“If you continue doing what you were doing, you will continue to get same results as before”
It is very much relevant for the pharma industry in the present context, in view of the rapid changes which we have seen in the industry during last 1.5 years. Some of the major being DOP proposal/price control / regulatory changes /compulsory Bio equivalence and Bio availability for manufacturing sites / Generic Rx over branded/upgrading the Plants to meet FDA requirements
If we fail to respond to these changes with apt modifications in our overall approach towards the business, the returns would start sliding and it would become difficult to maintain the current level of performance
Some of the practices followed till recently will have to undergo change for sustainable medium to long term gains in both sales and profits
I have captured below 10 Tasks which pharma companies should take up on priority with slight variations depending on the business model adopted by individual companies. The suggested actions would help cut costs in some instances and re deploy funds in activities which have become more relevant in current scenario
1. Prioritise and work on strengths while building portfolio
The companies will have to discipline themselves to stick to their core strengths in terms of existing portfolio/pipeline products/research capabilities and available resources and refrain from the temptation of entering into new segments and therapies where they do not have the expertise. As this would-be investment intensive adding to already reduced margins in view of the changes mentioned above.
2. Retrain Field Force for improved Productivity and per capita from Customers
The biggest resource available with PHARMA even today is the effective field force. The role has to undergo a change from merely detailing / sampling and gifting to doing consultative selling inside the chamber as Doctors have easy access to data and information. Also, sampling / Gifting and CRM are becoming obsolete in terms of new norms and regulations being imposed upon the industry. It is also required to build brand equity
Representatives as a resource though most effective also consume a major part of the expense. Improved quality of field force can improve productivity manifold thus reducing cost on managing / re training and training periodically as attrition would come under control. Also, any expansion required may have to be kept in abeyance unless absolutely necessary. We have classic examples with in the industry and within different divisions of the same organisation where the productivity of representatives varies from 12 lacs to 0.50 lac. This action would free up a lot of funds and would provide for additional funds for other required activities through accelerated sales growth
3. Managers as Mentors and not Sales facilitators
The role of managers in sales has to be that of a mentor and Coach instead of doubling up with representatives to achieve sales target. The induction programme has to make this as a part of curriculum The tradition of promoting consistent sales performer in pharma industry or those with reasonable sales experience in order to prevent them from leaving will have to be curtailed. There are different skill set required for delivering sales numbers and managing team such selections would on its own reduce the attrition and give set of promotable and effective people within the organisation
4. Rationalise Portfolio
Re visit the entire SKUs and dispassionately cull down the SKUs which are not yielding revenue to achieve break even. Most of the times the brand managers and field force try and justify based on the emotional attachment to brand not so much backed by logic. Such temptations need to be suppressed. The resources used for promotion/inventory carrying costs/manufacturing/transportation / Expiry and breakages for such laggards can be shifted to other progressive products identified
5. Cut costs in distribution
In view of the GST implementation, I am sure the pharma companies are already in the process of revisiting the distribution points required for continued adequate availability of the stocks throughout the country which would save overall distribution costs on various fronts and limited points would also ensure better control on overall inventory carrying costs along with other related benefits which accrue out of this action in terms of manpower/transportation/expiries etc.
6. Timely price increase
While it is always a good practice to take price rise whenever due or feasible to the extent possible, but in view of many combinations and the new category of drugs coming under price control recently the overall value coming under price, control would increase significantly. Improved volumes coupled with price increases in the remaining brands is the way forward.
7. Rework on brand Communication to Doctors
This aspect is extremely critical in present scenario with so much being talked about GENERICS and government going full throttle into promoting the same and making it mandatory for doctors to prescribe. This increase in “JAN AUSHADHI” counters is indicative of the direction which government has adopted to promote generics. The importance of creating brand value cannot be over emphasised. Therefore, the focus through whichever media of promotion used should be only benefits which patient may derive out of the product with demonstrable data. Bio availability studies and Bioequivalence need to be shared and discussed with key stake holders. The generic branded products with price advantage alone are not going to cut much ice with customers.
8. Re define relation with health care professionals
The time has come to think creative ways of partnering with HCPs in terms of shared services to customers and mutual benefits. Programmes and funds will have to be provided for this purpose. It may also mean working together with pharmacies/labs / Patient groups along with consulting primary / secondary referrals Doctors, thus, capturing the entire chain of interaction with patients. It is also important because patients today are smarter and have multiple channels to educate themselves and acquire knowledge about the disease and its management,
9. Focus on Pharmaco-economics
Discussing pharmaco-economics at the institutional level for winning tenders is a common practice. However, the need of the hour is to take this up with more customers to handle the onslaught of generic and also safeguard stakes towards institutional business in both private and government institutions.
10. Create Advisory Forums
This is something which is not new to industry and formation of advisory forums are seen more often in companies with super specialised products or chronic therapies. There is need to step up this forum and ensure that it is taken through the logical process and not created only for the purpose of pleasing some KOLs. In the science-based industry like pharma irrespective of the environment, the credibility of expert opinion will never be lost. Experts are also going to be on the panel for deciding price controls in accordance with the latest DOP proposal. Also in order to keep pace with recent trends and innovations to upgrade the portfolio and services, the expert opinion is going to be invaluable. We need to segregate KOLs whose tweets and articles are read in big numbers to capture digital route and others who engage and interact with HCPs in various other forums.
These are tough times for pharma industry and would continue to be so for at least couple of years. The challenge lies in embracing the changes enforced or introduced by choice but without compromising on the performance.
