‘Fake Drugs’ and Online drug sales:

Before I touch upon this point and at the very outset, let me submit that in this article I shall not discuss on the merits or demerits of online pharmacies and the need of such e-outlets in India.

That said, it is now widely believed, backed by hard data that the Internet is increasingly assuming an attractive niche in the global diffusion of ‘fake drugs’.

Unlike India, some countries already support the business of legal online pharmacies by charting a transparent regulatory mechanism in place. For example in the United States all Internet pharmacies have to be licensed in the country. All their States require this. The general rule is, if an Internet pharmacy is offering to ship drugs into a particular state, they have to be licensed (but not necessarily located) there.

However, if an Internet pharmacy is shipping prescription drugs to individuals in the US from outside the US, that is absolutely illegal.

Some institutions in the US developed an accreditation system for Internet pharmacies. The official seals of these institutions, require to be posted on pharmacies’ website as a warrantee.

It is important to note that these institutions operate only at the national level and due to differences in domestic laws in different countries, it is difficult for any of them to provide customers with reliable information concerning the quality of pharmaceuticals, in general, available online.

Status of online pharmacies in India:

Although online sales of pharmaceuticals are totally illegal in India till date, there seems to be several such pharmacies still operating in the country.

It is generally believed that the impact of the Internet on ‘fake drugs’ business models is real. Thus, enforcement strategies need to be very stringent.

It is precisely for this reason, on April 17, 2015, Maharashtra’s Food and Drugs Administration (FDA) reportedly raided the premises of e-commerce major Snapdeal.com for allegedly selling medicines, including prescription drugs.

Immediately thereafter, the company announced that it has delisted the drugs on its portal and is assisting the FDA in the investigation.

Taking note of the prevailing scenario of illegal online sales of prescription drugs through e-commerce sites in India, DCGI office has reportedly started studying the existing regulations internationally to come out with a set of rules for online pharmacies. Meanwhile, DCGI has reportedly appointed the Federation of Indian Chambers of Commerce and Industry (FICCI) as the nodal agency for consolidating the guidelines.

Be that as it may, experts believe that online sale of drugs should be permitted in India only with strict and well thought out norms, which are enforceable hundred percent, anywhere within the country. Stringent guidance should be formulated in the amendment bill, 2015 of Drugs & Cosmetics Act & Rules, accordingly.

Conclusion:

Keeping this emerging scary scenario in perspective on the menace of fake drugs, the message of the CBI Director in this regard must be noted by the Government with all seriousness…continuing ‘all is well’ signals from the DCGI, not withstanding.

All stakeholders of the pharmaceutical industry must be made aware, on a continuous basis, of the health hazards posed by fake medicines in India.

As the penetration of Internet keeps increasing at a galloping speed in the country, unregulated online sales of ‘fake drugs’ in the guise of ‘licensed medicines’, pose a very real threat to public health and safety. If and when online sales of medicines are legalized, enforcement of all rules and laws in this regards need to be very stringent with exemplary punitive actions prescribed, for even slightest violations.

In tandem, the DCGI and other regulatory and enforcement agencies in the states, healthcare professionals, patients, all pharmaceutical manufacturers, drug distributors, wholesalers and retailers should join hands to play a proactive role in curbing the menace of ‘fake medicines’ that victimize the innocent patients.

No Wolf in sheep’s clothing must be allowed coming anywhere in the near vicinity…at 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.

 

Is Drug Innovation As Critical As Access To Medicines For All? [Augmented By A Video]

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To make important medicines available to all in a sustainable way, the renowned philosopher Thomas Pogge in this very interesting video clipping titled “Medicines For The 99 Percent” suggested the following three simple, yet critical, steps to effectively run the healthcare system of any nation with a cost-effective and patient-centric approach:

  • Access to important medicines for all
  • A robust drug innovation model to meet the unmet needs of patients
  • Transparent and efficient systems to make medicines affordable to all, eliminating wastage of all kinds

To translate this process into reality Pogge proposed an out-of-box model, not just to incentivize companies for drug innovation, but also to produce those drugs in a cost-effective way . In his submission, Pogge recommended a US$ 6 billion ‘Health Impact Fund’ to revolutionize the way medicines are developed and sold. He strongly argued that the value of an innovative drug should always be ascertained by its differential “Health Impact” on patients over the equivalent available generics in the respective disease areas.

As you will see in the video, the model is interesting and deserves wholehearted support from all stakeholders, despite possible resistance from some powerful quarters prompted by vested interests.

Drug innovation and access to medicines:

As the good old saying goes, “Health is Wealth”. When a person falls sick, regaining health is all-important. Medicines play a very critical role there, for all. In the ongoing battle against various types of diseases, addressing unmet needs of the patients is also equally important. For this reason, drug innovation plays just as critical a role.

However, it is now a well-known fact that medicines, as such, are not very expensive to manufacture on a relative yardstick. Abundant availability of cheaper generic medicines, post-patent expiry, with as much as  90 percent price erosion over the concerned patented drug price, would vindicate this point.

Current R&D model:

Astronomical mark-ups on the cost of goods for the innovative-patented drugs coming out of the current R&D model, restrict access to these medicines mostly to rich people of both poor and rich countries of the world, depriving majority of the have-nots. Although in an ideal situation, all these medications should be accessible to those who need them the most.

Is the model sustainable?

Innovator companies attribute ‘astronomical’ high prices of patented drugs to hefty R&D expenditure, which probably includes high cost of failures too. Unfortunately, despite ongoing raging debates, R&D expense details are still held very close to the chest by the innovator companies, with almost total lack of transparency. Many experts, therefore, believe that this opaque, skewed and unsustainable drug R&D model of the global pharma majors needs a radical makeover now, as you would yourself see by clicking on the ‘video clipping’, as mentioned above

To ensure full access to important drugs for all, there are other R&D or innovation models too. Unfortunately, none of those appears to be financially as lucrative to the innovator companies as the one that they are currently following, thus creating a challenging logjam in the inclusive process of drug innovation.

Are Pharmaceutical R&D expenses overstated?

Some experts in this area argue that pharmaceutical R&D expenses are overstated, as the real costs are much less.

An article titled “Demythologizing the high costs of pharmaceutical research”, published by the London School of Economics and Political Science in 2011 indicated that the total cost from the discovery and development stages of a new drug to its market launch was around US$ 802 million in the year 2000. This was worked out in 2003 by the ‘Tuft Center for the Study of Drug Development’ in Boston, USA.

However, in 2006 this figure increased by 64 per cent to US$ 1.32 billion, as reported by a large pharmaceutical industry association of the United States, though with dubious credibility as considered by many.

The authors of the above article had also mentioned that the following factors were not considered while working out the 2006 figure of US$ 1.32 billion:

▪   Tax exemptions that the companies avail for investing in R&D

▪   Tax write-offs that amount to taxpayers’ contributing almost 40 percent of the R&D cost

▪   Cost of basic research should not have been included as those are mostly undertaken       by public funded universities or laboratories

The article observed that ‘half the R&D costs are inflated estimates of profits that companies could have made, if they had invested in the stock market instead of R&D and include exaggerated expenses on clinical trials’.

“High R&D costs have been the industry’s excuses for charging high prices”:

In line with this deliberation, in the same article the authors reinforce the above point, as follows:

“Pharmaceutical companies have a strong vested interest in maximizing figures for R&D as high research and development costs have been the industry’s excuse for charging high prices. It has also helped generating political capital worth billions in tax concessions and price protection in the form of increasing patent terms and extending data exclusivity.”

The study concludes by highlighting that “the real R&D cost for a drug borne by a pharmaceutical company is probably about US$ 60 million.”

Should Pharmaceutical R&D move away from the traditional model?

Echoing philosopher Thomas Pogge’s submission, another critical point to ponder today is:

Should the pharmaceutical R&D now move away from its traditional comfort zone of expensive one company initiative to a much less charted frontier of sharing drug discovery involving many players?

If this overall collaborative approach gains broad acceptance and then momentum sooner, with active participation of all concerned, it could lead to substantial increase in R&D productivity at a much lesser expenditure, eliminating wastage by reducing the cost of failures significantly, thus benefiting the patients community at large.

Choosing the right pathway in this direction is more important today than ever before, as the R&D productivity of the global pharmaceutical industry, in general, keeps going south and that too at a faster pace.

Making drug innovation sustainable: 

Besides Thomas Pogge’s model with ‘Health Impact Fund’ as stated above, there are other interesting drug R&D models too. In this article, I shall focus on two examples:

Example I:

A July 2010 study of Frost & Sullivan reports: “Open source innovation increasingly being used to promote innovation in the drug discovery process and boost bottom-line”.

The concept underscores the urgent need for the global pharmaceutical companies to respond to the challenges of high cost and low productivity in their respective R&D initiatives, in general.

The ‘Open Innovation’ model assumes even greater importance today, as we have noted above, to avoid huge costs of R&D failures, which are eventually passed on to the patients again through the drug pricing mechanism.

‘Open Innovation’ model, as they proposed, will be most appropriate to even promote highly innovative approaches in the drug discovery process bringing many brilliant scientific minds together from across the world.

The key objective of ‘Open Innovation’ in pharmaceuticals is, therefore, to encourage drug discovery initiatives at a much lesser cost, especially for non-infectious chronic diseases or the dreaded ailments like Cancer, Parkinson’s, Alzheimer, Multiple Sclerosis, including many neglected diseases of the developing countries, making innovative drugs affordable even to the marginalized section of the society.

Android smart phones with huge commercial success are excellent examples of ‘Open Source Innovation’. So, why not replicate the same successful model of inclusive innovation in the pharmaceutical industry too?

Example II - “Accelerating Medicines Partnership (AMP)” initiative:

This laudable initiative has come to the fore recently in he arena of collaborative R&D, where 10 big global pharma majors reportedly decided in February 2014 to team up with the National Institutes of Health (NIH) of the United States in a ‘game changing’ initiative to identify disease-related molecules and biological processes that could lead to future medicines.

This Public Private Partnership (PPP) for a five-year period has been named as “Accelerating Medicines Partnership (AMP)”. According to the report, this US federal government-backed initiative would hasten the discovery of new drugs in cost effective manner focusing first on Alzheimer’s disease, Type 2 diabetes, and two autoimmune disorders: rheumatoid arthritis and lupus. The group considered these four disease areas among the largest public-health threats, although the span of the project would gradually expand to other diseases depending on the initial outcome of this project.

“A Social Brain Is a Smarter Brain”: 

As if to reinforce the concept, a recent HBR Article titled “A Social Brain Is a Smarter Brain” also highlighted, “Open innovation projects (where organizations facing tricky problems invite outsiders to take a crack at solving them) always present cognitive challenges, of course. But they also force new, boundary-spanning human interactions and fresh perspective taking. They require people to reach out to other people, and thus foster social interaction.” This articulation further reinforces the relevance of a new, contemporary and inclusive drug innovation model for greater patient access.

Conclusion:

Taking these points into perspective, I reckon, there is a dire need to make the process of offering innovative drugs at affordable prices to all patients absolutely robust and sustainable as we move on.

Philosopher Thomas Pogge, in his above video clipping, has also enunciated very clearly that all concerned must ensure that medications get to those who need them the most. He has also shown a win-win pathway in form of creation of a “Health Impact Fund’ to effectively address this issue. There are other inclusive, sustainable and cost effective R&D models too, such as Open Innovation and Accelerating Medicines Partnership (AMP), to choose from.

That said, a paradigm shift in the drug innovation model can materialize only when there will be a desire to step into the uncharted frontier, coming out of the comfort zone of much familiar independent money spinning silos of drug innovation. Dove tailing business excellence with the health interest of all patients, dispassionately, would then be the name of the game.

Bringing this transformation sooner is extremely important, as drug innovation would continue to remain as critical as access to important medicines for all, in perpetuity.

However, to maintain proper checks and balances between drug innovation and access to medicines for all, the value of an innovative drug should always be ascertained by its differential ‘Health Impact’ on patients over equivalent available generics in that disease area and NOT by how much money, including the cost of R&D failures, goes behind bringing such drugs to the market, solely driven by commercial considerations.

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.