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.

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



Donald J. Trump is POTUS

Initial reactions of the stock market to Donald Trump’s victory in the US Presidential Elections is one of joy as witnessed by the jump in share prices. This is obviously a very unmuted reaction to the settling down of the anti-pharma rhetoric offered by Hillary Clinton. While investor sentiment is obvious, what I find surprising is that the industry lobby bet more on Hillary going into the White House than Trump. Despite all the recent anti-pharma rhetoric from her, they still preferred the staid Democrat (by funding her campaign) over the wildly unpredictable Republican.

This might have been because in his manifesto, Trump spoke little of drug pricing but more about importing medicines to reduce their cost to American citizens (“Allowing consumers access to imported, safe and dependable drugs from overseas will bring more options to consumers”). How he intends to increase medicine imports while curtailing international trade will be interesting to watch. He also spoke of following free market principles to broaden healthcare access, make healthcare more affordable and improve the quality of the care available to all Americans.

So, does this mean that he will loosen up IP laws, make it easier for generic companies to manufacture on American soil (or encourage drug imports despite his claimed abhorrence for trade) and increase competition in the sector thereby bringing down prices of healthcare in general and medicines in particular? This seems plausible as a solution that he hasn’t yet explicitly offered, while promising to do away with the Affordable Care Act ‘on day one’. If he can pull that off, he just might go down in history as a great President.

If Trump really backs up his rhetoric with action then it indeed augurs well for the Indian pharma industry which stands to gain the most. Also, since Big Pharma has not exactly backed him so far, he might take a more serious look at easing up imports to tighten the screws on them.

The critical thing that I will look out for is 1) the stand he takes on IP laws and 2) easing up local manufacturing for pharma. On the first point, his view on IP will be particularly interesting since he vocally opposed the TPP and TTIP – two of President Obama’s biggest attempts to create a near universal acceptance of US IP law. On the second point, although quite unlikely, if he makes local manufacturing easy, Indian companies can make a windfall profit given that they are more comfortable with FDA procedures and requirements than they were a few years ago.

Overall it does seem net positive for Indian pharma unless Trump’s famous unpredictability comes in the way.

Slaying the Digital beast

Digital technology is an amazing system whereby information (words and images) are stored in the form of code. This enables unimaginably vast amounts of information to be compressed on small storage devices that can be easily preserved and transported. Digitization – or converting information to code-  also quickens data transmission speeds. This technology has transformed how people communicate, learn, and work.

It is quite understandable how folks confuse between what is digital and what is not. Largely that’s because they just use the term digital and do not suffix it with either ‘marketing’ or ‘technology’. While ‘digital marketing’ is a new buzzword at least in pharma, ‘digital technology’ is not. Digital technology has been used in phones (landlines) since the 1980s, when the newer models (portable phones versus the old black telephones) were introduced. In the 1990s, digital technology enabled satellite television to enter Indian homes with a variety of 24X7 content instead of the boring, fixed time single channel DD. In the wider context, digital technology transformed information (as libraries digitized books), the airline industry (as more sophisticated air monitoring systems came into vogue).

Once we understand what ‘digital’ and ‘digitalization’ means, it is easier to understand that this is the process and everything else is the channel. Social media sites such as Twitter, Facebook and LinkedIN have used digital technology to create platforms for engagement over the internet. The amazing part of these social media outlets are that unlike traditional media such as newspapers and TV news channels, online sites do not create any content of their own. They merely provide platforms where it is easy for the layman to create his/her own content and engage with like-minded people from around the world. This is called user-generated content where users actually generate the content instead of the website. A more formal example is Wikipedia.

While social media is about humans interacting with machines (computers, mobile phones etc), the Internet of Things (IoT) uses digital technology to make machines interact with machines and humans. This is how a device on your hand can tell the app in your phone how much you walked or ran this morning. Or your laptop at office can switch on the coffee maker at home so that hot coffee awaits you as you drive in. Or the dashboard of your car can inform your doctor if you had a hypoglycemic attack and an accident. This is fascinating stuff and you can imagine how endless the possibilities with digital technology are. IN our business of selling medicines, the applications can be massive and can change the way disease is managed and treated.

Q: Is digital like a photocopier that is used by all the functions in a company or is it something only for the marketing and sales functions?

“Digital” – if it refers to technology – is used by almost everyone in a company. If you’re using a laptop or a phone or a scanner, then you’re using digital technology. However, if this refers to using digital channels to market your product or an activity to support your brand, then this is largely the domain of the marketing and sales team. The success of a digital campaign, in my opinion, is when it steps out of the domain of a marketer. Of course, the concept and execution still stays with them, but if colleagues in office don’t engage with the activity, or if the online campaign is too doctor-focused, then we aren’t leveraging the power and the reach of the medium.

I think it is also very important to understand that digital never drives strategy. It is always the brand strategy which decides the channel. Does a leave-behind piece or a visual aid decide the strategy of a brand? Of course not. They are just tools that a marketer uses to achieve an overarching brand objective (like create higher brand awareness amongst a specialty of doctors). It is the strategy of the brand that decides on which tools you want to use. It’s the same with digital – these are just channels or tools that one uses as one deems fit. I have always been amused when brand leads come to me and say “I have a Facebook strategy”. You can’t have a facebook strategy. You have a brand strategy. Using Facebook or not using it depends on that strategy.

Q : How can digital lead to better engagement with doctors and patients?

Digital technology allows innumerable options to engage with doctors and patients. As you would know customers engage most effectively with organizations or products that solve a pain point or what we call as an ‘unmet need’. One of the larger ones in health care for quite some time is ‘information asymmetry’ or the lack of availability of information that can be easily understood for patients or care-givers. This prevents them from understanding their choices and making informed decisions. Websites like attempt to bridge that gap.

Some other pain points are when patients want to consult another doctor to take a second opinion. This is very different from ‘doctor shopping’. Again there are websites that allow such discussions. Today finding the right doctors, setting up appointments, using mobile/digital prescribing and having medicines home-delivered through online orders reduces costs (makes it easier, sometimes cheaper) for health care transactions.

All this is possible through the use of digital technology. Pharma may not probably play in all those spaces. Yet, in its core area, pharma is making major changes to its operating model to wrap it around the possibilities that digital tech creates. Globally, there is a move to use big data to glean sharper and more relevant insights into patient and doctor thinking and behavior. There is also a realization that the industry must move away from monologues or ‘pushing’ information to engaging in a conversation or creating a ‘pull’ for information. This engagement of course will be required across all the possible channels (omni-channel) and must occur almost in real-time. No customer will wait if he/she receives an auto-response saying “Thank you for your email, you will receive a response from us in 7 working days”. Those days are long gone!

Considering the constrained environment that the industry operates in, it is little wonder that pharma is taking so long to institutionalize these changes. However, stellar examples in digital engagement can be found from companies such as Pfizer, BI, AZ, J&J, GSK and some more. These convince me that the industry is surely headed in the right direction. In the future, I think we will see more tie-ups and collaborations to create better and user-friendly products. That will make health care democratized (of the patient, for the patient and by the patient) in the true sense.

Q : How well prepared are professionals in terms of skill levels to facilitate digital adoption by companies?

Not much at the moment. There is too much of entrenchment into the traditional style of operations. We see human capital being built up within organizations but it is too focused on execution at the moment. There is limited play of digital natives within executive teams where decision making lies. That’s probably why we rarely see brand managers or business heads evolving their plans to wrap around the massive opportunities that digital creates. There is no ‘new-orbit’ thinking at the moment and therefore we see pdfs of visual aids on iPads, aspirations to create mobile apps (with little understanding of what end that will achieve) and 2-hour long CMEs distributed over web streaming platforms, once or twice a year. This belies little or no understanding of either the medium or the consumer of such content. This is the typical “monologue” or “push” mode that pharma is so comfortable with.

One could argue that reverse mentoring can help move understanding up the chain, but like most things that try to defy gravity, such initiatives rarely gain altitude. I am waiting for the day when pharma hires a CEO from a tech company. Someone who is told, “We are in the health care (not pharma) space and we need your help to do better in the new age economy.” That will be the day.

Q : Any good examples of digital adoption by pharma – global and domestic?

There are quite a few examples that are isolated (brilliant iPad campaigns or SM engagement etc.) but I want to focus on a couple of them. One of them is the “Don’t turn your back on it” campaign by Abbvie. This is for lower back pain and it is phenomenal in its omni-channel presence and the way it is being executed. I do not know the result of it, but I am sure it is good. Another such campaign in India is the “Knowledge Genie” project that Abbott rolled out in India a few years ago.

There are definitely many more such examples, but the reason I picked out these two campaigns are because of their distinct uses and I think there are lessons here for us. The Abbvie campaign is a glocal one – designed and created by the Global team but executed by individual markets. This shows a great alignment of the ‘go-digital’ spirit through the entire breadth of the organization. This is a brand-oriented campaign.

The Abbott India campaign is different in the sense that this is a doctor engagement campaign and not a product/brand-oriented one. Both these are long-term engagements that require a tremendous amount of capabilities and alignment within the organization and therefore worthy of mention.

Q  How useful are platforms like Docplexus, Curofy and others to Clinicians? 

This is a tough one for me to answer considering that I am neither a clinician nor a part of these platforms. However, I think the need for such platforms exists in terms of a neutral discussion forum for doctors to exchange ideas and to network. Recently I saw another such platform which advertised its USP to be “pharma-independent”. Of course, this may be done to differentiate this platform from the others who engage pharma; but I see a lesson here.

If pharma not participating in such platforms is considered a boon, then there is something seriously wrong. The industry which has to be an enabler of such initiatives is considered unwanted. It’s a shame since it signifies how wrong we have gone with our understanding of our customers’ needs and wants.

Who are the others new players in healthcare – what do companies Practo signify for healthcare?

There are many new players and it excites me tremendously. When Sergey Brin famously said that health care is ‘over-regulated’ he expressed the angst of millions of people amongst who are hundreds of innovators. I was afraid that these words from the co-founder of Google would scare off many of them. Fortunately, it hasn’t.

I have been fortunate to have the opportunity to coach a few startups in India and the energy, enthusiasm and never-say-die attitude that these youngsters have is just phenomenal. It is such a refreshing change from my day job.

“Startups” – as the new entrants in the space are referred to – are run by very smart youngsters who have identified “white spaces” in the health care arena. White space is jargon for an area in the sector that has a potential (and lucrative) customer pool but nobody to service them. To illustrate that, take the example of knowing the right doctors to meet when there is an urgent medical need. While this was a very obvious unmet need, the established players (hospitals, doctor organizations or pharma) did nothing for years. It took one determined youngster to begin a company that specialized in that area and then built around that core proposition.

This is what companies like Practo signify for healthcare. These companies have the potential to disrupt the health care space. They can create efficiencies in processes that established players have little incentive to reform. If and when they do that, it won’t be very pretty for the incumbents. We are seeing start ups all across the value stream – from data analytics to R&D, clinical trials, manufacturing straight up to managing the end-user experience. Almost every area in health care is looking at potential disruption. How soon will it happen? Only time will tell.

Q : Will tech products like Uber and Ola mean a better deal for doctors and patients? How can pharma partner with such players?

This has been a fascinating question and one asked quite often. To elaborate on your analogy – Uber and Ola are aggregator organizations. This means that they use digital technology to bring a cab to a customer. The beauty of the model is that they neither own the cabs, nor are the drivers their employees. In health care, the likes of Practo bring patients to doctors and the likes of Nightingales bring doctors to the patients.

While on the face of it, it seems like a good idea to have a service of bringing additional patients to doctors, this hasn’t really gone well with doctor organizations (who protested their members advertising on a website) or with the govt who cannot get themselves around to regulate these new-age services. To answer your question specifically – any program or company that reduces transaction costs for consumers to seek health care of their choice is definitely a better deal for everyone.

Since pharma still focuses on pushing its pills, and will continue to do so for the foreseeable future, I think what it can seek to benefit from these tech players is Big Data. Many of these companies over time will accumulate information on the beliefs and behavior of health consumers. Pharma can glean out great insights from that information. Now whether the tech players will want Pharma to monetize that information or want to do it themselves will be interesting to see.

Q : Is there an increased understanding of digital by Indian Pharma? How do you look at digital adoption by Indian Pharma?

Oh yes of course! Adopting digital channels to engage with doctors has picked up rather well in India as it has around the world. I am aware of some very interesting things that Indian pharma is doing on this front.

When we speak of adopting digital, there are two ways in which I would see it – the first way is to evaluate the use of content across channels. I would be very impressed to see content created and customized for multiple channels. I think this has a lot to do with understanding the functionalities and the scope of each channel and how that helps to promote the chosen story/message.

The second way to view digital adoption would be to see if content across multiple channels carries the same message or storyline. Most often I see messaging created for Twitter being quite different from Facebook which is itself far removed from website banner adverts. It would seem odd to customers if they’re unable to see the same message or connect the dots when they view that content over different channels. This, in my opinion, is quite key to superior engagement of digital technology. Of course all of this stems from the broad strategy for the brand/company.

That said, its great to see marketers finally accept this technology for its scope and power. One must experiment with it to learn how to use it best.

Q : Is there is need for education in digital adoption by way of workshops and what should these workshops focus?

Education is always useful. It helps to know what the industry is doing at large. Of late, I have noticed that fewer pharma managers are skeptical about non-pharma examples and this is a very encouraging trend. Earlier, I would see people rejecting any great example from non-pharma without understanding that the principle is more important than the example. The change means that pharma managers are opening up their minds and this augurs extremely well for the industry.

I don’t think workshops on digital technology would work in isolation. Since technology only adds further scope to engage with doctors and patients, the workshop should examine marketing plans to see if they have really built in the use of technology to optimize results. Ideally this exercise should happen a few weeks before the marketing team begins to work on their brand plans. If they understand the technology available, its functionalities, scope and results it can bring, I am sure marketing managers will understand better how to use it in their work.

Current and Future Trends for Pharma

We live in exciting times. New technology and innovation that can change the way we live, is pouring out at unprecedented frequency. It is well known that although the pharmaceutical industry is considered to be very technologically advanced, it is also one that is quite inward focused and therefore stuck in the past. Therefore, it has been of great interest to me to understand how advances in technology and innovation are shaping trends and how ready the industry is for those trends.

From my viewpoint, in the last few years, the industry has defined its success on how it handles the following three trends:

  1. Increasing Role of Generics

A record number of patents expired in the last few years. As soon as a drug goes off patent, generics force drug prices to drop by almost 85 percent. Pharmaceutical companies have responded to the generic threat in several ways.

It was thought that the most promising approach is drug companies getting into “branded generics” themselves. The logic was that these branded versions of their original drugs sell for higher prices than unbranded generic equivalents but are less expensive than the true branded product. While this didn’t work for ‘innovator companies’, it did throw up a vast generic industry globally with companies such as Teva, Valeant and Mylan growing into industry dominating positions as governments around the world preferred cheaper generics.

  1. Emerging Markets

Rapid growth in emerging markets is a beacon of hope for the pharma industry. The Indian and Chinese drug markets could grow even more rapidly. However, drug firms’ traditional approach of creating drugs in the West and then pushing them in the East is not likely to work any longer for a several reasons.

First, there is a significant price pressure in these emerging markets, which argues for a stronger role for branded generics. Second, drugs developed in the West are not always relevant in emerging countries. Virally induced cancers, for example, are rare in Europe but common in China. Finally, the insurance and payment systems in many of these markets are quite different from those in the developed world.

  1. Outcomes – based medicine

Pressure on healthcare costs is rapidly pushing pharma to enter into outcomes-based pricing deals with payers. While there have been a few noteworthy ones so far, companies are likely to add more to that list soon. A majority of health plans want to ink outcomes-based contracts with companies, particularly in the high-end, niche and ultra premium priced therapies such as hepatitis C, oncology, multiple sclerosis and rheumatoid arthritis among others. Even drugs for widespread chronic conditions–such as cardiovascular medicines–are also on payers’ radar.

Unless the preference for outcome based drugs picks up faster, the industry is due to commoditize itself. As the blockbuster model becomes less dominant and the market becomes more competitive, commoditization has led to business models to become more customer-centric.

We have seen medical costs increase per capita even though the industry has commoditized. With costs increasing, and patients expected to pay for innovation on their own (as payers fail to keep up with technology and innovation), the following three trends are set to change the way health care will be consumed. How cognizant pharma is to these trends will probably decide how it moulds itself for the near and foreseeable future.

  1. Personalized Medicine and Empowered Patients

Personalized medicine and targeted therapies can significantly increase the effectiveness of new drugs in specific patient groups. Drugs that would be deemed ineffective in typical clinical trials now have a chance to show high degree of success among certain patients.

This changes the economic model of firms and calls for highly specialized marketing. Some experts argue that this specialization may force the industry to move away from its vertical structure and focus instead on a few core areas such as drug discovery or development. It also calls for drug firms to take a larger role in diagnostic procedures. This trend is very promising, and is fast expected to come of age.

Unless payers place a premium on outcomes-based, patients will have to self-finance this innovation. How will pharma react to it? When patients pay for innovation, they research it, gather information around it and update themselves regularly. Here lie opportunities for pharma to engage with empowered patients.

  1. 3-D printing of drugs

The first 3-D printed drug was approved by the US-FDA in 2015. If the trend catches on – and it surely will – patients can print their pills on their own and completely bypass pharma. All they need is to use the algorithm or procedure that will become available on the internet and use a 3-D printer at home.

Business savvy pharmacy chains may sell these procedures to patients instead of pills. In its current state the pharma industry has no control on 3-D printing and no coordinated action to counter it. Does it have a scenario with an action plan ready? And if you think it sounds like science-fiction, be aware that human organs that were made using 3-D printers have already been used for transplants.

  1. Supercomputers

Google announced recently that it launched a feature called symptom search which seeks to use its vast computational prowess to help patients self-diagnose their symptoms. In its current mode, this is unthinkable in pharma that always tells patients to consult their doctors.

Google’s use of combining big data to mine zillions of patient records and match symptoms search words to throw up the most relevant answers is a show of how artificial intelligence and big data can be harnessed through the power of supercomputers. Another example is IBM’s use of machine intelligence to scan through zillions of doctor notes and available medical literature to throw up diagnosis and treatment plans for treating diseases. Imagine the impact this can have on pharma which prides itself as the sole owner of information on disease and drugs. This, it considers, is its sole value proposition to its health care professional customers. With supercomputers, artificial intelligence and big data, pharma risks losing the very value that drives its customer interactions and therefore its business. Does pharma have a plan to counter or harness this development?

The challenges facing pharma due to developments in the outside world are not routine ones in the traditional sense. The solutions will revolve around ‘unlearning’ a lot. It will be very interesting to see how a traditionally technologically advanced sector surfs the wave unleashed by rapidly developing non-traditional technology.


Global trends, successful companies and pharma marketing in India

Global trends 

The healthcare landscape across the world is in quite a multi-polar state at the moment. What this means is that globally there isn’t a single trend that dominates the sector. In the developed world, the economic slump pushed governments to implement drastic measures to control healthcare costs. This has had a significant impact on pharmaceutical companies as they see more of their portfolio hemorrhage value as prices fall around the world. This development opened up avenues of opportunities for generic players, many from India as well as a few global ones as well.

What I find very interesting in this geography is that on one hand, governments increasingly became picky about supporting high priced patented products that bring only incremental value compared to off-patent products in the same category. On the other, they opened up their coffers to products that solve niche problems and unmet needs. It is probably a sign of the economic revival in the Western world, but this doesn’t seem like a balanced approach if the objective is to manage rising healthcare costs!

In the developing world, two trends are noticeable – the increasing acceptance of universal health care or the provision of health care by the state and the growing willingness of governments to protect their domestic industries against the vagaries of multi-national companies.

While the supply chain is more consolidated in the Americas and in the UK, pharmacies in the rest of Europe are quite independent as governments ensure margins and profits to pharmacists in exchange for active dispensing of generic drugs. There is a likelihood of the supply chain consolidating in the developing world as margins are threatened due to aggressive government policies.

As you may have noticed, a common thread here is the dominant role of the government in providing healthcare extends across the world and is likely to come to India soon enough. It’s important for the domestic industry to quickly learn and adapt from other markets where it has happened. These are more supply-side levers.

One the demand side, in the developed world, we see the emergence of niche products and newer therapies from smaller and more agile companies. The larger ones view these smaller players with interest. Big companies with barren research pipelines are actively seeking out smaller ones with more productive and differentiated assets. This might lead to some consolidation in the industry.

The void in healthcare from Big Pharma’s inability to look ‘beyond the pill’ is rapidly being filled up by either non-traditional players (large companies from technology, telecommunications, data analysis etc. who are diversifying rapidly into healthcare) and nimble start-ups with amazingly creative ideas to service unmet needs of customers.

Big Pharma seems content at the moment to wait and watch, probably with the intention of gobbling up the start-ups if their services gain acceptance. Pfizer buying a gene-therapy company and GSK collaborating with Alphabet (Google’s parent company) on bio-electronics, points to this mushrooming into a trend sooner than later.

Successful pharma/devices companies 

While the merit of the products and pipelines helps analysts bet big on some firms than others, almost all of them define success by market capitalization, share price and dividends paid out to investors. These are hard metrics and easy to track and therefore gain prominence over softer ones like patient centricity, customer satisfaction and lives saved. Whether the softer ones should be considered as lag measures instead of as lead measures to measure success is as yet a debate that hasn’t surfaced. In the absence of that however, the most successful companies are the ones with sometimes the better product and more often the deeper pockets.

This is not a rant, but is relevant as the definition of success in pharma is rapidly changing. If you look at the Forbes ranking for the best (not successful) companies, very few big pharma companies feature in the top 10. You have companies like Celgene, Biogen Idec and Gilead on that list ahead of Pfizer, Novartis, J&J and Merck. So the really good companies are focusing on bringing in newer therapies to address unmet needs and niche disease areas. This not only allows them to dominate the market, but also charge a significant premium for those differentiated products. It seems pharma’s bet on biologics paid off after all!

The same is true in the medical devices area, as newer technology platforms are built with more innovative channels of access (eg: wearable devices working over the internet of things). Some of the larger companies are bringing in more focus to therapy areas that they are strong in and thus creating better and more efficacious products to better serve those patient populations.

Some of the better companies are also actively evaluating customer behavior changes and have realized that using a single communication channel is probably not enough and leads to unpleasantness over access to physicians. Adoption of multiple channels deploying digital technology to engage with customers is on the rise. Pfizer piloted virtual clinical trials a few years ago while Merck took an entire medical conference online and created a virtual experience for physicians to closely duplicate the feeling of being physically present at the venue.

What is urgently needed is a disruption of the current supply chain structure which is too expensive. As pharma faces pricing pressure across the world, innovation in this area will be explored. Also required urgently is pharma’s adoption of big data and predictive modeling techniques. Some start-ups in the healthcare arena are creating solutions that will allow companies to predict irregular patient compliance, matching patient genome types to the best suited medicine to increase efficacy etc. Hospitals, insurance companies and other payers in the developed world work with big data solutions to predict worsening of health outcomes, outbreak of epidemics etc. Pharma urgently needs to get onboard.

Pharma Marketing in India

India is a very rare market where the importance of branding and marketing continues despite the high degree of commoditization. Indian companies have also increased dependence on overseas revenues. However if companies were to focus on the Indian market alone, marketers must probably be aware of the winds of change that will circle the land if the government implements certain policies. While pricing pressures continue to challenge the industry, they definitely do not spell its doom as is often touted by over-enthusiastic media persons.

However, if the government decides to play a larger role in providing healthcare through its UHC implementation plan, attracts investments actively in the sector to build infrastructure in semi-urban and rural areas, becomes the biggest buyer of drugs and devices etc., will the industry be caught unawares? Are pharma companies still training large sales forces to influence physicians while in a few years they may cease to be the decision makers? Are companies concerned enough about building key account management capabilities to tackle such a development? Are these companies engaging enough with pharmacists and the trade channels to build relationships that will stand them in good stead as decision making power accrues to these stakeholders? Should branding and marketing be targeted only to doctors? Why is corporate branding so underachieved in India? If the govt asks physicians to prescribe only INN names and pharmacists have the power to influence brand choice and patients become more empowered to choose a brand, will the current investments in marketing, training and deployment suddenly be found wanting? The pharma business model didn’t change in the last four decades. That doesn’t mean that it won’t change over the next four years!

Marketing is by definition, a tightly integrated effort to discover, create, arouse and satisfy customer needs. This essentially means that the marketer must have an acute sense of customer behavior and must adapt accordingly to satisfy the needs of that customer. In our line of business, some of our customers (physicians) need just the right information at just the right time; some others (pharmacists) need just the right product at just the right time while even others (patients) need just the right information, support and possibly some reminding. Pharma marketing strategies in India today, do little to address these needs, much less satisfy them. As the market dynamics change due to macroeconomic and policy changes, each of these customer types will undergo significant changes in deciding power. Marketing needs to be ahead of the curve to be prepared. Unfortunately, pharma marketing today has a disproportionate focus on physicians while all but ignoring the other customer groups. This must change.

“Challenge” – Pharma’s middle name

For the Indian pharmaceutical industry, ‘challenge’ has come to be its middle name. While for one part of the industry it is to create newer and better medicines for the diseases of tomorrow, for the rest of it; the challenge is simply to get to that tomorrow.

40 years after India aspired for self-sufficiency in medicines, the Indian pharma industry has emerged as a robust, globally-aligned industry that has witnessed substantial growth. Yet, challenges remain. We tend to think of these challenges as applicable to different sections of the industry i.e. MNCs and domestic companies. In my experience, they more often than not, apply to different parts of the same organization.

Domestic Giants:

  1. Abiding by the UCPMP code – the challenge is to continue growing at the same rate (13-15%) within a strictly ethical business framework. This is made worse by a total lack of co-ordination between the different lobbies representing the industry in India.
  1. Re-establishing credibility– Here the challenge plays out at multiple levels

(i) HCPs – resetting expectations within a new business model

(ii) MSMEs – gaining orders from govt tenders, Jan Aushadi and other public health initiatives.

(iii) Manufacturers looking to enter the lucrative US market after the slew of 483s issued by the FDA

(iv) General public – convincing them that the prices that they pay for medicines are the best possible ones

(v) Public health – convincing the govt and other activist groups that pharma cares enough about society to participate in neglected diseases (eg – Sun Pharma partnership with govt on malaria eradication)

  1. Non-evolving business models – This challenge is common to both domestic and MNC companies albeit in different contexts. For domestic giants, this would involve issues like inability to transcend a transactional model with all stakeholders (docs, pharmacies and patients). This involves incentives to HCPs and rebates to pharmacies and patients. While money is definitely a decision driver, it precludes the opportunity to create meaningful value which is often more appreciated by receivers.


Multi-National Corporations:

  1. Growth through fewer new product introductions – This challenge has recently become applicable to domestic giants as well after the govt action against fixed dose combination products. However, I do not consider this a rate limiting step for companies since they have the option of launching free-dose combinations or the single drugs on their own. Specifically for MNCs, a dry pipeline followed by uncertainty of monopoly in the Indian market (Sec 3(d)) and a threat of capped pricing is a far bigger needle mover in my opinion since MNC business models are copied from the western parent orgs and rarely if ever localized in the true sense. This brings me to the next challenge.
  1. Operating in a Gx market like an IP firm – Following western business models may add to novelty for a while but are rarely sustainable on scale. Dabbling in ‘new financing methods’ or other such may reflect the temporary genius of the MNC marketer but hardly does much for long standing issues of creating true access to innovative medicines or penetrating beyond Tier-3,4 markets. Again, opportunities to create meaningful legacy in a foreign land is all but lost.
  1. Non-evolving business models

(i) In the context of MNCs, this challenge comes from the fact that the parent organizations do not consider the 4Ps very seriously when marketing an innovative product and very few MNCs market generics globally. Therefore, their prescribed business model remains very HCP focused and ignores opportunities to partner with other stakeholders. This despite the fact that there is enough literature to prove the considerable and certain shift in decision making from HCPs to HMOs/insurance payers, pharmacies, patient groups and caregivers.

(ii) MNCs also struggle with making sense of the digital space (one does not see this too much from domestic giants) and make their models very rep-centric. This allows a single channel to be maximized while all but ignoring multiple other channels of direct contact with HCPs and other stakeholders.

(iii) Utilizing alternative (non-rep) channels can be a good way to harness the increasing power of the patients and their caregivers while reducing the appalling asymmetry of information that plagues this industry.

(iv) Unfortunately, with the power of making conversations comes the great responsibility of owning up to mistakes. Not having to do so is a singular pleasure offered by monologues.

Of course, challenges are aplenty and hardly limited to the ones listed above. As the country moves ahead, these challenges, coupled with fierce competitive pressure, could further escalate, if not attended to with crafty strategies by companies keep up with the evolving business environment.