Dr RB Smarta, MD, Interlink Marketing Consultancy shares his insights on how the pharma industry will evolve this year and highlights the areas of focus for investment and growth
Considering the global industry dynamics and new competitive intensity, it looks like the pharma industry has been disrupted industry by itself. A self-reliant pharma industry, right from discovering, developing and manufacturing new medicines to
creating a market position, has been fully outsourced. Perhaps at the core, the industry is focusing on commercialisation and value creation. Similarly, the entire focus is on providing medicines and future medicines to the world.
In the Indian scenario where high demographic dividend, health consciousness and disposable income is creating a voluminous market. On the top of it, proliferation of hospitals at cities across different tiers is building capability to treat patients with the help of a payer like health insurance or without a payer. As a result, there is a need for more impetus of science and business in pharma and healthcare industries.
Having a conducive atmosphere which provides higher spending power to patients than in the earlier years on medicines should yield much higher growth than expected. However, 2018 has shown single digit growth due to disruptions and also due to creation of new habits to regularise business.
Emerging competitors
Many indirect competitors from the world where health is a priority and a substantial amount of GDP is spent on health have cropped up after considerable preparatory work by utilising knowledge, technology, IT and AI. As a result, giant IT and AI companies like Google are emerging as competitors in the pharma sector. The Silicon Valley has created enough start-ups during last five years which could be formidable competitors to the providers of the pharma industry.
These competitiors have paid heed to international developments along with changing social and medical paradigms and are bringing newer models to manage communicable and non-communicable diseases. There is a lot of investment happening in these areas. Obviously these companies would be ahead of others in 2019.
Reality in Indian pharma
In India, pharma industry has been pursuing growth with different business models. Start-ups, SMEs, small sized pharma companies, big sized national companies and MNCs. All of them operate with different foci as they have limitations of resources and target customers. In addition to this, e-commerce, B2Bs and businesses based on econo-metrics model have been emerging at faster pace.
The ever-changing Indian pharma business, marketing and branding have created road blocks as well as opportunities. These could arise through pricing, regulatory, market control, sales and marketing methods, disposition of HCPs, etc.
Business strategy and model
As Indian pharma industry has low maturity on the digital front, communication from organisations are dependent on the adequacy of those communicators. Understating this inadequacy and high attrition at the level of communicators, many are changing their business strategy from prescription to OTC, domestic to international markets, mergers and acquisitions, market penetration, generic to niche marketing, etc.
Those who have already changed their business model and looking at business opportunities in changed directions they would remain in pharma industry but the core business would come from accepted different models. Asymmetric and non-
linear competition from different corners of world such as Silicon Valley start-ups, google and other digital gadgets producers have already made their entry in the lives of patients and increase their health consciousness.
Everything is possible for each pharma organisation in 2019
Indian pharma market, at some organisational categories and their existing business models, will provide flavour of sustainability to one, and growth for those who have IT and AI maturity and quick gains for others.
Those who are at the stage of a turnaround would need higher focus on competency, those who are at niche level would perhaps need more personalisation with granular segmentation. Start-ups would need to enter with new markets or new technology. Besides being in pharma, most of the big sized domestic companies have charted their path from illness to wellness and are considering new ways to get growth through consumer health products in the health domain. This offers a varied complexion to the industry from flavour to experimentation and business results such as.
Industry structure
Structure of industry with new types of competitors having IT at centre and medicines at the support level, pharma industry must reimagine, rethink and accept reality to change their investments, practices and take advantage of new techniques, IT and AI to progress their business in 2019. At some level corporates may have to look at their mindset and re-orient towards their growth has plenty of opportunities to grow in 2019.
Leveraging factors
This year, depending on the strength of individual company, basic strategy and structure will change and yield benefits for that company. As everything like marketing, branding is getting personalised even the company needs to have a personalised strategy and structure the business on that.
The factors are as follows
1. Repurposing: Repurposing the molecules products to differentiate the competitors. This repurposing can even carnage the target customers.
2. Messaging: Segmenting the class of prescribers in such a way that company representatives do not have the same message to all segmented doctors. It becomes personalised attention.
3. AI and technology: Use of AI and technology in promotion of pharma communication through multimedia to substantiate brands
4. Going beyond to patients: Use of identified data points to understand patients’ need and use of digital media to move towards patients with doctors’ permission to add value from his side.
5. Enabling sales and marketing teams for changing environment: Enabling field staff for managerial contribution and not just supervision of their subordinates with same selling skills and KRAs. This includes even managing talent.
6. Rural markets: Penetrating rural markets with technology and other healthcare gadgets and medicines where primary and secondary health care is in no shape.
7. Niche expansion: Increasing niche areas of business and creating value through corporate branding, processes and support systems
8. R&D investment: Investing in patents and innovation to get exclusivity and relief from price control for the next five years.
9. Regulatory vigilance and coping skills to comply with the regulations: This year is a mixed year and success in the focus areas of each company will depend on its strength to invest and its teams to compete with the competition.
Six growth drivers
This year, there are many growth areas and also variables which will be helpful to pull up the growth and there are also chances that it will further deteriorate for those who will not be able to take advantage of these variables. The priority of each segment, right from R&D to enabling sales and marketing, would need more focus. It could be also extended to digitisation process and one-time investment in getting digital maturity. Hence investment is required in all these six six areas.
Driver 1: Managing medicines and segments with the use of IT and AI
Driver 2: Managing R&D processes to work on innovation and patents
Driver 3: Managing branding and marketing operations in a personalised way
Driver 4: Enabling sales and marketing management teams with business skills through (training mentoring, counselling, mind set alignment programmes)
Driver 5: Exploring new markets such as international markets, Indian rural markets, new and related segments, niche therapies etc.
Driver 6: Making efforts on wearables, ingestible, gadgets and new apps usefulness for the segment of patients
Focus for the future
The industry has a focus on discovering and developing new medicines within the regulatory frame work. Regulatory changes on allfronts, from quality of medicines to delivery systems of medicines are getting innovated. The consumer and patient ecosystems have been very fast in adopting new technologies and mobile is taking center stage. In this case, stakeholders like insurance companies, diagnostics companies, new competitors like Google as well as healthcare providers (HCPs) have to design individual flow charts of initiatives with adequate investment in each initiative to execute it effectively.
What does 2019 hold for the industry?
This year is full of challenges, opportunities, and learnings from very volatile from environment, be it politics, economics or business health. Pharma industry is a sociopolitical, economic and medical industry. As a result, all four industry segments would grow at different level of growth.
Start-ups may establish their relevance but may not add to growth. Small businesses which can create value could be better candidates for acquisition which would also not provide immediate growth. Mid-sized and big-sized domestic organisations would definitely grow much better than 2018 and MNCs would be at a different level of digital maturity would bring patients pool together to grow at a higher rate. Overall, the industry as a whole is on the growth path with atleast 12-15 per cent growth.