Is India Shining?

Friday, May 18, 2007

All of us, who either work in pharma, follow it or read about it, know that the industry is going through a tough phase. This is not just restricted to the West but to India too. The West is more in the news because of the sheer size of the industry there. The crunch seems to have percolated down to ‘smaller’ countries like India. However, this may not be an industry-wide phenomenon as the Indian pharma retail industry seems to be growing strongly in the higher tens.

In a presentation to industry leaders last week, Shailesh Gadre, head honcho at IMS Health, a market research company that pharma marketers generally follow, referred to this as the highest growth performance recorded in the last decade. This, he also pointed out, was in line with the growth of other emerging markets such as Brazil, China, Mexico and Korea. Mr. Gadre attributes this growth to interalia the impact of the IPR transition and the dynamic disease pattern in India.

This brings me to my point! India has a population boom and try as we might, this is something that we will have to live with. While we have tried to showcase this as our advantage, by projecting this population as potential customers to herald the retail boom, the fact is that more than 70% of them can barely afford more than two square meals a day! With an estimated 1.5 billion by 2050 (somebody, somewhere expects family planning to finally take shape!) is the Indian population a boon or a bane? The ‘dynamic disease pattern’, as Mr. Gadre puts it, makes this country sound like one with the most unhealthy population in the world (China’s population is estimated to be lower than India’s by 2050). India will lead the world in terms of people afflicted with diabetes, cardiovascular disease, AIDS and cancer!

Is it all dull and grey? Thankfully, no! There is a retail boom in India with FDI/FII investment on the upward of $12 billion. India Inc.’s profitability is at an all-time high. 1 out of every 6 firms listed on the Sensex made more profits in H-1, 07 than in FY-06. This robust profitability and GDP growth is driven by the services sector comprising IT, ITeS, Healthcare, Tourism and others. Now if healthcare is expected to drive GDP growth, is it not ironical that we ignore the largest chunk of the population? 60% of hospitals are concentrated in urban areas. What about rural areas? The ~70% who are in the rural areas and who do not have access to medicines and healthcare? What are we doing about them?

I asked this question of V. Vaidyanathan, Executive Director – ICICI Bank, India’s second largest bank and the largest private one. He found the question quite pertinent and said that ICICI dealt with this problem by helping the poor create wealth to make them more self-reliant and this was by extending credit facility to them. Sustainable model? It sure worked in the case of Bangladesh’s Grameen Bank! Let’s hope it works here too!

Things surely don’t look very rosy for India, at least not in the health department! A population boom, most of them unhealthy and unable to afford basic medicine and healthcare. And to top it all distribution of medicines and delivery of healthcare is all set to get more expensive in a country where 95% of the people are expected to pay out-of-pocket!

What is the government thinking? Is there any work on to bring the common man under a social security scheme? What is the pharma industry doing to drive this? We hear that the pharma market is cluttered and fragmented and very competitive. Isn't competition supposed to compel companies to deliver increasing value to customers? Aren't companies supposed to get more innovative? Obviously the strategy is one of profit maximization! Nothing wrong! Companies exist to make profits. But, is it not important for a company to invest in making both physicians and patients better informed and therefore, compelling themselves to deliver better value? Will short term cost savings or myopic strategies such as profit maximization overwhelm companies desire to widen access to life-saving medicines address the health needs of a growing population? Can't companies profit even by addressing these basic issues?

So far, there’s nothing out for the common man to see! India had 10 years to set its house in order before the WTO agreement came into force. Have those 10 years been wasted or have all the efforts that have gone in yet to bear fruit? Only time will tell if India is truly shining.

Posted by Salil Kallianpur at 5:34 PM

Reinventing the Market Place: Focusing on the Consumer

We attended a conference titled "Reinventing the Market Place: Focusing on the Consumer' which was organized by the AIMA. Great thoughts as usual and put across as passionately as possible! I have been thinking about this myself, quite a bit since my brief break from Pfizer last year. That experience was a unique one in that it gave me an opportunity to step out of the organization, get into a better one and then realize how much better Pfizer could have done stuff that is done routinely elsewhere and is ignored at Pfizer. Now that I am back, I sincerely hope I can apply that learning to deliver better at Pfizer.

A lot of what was discussed here has to do with what I studied at B-school. When I studied marketing, my professors drilled one idea into me (or at least it is the only one that I can recall now, ten years later): a brand is a promise kept. Over the last few months I reflected upon those carefully selected words: promise, kept. Two key words that let us know there is something we can count on . . . an assurance, a guarantee of sorts. In our uncertain world, more than anything, I believe, human beings are drawn to that which is certain, predictable, or familiar. All this has a lot to do with how leaders build trust. Like you so often say, as organization leaders, we are our organization...WE are Pfizer! Externally and internally, we are always on display. Our actions and words carry increased importance as we move up the organization. Others watch us and quickly form opinions about who we are based on their sometimes very limited interactions with us. The question we must ask ourselves is, "What is our promise kept?" It has been said that is it not what happens, but how we decide to deal with what happens that reveals our true character. This, I believe, is never truer than in our roles as leaders.What I have learned is that leadership (i.e. the application of all we are busy reading about or taking courses in) can only be lived in this moment.

Reading more articles, books, and taking more leadership courses will not provide significant value if we cannot apply all that we already know now - in our next interaction - our next brand impression. What you do today matters. How you handle things now is your leadership brand. You are your organization to the marketplace. Does every interaction communicate its promise?If I am to build brand trust in my own organization, I must be a living example of all that it stands for and seek to live our promise kept at every touch point - with every client, potential client, colleague, competitor, citizen. Am I always able to do so? Of course not. In fact, I am quite certain I fall frequently short. However, in striving to deliver on our promise kept, I know I am delivering the kind of interaction our clients and my colleagues deserve more frequently than I am not. A brand is a promise kept - an assurance of something valuable, something we hold dear, respect, appreciate or enjoy. The strength of that brand depends upon how consistently the promise is evident at every touch point.

"It is perfectly human for managers to want to blame 'up there' for how hard it is 'down here.' But real leaders can't do that. And they don't." - Jack and Suzy Welch
1:19 PM

What Makes People Buy?

Over the weekend, I was sitting in an empty house (my own), waiting for my household goods to arrive from Bangalore and doing little more. This essentially gave me a lot of time to think of the one question that dogs us ‘drug pushers’. What drives buying decisions of end-consumers (patients)? Now this is not an earth-shattering question and certainly does NOT make me feel like Isaac Newton. However, it is interesting because the purchase of drugs is more than a ”purchasing act in itself”. It involves a multi-stage process in which, firstly, a physician writes a drug prescription, secondly, a retailer dispenses and substitutes and, finally, a patient consumes. My understanding (not backed by hard data, but I don’t think I will be challenged on this!) is that the existence of information asymmetries between physicians and patients and uncertainty about drug effectiveness generate opportunities for retailer inducement and brand loyalty respectively. This is the traditional business model where physicians are the core of the system. However, under the new scenario of easier access to information, patients are becoming more demanding and sometimes question their prescription (albeit largely in urban markets). Furthermore, new models (Pfizer India’s DMP and the way we want to develop patient assistance programs) will encourage patients to adopt an active role in the decision between innovator and generic drugs. In this sense, I expect that healthcare systems will go through a transition from a physician-directed system to a patient-directed one. This new pharmaceutical framework (if it evolves as I expect it to) makes the analysis of patient preferences interesting. Do you think so too?Despite their importance in the drug purchasing process, we know little with regard to the influence of these factors in the process by which patients decide between drugs at the chemist counter. Furthermore, our understanding on product demand is very limited and has always been focused on the behavior of physicians, or very rarely, on pharmacists. It will be interesting to see what could modify consumers’ decision. Is it the degree of illness awareness? Is it company reputation? Is it age group? We don’t know for sure yet!We know that when individuals are faced with a chronic disease, the higher is the dominance of expert inducement and lower the influence of brand loyalty. Furthermore, when faced with a chronic disease, individuals become more price inelastic. I also think that age is a relevant variable in the decision between an innovator drug and a generic at the chemist. The old probably trust incumbent brands and doctor’s prescription more firmly; on the contrary, those in the younger age group are easily influenced by a chemist’s recommendation and, despite not being loyal to incumbent brands, they might value company reputation. In addition to this, those patients exhibiting high switching costs firmly trust doctor’s opinion and are reluctant to switch to drugs other than the prescribed ones. But those that have already tested and learnt about generics are more easily influenced by a chemist’s recommendation or a company’s reputation. Another significant implication (more in the Western regulated markets) has to do with pharmaceuticals public policy, such as the Generic Paradox. Since generic drugs are generally equivalent and priced lower than their innovator counterparts, they are expected to entail substantial savings for both National Health Systems and final consumers. This also makes it difficult for us to use the “imported/MNC drug hence better quality” line in India. One possible interpretation of this situation is the rise of uncertainty among patients. Will working on both physicians and chemists exert an important influence on patients’ decisions? Will focused programs with these target groups help them become key agents in the process by which consumers do not accept generic versions as a feasible alternative? Can we develop DTC campaigns to explain our point to the lay public or at least to patients who are prescribed our products? I think these are very important questions that we need to crack if we have to fine-tune the art of patient acquisition and retain them to optimize CLV. This can be a very important way to increase top-line sales that we ignore today!

Your comments please!
1:09 PM

Product Ads on Websites

After my post on why product websites seldom serve as advertising platforms for allied product/services, I did a little looking around. Spoke to my good friend Anupama Raosingh too! And what an ocean of information that happened to lead me to! Tons of blogs out there talking about how The Long Tail is applicable -or not- to pharmaceutical marketing, how social activity networks should be used to propagate patient interaction in those millions of little groups of patients with "nichefied" diseases/conditions. I am sure the same principle can apply to doctor groups too. As pharma marketers, we CAN help create these groups and also link that network to the relevant med specialist/clinicians. Maybe there can be boards where these specialists respond to patient queries. Can the industry help the long tail to wag?
5:39 PM

Product Ads on Websites

Well, its heartening to see no comments even after a few days. Either no one knows about this blog or no one cares. Either ways, its cool! A few thoughts that I wanted to 'pen' down here. Was wondering why pharma product websites dont have ads on them. Is it because, the product sites are hit as a result of an ad-click? Or is it a regulatory requirement? Dont know. But want to know. Why hasn't any product manager thought of advertising on pharma product websites as a potential source of revenue or as a new stream to the brand's topline? I am sure there is someone who has thought about it. But why havent they succeeded? Again my Q about it being a regulatory hurdle? I visited the Crestor website (www.crestor.com). No ads! Just links to AZ's programs. The same thing on the Norvasc site (www.norvasc.com). No ads placed! WHY?
10:29 AM

Does Pharma Breed Mediocrity

Wednesday, September 20, 2006

Do the principles of marketing differ so differently from industry to industry? What is it in pharma that makes marketing so difficult? Is it because this is a vastly regulated industry or is it because we cannot get to the end consumer (at least in India)?. Why do we not see any pathbreaking campaigns or case-study kind of marketing approaches. Why is it that none of what we do in pharma gets published in HBR? Why is it that pharma marketers dread to veer from the treaded path? Why??!