Legend has it that Microsoft Founder and Chairman, Bill Gates, was once asked who he thought his fiercest competitor was. Without batting an eyelid he said, “Goldman Sachs”. Mint on Tuesday, September 4th, 2007, carried a report that said Nokia and Google could be on a collision course as potential competitors. http://www.livemint.com/2007/09/04001632/Nokia-Google-could-be-on-coll.html
How could an investment bank cross paths with the world’s leading developer of computer software? How could the world’s leading mobile phone manufacturer be a competitor to the world’s leading Internet company?
Management thinkers and gurus always advocated the creating and owning of new markets and ‘blue oceans’ as an alternative growth strategy for players in large, fragmented and competitive markets. For companies like Google and Nokia, are these new markets or blue oceans difficult to create? Or are they actually creating them by looking at markets that they had hitherto not considered. The Internet is uncharted territory for Nokia and mobile phones for Google and hence they ARE ‘blue oceans’. However, there are big players in both these spaces making them highly competitive and limiting growth opportunities. “Devices alone are not enough anymore…..people want more; they want the complete experience,” said Olli-Pekka Kallasvuo, CEO of Nokia Corp., when the firm announced its plans for mobile initiatives. Sounds to me like a logical growth plan for the world’s top mobile phone maker that is well on its way to control 40% of the world market. http://news.zdnet.co.uk/hardware/0,1000000091,39287758,00.htm Could the launch of Apple Inc.’s iPhone have propelled this thought in Nokia? Maybe not, considering that the iPhone is selling only in the US and Apple has no plans to enter India and China, the two biggest mobile phone markets, until 2009.
How would Nokia cope with Internet business, a domain that is dominated by Google and how would Google get into the phone market that Nokia has in a vice-like grip? Collaboration? Superior quality? New products? As companies enter new categories, they are bound to overlap more and more not just with each other but with others in that category as well which is a certain downside of convergence. However, what motivates them to do so? Growth is an internal motivator – one that is necessary for survival. The external and the more important motivator would be to control more of consumers’ buying decisions. Firms cannot control the timing of the decision but they can benefit from these decisions when they control more of the end-to-end experience.
What can pharmaceutical marketers learn from this? Growth models in pharma are limited. Driving in-line business with commoditized products, dwindling R&D pipelines, increased low-cost generic competition and regulatory and pricing pressure is making it tough for marketers to build the next blockbuster. How can companies cover up for business that is lost after patent expiries? Listen to consumers!
Pharma, like most other businesses, is largely driven by two things: products & services. However, unlike other businesses, pharma does not have the flexibility to offer more and better products on frequent intervals. Pharma R&D, which is both capital intensive and time consuming takes years before new and better products can be offered to customers. In the existing time intervals, pharma spends millions of marketing dollars to build existing products into blockbuster brands. This involves persistent and highly scientific marketing programs targeted at highly educated decision makers who, unlike consumers of clothes and cosmetics, are experts in the field. So when companies have good products, they make money (like Pfizer did with Lipitor and many others) and when they dont, they just milk the older good products a little bit longer. So what does pharma do when they stop getting newer and better products? We focus on services! But do we really? What services do we offer and to who? Our ‘services’ are limited to better versions of things that we did for years at end. Better and quicker ways of getting medical information to doctors. Better locations and agendae at CMEs. International speakers instead of domestic ones. Are these really “better” services? What about patients? Simply discounting expensive medicines does NOT account for service or “assistance programs” as we call them!
Where will the pharma growth model come from? I believe it will come from services that are simple, efficient and cost-effective. The key however, is that these simple, efficient and cost-effective services must be in sync with what customers (doctors) and consumers (patients) want. What they want is an understanding of the disease and its outcomes. When a patient is diagnosed with hypertension, he greets the diagnosis with firm denial. How can a young man of 35 have heart problems? Heart problems are for older people. I just have a headache and it’ll go away! Doctors do not have time to counsel patients in India.
A report titled “Doctor Statistics in India” released in Jan 2007 http://www.ephmra.org estimates that India has the third largest number of registered doctors after China and the USA. According to the Medical Council of India (MCI) there are over 650,000 registered doctors for the year 2005. However when this data is analysed, it is estimated that only about 475,000 doctors are currently in active practice. The rest represent those who have passed away, retired or have gone abroad. Currently, data on the exact number of specialists in India is limited. It is estimated that there are about 78,000 specialists in the country. Presently, there are 243 medical colleges in India with a capacity to train and graduate 25,537 students per year and in the next 4 years, India will add 100,000 new doctors to its pool. Experts are certain that in spite of this large number, the total numbers of doctors in India will not be sufficient to meet the present and future needs of the country. In a country of 1.3 billion people, there is just no time for a doctor to counsel his patients – leave alone talk to them about the need to adhere to therapy.