Pharma’s Digital Lens

As I meet more people and discuss their digital ideas and strategy, I think Pharma looks at digital through the wrong lens. The question I am often asked is: “This is my business model, how can tech help?” I think trying to answer the question framed that way cannot lead to the write answers. It is simply too product-centric. It is all about me, my Rx and my brand.

Instead if the question was to be re-framed thus: “I get a sense that it’s not business as usual. The fundamentals are changing. What should I do?”, I think business leaders could open their marketing teams to considering many more possibilities than they currently do. This would be true customer-centricity since the concern here is about how to serve the customer better in a changing environment, rather than worrying about I, me and myself.

Trying to make teams think of how to use technology in the existing business model and in the current framework can be misleading. The shift is fundamental. Do business leaders think this is understood and internalized well by everyone?

Maybe the real problem is that the shift is slow and imperceptible. Fundamental shifts creep upon us and are imperceptible until we are engulfed by it. For eg: the shift to a rental economy (I rent a car instead of owning one, I rent a home away from home, instead of staying in an expensive hotel) wasn’t felt and perceived by everyone. Yet, today, Uber and AirBnB are a way of life. Similarly, today, we can’t imagine life without touchscreens, but Nokia was King not so long ago. There are many more such examples of how imperceptible fundamental shifts have damaged the businesses of many a strong incumbent.

So if pharma marketing teams feel that fundamentals aren’t changing in the way customers behave or the way business is conducted, then probably forcing them to adopt digital won’t work. It explains why so many say “we do a lot of digital”. You don’t “do” digital. You “go” digital i.e. transform. You “do” digital if you are either forced to do it, or you don’t understand or agree with it. If you don’t feel the shift, then you probably don’t need digital. So, don’t do it.

However, if you’re worried about missing out, or that its not right to avoid digital, then maybe you feel the change in your gut, but you aren’t too sure. So look more closely. Do you know your customers really well? Or do you think you do? Are they still the same? Or are there signs that things have changed?

Once you understand and agree that the shift is indeed happening then begin to re-examine the basis of your current business model and framework. Look for areas which don’t appeal to your customers and see if tech tools can help you regain the engagement of your valuable customers.

That’s the essence of transformation:

1. Ask if you notice shifts in macro factors such as environment, customer behaviour and business basics.

2. Update your understanding of each factor.

3. Identify areas in your model/framework that are outdated.

4. Can tech help to update?

This would be the right lens through which pharma looks at digital.

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Digital Awareness to Digital Utilitarian

Two unrelated new articles caught my attention last week. The first one was about a prominent Indian pharmaceutical company who seemed to have got into the news for their digital strategy. The second one was a comparison of prices for mobile data across the world.

The first news article about the digital strategy of a pharmaceutical company intrigued me, as it did many others – given a tweetchat that ensued during the day. My intrigue was about how this company used technology to do more of the same, rather than to carefully consider the different options that technology throws open. This is a classic case where digital is ‘done’ instead of the business transforming to leverage technology.

I will not embark on a long post on the merits of digital transformation since I wrote a bit on the topic in the past. Suffice to say that technology is best utilized when its potential is understood. Instead of looking to find how technology can help a business do more of what it is already doing, business leaders must seek to understand what new tech tools can offer and how those new options can transform the way they did business. “Moving beyond the pill” is not merely the stuff that ppts are made of. It is right here in the real world.

It is well known that there is tremendous growth in technology and the number of tools that have emerged from it. What is not so well known is that those tools have application in the pharma business model and can solve for many an inefficiency that business heads have worried about. Very rarely do business heads seek insights into the tech that they buy, or the tools that they deploy. Business plans, when looked at from the window of such insights, can look inadequate and tech can then be very meaningfully deployed to get much better results or to achieve a business objective in a much easier and cost-effective manner.

This is the essential difference between being digitally aware versus being a digital utilitarian.

A digitally aware business head generally considers digital to be ‘in addition’ to organizational objectives, thinks of technology as more important than strategy and will spend huge resources to buy new tech and as the novelty wears off, declare tech to be of no use.

A digital utilitarian will on the other hand, understand that the need to change is not because tech is available, but because the fundamentals of business and customers have changed. These business heads realise that customers are well into the digital economy. Doctors, patients and caregivers alike, search for a lot of health-related information on the net. Can you therefore not afford to be where people are looking for you and insist on pushing more money after bad, on a sales force that doctors increasingly reject? A digital utilitarian will thus, be acutely aware of the challenges that the changing environment has on his business and will look for tech solutions to *transform* the way he reaches out, engages and converts his customers.

Typically, pharma businesses grow when more doctors prescribe their brand and patients consume it. This means that these two sets of customers need to be familiar with the brand. The current pharma model falls short on both fronts. The company with the largest sales force in India can barely cover 3/4^th of the doctor universe. Others fall woefully short. On the patients’ front, in most cases, pharma is still learning how to.

This brings me to the second article that caught my attention – the one comparing the prices of mobile data around the world. No one needs to be told about the penetration of mobile phones in India or the emergence of high speed and dirt-cheap (Rs. 18 per 1GB data compared to global average of Rs. 600) data connectivity. How many pharma managers have changed their plans or even thought about this? When I recommended this to clients I was countered by the lack of speed that accompanies the cheap prices. They don’t seem convinced even when I tell them that online video audiences are expected to double to 500 million by 2020. What does that say about speed and connectivity?

Almost every pharma business worries about increasing awareness, penetrating and gaining access to new customer groups and geographies. If these are your business challenges, shouldn’t you be looking for tech options that can help you achieve this? At such cheap data prices, you have so many options to create live channels, conduct social media campaigns, create communities, reach specific targeted customer groups or even something as mundane as increasing the number of contacts with your targeted doctors at a fraction of the cost of hiring new reps.

Technology offers a plethora of solutions and more to tackle these mundane problems that have plagued pharma for years. Pharma on its part has moved from being digitally illiterate to digitally aware. The next step towards business transformation would be to become a digital utilitarian.

Don’t make it feel like it’s marketing

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.

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.

 

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!