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.

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 3/4th 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.

‘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 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?

 

 

 

Current and Future Trends for Pharma

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

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

  1. Increasing Role of Generics

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

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

  1. Emerging Markets

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

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

  1. Outcomes – based medicine

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

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

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

  1. Personalized Medicine and Empowered Patients

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

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

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

  1. 3-D printing of drugs

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

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

  1. Supercomputers

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

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

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

 

Pharma Selling Model must Adapt

Pharma Selling Model must Adapt  (Listen to the audio file (5:03) by clicking on the link)

Worldwide, medical research and health care philosophy is undergoing fundamental shifts. The first is a fundamental and significant shift in healthcare philosophy and medical research – from a world in which we “react” to disease and illness after it has happened, to one in which we will be doing far more in advance to “prevent” specific health care problems. The driver for this massive change is the emergence of extremely specialized and highly personalized medical treatments based upon your own particular DNA.

The second shift (which is because of the first) is that healthcare is now becoming

  1. Predictive – forewarn people of susceptibility to diseases
  2. Preventative – empower them with information and resources to take preventive measures and to keep themselves healthy
  3. Personalized – provide information that is most relevant to them and what they want to know instead of generic and unimaginative information (n=1, R=G)
  4. Participative – make people a part of decisions made about their health. After all, its their lives. Enable them and trust them to hold themselves accountable

The common underlying cause for these two shifts is the advent of technology

These developments raise some interesting questions. Are these changes heralding in rapid change across the pharma industry and causing companies to re-evaluate their sales and marketing strategies? Are the pharma industry’s sales forces, with their current structure and training, capable of leveraging – to their advantage – the impact that the advent of technology has on the way patients seek treatment and on the way doctors treat them?

A pinch of creativity and a fist full of commercial effectiveness

Rapid change across the pharmaceutical industry in India is causing many companies to re-evaluate their sales and marketing strategies. The rampant generic nature of the market leaves it commoditized with little to no leg-room for branding and differentiation. The threat of price control and loose IP laws discourage the launch of innovative products leaving little hope of adding freshness to the portfolio. In such a scenario companies must focus on maximizing returns on revenues that accrue from existing products. Doing more with less, in an increasingly competitive market, inevitably puts pressure on the sales force.

Today, sales forces have to prepare themselves to deal with two significant shifts in disease and healthcare management that can change the way they work in the future.

As a response to disease patterns moving from acute to chronic, the first is a fundamental and significant shift in healthcare philosophy and medical research – from a world in which we “react” to disease and illness after it has happened, to one in which we will be doing far more in advance to “prevent” specific health care problems. The driver for this massive change is the emergence of extremely specialized and highly personalized medical treatments based upon one’s own particular DNA.

The second shift (which is because of the first) is that healthcare is now becoming:

a. Predictive – forewarn people of susceptibility to diseases.

b. Preventative – empower them with information and resources to take preventive measures and to keep themselves healthy.

c. Personalized – provide information that is most relevant to them and what they want to know instead of generic and unimaginative information (n=1, R=G).

d. Participative – make people a part of decisions made about their health. After all, it’s their lives. Enable them and trust them to hold themselves accountable.

The common underlying cause for these two shifts is the advent of technology.

Are the industry’s sales forces, with their current structure and training, capable of leveraging to their advantage the impact that the advent of technology has on the way patients seek treatment and on the way doctors treat them? The recipe for success is probably a pinch of creativity and a fist full of effectiveness.

Pharmaceutical companies have managed their business in much the same way for decades. But significant changes in government regulations, market conditions, and technology will force the industry to look for new business models and practices. With a little bit of creativity, companies can achieve a lot more and adapt quicker to the changes. Sales teams must evolve to adapt to the impact that technology will have on the pharma business model. Consider a few changes in the buyer-seller dynamic that is expected to emerge in the pharmaceutical industry causing a deep seated transformation in its fundamentals.

1. In 1–2 years we will see a hybrid salesperson emerge, and they will be technically, culturally, socially, and skillfully diverse and astute.

2. In the Western world today about 85% of buyer-seller interactions happen online through social media and video. Customers will not need a field salesperson to come on-site as regularly as they do today.

3. With the amount of information available through technology, the internet, social media, smart phones, tablets etc, the customer won’t need to engage early in the sales cycle. A total of 60% of the buying process will already be completed before connecting with a salesperson.

4. Virtual interactions will replace face-to-face field visits. Right now, Skype, web conferencing, and video are quickly catching on over face-to-face visits and traditional meetings in other industries. Tele-consulting or tele-medicine is common. If doctors prefer to see patients online, what are the chances he / she will want to see a sales rep in person?

5. With India moving towards Universal Health Coverage, doctors will no longer be the decision-makers. We will be up against non-medical decision-makers who may be tele-commuters or technologically savvy people.

6. It is only a matter of time before healthcare providers would start prescribing mHealth apps as soon as they prove to be as or more effective than prescription drugs.

So if your most important customers today (doctors) are not going to be the most important customers tomorrow, how well are we prepared to deal with non-medical people who are more clued on to technology and seek information from the internet, intranets, online groups, social media, patient activist groups etc? If doctors choose to decrease personal interaction and seek information, diagnosis and treatment remotely, what impact will that have on the current model?

Maintaining ongoing commercial operations, as it has been managed over the last decades, is economically unsustainable. Pharmaceutical companies must adapt to a new environment, which is more demanding than ever before. They must adopt lower cost models across the whole value chain and improve productivity and efficiency in their commercial approaches. Dispassionately analyzed, almost every “innovation” that we hear about in the industry is merely a tweak of the existing business and / or model. For an industry that has made colossal investment into research, pharma is uncharacteristically risk-averse when it comes to the changes coming in health technology.

None of the changes mentioned above essentially threaten the fundamentals of the current model. The pharmaceutical business, in India, will continue to be a B-2-B model for the foreseeable future. However, customer needs and wants will evolve as technology adoption spreads. Patients who have more access to trustworthy information will seek to participate in decisions pertaining to their health while health providers will work to predict and prevent illness to contain costs. These developments create exciting opportunities for pharma marketers to differentiate and deliver value. The more creatively and effectively they do it, the better.

This article was previously published at http://www.pharmaphorum.com

Sealed Doors of Bomb Shelters

When discussing why the pharmaceutical industry does not use social media, Andrew Spong (@andrewspong), one of the best known names on the health care social media circuit once tweeted,

 

“Without the change in mindset, for pharma SM can be akin to trying to hold a conversation through the sealed doors of a blast shelter”

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This clever sentence captures the somber mood of social media evangelists who have often bashed the industry for not adapting to the new world of communication that social media has opened up. Mr. Spong implies here that by not adapting to the changes that are exploding in the new world, the pharmaceutical industry has locked itself into a bomb shelter to protect itself. And, it is trying to communicate through the sealed doors of that bomb shelter with its stakeholders. In short, trying to communicate without using social media tools is as ineffective as trying to talk to someone through the sealed doors of a bomb shelter.

Why then is the pharmaceutical industry not attracted to this promising new world? Are pharmaceutical marketers stupid? Are they risk averse? Are they so ‘unplugged’ from the world that they do not understand paradigm shifts in their sectors? That probably explains it. Unlike in most industries, social media has hardly changed any paradigms in the pharmaceutical industry.

But, the question still has me flummoxed. We (pharma people) operate in an industry that’s all about information and knowledge. We position ourselves as information providers to all the health care professionals, be they doctors, nurses, pharmacists or in some cases, even to patients and their families. If that’s what we really do, then why would we not naturally adapt to new and exciting media that allow us to engage with all these people more closely? Let us examine a few facts.

Corporate brands

Essentially 2006 was the turning point in social media for most businesses. Pharmaceutical companies (mostly outside India) at this point began to slowly join the social media milieu, but in limited capacity. This is because Twitter accounts and Facebook pages were often for the corporate brand, not the individual drug brands or care areas, and Facebook page comments were disabled almost across the board.

 Concerns about AER (Adverse Event Reporting)

This limitation of conversation on social media is logical given the concerns about AER (Adverse Event Reporting) requirements and the lack of relevant FDA guidelines. But its not like the industry gave up totally on social media. It tried, but minimally, with measured and unsure steps, as if walking on thin ice. And, minimal effort led to minimal results.

Uni-directional engagement

Pfizer (@pfizer_news) the largest pharmaceutical company in the world, attracted about 30,600 followers on Twitter (as of Aug 1st, 2012). Fantastic? Not really. Coca Cola (@CocaCola) has 586,000 followers and Nike (@Nike) has 561,000. Pfizer’s followers were largely made up of the Health 2.0 community rather than patients. Fewer people engage with Pfizer because of a strict regulatory environment that holds the industry back from being able to provide real value to the patient. Therefore, only being able to leverage social media as a traditional one directional media channel, very much like the traditional detailing to the physician, no significant relationship between brand and patient can be formed.

 Real time communication and engagement

The nature of current social media approaches and tools demands real-time interactive response and dialogue. The pharmaceutical industry does not and cannot communicate that way.

Image1)      Facebook demands interactivity and informal two-way communication. Companies evolve convoluted versions of it just to be present, killing the fun and the interactivity that makes Facebook so enjoyable.

2)      Twitter demands 140 characters to communicate. Pharmaceutical communications (prescription brands) demand fair balance, context, long explanation, disclaimers, and all kinds of fine-print.

3)      LinkedIn is all about the individual professional. It’s a great platform for recruiting, even in the pharmaceutical industry. The problem on LinkedIn is that interactivity is almost nil. Pharmaceutical companies hardly create meaningful interactions and networking on this medium.

4)      YouTube is one place where pharmaceutical companies can participate on a social platform, as long as it is one-way broadcasting and storytelling. That is only media. Not social.

Social media is about on-demand mobile communications (user generated content, location data, commerce etc.) that is real-time and fragmented. The pharmaceutical industry is all about centralized, one-way, controlled communications.

Discontinuous engagement

As a result of these challenges, patients quickly realized that pharmaceutical social media channels do not offer any venue for real communication (and are, in fact, anti-social media) and began to choose other social venues to discuss their medication and conditions. This then created opportunities for other interested parties to establish engaging social destinations for patients that focus on specific brands and conditions. As a result, pharmaceutical companies have slowly but surely been losing control over the discussions regarding their brands and allowing other parties to “hijack” the mindshare of their clients. 

Uncontrollable online activism

The industry is unsure of how to handle customer problems via social media. Last year, a pharmaceutical company planned to launch a medicine in the US in a newly approved indication for $1,500 per dose. Unfortunately that medicine had a generic version for just $10-$20. Activists led a social media campaign in protest. Despite quickly lowering the cost of the drug to around $20 or less per dose, the damage was done. The online campaign created a widespread backlash and ultimately damaged the company’s image. This sort of social media crisis is a clear demonstration of what can happen if such a volatile medium is not handled properly with expertise.

 Unclear regulatory framework

Even as pharmaceutical companies have increasingly struggled with their online presence, the US-FDA has repeatedly failed to deliver promised guidance, even while issuing warning letters for egregious web sites. Meanwhile, Facebook recently decided that it will no longer allow drugmakers to disable comments posted on newly created pages, prompting some to consider walking away from the site.

Despite the fact that there are minimal regulations currently in place for social media, the industry is struggling with the medium. Can it afford to leave its social media initiatives in the hands of others much like its R&D and manufacturing processes? Perhaps, the answer to the industry’s social media problem lies in the creation of private and branded communities with the ability for Facebook integration. In private communities, control can be established through various modes including strong moderation policies or by further controlling the discussions using innovative approaches. Within private networks, pharmaceutical companies have the ability to create guided experiences, increase patient engagement, adherence and education, listen to patient comments while simultaneously promoting their brand.

 Yet, with all these limitations, the pharmaceutical industry will, in the truest sense of the word, betray the essence of social media. The intersection of the pharmaceutical industry with social media presents a major cultural collision – they type when a regulated, top-down, one-way, controlled communication corporate culture meets the free-wheeling, bottom-up, conversational, unpredictably evolving world of digital networks. Even as digital network communications are rapidly becoming “the new normal”, the pharmaceutical industry with its old economy mindset driven by environmental challenges continues to shout itself hoarse through the sealed doors of bomb shelters.