India Pharma – Of Markets and Morals

Of late, the pharmaceutical industry has been in the news for all the wrong reasons. First, the government intervened to bring in large groups of medicines under the price cap to make them more affordable to the sick. Even before that happened, companies were caught overcharging for some medicines in violation of the prices set by the national price regulator.  Recently fixed dose combinations (FDCs or products containing two or more medicines in a single dosage form) were banned en masse by the government. All these decisions caused observers to declare that the free market in pharma had all but failed.

Fixed Dose Combinations (FDCs) – convenient but deadly

Recently, an expert committee found about a 1000 of these products to be irrational in nature which means that they could potentially harm patients who consumed them. Commentators pegged FDCs to constitute nearly 50% of the $15 billion domestic Indian pharma market. It is impossible to believe that such a large market exists without consumer demand to match.

These medicines have been available for years – in some cases, over 30 years. To be sure, this doesn’t make it legitimate. If FDCs have been deemed to be unsafe for patients by experts, then we must accept the verdict. What is wrong is wrong and one should not defend it.

What one should definitely do though, is debate how to make things better. Why were irrational combinations approved? What systemic shortcomings should be plugged to ensure that this doesn’t happen again? What kind of punitive action should be forthcoming?

Rather than engage in such conversation, the discussion in the public domain has been completely a moralistic one. Pharmaceutical companies have been labeled greedy and corrupt. They have been accused of caring nothing for human lives and focusing only on making profits instead.

This is not to absolve companies at all, but what seems to irk some commentators more than anything else is that no laws were broken and so it is difficult to lay the blame squarely on one party. To confound matters, the courts immediately granted stay orders on the ban. This prompted commentators to wonder if companies bent the rules. Why else have state regulators – who approved most of these products – not stood up to defend their case, they ask?

Instead of such conjecture, would it not be more fruitful to understand why this was allowed to go on for so many decades?

Governance and Free Markets

If FDCs were irrational, why were they authorized in the first place? If the rules stipulated that licenses obtained from state regulators be validated by the central regulator, why were there no checks in the system to make sure that was done?

Obviously, there isn’t an appropriate approval system that seeks proper documentation. There is no proper adverse event reporting (AER) system in place that helps gather real-world evidence of the harm caused by such medicines. Absent all these systemic check-points, the government action seems ham-handed and open to moralistic judgment.

This is probably why an informal survey carried out by a leading business daily found that 40% of doctors disagreed with the ban on products they had routinely used in thousands of their patients over many years.

It is common knowledge that the governance system is severely underdeveloped in India. Yet, when a PIL was filed in the Supreme Court of India, the judges threw the case out saying something to the effect that they had bigger priorities to work on! An indifferent judiciary kills free markets.

In this backdrop, does a ban seem like the best solution to the problem? It seems more like a reaction by a hapless regulator to fill the void created by an inefficient judicial system. Yet, there is not a single voice appealing to reform this system. That would have been more logical than moralistic jingoism.

Aside from the lack of science to support the products, the ban is based on the fact that these FDCs aren’t approved by the US-FDA. This is simply because the single medicines used in creating the combinations are often under patent protection and belonged to different companies. It would take extraordinary effort for these companies to forge deals to create such combination products. India does not recognize these patents and therefore Indian companies can easily formulate combination products.

Voice of the patient

Sadly, what began as an exercise to help patients reduce pill burden and increase compliance to therapy ended up in an overambitious industry effort to create products, not all of which were supported by science.

But, has anyone bothered to ask what the patient wants? It would be interesting to examine if patients complained about problems with these products. What happens to people for who a particular combination that worked to relieve cold and fever for years is suddenly pulled off the market? Shouldn’t consumers have a way of lending their voice too?

Despite being morally correct to do so, no commentators called for the formalization of patient bodies that can have a place at the table during such decisions. No one asked if it was right for government to decide what’s right for people. No one asked about personal choice.

On one hand, it is common knowledge that goods with great demand that are banned by governments, find their way to consumers through a parallel marketplace that we commonly call the ‘black market’. The government knows this through its strict regulation on alcohol, narcotics, gold and other such goods. Sadly, it learns nothing. Is it morally right to allow patients to buy low grade medicines off the black market? If the government cannot tell people about legitimate medicines, can we expect them to “protect” citizens from spurious and counterfeit ones?

Corporatization of Free Markets

On the other hand, it goes without saying that exploiting loopholes in the law is definitely not a smart business decision. History has taught us that such seemingly short-term benefits can turn out to be disasters in the medium to long term. Companies considered market leaders and ‘too-big-to-fail’ have disappeared after doing so in the past. Why do executives not learn from history then? Are they evil, scheming Scrooges as they are made out to be?

Perhaps, corporate incentives are completely misaligned. They are too skewed towards profit. While this in itself is not bad, it can encourage risk, recklessness and avarice especially in a system with a grossly underdeveloped governance structure.

What about internal ethics and governance policies of companies? Even if local laws are not stringent about submitting scientific evidence to back up the therapeutic benefit of these products, shouldn’t drug-makers have gathered evidence anyway? It is no excuse at all as observers claim,  and rightly so.

Morals and Markets

At the end of the day, whether for moral reasons or economic ones, companies should know that irresponsible behavior undermines the very nature of the free markets that they advocate for. Popular moralistic sentiment mistakes corporate behavior as the epitome of the evils of privatization and the subsequent failure of free markets. The irony is that bans, punitive government action and continued interference prove time and time again that markets are NOT free at all.

Much reform in the space is required to set markets free in the true sense. To argue against free markets by pointing out recent failures is to not understand what free markets truly mean.

Not much can be said if the government is forced to intervene because of reckless corporate behavior. The key question is who will stand up and take the responsibility of breaking this vicious cycle?

Until then, we will misguidedly worry about markets becoming detached from morals instead of using the opportunity to push for reforms that will truly benefit patients. And that is through a free and fair market.

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TG – An Era That Passed

Image result for tarun gupta nmims

The news broke with dawn today. An era had passed. And it passed as peacefully and privately as he would have probably wanted it to. Tarun Gupta – professor to youngsters, boss and mentor to those slightly older, but ‘Sir’ to almost everyone in the vast Indian pharmaceutical industry, was no more.

As the sun rose higher in the eastern skies, so did the disbelief amongst those who knew him well. They had worked and interacted with him and were leaders and mentors now themselves. They reminisced wistfully of the days when he led and mentored in his inimitable style. The young who had transitioned from being his students to junior and mid-level positions in the industry, spoke with awe of the pearls of wisdom that they received from him. In an era where pharma leaders are few and far between, Dr. Gupta had left behind a humongous footprint.

Like those who create legacies, TG – as he was fondly called – was a man you either loved or hated, but never ignored. His love for simplicity was disarming. He preferred simplicity in life and in work. He often said he was successful because he stuck to basics. That, and his ability to communicate ideas in a simple way.

TG’s greatest gift to the pharma world is even after 40-plus years, a ubiquitous tool in pharma selling – the visual aid. He was loved by medical reps for giving them a tool that was simple and helped them communicate effectively with doctors about their medicines. He was hated by product managers who were forced to write detailing stories for those visual aids in less than 40 words, 4 of which were the brand name! No doctor would listen to long winding stories, he would say. Keep it short and simple. Tell the customer what he wants to hear. Wise words indeed!

Another area that TG was ahead of the pack was in recognizing the power of data and competitive intelligence. Along with another stalwart of the 70s – Prof Chitta Mitra – he set up C-MARC, an agency that churned out stellar market intelligence at a time when the only source of information to Head Office was the medical rep. TG was then the head of operations for Glaxo India, and he knew that access to this data moved his team several notches above competition. He fiercely guarded the information, striking an exclusive deal with Prof Mitra. It was only after TG moved to the Americas did his successors allow C-MARC to sell their reports to the rest of the industry. By then, Glaxo had cemented its leadership position in India for several decades to follow. Even today, Glaxo – now GSK – is the only multinational company in the list of top 10 (Abbott is the other due to the Piramal acquisition) and this is in no small measure due to TG’s foresight.

TG had his share of weaknesses too which made him human. For instance, despite being such a visionary, he completely missed out the digital wave where multichannel customer engagement and big data (his favorite topics from 4 decades ago) were challenging the long-held pharma commercial model. I met him last at a company event in March where I presented my thoughts on marketing in a digital world. In his characteristic style he walked up to me in the break and said, “I loved your presentation, but you must forgive my ignorance on the subject. I am a Gadhaaram (donkey),” and laughed heartily.

Much to my surprise, I found TG to be most upset when we discussed his greatest legacies – the visual aid and CMARC. From his perch as an academician, he pored through visual aids and marketing plans of different companies searching desperately for insights and intelligent application of data. Sadly, what he saw, pained him immensely. It pained him that something that was relevant in the 70s was still thought to be so. There were no challenges or improvisations. The industry had made it worse by declaring it indispensable.

An era has passed today. The most fitting tribute that the industry can give him is to challenge his legacy. To dissect dispassionately and intelligently what we held as sacred for all these decades. To herald in a new era. Let us pay our tributes to one of the greats by doing what he always did – tearing apart the old and heralding in the new. As they say, “the King is dead, long live the King.”

The Digital World – Be there or be square!

A few weeks ago I had the opportunity to talk to a group of mid-level pharma marketers on what marketing means in a digital world and how the rules of the game have changed. I began by asking them what they thought was the basic purpose of a marketer. They responded in their own ways and after a bit of debate, we agreed on headlining it as “promoting my product”. Didn’t that sound too much like a product-oriented approach, I asked. Isn’t that exactly your problem as a pharma marketer? That there is a clutter of products? That the market is commoditized with over 60,000 brands? Heads nodded in agreement.

As the group warmed up to the chat, they threw up the challenges that they faced every day. Customers did not see value in sales reps calling on them, hence did not give them more call time in their clinics. They often complained to senior company executives who called on them, that pharma marketing was getting dull and boring and did not provide them with information that was helpful to treat their patients better. On their part, marketers faced the constant challenge of slow sales and sought to constantly improve product sales. They wondered if the panacea for all their problems was “digital”. Is digital the answer, was their eager question.

Of course not! Digital is not the solution to all the problems that the industry faces, but it surely is the way the world is moving, so why not catch up? If the pharma industry – that for long had held up the flag of innovation – was comfortable launching new and better products, why was it such a laggard in recognizing and adopting the advancements in technology?

Digital is simply about leveraging technology

It is often misunderstood that digital means reorienting the entire company and sometimes even the business model. This is not always required. Most pharma companies have very customer-facing business models. A majority of the industry makes a sincere effort to understand and serve customers. Going digital simply means understanding technology and how it can help the company serve its customers better. It’s more about the mind-set than anything else.

Shifting the mindset

If the dominant mindset in a company is “promote my products”, digital does play a role, but the purpose of digital adoption might be slightly different as compared to another company where the mindset is “engage or serve my customers”. If more and more customers have an increasing digital presence, does it make sense for the company to not be there? Like an old adage goes, “fish where the fish are!” If all the fish are downstream, looking for them to bite upstream might be stretching the optimism a bit, wouldn’t it? So, if your customers are looking for information online and using digital tools and platforms to update themselves, would it make sense for you to not be there? As they say in America, be there or be square.

Misplaced obsession with sales

A “promote my products” mindset betrays an obsession with product sales. While this is not necessarily bad, it misses a crucial point. You can sell only to those who engage with you. If the idea is to simply push your product all the time, it won’t necessarily work. However, if the customer is engaged and sees value in engaging with you, they are already sold to. Engaged customers don’t need to be sold to, they already love your company and your product. Sometimes, they are even willing to pay more for your product because they love it so much. While this may set off alarm bells in the howling winds of price control, the point is that engaged customers become agnostic to price. This means that you will succeed even if you have a premium-priced product. Provided you have engaged your customer base very well and consistently. Digital provides you with tools to do exactly that!

If today the only way you engage your customers is through your sales force, why then would you ignore or avoid more channels of reaching and engaging them? Instead of just the visual aids that reps carry, technology allows you to create content in multiple different ways (graphics – simple and in 3D, videos – short and long, using augmented and virtual reality and a lot more) that bring novelty and value to customer interactions. Platforms allow you to host all the wonderful content that you create and apps allow that content to be distributed in the most efficient manner to your customers – at a time and place of their choice. And the best part is that all of this augments the efforts of the sales force. Where you have one channel (the sales force) to engage your customer, technology allows you multiple channels. Hence, multi-channel marketing or MCM.

Marketing in a digital world

In an almost totally digital world, marketing is therefore about:

  1. Engaging your customers and not merely promoting your product.
  2. Providing to customers what they want to see and not what you want them to see
  3. Personalizing content – each individual (your customers are individuals too) has different likes and dislikes. Personalise by curating content. There is a ton of it already created, so don’t waste your time creating more (as much as you would like to think otherwise, your visual aid bores your customer. So show her what she wants to see or someone else will).
  4. “Pulling” customers. Pulled customers look for excuses to engage. They wait for more content, new products and are willing to pay more for it.

I asked the group to imagine a world where they could provide their customers a fast, personalized and frictionless experience. They had difficult imagining it, so I asked to think of the kind of experience that they had while searching for information, buying or selling something and completing banking transactions online. All at a time and place of their choice. That’s the kind of experience your customers seek in the digital world. It is your role to give them that experience. So, dear pharma marketers, be there, or be square!

Digital Darwinism

Digital Darwinism is when technology and society evolve faster than an organization can adapt. Digital Darwinism is a fate that threatens most organizations in almost every industry, but particularly those in the pharmaceutical industry in India.

Evolution of technology will make it tougher for pharma companies to differentiate, engage customers and compete, unless they master digital evolution.

Digital Evolution

 

 

Selling in a digital era

Recently I decided to buy a laptop. As I looked around for the right one, I realized how little I knew about hardware. Having always used a company provided one, it was one of the things I had never bothered to educate myself on. As I always do for most things that I know nothing about, I spoke to friends. From what they told me, I did a lot of research online. Armed with information of an ideal laptop, I decided to “look and feel”. I headed off to an electronics store and spent the better part of an hour ‘testing’ a few models with the help of the friendly salesman before I bought the one I wanted. Do most of us shop this way? Maybe!

As you see, in my ‘journey’ the human element came in just once – to seal the deal. With so much information available online, I had already made up my mind before I went into a store and bought what I wanted to. This was a case of laptops and dummies, but is this very different in the case of drugs and doctors?

In such an era, pharma companies invest a significant amount of money into hiring and maintaining large sales forces. This component is, in fact the largest part of a company’s selling expenses. This is driven by the decades-old belief that nothing compares to a salesman calling on a doctor to convince him of a company’s product. Yet, in reality, the idea that reps will soon be obsolete is constantly reinforced by reducing in-clinic time for them, as doctors see lesser and lesser value delivered. There is also the constant pressure on profit margins as companies negotiate a fluid regulatory environment. These factors are as true in India as they are overseas. What is yet to be determined is if ‘non-rep’ models are bust-cycle fads that will reverse in soon to follow boom-cycles?

My personal opinion is that in any selling process, a human element is never obsolete, but the effectiveness of that element is maximized when it is introduced at the most appropriate moment in the ‘customer journey’.

old to new model

It is quite well known that in the new era, 70% of the buying decision is made before the first contact with a supplier is made. By the time I walked into the electronics store, I knew which laptop I wanted to buy, its specifications, its size, color and add-ons. I walked into that store just to see how that laptop actually looked and to understand the deals that the store would offer on my purchase. The salesman at the store already had a ready and willing customer and his sale was efficient and quick even though I made a big show of looking and evaluating other options. The actual amount of time he spent on making the deal was not more than 15 minutes of that hour.

Such efficiency is needed in pharma sales as well since the rep model is currently under stringent evaluation. Companies seeking operational efficiency are critically analyzing all major costs and are looking for alternatives. In such a scenario, instead of considering a ‘no-rep’ model, companies should consider a ‘low-rep’ model. This means downsizing a bulging force to just the optimal number of people needed to quickly and efficiently close deals. An example is illustrated below:

customerjourney

As companies build websites, apps, videos and other digital content, is this a ‘customer journey’ that they have at the back of their minds? Are they willing to prime a customer as much as they can using their formidable online resources and connect a medical rep as the final point of contact to seal the deal? If this is how it can be done, how would the medical rep’s job evolve? What kind of training would such sales forces require?

Of course, this isn’t an easy process. Moving away from a decades-old mindset of building armies of medical reps isn’t going to be easy. And to be sure, such models will probably not be the best in every single situation. For example, a new product launch will require a different strategy compared to a more established brand. The fact of the matter is, evolving technology provides superior alternatives to creating value for customers without having to compromise traditional sales metrics.

I am pretty sure the salesman at the electronics store was half-relieved that I knew what I wanted when I walked in. It saved his time and allowed him to refocus his energy to other dummies who wanted laptops. Wouldn’t drug reps and doctors feel the same way?

 

 

 

Is Digital Transformation Difficult?

Over the last few weeks, I had the opportunity to interact with several senior executives of the pharmaceutical industry in India. Among other things, I was keen to understand how their organizations were preparing for or participating in the digital era.

As I gently broached the topic, I expected animated discussions on the need for such a transformation in pharma, but was pleasantly surprised that none were required. Of course the concerns stayed the same – navigating internal compliance mandates, defining return on the investment, building the required capabilities within their teams and shrinking promotional budgets. How does an organization lead a transformation while facing such headwinds they wondered? The transformation process is a slow one and not an overnight change as most people perceive it to be.

This is because leaders perceive that jolting a time-tested structure that supports a multi-crore business is risky. So why create more risk than what the environment already presents? Yet, leadership acumen is put to test more often than not, because success depends on anticipating market trends and responding quickly. It lies not so much in the structure of the organization but in the way that structure behaves and responds to emerging market trends.

Transforming an organization to make it digitally capable is not as overwhelming a task as most leaders perceive. As illustrated below, it can be done in a four-step process that does not disturb any ongoing activity and yet can gradually transform a business into a more digitally capable one.

 Digital Transformation - 4 steps

 

  1. Use existing structure to begin digital activities

Assuming the existing structure is digitally naïve, it will have the hierarchy oriented in an old-economy framework with little experience of promoting via newer online channels, and the huge size of the business adds its own complications. Leaders can look at using existing strengths in this model to gradually initiate digital activities. Sales teams love to interact with each other and would probably already have vibrant message groups on WhatsApp or similar IM tools. Encourage them to do more of it. Appeal to their competitive spirit by letting them know how their performance compares to the best teams in the country. Think of ways in which more can be done using digital channels that teams are comfortable using. For example, we know marketing teams are comfortable using emails. Can they make (at least a part of) their communication IM-friendly to leverage the comfort of the sales teams instead of expecting them to read long, boring emails?

  1. Encourage experimentation to build digital capabilities

A key aspect of the strategy-execution gap is often a one-size fits all approach. Sales leaders always talk about rigidity in the strategy that doesn’t allow it to be applied in the most effective manner. Leaders can attempt to solve this by allowing a bit of “managed improvisation” of a digital plan therefore bringing in a mindset shift on two critical success factors – a) dropping a one-size fits all approach b) encouraging marketers to give up control. Partially giving up control is a very essential feature for success using digital channels since the idea is to engage and converse with customers rather than ‘push’ messages to them. Why not encourage marketers to experiment? Ask them to co-create a digital plan with the sales teams and encourage them to improvise as they implement. This managed improvisation could be partial to begin with and more control can be imparted as the team gets comfortable doing it. As a leader, ensure that governance strictures don’t get in the way of these experiments.

  1. Create digital innovation team in parallel

This step is a bit tricky and a few of the executives I spoke to pointed it out to me. Why waste time with the first two steps if real digital innovation will happen in parallel? Why not jump straight to this step? The answer is simple. Digital transformation is as much about building capabilities as it is about embedding them deeply within the organizational DNA. An organization can only metamorphose with some gene editing. The innovation team can help with that. It can create some serious imagination that the organization otherwise lacks to understand the full scope and power of technology. After all investing in capabilities means building support systems that span the traditional BU structure. Something to be wary of is not to get caught in cost-benefit metrics. Defining the benefit of a new capability is not easy to do and the discussion therefore must be on the value that it brings to achieving strategic advantage.

  1. Gradually embed innovation into the existing structure

Through a clever mix of experimentation (through the existing structure) and innovation (with the new one), an organization gets used to doing things better as well as doing better things. It takes a lot of effort to overcome organizational inertia, to re-orient and re-calibrate and to pull oneself away from engulfing yet mundane activity. Some quick and early successes can help to set the mood to adopt new practices. Modify governance structures to support and enable customer engagement in innovative ways.

This four-step method that I suggested during some of the conversations seemed to get the executives to wonder whether they were doing enough of all this in their organizations. They promised to think hard on how much of the difficulty in transforming their companies was really true and how much was merely perceived. Nothing about transformation is easy but it isn’t impossible. It requires an adaptive environment which empowers individuals and allows constant improvisation. The environment is a constantly evolving one. Can companies help but transform?

Technology enabled Learning

Yesterday, a colleague asked me to make a short video on my thoughts on notable trends in the learning ecosystem. Knowing that he was more passionate than I on the influx of technology into the work-space, I decided to speak a bit on how technology is/will disrupt learning and development.

Learning is essentially getting a good grasp on one’s environment. Like most things in the environment, technology is the big disruptor. The influx of technology-enabled learning will throw up many new and exciting avenues. For a start, it will make learning:

Personalized – Learning is always different for different people as each individual experiences and grasps his/her environment uniquely. As a consequence, no one-size-fits-all approach will work here. Just as individual preferences of different forms of entertainment threw up the “entertainment on demand” industry, learning too is increasingly becoming “education on demand”, catering to individual choices and preferences. MOOCs and video-based lessons from Khan Academy or TED talks are great examples of how learning has become personalized.

Participative – Each individual wants to participate and shape his/her learning. They want to choose their sources of learning, actively selecting people who they want to learn from. People create their ‘personal learning networks’, which are often technology enabled in the era of the ubiquitous web. These personal networks act as an individual’s greatest source of the latest and most relevant information. The use of Yammer, WhatsApp groups etc, show how people choose and actively participate in groups they want to learn from and contribute to.

Power-packed – As learning has moved on from formal full-day classroom sessions to more informal and ‘just-in-time’ information gathered from trusted sources, people get comfortable consuming power-packed chunks of information rather than massive data downloads. The popularity of Twitter, small videos on Facebook amply demonstrate this. Moving forward, technology such as Google Glass or its adaptations will allow individuals to pull up exactly the piece of information that is most relevant at that moment.

People learn from everywhere. From other people, from networks and from each other. They learn all the time. They observe and process information on the move. They choose their devices and applications. Technology has enabled exciting times ahead. How organizations and leaders shape up to face this future, will be interesting to observe.

Watch my 1-min video here.

Pharma in India and challenges MNCs face

 

Executives from foreign multi-national companies (MNCs) in India have often compared themselves to boxers entering the ring with one hand and one leg tied and a blindfold on their eyes, to take on a heavyweight champion. While this is definitely an exaggeration, it attempts to underscore the feeling of competing in a market which is not perceived to be a level playing field. While they are entitled to their emotional outbursts, a more rationale look reveals a slightly different reason to be upset, if at all.

Product – Are MNC portfolios truly aligned to the needs of the Indian patient? Or are they more aligned with their parent organizations?

Price – While MNC executives complain about having to price their products premium, they seldom complain about a lack of passion in their marketing, to explain that premium price to patients. And if patients, at the end of the day, consider every white pill the same, then should they be blamed? Of course, there is the odd value creating campaign which creates the odd blockbuster, but then this is more an exception than the rule.

Promotion – Complain about Indian company driven “CRM” here as much as you will, but the fact is that it is only the rare MNC marketing program that really leaves a mark with HCPs and patients.

Place – The complex distribution system in India does mean that a lot of value stays locked in. The system stays complex because of the unionized nature of the people who control it. Despite their global clout and expertise in negotiating with large purchasers in the developed world, MNCs do precious little to bring in that expertise into India. Until the pharma lobby in India has different faces representing MNCs and domestic companies, one can expect precious little to change.

Overall, in more cases than in fewer, MNCs treat India as just a market and rarely place a premium on its development and progress. Older executives I have interacted with, speak wistfully about the 70s, 80s and even the 90s when they had “more freedom” to align portfolios and prices for the Indian patient.

The question to answer then would be, is aligning with parent organizations – and the reduced leverage that offers – a far larger challenge than what MNCs are willing to admit?

Excerpted from an article published in the February 2017 issue of MedicinMan