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Digitization or Digitalization: What’s Seen More in Indian Pharma?

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Just before this New Year, a doctor friend from a large city of India invited me for dinner, as I happened to be there for a couple of days. Dr. Srikanth Kashikar (name changed) is one of my longtime friends, and a super specialist in the field of oncology.

As Srikanth planned to come for dinner straight from his clinic, I was keen to observe a few pharma  company representatives making professional calls to him, if possible. Srikanth agreed. as that was one of those days when he meets them, after seeing all his patients. 8 pm was the mutually agreed time.

I was there a little before the scheduled time. However, as Srikanth was still examining a patient, he came out and asked me to wait for a few minutes in his assistant’s room. Right around 8.15 pm I was in his office. He sent a message through his secretary that he won’t be able to see more than two representatives, as he needs to go out.

What I experienced?

Sometime back, I had a similar experience of sitting incognito in the clinic of another doctor friend, practising in another major city. Hence, I had a heightened level of interest in getting a ringside view of changes in the professional discourse, if any, especially involving the science and art of persuasive medical communication of the modern world.

Meanwhile, the first representative – a pleasant personality, and wearing a smile on his face, entered the room. As he greeted, my friend reciprocated with a brief smile. The young man was representing a large global pharma player. He seemed to be a bit nervous, though, probably apprehending the time constraint to do his job effectively.

I was delighted to see him taking out a tablet computer. He commenced detailing a complex oncology product, but apparently was going a bit faster than any normal communication process. Digitally captured impressive visuals, sound and medical references flashed in and out. It reminded me the age-old approach of Medical Representatives’ (MR) detailing from well-designed folders, printed on art cards.

Dr. Kashikar did not ask any question, neither during nor after the presentation. His face was rather expressionless – difficult to fathom what was going in his mind, at that time.  Nonetheless, having completed his detailing, the young MR explained the procedure for the patients to get his expensive cancer product at a concessional price. This also did not appear much novel to me, either. Requesting for prescription support, the young man left the clinic, a bit hurriedly, though.

The second MR came in, accompanied by a not so young gentleman, whom he introduced as a manager. They were from a large Indian company. As the MR was about to take his detailing aid out, my doctor friend asked him to make his presentation brief. This apparently unsettled the person. Highlighting just a few points for different products from his folder, he requested the doctor to prescribe a particular oncology brand, and looked at the manager. At that stage, his manager took out a tablet PC demonstrating a product price comparison chart, and also the results of some local clinical trials that his company has conducted on the product. My friend shifted his posture on the chair several times till the manager was done with his presentation.

After they left, I looked at my friend, as he looked at me. He smiled, and said let’s go. I did not enquire anything about the two just concluded calls, either. Thereafter, it was purely laughter and fun between two of us and our wives, as we all were catching up with each other.

My overall impression?

My impression? These will obviously be based on just two interactions, involving some big pharma names, though. It appeared to me, top and busy doctors, such as my friend, continue remaining mostly passive during product detailing. MRs usually switch into a mode of hurry, when asked for making a brief presentation by the specialists, just as what was happening in the past.

The only visible change, I guess, is in a few areas of digitization of detailing tools. I hope, considerable time-gap between my two such experiences, was filled-up by expensive external and internal training inputs of all kinds, including digitization in some areas. Thus, the moot question that surfaces: Are these training programs significantly improving per field staff average productivity on the ground?  In case the answer is ‘no’, there arises an urgency to know ‘why’ and what is the way forward?

Zeroing-in:

The answer to the above question of productivity would entail an enormous amount of data to analyze, which I don’t have access to, right now. Nonetheless, as an illustration, let me zero-in on to just one change that I noticed on that day –  the use of tablet computer during field staff interaction with the doctors. This brings me to the subject of today’s discussion – ‘Digitization or Digitalization: What’s Seen More in Indian Pharma?’ In this article, I shall deliberate on this fascinating area during the changing phase of pharma business dynamics.

More of ‘Digitization’ or ‘Digitalization’?

Both ‘Digitization’ and ‘Digitalization’ are important, and often used as interchangeable words. Although, these two are significantly different, it’s not possible to bring in a digital transformation in business sans digitization.

A.   Digitization:

Digitization basically means automation of currently followed manual systems, records and processes, from analog to digital formats. These cover different types of paperwork or paper-based information systems, including photos or sound or even movement. The simplest example of this is scanning a paper document or photograph and storing them as soft copies, or even converting a movie from a celluloid format to DVD.

Digitization in context of pharma:

In the pharma industry, it may mean converting a detailing folder into digital format and delivering a similar product message to the medical profession through a tablet computer. It may also include field staff reporting system or customer call planning, replacing the manual ones, among many others.

The changes that digitization may ensure are generally incremental in nature. It can help doing many routines much easier, at a lesser cost and in lesser time, facilitating business activities and operations. However, just as any other industry, digitization is unlikely to fetch any fundamental transformation – or help taking a quantum leap in productivity or overall effectiveness of a pharma business, as well.

B.   Digitalization:

Digitalization is defined as the use of digital technologies to change business models and provide new revenue generating opportunities with significant value-creation. It is, therefore, the process of moving a business into the digital world. Similarly, in pharma business ‘Digitalization’ or digital transformation can be achieved by digitalizing everything that can be digitized through integration of digital technologies in different platforms to create and deliver game changing values to patients and other stakeholders.

Interactive question and answer of ‘Siri’ – built into iPhone of Apple Inc. is an important example of digitalization – going way beyond digitization. Another interesting example of digitalizing business, creating path breaking values, can be drawn from the entertainment space – e.g. film and television industry. These businesses offer streaming or downloading facility for movies or TV-serials to viewers, anywhere at any time, at a reasonable price. A few important examples in this area may include, Netflix, Amazon Prime or Hotstar. For digitization, an equivalent example, as I said before, could be DVDs.

In fact, one of the largest vendors of Enterprise Resource Planning (ERP) software and related enterprise applications – SAP made an interesting statement in this regard. It said, having done digitization for many decades, which has immensely increased the efficiency of its processes, SAP is now on its way to digitalization.

Digitalization in context of pharma:

The May 30, 2017 article on ‘Pharma Digitalization’, published in the European Pharmaceutical Review (EPR) says pharma business is undergoing a concurrent transformation on multiple, unrelated areas changing the whole product lifecycle from early drug development to manufacturing and patient care.

Consequently, improving patient outcomes is becoming a key challenge for the pharma companies. Garnering capability to provide real-time information about the disease condition to patients, and collecting patient data for care analytics to improve the treatment process, are emerging as critical ingredients for quantum value addition to pharma business.

Digitalization of business processes with integrated technology can help pharma players to address several major patient care challenges. These may include good compliance to treatment and effective chronic disease management, which can also help them to create hundreds of billions of dollars in value.

Reading the writing on the wall clearly, some pharma giants, like Novartis, GSK and Novo Nordisk have started investing in partnerships and new business models with technology companies, such as Google, IBM and Qualcomm. Even the traditional device manufacturers – Apple, Samsung and Nokia are now researching beyond the wellness products, looking to the patient care market. All this will substantially improve the patient care processes, where the patient care data will become the new source of innovation and competitiveness.

Likewise, digitalization of pharma sales and marketing would entail transformative value creation through integrated digital technologies in all the related functions. As stated above, it should reach right up to the patient and other stakeholder needs, meeting expectations in effective prevention, management and treatment of a a plethora of disease conditions.

Conclusion:

To effectively compete and be winners in the new paradigm, Indian pharma players will necessarily need to step out of the comfort zone. Venturing into the complex world of digital transformative processes will eventually become an essential quality – not just for excellence, but survival too. This is a highly specialized area of qualified experts, both for training and hand-holding.

The clock has started ticking for pharma CEOs to lead from the front. In tandem, they would require empowering a team of the right people with hands-on experience, expertise and passion. The team should ideally consist of individuals, both from within and outside the organization. Their only mandate should be to translate the digital transformation of the organization into reality, with quantum value creation, within a given time-frame.

The choice is, therefore, not between digitization and digitalization, regardless of their often use as interchangeable words. The meaning of each is significantly different, which needs to be properly understood. Although, ‘Digitization’ is more visible in the Indian pharma industry than ‘Digitalization’, as on date, this is also a reality that ushering in digital transformation in any business, such as pharma, is not possible sans digitization – but one should not stop there.

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.

Pharma Governance Maladies and Corporate Leadership

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On September 26, 2017, two media headlines related to the Indian pharma industry, possibly made many wonder – Are these some of the key reasons prompting the Government to enforce stringent and costly regulations in this sector?

Above revelations came close on the heel of a series of alleged fraudulent, collusive and even criminal behavior of many domestic pharma players, by several overseas regulators, including the US-FDA. Besides international media, similar reports often featured in the national business dailies too. Most of these allegations are related to pharma marketing practices, and drug quality related concerns. In that sense, the core issues of following two news items are no different, and were reported as follows:

  • “The income tax (IT) investigation wing claims to have unearthed a nexus between a leading pharmaceutical company and doctors, and evidence showing payments running into Crores to the latter for prescribing the company’s medicines.”
  • Reaching out to Niti Aayog, Indian drug industry lobby groups, “mainly objected to three proposals in the draft policy floated last month: one drug one brand, curbing retailer margins, and mandatory bioavailability and bioequivalence (BA/BE) test for all drugs approved by state regulators and also future renewals.”

Out of these, the objection to mandatory BA/BE tests appears more intriguing to me – for two reasons. First, the news report doesn’t mention the participation of any global pharma company or their lobby groups in this meeting. If true, it would possibly mean, the pharma MNC players operating in India aren’t unduly worried about BA/BE requirements, which are mandatory in other countries of the world, primarily to ensure high generic drug quality standards.

The second one being, when the Indian pharma industry is so vocal on ‘poor quality’ of generic drugs sans brand names, apparently to protect branded generics, why is its lobby groups opposing mandatory BA/BE tests – so critical to address the quality issue. Opposing these tests, citing some ‘reason’, appears absurd. Resolving safety concerns on ‘Unbranded’ generics is nonnegotiable – for patients’ health and safety.

The major incident that snowballed:

It reminds me of the major US-FDA related quality issue involving Ranbaxy of India that eventually snowballed, attracting global media attention. This incident was well covered by Indian Press and Television, as well. As one such business daily reported, the much talked about whistleblower Dinesh Thakur, reportedly claimed that his boss in Ranbaxy made a detailed presentation of the alleged widespread manufacturing lapses and fudging of data in the company first to “a closed-door board of directors meeting in Thailand” in September 2004, and then to its science committee on December 21, 2004. Be that as it may, Ranbaxy subsequently pleaded guilty to several charges by the US-FDA, based on Dinesh Thakur’s testimony, and paid a hefty fine of US$ 550 million. It is worth noting, although Ranbaxy had an immaculate Board of Directors at that time, including distinguished and eminent personalities as the Independent Directors, the company used to be run by the promoters, or in other words, the key shareholders of the company. It may be coincidental that the majority of such incidences reported from India, either related to dubious pharma marketing practices or drug quality standard, may find a curious link with the promoter or the key shareholder driven domestic pharma companies.

The purpose of this article is not to assign blame to anyone, or any organization, but to have an intimate look at the governance process of most of such companies, which is systemic in nature. It may be worth pondering thereafter, whether one can learn the way forward from the credible research reports, available on this important subject.

The doctrine of ‘Maximizing Shareholder Value’:

In many corporate training sessions, especially for the senior management, including pharma industry in India, the above well-known doctrine is emphasized and reemphasized – again and again. It postulates, the ‘corporate managers should make maximizing shareholder value their goal – and that boards should ensure that they do.’

Indian pharma companies predominately being the promoter or the key shareholder driven corporations, choosing ‘maximizing shareholder value’ as the primary corporate mission, I reckon, is not too uncommon, either.

The basic premises of the theory:

The details of this theory were articulated in the 1976 Journal of Financial Economics article “Theory of the Firm,” by Michael Jensen and William Meckling. The concept was further deliberated in the article titled “The Error at the Heart of Corporate Leadership” by Joseph L. Bower and Lynn S. Paine, published in the May-June 2017 issue of Harvard Business Review, and its basic premises were summarized as follows:

  • Shareholders own the corporation and are “principals” with the original authority to manage the corporation’s business and affairs.
  • The corporation’s shareholders delegate decision-making authority to the managers and are thus “agents” of the shareholders.
  • As agents of the shareholders, managers are obliged to conduct the corporation’s business in accordance with shareholders’ desires.
  • Shareholders want the business to be conducted in a way that maximizes their own economic returns. (The assumption that shareholders are unanimous in this objective is implicit throughout the article.)

A flawed corporate governance model?

Bower and Paine in their above paper lucidly analyze a number of serious flaws in the basic premises of ‘maximizing shareholder value’ model. For example, they indicate that the ultimate responsibility and accountability for good corporate governance, or lack of it, lies squarely with the concerned senior management and the Board of Directors of the company and none else – not even with its large shareholders.

Moreover, the authors caution that this theory’s doctrine of alignment spreads moral hazard throughout a company and narrows management’s field of vision.

Putting it in the context of Indian pharma industry, I reckon, such risks increase alarmingly, when promoters take all management and Governance decisions, with the senior management, including the Board of Directors doing no more than endorsing those, knowingly or unknowingly, just as what happened in case of Ranbaxy, mentioned above.

Providing a more realistic foundation for corporate governance:

Against this backdrop, and accepting the following ground realities, there evolves a critical need to have a more realistic foundation for corporate governance and shareholder engagement, as the above HBR article deliberates:

  • Corporations are complex organizations whose effective functioning depend on talented leaders and managers.
  • Corporations can prosper over the long term only if they’re able to learn, adapt, and regularly transform themselves.
  • Corporations perform many functions in society – such as providing investment opportunities and generating wealth, producing goods and services, creating employment, developing technologies, paying taxes, and making several other significant contributions to the communities in which they operate.
  • Corporations may have differing objectives and strategies in this regard – such as, what the purpose of a corporation ought to be from a societal perspective may not be quite the same as what its promoters or key shareholders believe those to be.
  • Corporations must create value for multiple constituencies – such as, companies succeed only if customers want their products, employees want to work for them, suppliers want them as partners, shareholders want to buy their stock, and communities want their presence. In contrast, the ‘creating more shareholder value’ theory’s implied decision prompts that managers should always maximize value for shareholders – oversimplifies this challenge and leads eventually to systematic underinvestment in other important relationships.
  • Corporations must have ethical standards to guide interactions with all their constituencies, including shareholders and society at large – going beyond forbearance from fraud and collusion, is essential for earning the trust companies need to function effectively over time. ‘Creating more shareholder value’ theory’s ambivalence regarding corporate ethics can set companies up for destructive and even criminal behavior -which generates a need for the costly regulations that agency theory proponents are quick to decry.

All the above eight points, especially the last one, as many consider, are so relevant for the Indian pharma industry, probably more in the promoter-driven ones, as these constitute the bulk of it. It is equally important to understand that corporations are embedded not just in a network of financial systems, but also in a political and socioeconomic matrix, whose health is vital to their sustainability. Thus, changing from ‘‘creation of more shareholder value-centered governance’ to a ‘company-centered governance’ would be more meaningful in today’s paradigm.

The merits of ‘company-centered governance’:

As the Harvard article says, following are some of the merits of changing to a ‘company-centered governance’ from ‘creating more shareholder value-centered governance:’

  • More board-level attention to succession planning and leadership development
  • More board time devoted to strategies for the company’s continuing growth and renewal
  • More attention to risk analysis and political and environmental uncertainty
  • A strategic (rather than narrowly financial) approach to resource allocation
  • A stronger focus on investments in new capabilities and innovation
  • More-conservative use of leverage as a cushion against market volatility
  • Concern with corporate citizenship and ethical issues that goes beyond legal compliance

Conclusion:

Almost all domestic pharma companies in India are currently family run, mostly by the first or second-generation entrepreneurs, with well-defined and clearly established ownership pattern.

The glorious history of the family run Indian pharma business has started facing a more challenging future, especially in addressing the types of maladies, as epitomized in the above two recent media reports. With the ongoing process of ‘creating more shareholder value’ driven governance – almost totally scripted by the promoter or the key shareholders at the helm, the task ahead remains formidable. Additionally, the reports on Ranbaxy whistleblower’s narrative, prompted many to wonder the role of Independent Directors on the Board of strong promoter driven Indian pharma companies, besides others.

In this scenario, particularly to address the Governance related maladies effectively, a highly competent corporate leadership professionals should be empowered to steer the Indian pharma organizations, in general, from ‘creation of more shareholder value centric governance’ to a well-crafted ‘company centric governance’ process, in a well-calibrated manner and sooner.

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.

Pharma ‘To Endeavor More To Be What It Desires To Appear’

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Reputation is one of the most fundamental requirements for long-term sustainability of any business, without facing too much of avoidable distraction, or even a tough headwind from any hostile business environment. This fact is, of course, no-brainer. We all know it, yet continue faltering – often not so very infrequently.

Before proceeding further, let me recapitulate, how has the Oxford Dictionary defined reputation? It says, reputation is ‘the beliefs or opinions that are generally held about someone or something.’ Or in other words, it is ‘a widespread belief that someone or something has a particular characteristic.’

The subsequent logical question then arises – how to gain reputation? Again, this was very aptly captured long ago by none other than Socrates, when he said: ‘The way to gain a good reputation is to endeavor to be what you desire to appear.’

Taking a leaf from this quote, in today’s article, I shall focus on whether pharma is making enough endeavor to be what it desires to appear in the eyes of its stakeholders, and the public at large. If not, what are the ways forward.

Not all of it is pharma’s own creation:

The host of reasons for pharma’s adverse public image, may not necessarily be its own creation. Some of these could well be lying miles away from its operational domain. For example, articles such as, what appeared on July 7, 2017 in the BMJ titled, ‘We need to end cut practice in Indian healthcare,’ doesn’t seem to be much related to pharma’s direct business operations. But in many respects, the subsequent unprecedented announcement of the Maharashtra government on enacting a new law called the “Cut practices in Medical Services Act, 2017”, casts a darker shadow, not just on the doctors’ reputation, but also covers the health care industry, in general, including pharma.

Nevertheless, a commonly perceived nexus between the doctors and pharma companies, or for that matter alleged malpractices in many hospitals, also prompts a rub-off adverse perception – indirect though, on pharma’s overall reputation. Such barriers also need to be carefully navigated through.

While moving towards this direction, effective management of consumer perception is also of critical importance. For, reputation is a complex blend of both reality and perception, where perception is believed to contribute around 66 percent, and reality – about 33 percent, in various organizational efforts to gain business reputation.

Changing from a dogmatic to pragmatic approach:

The above area of adverse perceptual impact causing further dents in pharma’s reputation, is understandable, as these are beyond its control, as such. Nonetheless, what is difficult to fathom, why does pharma continue to remain so dogmatic in recreating a make-believe image, that continuously gets negated by its own actions on the ground.

To illustrate this point when I briefly look back, one of the critical themes around which, especially the research-based global drug industry has been trying to gain reputation, over a long period of time, is woven around – ‘innovation’. Concerned pharma players keep trying to gain consumers’ trust and reputation by trying to make them believe that pharma is one of the most innovative industries in the world, thus possibly trustworthy.

The same tradition continues even today. Millions of dollars are being spent through various communication and advocacy campaigns, hoping to drive home this point. Nonetheless, the current reality is that the pharma consumers hardly believe that the industry is particularly innovative today. I discussed that point in my article of July 26, 2017, appeared in this blog.

Therefore, I shall not dwell on that area again. Instead, let me try to arrive at, how is this dogmatic approach going way off the mark from consumers’ expectations, repeatedly. More importantly, why it calls for a rather pragmatic approach from pharma to gain reputation, taking well into consideration – what the patients’ or patient groups’ expectations are from the industry, based on meticulous research findings.

Patients’ recent perception on pharma reputation:

A recent report by ‘PatientView’ – a leading specialist in understanding the patient movement, and its impact on health care, captured perceptions of patient groups on the pharma industry, in this area. The report is titled, ‘Corporate Reputation of Pharma in 2016 – The Patient Perspective.’ The phrase ‘corporate reputation’, as defined in the study, is the extent to which pharma companies are meeting the expectations of patients and patient groups, and was assessed by the following three types of measures:

  • How pharma’s corporate reputation compares with that of seven other healthcare-industry sectors.
  • How pharma’s corporate reputation has changed over the past five years.
  • How good or bad the pharma industry is at various activities.

The results of this study are based on a survey conducted between November 2016 to early-February 2017 on 1,463 patient groups; 46+ specialties in 105 countries. 47 pharma companies were assessed on seven indicators of corporate reputation, as follows:

  • Patient centricity
  • Patient information
  • Patient safety
  • Useful products
  • Transparency
  • Integrity
  • Effectiveness of patient-group relationships

47 companies surveyed include names, such as AbbVie, Allergan, Amgen, Astellas, AstraZeneca, Bayer, Biogen, Boehringer Ingelheim, Bristol-Myers Squibb, Eisai, Eli Lilly, Gilead, GSK, Hospira, Janssen, Merck & Co, Merck KgaA, Mylan, Novartis, Novo Nordisk, Pfizer, Roche, Sandoz, Sanofi, Takeda, Teva, UCB and Valeant.

Some of the key findings of this survey are as follows:

  • In 2016, just 37.9 percent of respondent patient group thought that the pharma industry had an “Excellent” or “Good” corporate reputation. Whereas 44.7 percent of patient groups had said the same in 2015.
  • In 2016, only 23 percent of patient groups thought that pharma’s corporate reputation had improved over the previous five years. Whereas 28 percent of patient groups had said the same in 2015.
  • In 2016 (as in 2015), pharma continued to be ranked 5th out of eight healthcare sectors (ahead only of generics, for-profit, and not-for-profit health insurers).
  • Patient groups thought that pharma’s ability to conduct activities of importance to them declined in 2016. Patient groups were more sceptical in 2016 even about pharma’s ability to innovate, which is an important patient-group measure of confidence in the industry.
  • Regarding the quality of pharma’s innovation across several geographic areas: patient groups in New Zealand expressed the least confidence in pharma’s ability to innovate; and those in Greece, the most.

What should pharma do?

Keeping the above findings in perspective, the consequent question that arises in this area is, what should pharma do to improve its patient centricity, and thereby to gain trust and reputation?

It is interesting to note that pharma companies should ‘consider the cost of drugs’, has featured as one of the top three, in the 14-point plan proposed by the 460+ patient groups in the above study, as follows:

  • Partner with patient groups
  • Provide more or better patient services
  • Consider the cost of drugs
  • Try to understand patients
  • Develop better medicines
  • Be transparent
  • Involve patient groups in the design
  • Look at continuity of care
  • Listen to patients
  • Help patients in a holistic way
  • Increase participation in clinical trials
  • Offer training
  • Concentrate on safety
  • Tailor services to individual patients

Conclusion:

Thus, the bottom line is, among various stakeholders, patients and patient groups, play a critical role in pharma to gain reputation. Winning their trust is widely considered as the substratum to get this process rolling, effectively. In that sense, pharma players individually, and the pharma industry collectively, need to have innovative, and game changing strategic plans to win the patients’ trust, for a long-term gain in reputation.

Repeatedly trying to communicate that life-changing medicines exist, because of pharma’s years of efforts in painstaking research and development that are hugely expensive and time-intensive, doesn’t seem to be working much, any longer. Patients are increasingly expecting improved access to drugs for various treatments, coupled with related value added services, from the drug players.

In such a scenario, many top drug companies, on the other hand, publicly express: ‘we are patient-centric’. This creates a logjam, as it were, to take pharma’s ‘patient centric’ endeavors from this point to where the patients’ expectations really are. Thus, I reckon, it’s time for pharma to deeply introspect and act on what Socrates had advised a long time ago, ‘‘The way to gain a good reputation is to endeavor to be what you desire to appear.’

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.

 

Pharma’s Late Realization

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Technology, by and large, is impacting almost every part of our life. Interestingly, some of these, like mobile phones and desktop computers, found their initial uses, mostly as trendy status symbols of relatively rich and high ranking corporate honchos, before getting merged as essential tools in our everyday life, as it were.

Today’s digital world empowers people to virtually doing anything – literally, such as getting an online education, communicating with people – both in audio and video format, getting any routine medical test or household work done, transferring money, making any bill or other payments, buying travel-theater-concert tickets, or ordering any item online from home or wherever one chooses to, besides umpteen number of other things. A large global population now spends more time on communication in the virtual world, than face to face communication with physical presence.

Similarly, application of technology, especially digital, has radically transformed for the better, the way several companies in many industries have rewritten their respective playbooks of critical business processes. It starts from the generation credible data of humongous volume, critical analysis of those before initiation of the planning process, spanning across the endpoint of making consumers pay for the products or services willingly, while achieving both financial and non-financial business goals. In tandem, available cutting edge digital technology is being leveraged by these companies for developing both new products and processes, including the rejuvenation of many stagnating businesses.

Whether the pharma industry, as well, has started leveraging digital technology optimally or not, was discussed in the A.T. Kearney Report – “New Medicine for a New World, Time for Pharma to Dive into Digital”. It aptly captured the overall situation in this area for pharma a few years ago, by saying: ‘Pharma’s customers increasingly live and interact in a digital world. The industry has been dipping a toe in the digital waters, but now it’s time to take the plunge.’

In today’s article, I shall discuss on the current-status in this area, as some respected pharma veterans, still nurturing ‘traditional thought pattern’, keep displaying skepticism in this area, though indirectly. Nevertheless, directly they seem to keep their feet in two boats, probably for obvious reasons.

A disruptive change that can’t be ignored:

It’s a reality that we now live in a digital world. The speed of which is fast gaining momentum, and that too as a critical disruptive change agent. Interestingly, this is happening despite the existence of a digital divide, which I discussed in one of my previous articles.

That this trend is so recent has also been underscored by the above A.T. Kearney Report. It reemphasized, the way we interact has changed more in the past 10 years than in the previous 50, and this change is reshaping the society itself. It’s hard to believe that apps, social media, and everything that surrounds them date back to no earlier than 2007. With the expansion of interconnected Internet-enabled devices, the boundaries between the real and the virtual are increasingly getting more obscure.

When it comes to pharma industry, as various research studies highlight, an intriguing cautious approach for embracing digital prevails, unlike many other industrial sectors. This is despite facing numerous challenges in navigating through external business environment, and meeting stakeholders’ changing expectations.

“But the industry has now reached a tipping point: it has to put an end to hiding behind the challenges of engaging with its stakeholders digitally and stop treating digital as an add-on to existing operations. Rather, it needs to embrace a digital first engagement model with fundamental consequences for its organization and capabilities,” suggests the above A.T. Kearney report.

This fast-evolving disruptive change, I reckon, can only be ignored at one’s own peril. Nonetheless, the good news is, some pharma players have now slowly but surely, started embracing digital to transform their business processes, in search of excellence.

‘Digital India’ initiative to facilitate the process:

Recognizing the increasing importance of digital even across the public space, on July 2, 2015, ‘Digital India’ campaign was launched by the Government of India. This is intended to ensure the availability of public services for all, by making everybody in the country digitally-empowered. The campaign is expected to make India a leader in digitally delivering health, education and banking services, according to information released by the government.

It is generally expected that the creation of a robust digital ecosystem within the country, would facilitate the Indian pharma players, as well, while leveraging this state of the art technology for a quantum leap in business productivity.

The current status – Global pharma industry:

The July 11, 2017 article titled, “Pharma turns to big data to gauge care and pricing”, appeared in the Financial Times, highlighted an interesting point. It described, how the global pharma industry, which has been slow in responding to the fast-evolving digital environment, is now realizing its critical importance. This reckoning gets more strengthened, as it confronts tough external challenges, such as pricing pressures, huge volume of patient data, and more empowered consumers. The article also points out, how digitization has started changing the way pharma players used to interact with doctors, patients and other important stakeholders.

The seriousness in approach of several global pharma majors in leveraging digital technology, to take a quantum leap in the business productivity, is fast increasing. It is evident from the leading drug makers seeking out different skills and personality traits in employees to lead such digital transformation.

Moving towards this direction, Germany based Merck appointed its first chief digital officer, last year. The person holds a degree in biomedical engineering, with a tech background. Following a somewhat different approach, Boehringer Ingelheim – Europe’s biggest private pharma player, hired a new Chief Financial Officer from Lufthansa, who oversees a new digital “lab”, recruiting data specialists and software developers.

Similarly, Swiss drug major – Novartis, also appointed its global head of digital business development and licensing. The head of Human Resources of the company has reportedly expressed, “We’re already seeing how real-time data capture can help analyze patient populations and demographics, to make it easier to recruit patients for clinical trials, and how real-time data-capture devices, like connected sensors and patient engagement apps, are helping to create remote clinical trials that aren’t site-dependent.”

GlaxoSmithKline (GSK) too, reportedly employs more than 50 people to run webinars with physicians – a “multichannel media team” that did not exist five years ago. It has also begun hiring astrophysicists to work in research and development, keen to deploy their ability to visualize huge data sets. According to GSK, these qualities are especially important as the company seeks to use artificial intelligence to help spot patterns and connections amid a mass of information.

That said, global pharma industry still has a considerable distance to cover before it exploits digital technology as successfully and automatically as many other sectors, the article concludes.

The current status – Indian pharma industry:

Veeva Systems Inc.– a leader in the cloud based software for the global life sciences industry, has well captured in a recent report the current status of the Indian pharma industry on the adaptation of digital technology in business.

The report titled ‘The Veeva 2016 Industry Survey: Digital in Indian Pharma’ focuses on the current state of application of digital technology in the business processes of pharma companies in the country. The survey represents the views of respondents from commercial excellence, marketing, sales and IT at domestic and multinational pharmaceutical companies operating in India.

It highlighted, though the pharma companies have remained mostly Rep centric, several of them now realize the importance of increasing focus on customer engagement. Moreover, while the desired access to important physicians has gone down, expectations of the Health Care Professionals (HCPs) have increased, significantly. Alongside, the Government is bringing in more regulations, besides price controls.

The report also captures, though digital technology is slowly making way in the pharma marketing tool kit, it has been more an incremental effort to various Sales Force Excellence projects of the respective companies.

The key findings of the study are as follows:

  • Nearly two-thirds of respondents agree digital is yet to become a part of their overall pharma DNA, and one-third believe digital is well integrated within their organization.
  • While companies have initiated digital activities in various silos, one-third of the respondents believe these are tactical in nature, rather than strategic.
  • 21 percent of respondents feel digital should be driven by management, along with 24 percent voting for Digital Marketing. However, with customer relationship at the core of business activities, 31 believe Sales Force and Commercial Excellence are also responsible for the transition.
  • With integrated digital strategy, pharma companies aim to increase customer touch points through multichannel (93 percent) and improve customer engagement (79 percent). The other benefits of integrated approach are a greater competitive advantage, reduce execution gaps, improve content creation and delivery, and enrich customer data.
  • 59 percent of the respondents believe the industry will see a digital transformation in the next 1-3 years.
  • 69 percent of survey respondents agree it’s time for Indian pharma to think about digital strategically.

The top two challenges that pharma companies face in institutionalizing digital were identified as

  • Organizational readiness
  • Lack of digital as a strategy

This latest India specific survey brings to the fore that pharma players will have to move over from patching up old systems or building incremental solutions. They need to realize that digital opportunity is not an incremental approach.

Keeping this in perspective, the study suggests that pharma companies’ approach to digital needs to change substantially in India. This is essential to truly leverage the power of digital that will open the new possibilities to more meaningfully engage, communicate, and be relevant to all the stakeholders for business success.

The traditional face to face “visits” are just not enough for desired productivity, and deriving an adequate return on investments. On the contrary, a time has come to critically evaluate whether various Sales Force Excellence programs are  producing increasingly diminishing rate of return on investments, Therefore, this communication process ought to be augmented with innovative digital interventions, for the reasons explained earlier.

With a few organizations leading the way, digital is expected to become a mainstream conversation, ultimately. Thus, Indian pharma players need to think about digital from a long-term perspective, as opposed to the current way of setting short term goals, which may actually become barriers in your digital success, as the survey concludes.

Conclusion:

Pharmaceutical industry, in general, is yet to keep pace with many other sectors, first in acknowledging the game changing power of digital technology, and then adopting it with a crafty application of mind. Nevertheless, the good news is, some drug companies, especially in the global arena, have increased their focus in this area, as elaborated above.

In India, as the recent survey indicates, over 66 percent of respondents admit that digital is yet to become a part of the overall pharma DNA, while the remaining ones believe that digital is well integrated within their organization. Interestingly, even in that group, many would require moving over from patching up old systems or building incremental solutions. It is important for them to realize, sooner, that digital opportunity is not an incremental approach.

‘Digital India’ campaign of the incumbent Government, assures fast strengthening of desirable digital ecosystem in the country. Expected consequential strong wind on the sail must be made use of, effectively. As the saying goes ‘better late than never’, pharma’s late realization of the game changing power of digital technology is much better than no realization at all, which many naysayers indirectly pontificate, of course, under a facade.

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.

Rebuilding Pharma Image: A Laudable Mindset – Lacking In Many

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The fierce debate on ethics and compliance related issues in the pharma marketing practices still reverberates, across the globe. One of its key fallout has been ever-increasing negative consumer perception about this sector, sparing a very few companies, if at all. As a result, many key communications of the individual players, including the industry associations specifically targeted to them, are becoming less and less credible, if not ineffective.

Which is why, though pharma as an industry is innovative in offering new medicines, consumers don’t perceive it so. Despite several drug players’ taking important steps towards stakeholder engagement, consumers don’t perceive so. The list goes on and on. I discussed on such consumer perception in my article of June 26, 2017. Hence, won’t further go into that subject, here.

General allegation on the pharma industry continues to remain unchanged, such as the drug industry tries to influence the medical profession, irrespective of whether they write prescription drugs for patients or are engaged in regulatory trial related activities aimed at product marketing.

Let me give an example to illustrate the later part of it, and in the Indian context. On April 26, 2017, it was reported that responding to a joint complaint filed by Mylan and Biocon in 2016, alleging that the Roche Group indulged in “abusive conduct”, the Competition Commission of India (CCI) gave directions for carrying out a detailed investigation on the subject. This probe was initiated to ascertain, whether Roche used its dominant position to maintain its monopoly over the breast cancer drug Trastuzumab, adversely impacting its access to many patients.

Such a scenario, though, undoubtedly disturbing, is very much avoidable. Thus, winning back the fading trust of the consumers in the industry, should be ticked as a top priority by the concerned parties.

In this article, I shall mostly focus on some recent developments related to ethics and compliance issues, mainly in pharma marketing, and with a small overlap on the regulatory and other areas, as and when required to drive home a point.

It shakes the trust base on the medical profession too:

This menace, as it were, though, more intense in India, is neither confined to its shores alone, nor just to the pharma industry, notwithstanding several constituents of big pharma have been implicated in mega bribery scandals in different countries. There doesn’t seem to be much doubt, either, that its impact has apparently shaken the very base of trust even on the medical profession, in general.

Not very long ago, Dr. Samiran Nundy, while holding the positions of Chairman, Department of Surgical Gastroenterology and Organ Transplantation at Sir Ganga Ram Hospital and Editor-in-Chief of the Journal of Current Medicine Research and Practice, reportedly exposed the widespread malpractices of the doctors in India who are taking cuts for referrals and prescribing unnecessary drugs, investigations and procedures for profit.

This practice continues even today, unabated. On June 18, 2017, it was widely reported in India that Maharashtra Government has decided to form a 3-member committee for suggesting effective ways to check the ‘cut practice’ of doctors. This decision followed a public awareness campaign on this subject, initiated by well-reputed late heart surgeon – Dr. Ramakanta Panda’s Asian Heart Institute, located in Mumbai. The hospital had put up a hoarding saying: ‘No commission. Only honest medical opinion’. The Indian Medical Association opposed the hoarding. But the hospital wrote to Maharashtra medical education minister seeking a legislation to fight this malpractice.

To contain this malady across India, for the sake of patients, Dr. Nundy had then suggested that to begin with, “The Medical Council of India (MCI), currently an exclusive club of doctors, has to be reconstituted. Half the members must be lay people like teachers, social workers and patient groups like the General Medical Council in Britain, where, if a doctor is found to be corrupt, he is booted out by the council.”

This subject continues to remain an open secret, just as pharma marketing malpractices, and remains mostly confined to the formation of various committees.

“Corruption ruins the doctor-patient relationship in India” – a reconfirmation:

“Corruption ruins the doctor-patient relationship in India” - highlighted an article published in the British Medical Journal (BMJ) on 08 May 2014. Its author – David Berger wrote, “Kickbacks and bribes oil every part of the country’s health care machinery and if India’s authorities cannot make improvements, international agencies should act.”

He reiterated, it’s a common complaint, both of the poor and the middle class, that they don’t trust their doctors from the core of hearts. They don’t consider them honest, and live in fear of having no other choice but to consult them, which results in high levels of doctor shopping. David Berger also deliberated on the widespread corruption in the pharmaceutical industry, with doctors bribed to make them prescribe specified drugs.

The article does not fail to mention that many Indian doctors do have huge expertise, are honorable and treat their patients well. However, as a group, doctors generally have a poor reputation.

Until the medical profession together with the pharma industry is prepared to tackle this malady head-on and acknowledge the corrosive effects of medical corruption, the doctor-patient relationship will continue to lie in tatters, the paper says.

Uniform code of ethical pharma marketing practices:

This brings us to the need of a uniform code of ethical pharma marketing practices. Such codes, regardless of whether voluntary or mandatory, are developed to ensure that pharma companies, either individually or collectively, indulge in ethical marketing practices, comply with all related rules and regulations, avoid predominantly self-serving goals and conflict interest with the medical profession, having an adverse impact on patients’ health interest.

This need was felt long ago. Accordingly, various pharma companies, including their trade associations, came up with their own versions of the same, for voluntary practice. As I wrote before, such codes of voluntary practice, mostly are not working. That hefty fines are being levied by the government agencies in various countries, that include who’s who of the drug industry around the world, with India being a major exception in this area, would vindicate the point.

Amid all these, probably a solitary global example of demonstrable success with the implementation of voluntary codes of ethical pharma marketing practices, framed by a trade association in a major western country of the world, now stands head and shoulders above others.

Standing head and shoulders above others:

On June 23, 2017, the international business daily – ‘Financial Times’ (FT), reported: “Drug maker Astellas sanctioned for ‘shocking’ patient safety failures”

Following ‘a series of shocking breaches of guidelines’ framed by ‘The Prescription Medicines Code of Practice Authority (PMCPA)’ – an integral part of the ‘Association of the British Pharmaceutical Industry (ABPI)’, publicly threatened the Japanese drug major – Astellas, for a permanent expulsion from the membership of the Association. However, PMCPA ultimately decided to limit the punishment to a 12-month suspension, after the company accepted its rulings and pledged to make the necessary changes. Nevertheless, Astellas could still be expelled, if PMCPA re-audit in October do not show any “significant progress” in the flagged areas – the report clarified.

Interestingly, just in June last year, ABPI had suspended Astellas for 12 months ‘because of breaches related to an advisory board meeting and deception, including providing false information to PMCPA’. The company had also failed to provide complete prescribing information for several medicines, as required by the code – another report highlights.

Astellas is one of the world’s top 20 pharmaceutical companies by revenue with a market capitalization of more than £20bn. In 2016 its operations in Europe, the Middle East and Africa generated revenues of €2.5bn –reports the FT.

What is PMCPA?

One may be interested to fathom how seriously the implementation of the uniform code of pharmaceutical marketing practice is taken in the United Kingdom (UK), and how transparent the system is.

The Prescription Medicines Code of Practice Authority (PMCPA) is the self-regulatory body which administers the Association of the British Pharmaceutical Industry’s (ABPI) Code of Practice for the Pharmaceutical Industry, independent of the ABPI. It is a not-for-profit body, which was established by the ABPI on 1 January 1993. In other words, the PMCPA is a division of the British pharma trade association – ABPI.

According to PMCPA website, it:

  • Operates the complaints procedure under which the materials and activities of pharmaceutical companies are considered in relation to the requirements of the Code.
  • Provides advice and guidance on the Code.
  • Provides training on the Code.
  • Arranges conciliation between pharmaceutical companies when requested to do so.
  • Scrutinizes samples of advertisements and meetings to check their compliance with the Code.

As I often quote: ‘proof of the pudding is in eating’, it may not be very difficult to ascertain, how a constructive collective mindset of those who are on the governing board of a pharma trade association, can help re-creating the right image for the pharma industry, in a meaningful way.

Advertisements and public reprimands for code violations:

The PMCPA apparently follows a system to advertise in the medical and pharmaceutical press brief details of all cases where companies are ruled in breach of the Code. The concerned companies are required to issue a corrective statement or are the subject of a public reprimand.

For the current year, the PMCPA website has featured the details of three ABPI members as on May 2017, namely, Gedeon Richter, Astellas, and Gedeon Richter, for breaching the ethical code of practices.

However, in 2016, as many as 15 ABPI members featured in this list of similar violations. These are:  Vifor Pharma, Celgene, Takeda, Pierre Fabre, Grünenthal Ltd, Boehringer Ingelheim Limited, Eli Lilly, AstraZeneca, Janssen-Cilag, Astellas, Stirling Anglian, Guerbet, Napp, Hospira, Genzyme, Bausch & Lomb and Merck Serono. It is worth noting that the names of some these major companies had appeared more than once, during that year.

I am quoting the names of those companies breaching the ABPI code, just to illustrate the level of transparency in this process. The details of previous years are available at the same website. As I said, this is probably a solitary example of demonstrable success with the implementation of voluntary practices of ethical pharma marketing codes, framed by any pharma trade association.

In conclusion:

Many international pharmaceutical trade associations, which are primarily the lobbying outfits, are known as the strong votaries of self-regulations of the uniform code of ethical pharma marketing practices, including in India. Some of them are also displaying these codes in their respective websites. However, regardless of all this, the ground reality is, the much-charted path of the well-hyped self-regulation by the industry to stop this malaise, is not working. ABPI’s case, I reckon, though laudable, may well be treated as an exception. 

In India, even the Government in power today knows it and publicly admitted the same. None other than the secretary of the Department of pharmaceuticals reportedly accepted this fact with the following words: “A voluntary code has been in place for the last few months. However, we found it very difficult to enforce it as a voluntary code. Hence, the government is planning to make it compulsory.”

Following this, as reported on March 15, 2016, in a written reply to the Lok Sabha, the Minister of State for Chemicals and Fertilizers, categorically said that the Government has decided to make the Uniform Code of Pharmaceutical Marketing Practice (UCPMP) mandatory to control unethical practices in the pharma industry.

The mindset that ABPI has demonstrated on voluntary implementation of their own version of UCPMP, is apparently lacking in India. Thus, to rebuild the pharma industry image in the country and winning back the trust of the society, the mandatory UCPMP with a robust enforcement machinery, I reckon, is necessary – without any further delay.

However, the sequence of events in the past on the same, trigger a critical doubt: Has the mandatory UCPMP slipped through the crack created by the self-serving interest of pharma lobbyists, including all those peripheral players whose business interests revolve round the current pharma marketing practices. Who knows?

Nonetheless, the bottom line remains: the mandatory UCPMP is yet to be enforced in India… if 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.

Do Consumers Perceive Pharma Industry Innovative?

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

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

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

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

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

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

A recent study:

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

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

Consumer perception on pharma innovation:

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

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

Some other interesting findings:

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

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

-       Health and fitness wearables (21 percent)

-       Robotics (15 percent)

-       3D printing (10 percent)

-       Smart home devices (9 percent)

-       Artificial intelligence (9 percent)

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

Another study reflects a similar perception:

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

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

An important area worth exploring:

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

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

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

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

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

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

CEO Background

Pharma   (%)    (85 CEOs)

High-tech (%)     (137 CEOs)

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

26

61

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

48

33

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

26

6

11

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

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

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

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

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

Conclusion:

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

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

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

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

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

By: Tapan J. Ray

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

 

The Relevance of Content Marketing In Pharma

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

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

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

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

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

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

Areas of laudable contribution by the pharma industry:

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

Two areas requiring greater focus:

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

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

The core factors driving the trends:

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

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

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

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

Relevance of ‘Content Marketing’:

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

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

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

Why is it so important for pharma now?

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

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

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

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

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

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

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

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

Needs specialization:

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

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

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

A few examples:

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

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

Conclusion:

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

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

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

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

By: Tapan J. Ray

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

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

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

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

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

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

A recent study:

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

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

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

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

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

Significant cost reduction, with important economic implications:

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

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

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

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

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

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

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

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

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

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

Scope of mandatory UCPMP goes beyond prescriptions with generic names:

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

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

But…the indefinite wait continues:

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

Conclusion:

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

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

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

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

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

By: Tapan J. Ray

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