“Your industry is my opportunity”

As prescription power shifts, the power of the brand erodes and pharma continues to chase product over service, the rise of healthcare ecosystems led by Amazon and Reliance is imminent.

BhainBezos

A few years ago, when Netflix was becoming popular in India, friends and I sparred with a model to price medicines that way.

Would pharma companies allow patients access to their whole portfolio of medicines for upfront subscription fees, just like Netflix allows viewers access to hundreds of movies, TV shows and documentaries?

“Will our industry allow this?” wondered a friend. “Won’t it affect their business if an Amazon Prime like model is built?” As it happened, Amazon Prime and companies that followed, dropped prices further and expanded content, creating greater customer interest.

This week Amazon and Reliance announced their entry into Indian healthcare. Almost predictably, they chose to exploit the weakest link of the value chain i.e., distribution. For long, the movement of drugs from factory to pharmacy has been inefficient, locking in about 30-35% of value, making Jeff Bezos’ comment quite relevant.

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It is unlikely that either Amazon or Reliance, will merely distribute medicines and not extend to other parts of the sector.

Their motto, as evidenced by their past businesses is to ‘serve at scale’. And this is what the pharmaceutical industry should be watching with bated breath. While the giants are recent in their foray into the Indian healthcare space, their past successes provide lessons to incumbents.

D.I.Y. Healthcare

For long, different parts of the industry provide services to consumers of healthcare (patients, families, and caregivers). Pharma makes medicines, doctors prescribe them and retailers ‘fill’ those prescriptions. When patients ask for additional information, the doctor provides it grudgingly, as it consumes time better spent treating other patients.

Doctors employ counselors, or staff that provides this information. However, the sheer numbers or the repetitive nature of such tasks gradually erodes sensitivity and compassion required to deal with the ill. As a result, customer experience suffers.

Newer players in the area noticed these inefficiencies and rapidly used technology to reach out, engage and use far more satisfying experiences to acquire patients onto their platforms. They realized quickly that the need in the healthcare sector was not for new products but efficient services.

That incumbent pharma giants had exited the area opting to focus on selling products instead, made the model more attractive.

People need more to recover from illness than just a pill.

Beyond doctors and medicine shops, people also need gyms to work out, fitness gear such as clothes and accessories, healthy food, family doctors referred to as primary care, access to specialist doctors called tertiary care, health insurance to pay for it all, healthcare at home, access to diagnostic facilities and a health watch or other wearables that helps them to keep a tab on their health.

A ‘health concierge’ would be helpful, an app to manage all of this would be convenient, and if it all happened in the comfort of their homes that would be the cherry on top! As COVID changed old habits, people quickly realized the comfort of Do It Yourself (DIY) healthcare.

Healthcare ecosystems

Technology can link together diverse services and companies that provide a comfortable and a one-stop-solution to healthcare consumers. Technically called ‘ecosystems’ – this maybe the next innovation in healthcare.

Reliance and Amazon understand ecosystems well.

They will create them by linking these healthcare players together. This might involve either forming such companies or acquiring controlling stakes in existing ones like Netmeds. The result will provide a very strong and efficient healthcare ecosystem. It is quite likely that other players like 1mg and Cure.fit will enter the race.

New price structures will evolve

Such a re-organisation of healthcare may also solve for its biggest problem today – high cost. Subscription-based services could emerge as a mode of payment.

Rather than paying large sums upfront for hospital and medicine bills, Amazon, Reliance and other players could evolve a subscription model to pay for healthcare

This is well on the lines of the ‘Netflix’ model that my friends were thinking of. Prices at easily affordable monthly/annual subscriptions that cover the whole gamut of services offered via the network, will allow companies to acquire consumers at scale.

Also, since the ‘serve at scale’ model will be a ‘consumer acquisition’ one as opposed to the ‘patient acquisition’ one practiced today, the model will have multiple entry points for consumers to enter.

A 16-year-old student looking for fitness can join, as can a 55-year-old looking for tertiary care. Anyone looking for meditation or yoga facilities will be as welcome as someone opting for a health insurance policy. This might provide clues to the unfolding of Reliance/Amazon’s strategy in the sector.

What will aggregate therefore, is a base of people and not necessarily the ill. Staying attractive to people with varied needs and preferences will require the company to continuously stay low-priced while driving up the quality of their offerings.

Such innovation will be desperately welcomed in the world of medicines where high prices often exclude more people than include them. In a market with this new avatar, the government may not need to enforce price controls and can focus on ensuring competitiveness.

Erosion of the brand

Where would such structural shifts leave pharma? When medicines become a small part of the ecosystem, the bargaining power of these massive companies may relegate pharma to becoming suppliers of high-quality yet affordable medicines. Of course, innovative products will have an edge, but that is less than 10% of today’s market and unlikely to grow larger.

Private labels are a well-known evolution of most retail chains. Big Basket, Flipkart, Walmart, Tesco, Amazon, Reliance and almost every other retailer has a host of them that drive profit. While they develop their own private labels, they use scale to bargain hard with manufacturers and pass on those discounts to consumers, thus retaining their loyalty. With the rise of private labels sourcing generics, pharma brand power can erode.

Shift in prescription power

Healthcare ecosystems will own or control doctors, hospitals, and e-pharmacies, and will influence prescriptions, the purchase, the availability, and the fulfilment of those prescriptions. Think of it as a manifold scale-up of the corporate hospital model at very different price points. This can drastically erode the power of the pharma brand as we have seen with generics in Latin America and Europe.

Prescription power has been gradually shifting for years. When people gawk at the price of medicines prescribed to them, retailers show them options of the same medicine that are much cheaper. Decisions are made on prices, yet pharma does precious little to provide information that can allow consumers to make educated choices. Digital health companies have gleefully grabbed that white space and are therefore becoming more popular with the common man.

What then of the current doctor-brand promotion model that companies spend hundreds, if not thousands of crores to build and maintain? The big boys announced entry into an industry that is tired, old, unimaginative, and driven by the wrong incentives.

When my friend asked if the industry would allow a Netflix-like model, he probably did not expect that years later, Bezos or Ambani might well say “your industry is my opportunity”.

 

The sordid tale of Ranbaxy

The case of the Singh brothers (Malvinder and his brother Shivinder Singh) is one of hope and despair.

The hope that employees, shareholders and the lay public had from the legacy of the great Dr. Parvinder Singh who put his sweat and blood into creating a company that India could be proud of. And despair when this sordid tale finally ended yesterday with the news of the arrest of a senior executive and one or both brothers – sons of the great Dr Singh.

Ranbaxy was much loved in India. So much so, that when the erstwhile CEO of Pfizer said unpleasant things about its products and processes in the early 2000s, Pharma professionals across the board in India stood with the company – many in person, many more in spirit.

Ranbaxy was a great company built on the vision of Dr Singh and one that sought to put the Indian generic industry on the global map along with Dr. Reddys and Glenmark.

In the late 2000s, in less than a decade since Dr Singh’s passing, when news broke out that the Singh brothers had sold off the company to the Japanese, many of us were disappointed. Yet we sought solace in the fact that Indian companies seemed to be cutting their losses (with Piramal also selling to Abbott) and expected that the proceeds would be invested in diversifying the equity that Ranbaxy carried in healthcare. As the SRL and Fortis groups came up, we had high hopes that the Singh brothers were showing the way to other entrepreneurs too by carving out a new path.

In the years that passed, as news of the data fudging, manipulation and the very integrity of the group came under scrutiny, people gave more heed to what were earlier dismissed as rumours and conjecture. That at Ranbaxy, profit always came before patient. No matter the cost. Drugs, sometimes unfit for consumption- with glass residue in them- were palmed off. This came to light only when the diligent USFDA put a halt to batches bound for  US shores. No recalls were ever made in India and one shudders to think of what may have passed for medicine to the hapless millions of this land.

With their integrity in tatters, the news of financial embezzlement and attempts to escape from paying penalties to Daiichi Sankyo were the final nails in the coffin for the brothers.

A half-hearted attempt to gain public sympathy  by renouncing the world to join the Radha Saomi sect didn’t cut ice with anyone who followed the case.

The arrest yesterday and the all-too possible conviction seems to have ended speculation that the rich and powerful can get away with murder. India is well on its way to seek a seat at the world table. Making an example of these once-powerful tycoons being brought to justice will do its global image a world of good.

A strong country is one with a strong judicial system, tight corporate governance and one that can demonstrate that no one is above the rule of law. Surely, a fierce patriot like Dr. Parvinder Singh would have wanted this. Even if those behind bars are his own two sons.

Will 2019 be more of the same for pharma?

What’s new in 2019?

Nowadays, the most significant impact on the Indian industry is anything that happens in the US, more so, since most Indian majors have more than 50% revenue dependence on that market.

Trend 1: 2017-18 saw most of these companies build a very differentiated portfolio that included biosimilars, complex generics and differentiated formulations. The existing volatility around the ACA (Affordable Care Act) can mean that hundreds of thousands of Americans could lose their healthcare cover. If this happens, the FDA will look for ways to increase generic penetration and that would be big opportunity for Indian manufacturers.

Trend 2: Another mega trend could be the entry of ‘non-traditional’ players into healthcare. Amazon which is all set to become everything from an employer insurance aggregator to the next generation retailer to a global healthcare logistics specialist will probably disrupt almost every stakeholder in the healthcare arena today. Amazon’s interest spreads from primary care (tele-medicine) to healthcare at home services. The quicker Indian pharma learns to partner with such ‘non-traditional’ players, the better for them. What will be interesting to observe is will this relegate pharma to mere low-cost manufacturers instead of ‘patient care providers’ as they fancy themselves to be?

Trend 3: Increased power in the hands of patients is likely to upset a lot of current equations. Very vigilant healthcare media reporting has done well to harness patient power in some cases in India (J&J hip implants and Fortis dengue overcharge case). As patients and caregivers become more aware, pressure on the government and regulators will increase. How this plays out on pharma margins will be interesting to observe.

What about digital?

Some pharma companies have advanced capabilities of digitized process (manufacturing, quality, supply chain etc) but very few companies have actually appreciated the importance of digital technology in customer engagement. Pharma is traditionally a very product-oriented industry and therefore it is natural that it would embrace new technology into improving existing processes.

Therefore, companies are looking at how technology can help it to reduce inefficiencies in processes that are internal to the organization and I would think that internal digitization is definitely more widespread than its use externally (to engage customers / provide great experiences). Pharma still thinks of revenue as a product of volume and price. It hasn’t appreciated the possibilities of creating new service streams that patients would appreciate, value and pay for. This is the ‘white space’ that is being rapidly occupied by healthcare start-ups with billions of venture capital (VC) dollars flowing in.

A bit of shift in thought process is needed for pharma to apply digital technology externally to compete or reclaim that space.

Year of the Elections

On the political front I wouldn’t expect too much change with the general elections 6 months away. I think the govt has created enough political plank using healthcare and will tout it (PMJAY, reduction in prices of drugs and devices, hospital costs of surgeries getting reduced, implant patients being compensated etc.). Traditionally in India, healthcare (or education) has never been an electoral plank and politician understand that announcement of sops, loan waivers, direct cash transfers (DCT) etc will work more for the immediate term than announcements that will take a few years to materialize.

In a nation that depends solely on votebank politics, it is unlikely that any populist measure will ever be withdrawn. Drawing an analogy from the MNREGS scheme, even if the NDA doesn’t return to power, it is unlikely that a new govt will withdraw a scheme that has been touted to provide healthcare cover to 50 crore Indians. One may expect tweaks and small changes, but I believe the scheme will stay.

India Pharma 

In the domestic arena on the M&A front I would expect a lot of more niche alliances. Niche alliances aren’t very expensive and offer the opportunity to buy differentiated and complex products at relatively cheap prices. However the odd large deal cannot be ruled out if the US market opens up in the way Indian majors expect it to. In a market where no one can ever challenge the need for patent-induced monopolies that are the sole reason for high medicine prices, I believe there will be a greater urgency to introduce generics as a compensatory mechanism. This augurs well for Indian pharma companies – both large and small.

Do you think 2019 will be more of the same for pharma?

 

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

Image result for tarun gupta nmims

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

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

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

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

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

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

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

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

The Digital World – Be there or be square!

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

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

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

Digital is simply about leveraging technology

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

Shifting the mindset

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

Misplaced obsession with sales

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

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

Marketing in a digital world

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

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

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

Digital Darwinism

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

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

Digital Evolution

 

 

Selling in a digital era

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

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

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

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

old to new model

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

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

customerjourney

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

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

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

 

 

 

Is Digital Transformation Difficult?

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

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

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

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

 Digital Transformation - 4 steps

 

  1. Use existing structure to begin digital activities

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

  1. Encourage experimentation to build digital capabilities

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

  1. Create digital innovation team in parallel

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

  1. Gradually embed innovation into the existing structure

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

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

Technology enabled Learning

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

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

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

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

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

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

Watch my 1-min video here.