Do Consumers Perceive Pharma Industry Innovative?

Do Consumers Perceive Pharma Industry Innovative?

One of the world’s richest and most powerful American pharma associations, having an equally strong indirect global presence, apparently, expects all concerned to give an emphatic affirmative answer to the above question.

Vindication of this thought gets reflected in the self-description of the association claiming, it “represents the country’s leading innovative biopharmaceutical research companies. Our members are devoted to discovering and developing medicines that enable patients to live longer, healthier and more productive lives. New medicines are an integral part of the health care system, providing doctors and patients with safe and effective treatment options, and improving quality of life.”

Nearer home, the reverberations of the same could be felt when Novartis lost the Glivec patent case in the Supreme Court of India. At that time, the Wall Street Journal quoted Eric Althoff – a spokesman of Novartis saying, “If innovation is rewarded, there is a clear business case to move forward. If it isn’t rewarded and protected, there isn’t.”

In sync with this self-belief, all pharma trade associations, located across the world, intensely lobbying for the ‘research-based’ global drug companies, together with their individual members, also expect the stakeholders to believe, as if, innovation is the middle name of the pharma industry. This process continues unabated, though, is expensive, and costing millions of dollars every year.

This core intent of doing so, may well be a statement of fact to some, and a contentious one to many, for various reasons. Be that as it may, as the proof of the pudding lies in eating, it is worth ferreting out how successful these efforts have been with the consumers of pharma products. Do they generally buy this concept, and if not, why?

In this article, I shall try to explore the overall scenario in this area.

A recent study:

A recent study results released on June 12, 2017, based on a survey on this issue, and that too conducted in the homeland of pharma innovation – America, brings to the fore a startling fact. In the absence of any other, better and more credible recent study, I shall draw upon some relevant facts from this report.

Klick Health Health – reportedly one of the world’s largest independent health marketing and commercialization agency headquartered in Toronto, Ontario, conducted this survey. As the agency reports, this is an online omnibus survey, conducted between May 19 and May 21, 2017 among 1,012 randomly selected American adults. The margin of error is +/- 3.1 percent. To ensure that the findings are representative of the entire adult population of America, the results have been statistically weighted according to education, age, gender, region, and ethnicity. Discrepancies in or between totals are due to rounding, the report says.

Consumer perception on pharma innovation:

Some of the major findings on consumers’ perception regarding the innovativeness of the pharma industry, are as follows:

• Consumers do not believe that healthcare-related industries are particularly innovative today.

• Only 17 percent of consumers polled perceive pharmaceuticals & biotech, health & wellness, and hospital sectors as the most innovative, ranking in the 4th place after consumer electronics (72 percent), telecommunications (87 percent), and media & entertainment (90 percent).

• Among health-related industries, respondents ranked health & wellness first in terms of the industry that should be the most innovative (17 percent), quickly followed by pharmaceuticals & biotech (14 percent), and hospitals (9 percent) trailing behind the top 5.

Some other interesting findings:

On innovation and technology, general consumer perceptions are as follows:

• 91 percent of consumers believe that innovation will positively impact health care over the next five years.

• 90 percent of respondents say that technology will have a positive impact on their health in the future.

• 70 percent believe that technology will have the biggest impact in helping them personally manage their own health.nology

• Top five technologies predicted to have the biggest impact on people’s health in next five years:

-       Health and fitness wearables (21 percent)

-       Robotics (15 percent)

-       3D printing (10 percent)

-       Smart home devices (9 percent)

-       Artificial intelligence (9 percent)

• The survey reflects a shift in the consumer mindset from being passive recipients of healthcare to more active and autonomous individuals who appear eager to try more creative and innovative approaches to managing their health.

Another study reflects a similar perception:

Similar negative perception gets reflected in the January 17, 2017 Harris Poll, which reported only nine percent of American consumers believe that pharma and biotechnology drug makers put patients over profits.

January 17, 2017 Harris Poll, while comparing consumers’ perception among different entities in the health care space, found that only insurers have an overall worse reputation than the pharmaceutical industry.

An important area worth exploring:

When consumers do not perceive the pharma industry as innovative as the sector wishes to be, what could possibly be its reasons? While that could be a part of another discussion, it is worth exploring another important area in this article – Do the majority of global pharma CEOs have desired background to lead innovation?

Do the majority of global pharma CEOs have desired background to lead innovation?

This is yet another interesting question. A research article titled “Many CEOs Aren’t Breakthrough Innovators (and That’s OK)”, published in the Harvard Business Reviewon September 04, 2015 discussed this issue, well-supported by some interesting research data, while coming to a logical conclusion............

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Managing Pharma Investors’ Expectations When the Chips Are Down

Managing Pharma Investors’ Expectations When the Chips Are Down

Triggered by several critical factors, over a relatively short period of time, a downward spiral is visible with most Indian Pharma stocks, with a significant erosion in market capitalization of many large players in the country.

A set of important factors has been fueling this current downturn since around the last four years. These include, issues related to serious regulatory non-compliance with US-FDA and other foreign drug regulators, pricing pressure both in the domestic and the overseas markets, including the United States, delayed approval of several new generic drugs in the number-one pharma market of the world, for various reasons. Initial rollout period of GST expected to commence on July 1, 2017, may also prompt some major readjustments in the distribution setting of many pharma organizations. This has been further compounded with the wholesalers’ and retailers’ demand for compensation for any losses on input credit arising out of this critical reform.

As eroding market cap generally leads to commensurately lower market valuation of a company, it adversely impacts company’s many business growth related activities, which encompasses attracting low cost – high value investments, and M&A related activities, besides many others. Consequently, this negative swing has alarmed many investors, making them more demanding on company performance – uninterrupted, almost at any cost, as it were.

Not much headroom for necessary course correction:

Unrelenting expectations of this nature from the investors, inclusive of activist shareholders, to continue driving the business growth engine up the steep slope of ever increasing return on investment, is not expected to die down, anytime soon.

They may not be willing to leave enough headroom for the respective pharma management teams to realign their growth path with the changing and challenging needs of time, if it adversely impacts business even in the short-term. Nonetheless, if it is not allowed, the tailspin is likely to continue, as has been happening since, at least, the last couple of years, pushing the business at a dangerous level of sustainability.

Such demand of the investors and shareholders, irrespective of the gravity of the situation where their respective companies are in, may not be too uncommon, even in the global arena. However, many experts are now raising a key question in this area. In this article, I shall try to look at this issue, not just from the investors’ perspective, but also from what the concerned pharma players can and should do in this area, sooner the better.

A pertinent question needs to be addressed:

This important and relevant question is: what is the accountability of the investors, if their pressure for performance when the company is at a crossroad of this nature, causes a long-term irreparable damage to the business?

The very issue has been discussed immaculately in an article titled, “The Error at The Heart of Corporate Leadership”, published in the May-June 2017 issue of the Harvard Business Review.

The paper reiterates that attributing ownership of the corporation to its investors involves a challenging problem of accountability. This is because, ‘shareholders or private investors have no legal duty to protect or serve the companies whose shares they own and are shielded by the doctrine of limited liability from legal responsibility for those companies’ debts and misdeeds.’ Moreover, they are both physically and psychologically distant from the activities of the companies they invest in, and may generally buy and sell these shares without restrictions.

Nevertheless, such strong and ever increasing demands put the top pharma managers under increasing pressure to deliver faster and more predictable returns, regardless of the headwind that the business is facing. The issue becomes more complex when temporary-holders of large blocks of shares intervene to reconstitute a company’s board, change its management, or restructure its finances to drive up the share price, only to sell out and move on to another target, without ever having to answer for their intervention’s impact on the company or other parties, the article highlights.

Export business – the pain points:

“Pharma stocks take a beating on renewed US FDA scrutiny” – flashed the headline of a recent media report of June 12, 2017. As I see it, in the export business, especially in the top pharma market in the world, there appears to be a strong possibility of further worsening the business environment, especially for the Indian drug exporters.........

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The Relevance of Content Marketing in Pharma

The Relevance of Content Marketing in Pharma

“Nearly half of pharma industry may come under price control” – was the headline of a media report of June 7, 2017. Although, National Pharmaceutical Pricing Authority (NPPA) has apparently denied any such move, the fact is that the number of drugs coming under price control is steadily creeping up, ever since the Drugs Price Control Order 2013 came into force. If this trend continues, the gross profit margin of most of the branded generic manufacturers will also keep getting significantly squeezed, with a varying degree, though.

Coupled with drug pricing pressure in the United States, USFDA import bans from several manufacturing plants in India and dwindling number of new generic drugs ready for US launch, the market capitalization of many publicly listed pharma companies, may go further south. An important example of this situation was cited by Bloomberg, with reasons, in its report of June 07, 2017 carrying a headline “Pharma Woes Axe $14 Billion From Wealth of Once-Richest Indian.”

However, the overall setting is not so distressing for all Indian drug manufacturers, for different reasons. The June 08, 2017 headline of another  business news daily stating – “Cadila Healthcare overtakes Lupin as second most valuable pharma company in India,” vindicates the point. The promoter of this company reportedly said, ‘the company expects to receive 40 product approvals in the US in the current financial year.’

Be that as it may, added to these pain points of many pharma players in the country, Prime Minster Narendra Modi’s recent hint on framing rules for doctors to prescribe generic drugs, invites yet another wave of worries for the branded generic drugs players in India, regardless of a solid socioeconomic reason for the same.

Keeping these developments in perspective, collectively, the headwind faced by the Indian pharma industry, regardless of the underlying reasons, is indeed a tough one to navigate through, unscathed. Consequently, the stellar aggregate net profit growth of 41.3 percent in 2016 over 2015, as reported by the 2016 Dun & Bradstreet publicationtitled, “India’s Leading Pharmaceutical Companies 2016”, could possibly be rather challenging to maintain. Let me hasten to add that a much slower rise in the sector’s largest expense head – ‘raw material expenses’, also helped to achieve this enviable profit growth in 2016, as the report elaborated.

In this article, I shall try to fathom the depth this issue, and the possible way forward.

Areas of laudable contribution by the pharma industry:

For several decades, the pharmaceutical industry has been playing a leading role, not just in offering new innovative drugs, but their cheaper generic equivalents also, as those go off-patent, incessantly, to save and improve the quality millions of lives, across the world. The success of the drug industry is fundamentally driven by innovation – both in the discovery of new molecules and treatments, as well as in coming out with new cost efficient processes to significantly improve patients’ access to innovative drugs, post patent expiry.

Two areas requiring greater focus:

In tandem with these laudable initiatives, two disturbing trends are gathering momentum. One such trend is inadequate understanding of the grave fall out of not meeting with important stakeholders’ expectation on product pricing. As a result, various Governments and other health care payers are coming down heavily on pharma players to make drug prices affordable for the patients.

And the second one is, an intriguing apathy to be innovative in engaging with each stakeholder to take them on board. This can be done by communicating transparently, an easy-to-understand way and a customized way, the major benefits the individual players have been providing to facilitate various public health care initiatives. An apparent disinterest in this area continues, despite the snowballing effect of adverse public perception, and increasing trust deficit.

The core factors driving the trends:

These two trends are generally driven by two core factors – one is external, and the other internal. The external one is related to the general socioeconomic environment, and the internal one is intimately related to strategic business game plans of individual pharma companies.

The discussion will get more complex, if one wants to know whether the traditional pharma business models have a catalytic effect on the seemingly hostile business environment. As I have discussed several times in this blog, what the pharma players can possibly do in the pricing area, I shall not go into that subject yet again.

Nevertheless, what the pharma companies can do in the second area, to achieve their key strategic business goals, is quite different from what most of them are doing or not doing, till date. As we see around, many pharma players, especially the Indian branded generic companies remain engaged predominantly with the doctors, in the form of product detailing, or through Continuing Medical Education (CME) events, or the likes of these.

Today’s newer kind of strategic intervention calls for expert inputs. This is essential to create credible-research-based innovative content, and deliver the same with absolute precision through tailor-made platforms, for effective engagement with each stakeholder. It goes without saying, this should be done in a way that ordinary citizens or netizens can easily relate to.

Relevance of ‘Content Marketing’:

As the traditional pharma marketing is becoming progressively less and less effective, the need for a comprehensive content marketing model is becoming critical for the Indian pharma industry, more than ever before. In this model, useful content will be at the core of pharma marketing

According to the Content Marketing Institute (CMI): ‘Content Marketing is a strategic marketing approach focused on creating and distributing valuable, relevant, and consistent content to attract and retain a clearly defined audience – and, ultimately, to drive profitable customer action.’

It is possible to make the demand of a medical product, or a caring corporate image, more sustainable through content marketing, as compared to the traditional ones where individual product detailing and CMEs become the centerpieces of marketing strategy.

Why is it so important for pharma now?

According to a Pew Research Study, “One in three American adults have gone online to figure out a medical condition.”

Similarly, PwC Health Research Institute’s consumer survey of 1,060 US adults highlights, about one-third of consumers are using the social space as a natural habitat for discussions on health. More than 80 percent of individuals aged between18 and 24 would likely to share health-related information through social media, while nearly 90 percent of individuals would engage in health-related activities, or trust information found via social media. Around 45 percent of consumers said information from social media would affect their decisions to seek a second opinion.

In India too, increasing number of doctors and patient populations are ferreting information that they require from cyberspace, including different expert websites, online, and immediately when they require those.

Doctors are searching for detail information on different drugs, about their manufacturers, new treatment processes, and required data on clinical trials. Similarly, patients are searching for information in various other areas, such as, different aspects of the diseases that they or their near or dear ones are suffering from, and their effective modes of treatment with cost data, by getting connected online with related patient groups or communities. Even when engaging with the doctors, they often want to cross verify the outcome of discussion with the information available on the Internet. So do the doctors with the information provided by the pharma companies in person.

For example, one such popular website, among many others, is The Mayo Clinic’s Sharing blog designed for the Mayo Clinic community, and includes the following area:

• Sharing experience of patient communities
• Specialist doctors discussing new treatments, contemporary innovation in the health care space and patient care
• Medical researchers and specialist doctors sharing their research experiences
• Discussion on future health care and wellness by the professionals at Mayo Clinic
• Students sharing their experience and perspectives in various areas

Driven by the current digital wave, and the word of mouth publicity to the benefits derived by the doctors and patients through such process, an ever-increasing number of the population is expected to do the same, in the years ahead.

Thus, a huge marketing opportunity in this much unexplored area awaits the Indian pharma players to establish an emotional connect with the stakeholders, including the doctors and patients, by providing all relevant information that they are web-searching for.

Needs specialization:

Unlike traditional pharma marketing, content marketing is a highly-specialized area – especially for the generation of requisite meaningful and quality data, getting the relevant insight through analytics for innovative message creation..........

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