Pharma Reviews Newsletter Oct09

8/14/2019 Pharma Reviews Newsletter Oct09

1/20

http://www.mypharmareviews.com

https://twitter.com/salilkallianpur

THE PHARMA REVIEWS

MARKETING FORUM

Newsletter for the Healthcare Marketer

OCTOBER 2009Volume 1 Issue 2

Published by:SALIL S. KALLIANPUR

Mumbai, India

From Reverse Engineering to Reverse Innovation

Moving to copyright from right to copy

At the intersection of healthcare and life

CONTENTS

SPECIAL FEATURE

Information versus Promotion

What lies at the core of pharma marketing?

Global Pharmaceutical

Industry Emerging Trends

SPECIAL FEATURE

Companies Desire to Grow Exponentially Yet Plan Incrementally

A need to change existing business models to adapt to the changing landscape

GuestArticle

Dr. Viraj Suvarna

GuestArticle

Ajay Dhuri

Pooling Know-How in Healthcare

Helping create access to affordable medicines and healthcare


2/20

At the Intersection of Healthcare and Life

SALIL S. KALLIANPUR I am just another guy caught in the quagmire of pharmaceuticalmarketing, trying to get my two cents across through my blog andthis newsletter. I haven't worked outside the pharmaceuticalindustry and outside the sales & marketing function. I sincerely hopethat there will be people from other industries and domains who willdeem it fit to share their views and rich experiences. Last but notleast, I am no John Mack, so do forgive the limitations in viewsexpressed! It is my sincere hope that this newsletter helps each of usunderstand how our work in healthcare marketing intersects withlife, in general, and helps us to become better human beings.

My Two CentsIndias robust economy has expanded by more than 8% annually for a decade and like any dynamic emerging economy, it is in the throes of transformation. Huge new opportunities await companies that successfully innovate tofulfill the burgeoning needs of a market being redefined dramatically by demographic and social change. India is aready market for the right products and services, particularly in those areas that have been traditionally underserved by the government: education, health care and communications. All three sectors have common traits and needs that canspur new products and services that are uniquely Indian. Companies that get it right in meeting these critical needs willnot only reap rewards but will also help to narrow the knowledge gap and grow employment and wealth for thecountry overall. This will effectively create a virtuous circle as quality of life improves for millions beyond thetraditional middle class and a new class of consumers beyond the traditional base - show the potential to transformthe Indian market. After all, the attractiveness of the Indian market is its gargantuan size

To be successful in the Indian market, organizations must customize their services and products. Any offering shouldprovide value in terms of both convenience and cost. Typically, successful players in the Indian market use a high-

volume, low-margin business model, finding fresh and inexpensive ways to deliver existing technologies to morepeople and places. When economic progress does not facilitate percolation of basic benefits to its needy, its thesystem and not the progress that needs to be re-looked at.India and China decided to exercise their new found representation on the global stage by uniting on climate changeissues. One hopes that the co-operation extends to other common issues, such as education and healthcare, that bothcountries face while they steam on towards emerging as global economic superpowers. It is economic progress thatgot both countries included into the elite Group of 20.Can this inclusion be an opportunity to change things? CanPrime Minister Singh redo his magic of the Indo-US nuclear deal? Can the governments of India and China work withthe United States to let information flow from the knowledge based research centers in the developed world, to thelow cost research facilities in India so that medicines and services that are essential for the common good of at leastboth nations, if not many more, are addressed in a coming together of elite science and quality mass production?

Thank you for sparing time to read this issue of The Pharma Reviews Marketing Forum Newsletter.I hope you like it!

From the Editors Desk

SALIL S. KALLIANPUR


3/20




Information versus Promotion

What lies at the core of pharmaceutical marketing?

Dr. Viraj R. SuvarnaHead Medical Affairs andResearch, Pfizer Ltd. - India

GuestArticle

Information, not Promotion, is at the core of our offering as pharmaceutical marketers. The advantage of informationis that one is allowed to share information on off-label useof drugs too! After all, our products save lives, improvequality of life, and reduce suffering. Do we need to

'promote' such products? Or should we only make doctorsaware by ensuring that they are fully informed to make thebest possible decision for their individual patients? Doctorsneed to know all available information, publishedpreferably in truly peer-reviewed journals. Nowadays evennegative findings get published, so it is no longer evidencebiased but evidence-based medicine. The Medicaldepartment is also the seat belt of a healthcare organization.It does not come in the way of speed of execution butprotects the organization from billion dollar slaps.


4/20


5/20

This 'promotes' healthy skepticism and gives doctors what they really want. Be open and transparent.Involve them in your strategizing, understand currentmedical thinking from their perspective, really taketheir advice and then act on it. And this is something Medical Affairs and Research/Relationship Specialistsare best placed to do.

The future is Field Medical. And to be able to domuch more in harnessing relationship management,Medical needs to have much more of topline as abudget. Medical drives the business of healthcare, andconverts a 'for profit' to a 'for value' organization.

In these days of 2.3 billion dollar slaps, it is even moreimperative that Medical (along with Regulatory andLegal) takes a larger role, both strategically and

tactically. The medical representative should representthe Medical department and what it stands for - theConscience of the Company.

The professional service officer is a professional inthe way s/he offers value-added services and brandsthe value that we offer in the mind of the customer.

And Information, not Promotion, is at the core of ouroffering. After all, our products save lives, improve

quality of life, and reduce suffering. Do we need to'promote' such products? Or should we only makedoctors aware by ensuring they are fully informed tomake the best possible decision for their individualpatients?

Dr. Viraj Suvarna has an MD in Pharmacology from University of Mumbai and M.Sc. in Pharmaceutical Sciences from Hibernia College..

Dr. Suvarna is currently Head of Medical Affairs and Research at Pfizer Ltd. India. The views expressed in this article are personal and do not represent his current employer.

Information versus PromotionContd.


6/20


7/20

T he $890bn global pharmaceutical industry is going through tremendous upheavals and is trying tokeep pace with the aftermath of recessionary changes. The industry is putting forward a classiccase of changing business dynamics for thepresent and future managers to mull over. It ischanging not only the rule of the games but mostlikely will change the rulers in the future. Thereare not only mergers, acquisitions but alsocollaborations between competitors to topple thecurrent leader. When Big Pharmas are knownto go for big ticket acquisitions, there are few companies like GSK which followed a uniqueMICRO approach in M&A activities. In my mind, these changes have triggered few thoughtson the future which I am sharing with you.

Die or Diversify

The earlier business model of building blockbusters is already getting dismantled and theplace has been taken up by small, agile businessmodels to operate not only in high volume, low margin generic/emerging market business, but thekeen focus is also on high margin, premiumproduct, research / biologics business areas. Thisdiversity model is also getting skewed strongly toconsumer business segment

Are we moving from Pharmaceutical-to-

biopharmaceutical-to- healthcare-to-

wellness model?

Increasing cost base, lowering margins, drying up of product pipelines, fluctuating regulatory policies, bigger interference by governmentauthorities has forced pharmaceuticalcompanies to move laterally in both directions;do backward integration to improve cost base,and also move forward towards biologics andhighly intensive research areas. What willhappen after 10-15 years once this phase of consolidation ceases? Will the companies movebeyond biopharmaceuticals to a more serviceoriented business model by directly operating inhealthcare/wellness arena? This will surely givethem a better understanding and influence overregulatory concerns, closer to the endconsumer (patient) and not the currentcustomer (doctor)

Will the growing research in customizedtherapies, stem cell treatments, improved drug delivery systems, technological advances lowerthe need/consumption of medicines? Will thebig pharmas, GSK, PFIZER, MSD, J&J willhave their own chain of hospitals, patient carecenters? Will the next phase of M&A activitiesmay get extended to acquisition of chain of hospitals, distribution chains by big pharmas?Or will they move towards a more complex, yetcustomized gene based therapy research areas?

Global Pharmaceutical IndustryEmerging Trends contd.


8/20


9/20


10/20

Management thinkers have long advocated aggressiveplanning and execution of exponential growth-driving strategy as a preferred path for market leaders andchallengers during the relatively slow time of globalrecession. While the impact of recession is not asstrongly visible in pharmaceuticals and healthcare as itis in other sectors, there has been a conspicuousabsence of innovative growth-driving plans, apartfrom the few-and-far-between consolidation attemptsof Big Pharma picking up the odd biological orbiopharmaceutical company.

Crisis Gone to WastePharma marketing honchos [at least in India] do notseem to have done enough to make the most of theopportunity and, in the words of Rahm Emanuel, letthe crisis go to waste! Knee-jerk reactions haveresulted in so-called cost containment which may

have moved precious resources away from gainfuldeployment. While an eye on profitability is expected,I am not too sure that investors would prefer toignore revenue stagnation and a resultant abdicationof leadership status at the cost of increasing profits by a few percentage points. Even if investors dont mind,I am sure employees would! Who likes to work in acompany that is seen as passive and lazy? Wouldntfocused investment on improving capability at anopportune moment like this make sense? To be fair,

manpower hiring to increase penetration and reachmay still be an expensive proposition but areas suchas adopting latest technology may be not so expensive.

A lack of business demand is likely to have drivendown bargaining power of technology providers

Companies Desire to Grow Exponentially YetPlan IncrementallyA need to change existing business models to adapt to the changinglandscape

Can reality TV become asource of health awareness?

amongst other vendors. Just as retail investors areadvised to buy when the financial markets are down,

wouldnt companies be well-advised to upgradecapability when choices and options are likely toabound? Upgrading technology in areas such as state-of-art business intelligence [gathering preciousconsumer insights, reducing consumer transactioncosts etc.] and analytical tools, cutting edge capability in R&D, and in distribution & logistics packages caneasily shave off substantial dollars, time and effort. Itcan also make companies leaner, flexible and moregeared to take on leadership status in lucrativemarkets. To create long-lasting advantage, producedramatic shifts in competitive position and cross new performance thresholds, companies must cultivate amanagement approach that will encourage acontinuous flow of innovation, a recognizedcornerstone of all high-performance businesses.

Incremental Planning Exponential Expectations Also, doesnt a large player in the healthcare delivery space have any responsibility to deliver better andmore relevant products and services to theircustomers? Todays preoccupation with cost shifting and cost reduction undermines clinicians and patients

the very reason for pharmas existence! Instead,shouldnt we focus on improving health and healthcare value for patients? Shouldnt we focus on strategy

that is market based but clinician [customer] led?.Michael E. Porter and Elizabeth Olmsted Teisberg

wrote in an article published in the Journal of American Medical Association [JAMA] thatimproving the value of health care is something only


11/20

medical professionals can do and so clinicianleadership is essential. Can companies that lead oraspire to lead, not help clinicians to lead change andreturn the practice of medicine to its appropriatefocus: enabling health and effective care?

Improving health and health care value is the only realsolution. But what have pharma marketers done tohelp realize this? Although individual company strategies differ, they have at least so much incommon: each marketer examines todays marketdynamic and thinks of incremental change, that caneffectively rein in high operating costs that arefrowned upon by senior management. This approach

will fail because it starts with a flawed premise. Thepurpose of marketing, is not only to minimize costsbut to deliver better value to customers, albeit in acost efficient manner. I asked senior colleagues and

friends about how different thoughts and ideas werecompared to the 70s [when they began their careers],and they couldnt tell the difference! This means thatthe marketing model is virtually the same over 4decades!! Marketing and brand plan discussions overyears have remained the same feeble attempts atinnovation, yet principally the same! Every CMOmakes it mandatory to reiterate that cost containment

will not happen at the cost of business, but rarely haveI seen a path-breaking idea see the light of day. While

CMOs talk of exponential growth, it seems like they believe in incremental planning!

Companies Desire to Grow Exponentially YetPlan Incrementally


In the JAMA article, Porter & Teisberg also write thatcompetition spearheads innovation. The Indianpharma industry is as fragmented as it gets. ~25,000companies fight for share in a ~Rs. 36,000 crores[$7.2 bn] market. Hence there is no dearth of competition here. Then why doesnt competitionspearhead innovation? The problem is thatcompetition is dysfunctional since competitors work atcross purposes with each other and with the needs of the ultimate customer: the patient. This creates azero sum game which means that one player gainsat the cost of another. Sales reps are trained not tolead but to [grab] share .

Leadership or challenger strategy looks to break away from the mundane and create opportunities for newermarkets and therefore, exponential growth. How many marketers have looked to co-create value withother stakeholders along the value chain? Hospitals,for instance. Large scale consolidation amongsthospitals have led to a far greater integration of service offerings than within pharmacos. Not many have leveraged the opportunity to work withintegrated entities to create new vistas for growth.Diversification for growth is proven, yet companiesperceive it as a separation from core strategy. Why not look to partner vertically integrated players [suchas Apollo hospitals] to drive exponential growth?

A need to change existing business models to adapt to the changinglandscape contd.


12/20

Insights That Matter

Market developments such as the deal announced by Microsoft with their one time competitor, Yahoo Inc.,to reduce impact of a bigger thorn-in-the-flesh,Google Inc. provide insights that matter. Why haventleading pharmacos thought of something like that?Could this not be a wonderful way to create marketdeveloping projects between 2-3 leading/like-mindedplayers in the Cardiovascular (CVS) segment [thefastest growing segment of the Indian pharmamarket], for instance? Such initiatives can becomemore cost-efficient in the background of the globalmeltdown. When payer [govt./employer/insuranceco.] spending on healthcare is likely to reduce, at

worst, or stay the same, at best, the burden of spending out-of-pocket is felt highest amongstconsumers in such chronic therapy areas. New products and services such as managed care programs

[disease management programs] can help to createawareness on economic benefits of keeping healthy.Health economics research has shown that simplelifestyle changes such as giving up smoking helps savehuge sums of money. [Smokers spend Rs. 28,800($576) on cigarettes every year if they smoke 20 sticksa day @ Rs. 4/ 10 cents per stick numbers increaseexponentially if you include alternate tobacco users].Beside the opportunity to provide innovativesolutions to health issues, partnerships between

companies and healthcare providers can help to createhuge gains by better integrating and coordinating allactivities required to serve customers. Betterintegration of treatment with prevention,rehabilitation, and disease management will create

Companies Desire to Grow Exponentially YetPlan Incrementally


ways to improve the overall outcomes and reducecosts. Such programs when negotiated well canprovide pharma companies preferred supplier status

with hospitals leading to exponential growth! Thehuge intangible gains to corporate brand equity through well placed PR and patient word-of-mouthpublicity is an upside.

No business survives over the long term if it cantreinvent itself. But, human nature being what it is,change is often resisted. Thus, for market leaders,leading change is both absolutely essential although itis incredibly difficult. Planning for exponential growthis a good starting step. Companies cannot desireexponential growth and plan incrementally!

SALIL S. KALLIANPUR

A need to change existing business models to adapt to the changinglandscape contd.


13/20




From Reverse Engineering toReverse Innovation

Moving to Copyright from Right to Copy!

Innovator pharmaceutical companies have always cited unstable IPR scenario as a reason why they didnt look at India as a growth driving market despite its market size and thriving localindustry.

Now, an article titled, How GE is Disrupting Itself, published in Harvard Business Review,

October 2009 takes a refreshing new look at the vast opportunity that is India. Jeffrey Immelt,GEs CEO along with Profs. Govindarajan and Trimble provide wonderful insight on how big conglomerates can look at India [and other countries] as growth driving opportunities throughreverse innovation. What the authors means is that GE discovered that new ideas andopportunities lie in countries and markets that were hitherto thought of as underdeveloped.

They found opportunities to create products at price points for market segments that were notonly relevant to the local market and hence revenue generators, but more importantly, openedup new opportunities even in developed markets where company growth was stagnating. Froma pharmaceutical industry perspective, companies that always thought of India as masters of reverse engineering can now begin to look at India as a fertile market for reverse innovation!


14/20


15/20

While it is obvious that the economic boom being experienced by India has been unable to control ashocking rate of infant deaths among the countryspoorest, US statistics lead us to believe that it is notnecessarily the countrys economic progress that is key to basic healthcare but effort made to ensure itsdistribution to the needy in the best manner possible.

A 2007 CII-McKinsey report estimated thatoutpatient care currently accounts for 61 per cent of private healthcare spending, of which maximum is onacute infections like fever, diarrhoea andgastrointestinal disease. This for a country that isexpected to emerge as the third biggest economy inthe world in the next two decades! The healthcaresector contribution to GDP and employment issignificant and it is one of the largest service sectors

of the economy. The report suggests that to meet therising demand, India will need to invest ininfrastructure and create cost-effective facilities.

Approximately 80 per cent of the required investmentshould come from the private sector. Thegovernment's spending on healthcare is around 0.9per cent of the total GDP, which limits the extent andeffectiveness of the coverage it can provide. The USgovernment spends 16% of its GDP on healthcare

which is still very inefficient and called for recentreforms that are still under debate.

A study on the health system in India showed that amothers education/awareness had a high significancein all the three factors of maternal health care services.

Another very important finding was that mothersreligions have significance (99 percent level of significance) with assistance during delivery andpostnatal care services. The report highlights threeareas that have the most influence on child well-being:female education, presence of a trained attendant atbirth and use of family planning services. This again

reinforces the need for the 4 As:

1. Awareness people know about the facilitiesavailable

2. Access people can afford those services

3. Availability people get the services when they needthem most

4. Applicability people know how to reach thefacilities/services and are not confused about which touse when.

When economic progress does not facilitate percolationof basic benefits to its needy, its the system and not theprogress that needs to be re-looked at. It is thecountrys economic progress that got it included intothe elite Group of 20.Can this inclusion be anopportunity to change things? Can Prime MinisterSingh redo his magic of the Indo-US nuclear deal? Canthe governments of India and the United States cometogether to let information flow from the knowledgebased research centers in the US, to the low costresearch facilities in India so that medicines and

From Reverse Engineering to ReverseInnovation

Contd.


16/20

services that are essential for the common good of atleast two nations, if not many more, are addressed ina coming together of elite science and quality massproduction? Economists have proven that loans fromIMF/World Bank to countries is not necessarily linked to economic progress. Hence, a better option isto fund projects [private or state-run] that have

accountability rather than provide blanket loans thatare often diverted for political benefit than anything else [as in the case of Pakistan using US military aid].Can world leaders encourage big lenders such as IMFand the World Bank to provide capital to privateplayers to develop products and services throughpooling technology and manufacturing capability intrue humanitarian spirit? Royalties and revenuesharing models can be worked out to ensure that themodel becomes sustainable. In this context, does the

MSF call to Big Pharma teach us something?

From Reverse Engineering to ReverseInnovation

Contd.

SALIL S. KALLIANPUR


17/20

M decins Sans Frontires (MSF), an internationalhumanitarian organization called upon Big Pharma topool their HIV patents to enable quick transfer of know-how to manufacture and increase access tocheaper and more effective medicines for the deadly disease that affects millions around the world. This isa much needed step towards collaboration that can

lead to progressive percolation of health services andessential medicines to the poor and needy than everbefore.

The Indian healthcare scenario has a paradox. On onehand by 2015, India is expected to rank among thetop 10 global pharmaceutical markets. According toresearch, the industry is growing at around twice thecountrys GDP growth. Yet, according to Save theChildren, despite a decade of rapid economic growth,Indias record on something as basic as child mortality at 72 per 1,000 live births is worse than that of neighboring Bangladesh, one of the poorest countriesin the world. However, what is shocking is thatdespite having more neonatologists and neo-natalintensive care beds per person than Australia, Canadaand the United Kingdom, the United States has thesecond worst newborn mortality rate in the developed

world, according to the report. While it is obviousthat the economic boom being experienced by Indiahas been unable to control a shocking rate of infantdeaths among the countrys poorest, US statistics leadus to believe that it is not necessarily the countryseconomic progress that is key to basic healthcare buteffort made to ensure its distribution to the needy inthe best manner possible

2007 CII-McKinsey report estimated that outpatientcare currently accounts for 61 per cent of privatehealthcare spending, of which maximum is on acuteinfections like fever, diarrhoea and gastrointestinaldisease. This for a country that is expected to emerge asthe third biggest economy in the world in the next twodecades! The healthcare sector contribution to GDPand employment is significant and it is one of thelargest service sectors of the economy. The reportsuggests that to meet the rising demand, India will needto invest in infrastructure and create cost-effectivefacilities. Approximately 80 per cent of the requiredinvestment should come from the private sector. Thegovernment's spending on healthcare is around 0.9 percent of the total GDP, which limits the extent andeffectiveness of the coverage it can provide. The USgovernment spends 16% of its GDP on healthcare

which is still very inefficient and called for recentreforms that are still under debate.

A study on the health system in India showed that amothers education/awareness had a high significancein all the three factors of maternal health care services.

Another very important finding was that mothersreligions have significance (99 percent level of significance) with assistance during delivery andpostnatal care services. The report highlights threeareas that have the most influence on child well-being:

female education, presence of a trained attendant atbirth and use of family planning services.

Pooling Know How in Healthcare

Helping create access to affordable medicines and healthcare


18/20


19/20

My RecommendationsSome Great Ways to Stay Informed!

Books

Magazines

Great book on geopoliticsand history

Good read onbehavioraleconomics

Helps you understandthe current state of

affairs in India

Excellent book tounderstand how money defines world history

A leading source of analysis on

internationalbusiness and world

affairs

Educates andinforms on Indianbusiness and the

economy

Your portal toglobal politics,

economics and ideas

Serves as a bridgebetween academia

and enterprises


20/20



Thank you for sparing time to read this issue of The Pharma Reviews Marketing ForumNewsletter . I hope you liked it!

This newsletter will benefit from your feedback and suggestions.Please feel free to write to me at [email protected]@gmail.com with your comments and suggestions onhow to make this better and more interesting.

I would be very happy to receive your suggestions on topics thatyou think I should include in this monthly newsletter. If youthink I should feature something that you wrote, I will be happy to do it.

Salil S. Kallianpur

THE END TPRMF VOL. 1 ISSUE 2

Pharma Reviews Newsletter Oct09

Documents

Transcript of Pharma Reviews Newsletter Oct09