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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Don’t make it feel like it’s marketing

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Changes in pharma marketing will be profound with the advent of technology. Digital marketing will allow pharma marketers to engage the customer in very meaningful ways which were not always possible through the work of sales reps.

While sales reps are important in the scheme of things, they are but one channel. In-clinic time with doctors is massively decreasing today and that is because neither the channel (rep) nor the content can engage the doctor and hold his attention.

Through digital it is possible for pharma to know more about their customers than they ever have in the past.

This additional knowledge is thought to hold the key to understanding the customers needs and wants. Through this pharma can offer better services to them, thereby building loyalty along the way.

None of these tenets are new. This is what marketing is about. However, most of it has got lost along the way as pharma-doctor engagement became tactical and transactional; from information sharing and knowledge building to ultimately benefit the patient.

Overseas – especially in the US, pharma is more advanced in the use of digital technology considering that the market is matured to these advances. In India, pharma is scraping the tip and tentatively exploring these options. We have started to see pharma companies create websites, run email contact campaigns, conduct online CMEs and webcast them, create apps for their brands as well as explore the creation of discussion forums and social pages.

While all these are great initiatives, not integrating them will not allow doctors to understand the context of each initiative. Therefore, each digital piece is likely to be viewed as a random one. If doctors are unable to link all its initiatives, the company also risks their customers not consuming/linking key pieces of information. This can make the strategy look incomplete and leave customers with a sub-optimal experience.

Is Digital effective?

This can be viewed in two different ways. The first way is to view digital marketing as another channel of marketing. This makes it integral to the entire marketing strategy and increases its overall effectiveness. This makes it almost impossible to evaluate the effectiveness of individual pieces of the strategy and say that it was digital intervention alone that drove the success.

The second way is to re-assess the things we measure to define success. Generally marketing campaigns measure their success against increased prescriptions for their brands, more sales, higher market share etc. Yet as David Ogilvy said, “I know half of my advertising budget works; I only don’t know which half”.

The good part though is, digital can track and stream data like no other channel ever could.

We know how many people opened emails, how much of the email they read, clicked on a link, watched a video, visited a website, how long they stayed, what content they read and where they went from that website. These are the sort of metrics that digital marketing can throw up and these are the ones that should be measured to determine success or determine the specific lift that digital intervention provided to the marketing campaign.

The best part of digital is that when done right over a period, it becomes predictive.

Now very few other marketing tactics can tell a marketer in advance what their customer is thinking of doing. This predictability can be great differentiation and a source of competitive advantage as Google, Amazon, Facebook, Netflix and your local bank have shown.

Benefits of digital marketing

The time-tested mantra for efficient selling has always been “the right message to the right customer at the right frequency”. Digital adds “through the right channel” to it.

The new channels that tech allows access to help marketers to reach their customers at the place and at the time of their choice. Specific to pharma, doctors would always be inaccessible except for the stipulated days and hours at which they chose to meet sales reps.

Today pharma can reach doctors at a place of their choice, at the time of their choosing and through a channel that they most love. It could be a video, an infographic, a webcasted seminar, an email or in some cases a virtual rep. The choice therefore empowers the customer to seek info when he deems fit rather than having it thrust at him.

Of course, this isn’t as easy as is made out to be. To ensure that the doctor ‘consumes’ their content, pharma must make it very relevant and interesting. To make it relevant, they need to know as much about the doctor as possible.

The fundamental shifts in marketing are that it becomes all about the doctor/patient (customer-centric) rather than product-centric; it becomes data-driven (the more pharma knows about the doctor, the better they can serve him) and it focuses on experience (if the doctor finds pharma to be too nosy or the content uninteresting, he simply dumps them). This moves pharma marketing from the ABC – awareness (of the brand), (prescription of the) brand and CRM – to the CDE – customer, data and experience.

How relevant is digital marketing?

Currently, Pharma marketing is all about the ABC – awareness (of the brand), (prescription of the) brand and CRM. This is exactly why pharma hasn’t truly grasped the essence of digital marketing. Digital marketing moves it to the CDE – customer, data and experience. In simple words, this means that marketers must focus less on their product and focus completely on the customer.

In the digital economy there are 3 rules:

  1. Your business is not to sell your product. It is to engage your customer
  2. Your differentiation is not how good your product is. It is how well you know your customer (data)
  3. Your competitive advantage is not the size of sales force, or the number of SKUs you sell. It is the experience that you create for your customer which determines how loyal they stay to you.

Products have stopped to differentiate. Experiences have begun to differentiate. Does this mean that product selling is not important? On the contrary, the CDE of digital marketing only strengthens product sales. Through digital channels, you can engage the customer better. And engaged customers don’t need to be sold to.

Is Pharma Coping?

Pharma was for a long time in denial and even today the odd digitally illiterate executive exists. However, most of the pharma has now moved to the digitally aware phase where the newly initiated are smitten with technology. This explains why there is so much buying/subscribing to tech products and large-scale digitization of internal processes. This is a very important stage of the transformation cycle, but in their excitement, they often forget that success rides on three pillars – people, business models and things. When companies focus on technology (things) they ignore the other two that are the more important pillars.

Pharma will cope soon. After all, it is exactly what it has always wanted to do – engage with customers, ensure relevance of marketing content and ensure spontaneous brand recall. With digital there is a difference – it won’t feel like it is marketing.

 

 

 

‘Amazonization’ of Healthcare

Whether Amazon succeeds in the healthcare market, or not, remains to be seen, but the reason I believe healthcare is about to get ‘Amazonized’ is because of what Chris Holt, Amazon’s leader of Global Healthcare said recently. 

“When we think about the healthcare space, our overall philosophy of obsessing around the customer has served us really well. So, we start with the customer and we work backwards.”

This thought process is so anti-healthcare, that it comes like a breath of fresh air. Incumbents might smirk at it, but customer obsession is the primary reason why Amazon and other tech companies have built giant corporations in unbelievable time-frames.

In India, Amazon recently announced their interest in buying stake in Medplus, India’s second largest organized pharmacy chain after Apollo. So, the question on everyone’s mind must be: will Amazon disrupt the Indian pharmacy space?

Amazon has always had a track record of creating fundamental changes to any industry that they enter. The distribution part of the pharma industry especially in India has always been ripe for disruption and as an industry observer, I was amazed about how the glaring inefficiencies in the distribution part of their business always escaped the attention of CEOs and put it down to the strong union that dominates it. And this is exactly what can make or break Amazon in this space.

Amazon has had bitter experience with Drugstore.com in the past, when its ambitions to sell prescription drugs got lost in a maze of regulations, logistical challenges, and pre-existing business alliances that effectively blocked it from huge segments of the market.

This time, Amazon has the scale and reach to pose a serious threat to the pharmacy sector, despite the challenging economics. Also, the retail pharma scenario in India is highly fragmented and no one store holds a bulk of customers like PBMs do in the US. Consolidation if at all, is rare and this likely explains why Amazon plans to buy stake in India’s second largest retail chain with close to 1500 pharmacy outlets.

“We are just trying to figure out what we learned in other industries and how we have architected our own infrastructure to figure out how we can bring that to healthcare and help healthcare migrate to simpler solutions. “ – Chris Holt

Amazon’s biggest advantage in the area is that it is comfortable operating at loss or on very low margins, something that Indian retailers abhor. With the entry of Walmart (through Flipkart) and now Amazon, the margins will see new lows. This augurs well for patients, but not for drug manufacturers who will see squeezed profits but cannot escape this business since it will be volume intensive.

I had expected Amazon to be more interested in recently established online pharmacies instead of brick and mortar ones, except that Amazon already has an established presence in the online space in India. They have a well-functioning logistics arm that serves their Prime customers. This can surely be used for drugs distribution also. What they didn’t have was a brick-and-mortar format presence. Considering the hazy regulations around online pharmacies and the continuing habit of customers purchasing from brick-and-mortar pharmacies than online, its possible that Amazon sees the brick-n-click model as more India-centric.

I also believe that Amazon understands Indian consumers better than most other pharma players including retailers due to their dependence on data and business intelligence. So, this move could be better thought out than we can possibly see at the moment.

About data privacy rules and other regulations in the healthcare space, I think that is a battle Amazon has already fought through its terrific presence in India. How data privacy rules shape up in India will be interesting to observe, but my personal belief is that it will by and large mimic the GDPR. Amazon understands GDPR and should therefore be comparatively better prepared. Policy makers however, must be wary of online giants trying to influence policy to their advantage.

It would quintessentially not be Indian if we didn’t protest anything and everything at first and then buckle down quietly later. ‘Dharna’ or protests from retail chemists or opposition from the government on a potential entry of Amazon in the pharmacy space is expected. Online pharmacies are being vehemently opposed by the traditional pharmacy owners, but their concerns are mostly unfounded leading govt to announce “policy papers” that are supportive to e-pharmacies. In my opinion, it would be quite stupid to expect Amazon to only stay in the online pharmacy space. If successful, it would not be too long before Amazon disrupts most of the current model – either alone or with the entry of other tech giants.

We aren’t trying to fit into any traditional definition of how things work in healthcare. We’re trying to bring our own capabilities to the market. We’ve seen a tremendous willingness among our customer base to try out new things even though they know that it might not be something that they’re used to.” – Chris Holt

In the past, Amazon has shown itself to have a ruthless, ‘winner-takes-all’ approach and it is that monopolistic approach to business that will worry the government more than anything else. But, if patients, caregivers and consumers are happy, the ‘Amazonization’ of Healthcare will be complete.

India looks to Artificial Intelligence to solve Health Infra Problems

 In early June, the government think tank Niti Aayog unveiled its discussion paper on national strategy on Artifical Intelligence (AI) which aims to guide research and development in new and emerging technologies. While the paper per se focuses on five sectors for India — healthcare, agriculture, education, smart cities and infrastructure and transportation, this post will focus on healthcare alone.

In the paper, the think tank says India is not leading in healthcare because of issues such as shortage of qualified healthcare professionals and services like doctors, nurses, technicians and infrastructure. There are 0.76 doctors and 2.09 nurses for every 1000 people (as compared to WHO recommendations of 1 doctor and 2.5 nurses per 1,000 people). Hospital infrastructure is creaky and bursting at its seams with 1.3 hospital beds per 1,000 people as compared to the WHO recommendation of 3.5 hospital beds per 1,000 people.

Amazingly, the government believes that AI, and not fixing the inherent problems that are rotting the sector from the inside, can play a major role here. In the backdrop of India’s stretched and limited basic healthcare infrastructure, at one level the strategy for AI is indeed a bit like putting the cart before the horse.

New tech such as AI can often be spoken of to solve problems, but one forgets that tech is only an enabler and is not a substitute. It is only as good as its supportive infrastructure. The “intelligence” in AI basically comes from massive data repositories that the machine gleans information off. Not sure if India has much of that to boast of.

Even in the West where data is meticulously collected, stored securely and analysed, massive deployment of AI has still not happened and is still being tried out. In India which has 66% population in rural areas and 67% of doctors in urban areas, the requirements are still fundamental such as the need for physical hospitals, healthcare professionals and last mile connectivity for drugs and pharmaceuticals.

In a country where people in remote villages are just becoming aware of the magical effects of electricity; where clean drinking water and two meals a day are aspirational, talks of broadband, the internet and AI seem quite out of place.

Like most things that come from govt, these are noble intentions which pave the road to hell.

Over the long term, technology upgrades in the healthcare delivery model can create efficiency especially at the point of care level (in PHCs, clinics, hospitals etc). There are definite areas where the existing burden of care on doctors can be eased. But this has many pre-requisites – from as basic as having physical hospitals and doctors, medical supplies, electricity, and water to advanced things such as cloud-based tech, data privacy and security, trained personnel etc. The starting point would be to collate and build out massive data repositories, do away with silos and get different data collection points to inter-connect.

In a country as large and diverse as ours with a population as immense, this is a colossal project – one that can take years. Paradoxically, we Indians are great at managing scale (as we’ve seen with General Elections, the Kumbh mela and Aadhar enrolments) but are terrible at relatively basic tasks (simple queues, traffic rules and building roads & ensuring health and sanitation). One worries that we might succeed at putting up the technology but forget basic training and infrastructure creation.

If we get all that right, the potential is unlimited in areas such as screening and diagnosis, home healthcare, DIY healthcare for primary health (tend to simple cuts and wounds, treat common colds, aches and pains etc) and making health care participatory (arming patients with enough information for them to understand and participate in treatment).

Lessons can be drawn from tele-medicine (eg: The Sky program launched by World Health Partners in Bihar which didn’t do too well due to lack of participation from both providers as well as the targeted social groups). This of course, doesn’t mean that nothing new will work. It just means that a lot of things have to be in place for this to work.

One shouldn’t fall prey to the fallacy that technology is the panacea to all problems.

A good way to foretell the future is to study the past. And the past in this case doesn’t hold much promise. We have had “digital India” and “make in India” and now we have “solve for India”. The intention is noble, and the premise is strong. However, it doesn’t account for the fact that a very wide and capable ecosystem is necessary for innovators and entrepreneurs to survive. Especially those of the social nature who will dedicate their work to helping out strata of population that will not necessarily have the ability to pay. This will require major govt funding and backing which we haven’t really seen before. Plus, the fact that it takes years for such an ecosystem to thrive and investors have to be patient.

One must but look at China and how Govt invested millions of dollars into building such an ecosystem that is on the verge of catapulting China ahead of the US in terms of innovation. A recent MIT report that compared China and India in the race for dominance in AI, didn’t have very kind words for India.

There is a need to reskill many people in a short span of time. Insufficient research support, poor data quality, and the lack of expertise in the field will be stumbling blocks for India. China has had an early start with a robust digital infrastructure and their unmatched ability to produce PhD-level mathematicians and stem engineers.

The AI game is on. India is playing catch-up with China and the West in terms of technology, research prowess, investment, and most importantly, data, which is the lifeblood of AI.

How India grapples with issues such as water scarcity and poverty alleviation, while daring to believe that AI can change the world will be fascinating to watch. However, it’s important to remember that AI is just a tool, it is not an end.

 

The Digital Economy

The first time I heard the term ‘digital economy’ in the medical context, it was from a reputed doctor who was a co-panelist and speaker at a company town hall event on digital marketing. It did not surprise me one bit that the doctor knew more about the digital economy than most of the pharma marketers gathered in the audience. But, it set me thinking.

The digital economy is the effect that advancements in technology have on the ways of doing business. Things change in the digital universe only in shape and form. The principles stay the same. It is probably why marketers think that everything is new. They have simply forgotten the old.

Customer engagement, not products or services

While in the analogous world the golden rules of marketing have gathered a thick layer of dust, the digital world is brutal. It is ruled by customers who are spoiled for choice. In this economy your business is no longer only about your products or services. Customers believe product quality and features to be hygiene factors that are to be taken for granted. They do not give brands that dupe them a second chance. Not only do they expect honest and transparent business, they pay a premium for brands and companies that engage them.

Rule 1: In the digital world, your business is to engage customers in the most meaningful ways.

Data, not money

It goes without saying that customers will never engage with brands that do not recognize them. In the words of Keith Weed – the CMO of Unilever, customers today are informed, presumptuous and impatient. If you do not know enough about your customers to engage them almost instantly, they will ‘bounce off’ your website. They presume that you are tracking them and that you know everything about them. And it makes them impatient if they think brands will make them waste time by getting to know them when all they want to do is satisfy their needs. This makes data the new currency – not money. Money is just incidental for customers to get what they need and they will choose to spend that money wisely. Brands or businesses that do not know them, will not get their money.

Rule 2: The digital economy is powered by data – not money.

Customer experience trumps all else

If customers expect you to know them well and are willing to engage only with those who do, there is a reason for it. Let’s say you Skyped with your friend one morning and she told you about a new book or a video game. It fascinated you. You never heard of it and you want to know everything about it. Instantly, you Google it and read up every review that you can lay your hands on. Once you have, you want to buy it. Amazon it is! All in the matter of a few minutes. And since you’re all happy, you want to watch a new flick on Netflix.

Now imagine if this scenario had played out 15-20 years ago. You would have had to go over to your friend’s place to have that conversation and then walk over to the lone book store, then off to the bank to withdraw some money and then back to the store to buy the book or game CD. And if you had the energy to watch a movie, then you would trudge off to the local single-screen cinema to try your luck with buying a movie ticket on the black market.

Rule 3: Customer experience is your competitive advantage

Digital has made everything so easy! In the new world, experience trumps everything else. Digital natives keep ‘in touch’ on social media, text their friends more than speak to them, transact online, cannot remember when they last went to a supermarket or to the bank and don’t know what it means to have to wait for a cab!

Its almost like the physical world doesn’t exist anymore.

Why would you think that doctors and patients are any different? Digital has (in most cases) done away with time and distance. One can talk to a doctor on call and not have to go to a clinic or hospital (unless in emergencies). Doctors can get all the information they need at the click of a button. They don’t depend on medical reps anymore for it. And that’s probably why they don’t value meeting them so much anymore.

This is not to say that medical reps have no jobs to do. Far from it! It means the nature of their jobs have gone back to being what they were originally meant to be. The time-tested yet now forgotten – serve the customer. Its time to brush the dust off those principles.

I didn’t say this – the doctor at the town hall did. Doctors get the digital economy. You can be dead sure that he and his colleagues aren’t waiting with bated breath for pharma to start participating. Its time we accepted that and played by the rules.

 

Is GSK shedding legacy to build its future?

Towards the end of March, GSK found itself becoming the top contender for Pfizer’s Consumer Business. There was much speculation of how GSK CEO Emma Walmsley would find the $20 billion that Pfizer had reportedly valued its business at. However, within 24-48 hours, not only did GSK back out of bidding at Pfizer’s auction, it even announced a decision to buy out Novartis’ stake in its Consumer Healthcare arm for $13 billion. The surprises kept coming. As GSK share prices rose in appreciation, Ms. Walmsley announced that she had asked for a “strategic review” of the Horlicks brand and other consumer nutrition products.

The announcement most affects its Indian arm, GSK Consumer Health which is the largest consumer business for GSK in the world. Horlicks contributes about 75% of the total business and if the brand is sold off, the listed entity will whittle down to 25-30% of its current size.

What is surprising is that not so long ago, Emma Walmsley had said, “we will still continue to invest in India and we consider it a strategic market” referring to its consumer arm which is the largest in the world. Yet, within a short period of time she announced a possible sell-out for Horlicks which outsells Pepsi in India, as reported a few years ago. In fact, the brand is so well entrenched in the consumer psyche, that in some parts of southern India, Horlicks is synonymous with hot milk.

This begs the question why? It’s quite possible that a global spinoff for the consumer business maybe getting considered, which explains the regaining full control of Consumer Health from Novartis. It is unlikely we would witness a separate deal for India alone, and it seems quite plausible that this would be part of the global sale process.

GSK has three core businesses – Pharmaceuticals, Consumer Health and Vaccines. Apart from this it has a joint venture (JV) with Pfizer called ViiV, a specialty business focused on HIV. It is quite well known that activist investor Neil Woodford had quit the Board of Directors of GSK in 2017 citing Ms Walmsley’s resistance to his demand of splitting up GSK’s businesses to unlock value. At that point it wasn’t very difficult to understand why she had resisted. Selling off GSK’s ‘undifferentiated business’ (pharma and consumer) to focus on its ‘differentiated’ parts (vaccines and ViiV) would have left GSK a much small – albeit more profitable – enterprise.

The problem for GSK is that its pharmaceutical arm doesn’t have any strong brands in market or in pipeline. After its biggest brand, Seretide, lost its patent exclusivity, there has been no new success that comes anywhere close to filling that void. GSK must desperately be looking for a product that is in former CEO Witty’s words, “blockbuster capable”. This could explain its recently renewed foray into Oncology.

Yet, the foray is just beginning, and the business will take years to develop. GSK just spent considerable cash buying the Novartis share of the Consumer Health business. So, any large mergers or acquisitions to quickly gain share in Oncology can be safely ruled out for the time being.

That said, GSK Pharma faces strong headwinds with its US subsidiary looking for ways to stabilize and grow ever since flagship brand Advair lost its patent protection. It was assumed that its diversification and strength in Consumer Health would help to de-risk Pharma. So, focusing on pharma at the expense of Consumer Health, currently seems strange.

GSK Pharma R&D doesn’t have much to talk about, forcing Ms Walmsley to considerably downsize the team and exit over 30 projects. It is possible that GSK could be looking to ‘buy innovation’ – low value biotech acquisitions to boost the differentiated specialty portfolio which is a high margin business.

Recent hire, Dr Hal Barron has strong Silicon Valley contacts, having worked in Alphabet-funded Calico before joining GSK. There have been a few such instances of ‘buying innovation’ recently. Gilead bought Cell Design Labs for around $500 million, Novartis bought Advanced Accelerator Applications for $3.9 billion and Roche bought Ignyta for $1.7 billion. This seems like a new trend, as innovation happens more in smaller, agile Silicon Valley based companies than in tired, old Big Pharma R&D sites.

Selling off Consumer Health could give GSK the required war-chest to buy innovation as it prepares to reignite its growth engine. Given Ms Walmsley’s enviable legacy of heading consumer businesses, one expected her faith in GSK’s Consumer Health to strengthen. Her decision to strategically review Horlicks and other brands gives one a feeling that GSK is willing to shed its legacy to build its future.

TG – An Era That Passed

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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!