‘’Cipla seems to have stepped up the game in leadership and managing talent’’

In a study based on a unique peer ranking methodology, global management consultancy firm Hay Group has released the findings of the second edition of India’s Most Admired Companies (IMAC) across 16 sectors. It is to be noted that not a single pharma company made it to the Top 25. Shalini Gupta finds out more in a chat with Gaurav Lahiri, Managing Director, Hay Group India

What is the reason that pharma companies do not feature among the top most admired companies in the country? Are they going down the curve?

Gaurav Lahiri

It is hard to generalise this, looking at the overall rankings, wherein we ask companies to rank other companies across industry, so it tends to go a lot by the brands, shares etc. as opposed to a real deep understanding about a company or in-depth view of the organisation. Yes, it does mean that from a branding point of view the sector is less attractive to other corporates. Within the industry, there is significant disruption, most of the Indian and global MNCs are going through an identity crisis, trying to figure out their business models, MNCs are hitting a patent cliff, ability to have premium medicines at high price point is going down and R&D needs to be transformed to have new drugs coming in the pipeline. The industry is in transition.

Are pharma companies still not brands, have they not positioned themselves, if not why? Or have they not been perceived as brands?

For this we’d need to understand, what is the brand sense of a company. For some companies, the focus is more on product brand or the category brand, where the strategy is more on creating a product brand rather than a corporate brand. Whereas if you look at ITC, it is a corporate brand. Most product brands have come to realise that corporate branding is much more effective as compared to product branding. Pharma companies on the other hand are promoting products (consumer healthcare and OTC) rather than positioning themselves as brands.

Cipla seems to have stepped up on some parameters whereas GSK slid down. Explain.

Two major areas where its peers think Cipla seems to have stepped up the game is in leadership and managing talent. Leadership is well documented and well known, not only has Cipla brought in somebody of a very high calibre like Subhanu Saxena as a Managing Director, but also there is an array of leaders coming across the organisation. They are going out of their way to enhance leadership, giving people the autonomy to chart their own paths. Last year it was ranked fifth on leadership, this year it is in the second position. Similarly a lot more structure and process in the way people are being managed have been implemented and so it has gone up from rank sixth on talent management to second this year. GSK’s biggest slip is in innovation so it has slid down from No 1 last year to the fifth position this year in industry ranking.

Who ranks high on leadership? When we talk of leadership in pharma, is the view different? What sort of leadership would be required in pharma?

Dr Reddy’s labs ranks highest on leadership. Fundamentals of leadership remain the same, having leaders who are empowered to give direction to the company. As opposed to other industries, life sciences is much more family-oriented, For e.g. Cipla, Dr Reddy’s, Piramal, Biocon, Sun Pharma, Ranbaxy, Glenmark, Cadila, Torrent etc. These companies had a good 20-30 year run with first generation, passionate entrepreneurs who took the company to great heights by focussing on low cost drugs, leveraging human capital. The key issue now is managing generational change.

Could innovation be a deal breaker, given that most Indian firms are into generics and not new drug discovery, although they do have drugs in the pipeline?

That could be if you are looking at GSK’s case, there is a perception that they don’t have a strong enough pipeline. In life sciences, the need for innovation is higher from a business point of view, but the point is, that is more of an evolutionary thought process. Currently, India is still a largely generic market. Innovation is more in sense of processes to keep the cost low and having a good supply chain, with a high emphasis on reducing operational costs. Increasingly, as more and more high-end speciality hospitals come into place, consumers will look for higher end medication, so if we are not innovative, we’d have lost the game. Also, the pipeline in innovation for life sciences is longer as compared to say FMCG.

Pharma companies have dedicated CSR programmes. Where do they rank on CSR?

What is missing is a broader CSR strategy, what we tend to find is more tactical CSR, some initiative, grant etc. Look at TATA Steel which ranks highest on CSR, CSR and the brand go hand in hand, it is linked to the strategy of the company.

Pharma companies manufacture the most crucial products in terms of life saving medicines. Could the fact that not even one company is a part of the top 25 be a sign of mistrust in such companies?

I think people are unclear on what is the company’s promise to the customer, this is what they need to think and reflect upon. Pharma companies need to build their reputation, corporate identity and then communicate it to people.

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