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Leveraging Artificial Intelligence For Greater Patient-Centricity

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‘Artificial Intelligence (AI)’ – the science of simulation of intelligent behavior in computers, has the potential to leave a transformational impact on virtually everything that we see and feel around us. As many will know, the modern definition of AI is “the study and design of intelligent agents where an intelligent agent is a system that perceives its environment and takes actions which maximizes its chances of success.”

Let me begin with a couple of exciting examples on the application of AI for general use. One such is Siri the voice-activated computer in the iPhone that one can interact with as a personal assistant, every day. The other is the self-driving features with the predictive capabilities of Tesla cars; or even the well-hyped Google driver-less car. Alongside, Google is also in pursuit of creating AI with ‘imagination’ through its ‘DeepMind’. It develops algorithms that simulate the human ability to construct plans.

Pharma’s emergence in the AI space:

The unfathomable potential of AI is being slowly recognized in the healthcare arena, as well, including pharma industry. It’s gradual emergence in the space of ‘intelligent learning’, often called ‘machine learning’, ushers in a new paradigm of learning from a vast pool of highly credible real-time data. Innovative applications of this process can fetch a game changing business performance. Its scope spans right across the pharma value chain – from Drug Discovery, including Precision Medicine; Clinical Trials; Pharmacovigilance; Supply Chain Management, and right up-to Sales and Marketing.

Pharma’s emergence in the AI space is quite evident from Reuters report of July 3, 2017. It wrote that GlaxoSmithKline (GSK) has inked a new USD 43 million deal with Exscientia to help streamline the company’s drug discovery process by leveraging AI. With this deal in place, Exscientia will allow GSK to search for drug candidates for up to 10 disease-related targets. GSK will provide research funding and make this payment, if pre-clinical milestones are met.

Again, on July 27, 2017, Insilico Medicine – a Baltimore-based leader in AI, focusing on drug discovery and biomarker development, announced a similar agreement with the biotechnology player Juvenescence AI Limited. According to this agreement, Juvenescence AI will develop the first compounds generated by Insilico’s AI techniques, such as Generative Adversarial Networks in order to generate novel compounds with desired pharmacokinetic and pharmacodynamic properties.

Several other pharmaceutical giants, including Merck & Co, Johnson & Johnson and Sanofi are also exploring the potential of AI for streamlining the drug discovery process. It would help them to significantly improving upon the hit-and-miss business of finding new medicines, as Reuters highlighted.  Eventually, these applications of AI may be placed right at the front-line of pharma business – in search of new drugs.

I have already discussed in this blog – the ‘Relevance of AI in creative pharma marketing’ on October 31, 2016. In this article, I shall mainly focus on leveraging AI in health care for greater patient-centricity, which is emerging as one of the prime requirements for excellence in the pharma business.

Imbibing patient-centricity is no longer an option:

In an article published in this blog on the above subject, I wrote that: ‘providing adequate knowledge, skills and related services to people effectively, making them understand various disease management and alternative treatment measures, thereby facilitating them to be an integral part of their health care related interventions, for better health outcomes, are no longer options for pharma companies.’

The craft of being ‘patient-centric’, therefore, assumes the importance of a cutting-edge  of pharma business for sustainable performance.

What exactly is ‘patient-centricity’?

BMJ Innovations – a peer reviewed online journal, in an article titled, ‘Defining patient centricity with patients for patients and caregivers: a collaborative endeavor’, published on March 24, 2017, defines ‘patient-centricity’ as: “Putting the patient first in an open and sustained engagement of patient to respectfully and compassionately achieve the best experience and outcome for that person and their family.”

Thus, to deliver the best experience, and treatment outcomes to patients, their participation and engagement, especially with the doctors, hospitals and the drug companies assume significant importance.

The June 2017 ‘Discussion Paper’ of McKinsey Global Institute, titled ‘Artificial Intelligence the Next Digital Frontier’ also captured this emerging scenario, succinctly. Recognizing that health care is a promising market for AI, the paper highlighted the enormous potential in its ability. The power of which can draw inferences by recognizing patterns in large volumes of patient histories, medical images, epidemiological statistics, and other data.

Thus, AI has the potential to help doctors improve their diagnoses, forecast the spread of diseases, and customize treatments. Combined with health care digitization, AI can also allow providers to monitor or diagnose patients remotely, as well as transform the way we treat the chronic diseases that account for a large share of health care budgets, the paper underscored. This poses the obvious question: what exactly AI can possibly do in the space of health care?

What can AI do for health care?

In a nutshell, the application of AI or ‘machine learning’ system in health care generally uses algorithms and software to approximate human cognition in the analysis of relevant, yet complex scientific and medical data. In-depth study and interpretation of these in a holistic way would be of immense use in many areas. For example, to understand the relationships between prevention or treatment processes and outcomes, or various debilitating conditions affecting people with the advancement of age, to name just a few.

This necessitates the generation of a huge pool of relevant and credible data from multiple sources, storing and analyzing them meaningfully, and then garnering the capabilities of ‘machine learning’ with the application of AI. Such a process helps in zeroing-in to a series of complex, interdependent strategic actions to go for the gold, in terms of business results. Using conventional methods, as exist today, other than imbibing AI or ‘machine learning’, may indeed be a Herculean task, as it were, to achieve the same.

Invaluable business insights thus acquired need to be shared, across the various different functions of a company, for greater patient-centricity within the organization.

Moving from ‘patient-engagement’ to ‘patient-centricity’:

While making a significant move from just ‘patient engagement’ to being ‘patient centric’, one-size-fits-all strategy is unlikely to yield the desired results. The process of gathering adequate knowledge and understanding of any individual’s disease management skills, which mostly depend on complex multi-factorial, interrelated and combinatorial algorithms, will be a challenging task, otherwise.

Thereafter, comes the need to deliver such knowledge-based value offerings to target patients for better health outcomes, which won’t be easy, either, in the prevailing environment.

Considering these, AI seems to have an immense potential in this area. Some global pharma players are also realizing it. For example, GSK is reportedly engaged with IBM’s Watson in the development of AI-enabled interactive digital Apps for its cold and flu medication to provide relevant information to patients.

Conclusion:

Patient-centricity would soon be the name of the game for pharma business excellence. However, to be truly patient-centric, especially in the sales and marketing operations, pharma players would require to source, process and analyze a huge volume of relevant data in several important areas. These include, target patients, target doctors, environmental dynamics, demographic variations, regulatory requirements, current practices, competitive activities, to name a few.

In this strategic business process, AI or ‘machine learning’ will help accurately mapping the ongoing dynamics and trends in virtually all critical areas. It will help ferret out the nuances of turning around the competitive tide, if any, and that too with immaculate precision. In that sense, AI is likely to emerge as a game changer in imbibing patient-centricity, in the real sense. Consequently, it carries a promise of delivering significantly better outcomes, yielding higher financial returns, alongside.

Although, some concerns on AI are being expressed by several eminent experts, it is generally believed that on the balance of probability, it’s crucial potential benefits far outweigh the anticipated risks. In my view, this holds good even for the pharma industry, especially while leveraging AI for greater patient-centricity, better disease prevention, and more desirable treatment outcomes – improving the quality of life of many, significantly.

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.

 

Should ‘Pharma Marketing’ Be In The Line of Fire?

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Close to half a century ago, Peter Drucker – the Management Guru wrote: As the purpose of business is to create customers, any business enterprise has two basic functions: marketing and innovation. Drucker’s concept is so fundamental in nature that it will possibly never change, ever.

That innovation is the lifeblood of pharma industry is well-accepted by most people, if not all. However, when similar discussion focuses on pharma marketing, the industry virtually exposes itself in the line of fire, apparently from all directions. This trend, coupled with a few more in other areas, is making a significant dent in the reputation of the pharma industry, triggering a chain of events that create a strong headwind for business growth.

The consequences of such dent in pharma reputation get well-reflected in an article titled “How Pharma Can Fix Its Reputation and Its Business at the Same Time,” published in the Harvard Business Review (HBR) on February 3, 2017. The author observed:

“This worrisome mix of little growth potential and low reputation is the main explanation for why investors are increasingly interested in how pharma companies manage access-to-medicine opportunities and risks, which range from developing new treatments for neglected populations and pricing existing products at affordable levels to avoiding corruption and price collusion.”

On the above backdrop, this article will try to explore the relevance of Drucker’s ‘marketing’ concept in the pharma business – dispassionately. Alongside, I shall also deliberate on the possibility of a general misunderstanding, or misinterpretation of facts related to ‘pharma marketing’ activities, as these are today.

Communicating the intrinsic value of medications:

Moving in this direction, let me recapitulate what ‘pharma marketing’ generally does for the patients – through the doctors.

Despite being lifeblood that carries the intrinsic value of a medication from research lab to manufacturing plants and finally to patients, ‘pharma marketing’ is, unfortunately under incessant public criticism. It continues to happen, regardless of the fact that one of the key responsibilities of pharma players is to disseminate information on their drugs to the doctors, for the benefits of patients.

One may justifiably question any ‘marketing practice’ that is not patient-friendly. However, the importance of ‘marketing’ in the pharma business can’t just be wished away – for patients’ sake.

Way back in 1994, the article titled, “The role and value of pharmaceutical marketing” captured its relevance, aptly articulated:

“Pharmaceutical marketing is the last element of an information continuum, where research concepts are transformed into practical therapeutic tools and where information is progressively layered and made more useful to the health care system. Thus, transfer of information to physicians through marketing is a crucial element of pharmaceutical innovation. By providing an informed choice of carefully characterized agents, marketing assists physicians in matching drug therapy to individual patient needs. Pharmaceutical marketing is presently the most organized and comprehensive information system for updating physicians about the availability, safety, efficacy, hazards, and techniques of using medicines.”

The above relevance of ‘pharma marketing’, whether globally or locally, remains unchanged, even today, and would remain so, at least, in the foreseeable future.

It’s a serious business:

As many would know, in many respect ‘pharma marketing’, especially of complex small and large molecules, is quite a different ball game, altogether. It’s markedly different from marketing activities in most other industries, including Fast Moving Consumer Goods (FMCG), where customers and consumers are generally the same.

In contrast, in prescription drug market customers are not the consumers. In fact, most consumers of any prescription medicine don’t really know much, either about the drugs or their prices. They get to know about their costs while actually paying for those directly or indirectly. Healthcare providers, mostly in those countries that provide Universal Healthcare (UHC) in any form, may also be customers for the drug manufacturers. Even Direct to Consumer (DTC) drug advertisements, such as in the United States, can’t result into a direct choice for self-medication, other than Over the Counter (OTC) drugs.

Additionally, pharma market is highly regulated with a plethora of Do’s and Don’ts, unlike most other industries. Thus, for the drug manufacturers, medical professionals are the real customers, whereas patients are the consumers of medicines, as and when prescribed by doctors.

With this perspective, ‘Pharma marketing’ assumes a critical importance. It is too serious a strategic business process to be jettisoned by any. There exists a fundamental responsibility for the drug manufacturers to communicate important information on various aspects of drugs to individual physicians, in the interest of patients. This has to happen, regardless of any controversy in this regard, though the type of communication platforms, contents used and the degree of leveraging technology in this process may widely vary from company to company.

Assuming that the marketing practices followed by the industry players would be ethical and the regulators keep a strict vigil on the same, effective marketing of a large number of competing molecules or similar brand increases competition, significantly. In that process, it should ultimately enable physicians to prescribe drugs that will suit each patient the most, in every way. There can’t possibly be any other alternative to this concept.

A common allegation:

Despite these, a common allegation against ‘pharma marketing’ keeps gathering momentum. Reports continue pouring in that pharma companies spend far more on marketing drugs than on developing them. One such example is a stinging article, published by the BBC News on November 6, 2014.

Quoting various published reports as evidence, this article highlighted that – 9 out of 10 large pharma players spend more on marketing than R&D. These examples are generally construed as testimony for the profiteering motive of the pharma companies.

Is the reason necessarily so?

As any other knowledge-based industry, effective communication process of complex product information with precision, to highly knowledgeable medical professionals individually, obviously makes pharma marketing cost commensurately high. If the entire process of marketing remains fair, ethical and patient centric, such costs may get well-neutralized by the benefits accrued from the medicines, including lesser cost of drugs driven by high competition.

Further, a successful pharma marketing campaign is the ultimate tool that ensures a reasonable return on investments for further fund allocation, although in varying degree, to offer more new drugs to patients – both innovative and generics.

Marketing decision-support data generation is also cost-intensive:

Achieving short, medium and long-term growth objectives are as fundamental in pharma as in any other business. This prompts that investments made on ‘pharma marketing’, fetch commensurate returns, year after year. To succeed in this report, one of the prime requirements is to ensure that the content, platform and ultimate delivery of the product communication is based on current and credible research data having statistical significance.

With increasing brand proliferation, especially in competing molecules or branded generic market, arriving at cutting-edge brand differentiation has also become more challenging than ever before. Nevertheless, identification of well-differentiated patient-centric product value offerings will always remain ‘a must’ for any persuasive brand communication to be effective.

It calls for generating a vast amount of custom made decision-support data on each aspect of ‘pharma marketing’, such as target market, target patients, target doctors, competitive environment, differential value offering, and scores of others. The key to success in this effort is to come out with that ‘rare commodity’ that separates men from the boys. This is cost intensive.

What ails pharma marketing, then?

So far so good –  the real issue is not, therefore, whether ‘pharma marketing’ deserves to be in the line of fire. The raging debate on what ails ‘pharma marketing’ should primarily focus on – how to ensure that this process remains ethical and fair, for all.

Thus, when criticism mounts on related issues, it may not necessarily mean that ‘marketing’ is avoidable in the pharma business. Quite often, critics do mix-up between the crucial ‘importance of pharma marketing’ and ‘malpractices in pharma marketing.’ Consequently, public impressions take shape, believing that the pharma marketing expenses are generally higher due to malpractices with profiteering motives.

As a result, we come across reports that draw public attention with conclusions like: “Imagine an industry that generates higher profit margins than any other and is no stranger to multi-billion dollar fines for malpractice.”

A similar article published ‘Forbes’ on February 18, 2015 also reiterates: “The deterioration of pharma’s reputation comes from several sources, not the least of which is the staggering amount of criminal behavior that has resulted in billions of dollars’ worth of fines levied against the industry.”

One cannot deny these reports – lock, stock and barrel, either. Several such articles named many large pharma players, both global and local.

Conclusion:

In my view, only pharma marketers with a ‘can do’ resolve will be able to initiate a change in this avoidable perception. No-one else possibly can do so with a total success in the foreseeable future – not even the requirement of a strict compliance with any mandatory code having legal teeth, such as mandatory compliance of the Uniform Code of Pharmaceutical Marketing Practices (UCPMP) that the Indian Government is currently mulling.

I guess so because, after a strong deterrent like mandatory UCPMP is put in place, if reports on marketing malpractices continue to surface, it will invite more intense public criticism against ‘pharma marketing’ – pushing the industry’s reputation further downhill, much faster.

Be that as it may, it’s high time for all to realize, just because some pharma players resort to malpractices, the ‘pharma marketing’ process, as such, doesn’t deserve to be in the line of fire – in any way.

By: Tapan J. Ray 

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

 

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.

Marketing Practices: Why Pharma Does What It Does?

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It started way back – spanning across many developed countries of the world. However, probably for the first time in the last five years, an international media group focused on this issue thriving in India, with so much detail.

Reuters reported it with a headline “In India, gift-giving drives drug makers’ marketing.” The report was supported by a detailed description of the relevant events, with ‘naming and shaming’. It drew the attention of some, apparently including the Department of Pharmaceuticals (DoP), but escaped the attention of many, and finally – got faded away with time, without any reported official investigation.

In this article, I shall revisit this subject against the backdrop of draft pharma policy 2017. My focus will be on the current marketing practices, with the moot question ‘why pharma does what it does’ occupying the center stage of this piece.

Bothering many across the world:

Pharma marketing practices wear different hues and shades. Many of these are contentious, and often perceived as gross ‘malpractices’. Nevertheless, across the world, these have mostly become an integral part of pharma business. Many law-enforcing authorities, including in the US, Europe, Japan and even China, have started taking tough penal action against those transgressions. Interestingly, the draft pharma policy 2017 intends to take this raging bull by its horn, with a multi-pronged approach, as I see it.

It’s a different debate, though, whether the policy makers should bring the mandatory Uniform Code of Pharmaceutical Marketing Practices (UCPMP) under the Essential Commodities Act, or the Drugs and Cosmetics Act of India. Let’s wait and see what exactly transpires in scripting the final version of the new National Pharma Policy to address this issue, comprehensively.

The net impact of the fast evolving ‘newer norms’ of pharma ‘marketing’ practices, has been bothering a large section of the society, including the Governments, for quite some time. Consequently, many top-quality research studies are now being carried out to ascertain the magnitude of this problem. The top ranked pharma market in the world – the United States (US) are leading the way with such analysis. However, I haven’t come across similar India-specific analytical reports, just yet, probably due to lack of enough credible data sources.

Four recent studies:

Several interesting studies supported by a robust database have been carried out in the US during 2016 and 2017 to ascertain whether any direct relationship exists between payments in various forms made to the doctors by the pharmaceutical companies and physicians’ prescribing various drugs in brand names. For better understanding of this issue, I am quoting below, as examples, the gist of just four of such studies:

One of these studies conducted by ProPublica was published in March 2016. It found that physicians in five common medical specialties who accepted, at least one industry payment were more likely to prescribe higher rates of brand-name drugs than physicians who did not receive any payments. More interestingly, the doctors receiving larger payments had a higher brand-name prescribing rate, on an average. Additionally, the type of payment also made a difference: those who received meals alone from companies had a higher rate of brand-name prescribing than physicians receiving no payments, and those who accepted speaking payments had a higher rate of the same than those drawing other types of payments.

The details of the second study published in PLOS on May 16, 2016 states, “While distribution and amount of payments differed widely across medical specialties, for each of the 12 specialties examined the receipt of payments was associated with greater prescribing costs per patient, and greater proportion of branded medication prescribing. We cannot infer a causal relationship, but interventions aimed at those physicians receiving the most payments may present an opportunity to address prescribing costs in the US.”

The third example of such investigative study appeared in the Journal of American Medical Association (JAMA) on August 2016. This cross-sectional analysis, which included 279,669 physicians found that “physicians who received a single meal promoting the drug of interest, with a mean value of less than $20, had significantly higher rates of prescribing rosuvastatin as compared with other statins; nebivolol as compared with other β-blockers; olmesartan as compared with other angiotensin-converting-enzyme inhibitors and angiotensin-receptor blockers; and desvenlafaxine as compared with other selective serotonin and serotonin-norepinephrine reuptake inhibitors.”

This study also concluded that “Receipt of industry-sponsored meals was associated with an increased rate of prescribing the brand-name medication that was being promoted. The findings represent an association, not a cause-and-effect relationship.”

And the fourth analysis on the same subject featuring in the British Medical Journal (BMJ) of 18 August 2016 concluded that “Payments by the manufacturers of pharmaceuticals to physicians were associated with greater regional prescribing of marketed drugs among Medicare Part D beneficiaries. Payments to specialists and payments for speaker and consulting fees were predominantly associated with greater regional prescribing of marketed drugs than payments to non-specialists or payments for food and beverages, gifts, or educational materials.”

Exceptional steps by a few global CEOs – would the rest follow through?

As this juggernaut continues to move unrelenting, a few global CEOs have been taking some exceptional steps in this regard, e.g.:

- In December 2013, Sir Andrew Witty –  erstwhile global CEO of  GlaxoSmithKline tossed out the ‘Big Pharma marketing playbook’. He announced, no longer will his company pay doctors to promote its drugs or shell out bonuses to sales reps based on their ability to boost prescription numbers.

- Around September 2015, Brent Saunders – the Global CEO of Allergan was the first major drug company chief to explicitly renounce egregious price increases. Outlining his company’s “social contract with patients,” he vowed that Allergan would:

  • Limit price increases to single-digit percentages, “slightly above the current annual rate of inflation,” net of rebates and discounts
  • Limit price increases to once per year
  • Forego price increases in the run-up to patent expiration, except in the case of corresponding cost increases.

- In October 2016, Joseph Jimenez – the current global CEO of Novartis said, “We tell people, we don’t want you to deliver at any cost. We want you to deliver, but we want you to deliver in the right way,”

It’s probably a different matter, though, that one of these CEOs has already stepped down, another will do so early 2018, and third iconoclast is still in the saddle. They all are still relatively young, as compared to several of their counterparts.

These are some of the laudable steps taken by a few CEOs for their respective global operations. However, the moot question remains: would rest of the Big Pharma constituents come on board, and successfully follow these initiatives through?

That said, the overall scenario in this area, both in India and abroad, continues to remain mostly unchanged.

Why pharma does what is does?

This may not be akin to a million-dollar question, as its right answer is no-brainer – to generate more, and even more prescription demand for the respective focused brands of the concerned pharma companies. In a scenario, as we have seen above, when money can buy prescriptions with relative ease, and more money buys more prescriptions, how do the prescribers differentiate between different brands of the same molecules or combination of molecules, for greater support?

As evident from various available reports, this kind of intangible product differentiation of dubious nature, doesn’t necessarily have a linear relationship with the quantum of money spent for this purpose. Many believe, it is also intimately related to the nature or kind of various ‘gratis’ extended, some of which are highly contentious. Illustratively, how exotic is the venue of so called ‘Continuing Medical Education (CME)’ event, whether located in India or beyond its shores, bundled with the quality of comfort provided by the event managers, or even whether the spouses can also join the doctors for a few days of a relaxed trip with fabulous sight-seeing arrangements.

Regardless of many pharma players’ terming these events as purely educational in nature, lots of questions in this regard – accompanied by proof, have reportedly been raised on the floor of the Indian Parliament, as well, cutting across virtually all political party lines.

Conclusion:

Should anyone tag the term ‘marketing’ against any such pharma business practices, or even remotely accept these as integral parts of any ‘branding exercise’? For better understanding of my readers, I had explained what this buzzword – ‘branding’ really means in the marketing vocabulary.

Be that as it may, where from the pharma companies recover the huge cost of such vexed business practices? Who ultimately pays for these – and, of course, why? So far, in India, the basic reasoning for the same used to be – branded generics provide significantly better and more predictable drug quality and efficacy than non-branded generics, for patients’ safety.

This logic is anchored mainly on the argument that bioequivalence (BE) and bioavailability (BA) studies are mandatory for all generic drug approvals in India. Interestingly, that loose knot has been tightened in the draft pharma policy proposals 2017. Hope, this commendable policy intent will ultimately see the light of the day, unless another innovative new reason pops-up.

Against this backdrop, many ponder: Are the current pharma ‘marketing’ practices, especially in India, akin to riding a tiger? If the answer is affirmative, the aftermath of the new pharma policy’s coming into force – broadly in its current form and with strict enforcement measures, could well be too tough to handle for those drug players without a Plan B ready.

That said, pharma ‘marketing’ ballgame is getting increasingly more complex, with the involvement of several third-parties, as is often reported. Alongside, it’s equally challenging to fathom ‘why pharma does what it does’ to generate more prescription demand at an incremental cost, which far exceeds commensurate incremental value that branded generics provide to patients in India.

By: Tapan J. Ray 

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

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.

Managing Pharma Investors’ Expectations When The Chips Are Down

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

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

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

Not much headroom for necessary course correction:

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

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

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

A pertinent question needs to be addressed:

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

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

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

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

Export business – the pain points:

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

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

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

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

Overcoming the odds in export business:

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

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

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

Domestic business – the pain points:

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

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

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

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

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

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

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

Overcoming the odds in domestic business:

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

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

In conclusion:

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

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

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

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

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

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

By: Tapan J. Ray

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

The Relevance of Content Marketing In Pharma

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

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

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

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

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

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

Areas of laudable contribution by the pharma industry:

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

Two areas requiring greater focus:

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

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

The core factors driving the trends:

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

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

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

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

Relevance of ‘Content Marketing’:

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

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

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

Why is it so important for pharma now?

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

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

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

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

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

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

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

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

Needs specialization:

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

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

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

A few examples:

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

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

Conclusion:

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

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

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

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

By: Tapan J. Ray

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

Rebalancing Skill Sets In Pharma Sales And Marketing

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

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

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

A recent vindication:

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

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

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

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

Skill – the ability to do something well:

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

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

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

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

Which one is more important?

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

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

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

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

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

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

Future need – rebalancing the skill sets:

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

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

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

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

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

Becoming digital natives?

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

The new normal:

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

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

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

In conclusion:

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

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

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

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

By: Tapan J. Ray   

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