For the Indian pharmaceutical industry, ‘challenge’ has come to be its middle name. While for one part of the industry it is to create newer and better medicines for the diseases of tomorrow, for the rest of it; the challenge is simply to get to that tomorrow.
40 years after India aspired for self-sufficiency in medicines, the Indian pharma industry has emerged as a robust, globally-aligned industry that has witnessed substantial growth. Yet, challenges remain. We tend to think of these challenges as applicable to different sections of the industry i.e. MNCs and domestic companies. In my experience, they more often than not, apply to different parts of the same organization.
- Abiding by the UCPMP code – the challenge is to continue growing at the same rate (13-15%) within a strictly ethical business framework. This is made worse by a total lack of co-ordination between the different lobbies representing the industry in India.
- Re-establishing credibility– Here the challenge plays out at multiple levels
(i) HCPs – resetting expectations within a new business model
(ii) MSMEs – gaining orders from govt tenders, Jan Aushadi and other public health initiatives.
(iii) Manufacturers looking to enter the lucrative US market after the slew of 483s issued by the FDA
(iv) General public – convincing them that the prices that they pay for medicines are the best possible ones
(v) Public health – convincing the govt and other activist groups that pharma cares enough about society to participate in neglected diseases (eg – Sun Pharma partnership with govt on malaria eradication)
- Non-evolving business models – This challenge is common to both domestic and MNC companies albeit in different contexts. For domestic giants, this would involve issues like inability to transcend a transactional model with all stakeholders (docs, pharmacies and patients). This involves incentives to HCPs and rebates to pharmacies and patients. While money is definitely a decision driver, it precludes the opportunity to create meaningful value which is often more appreciated by receivers.
- Growth through fewer new product introductions – This challenge has recently become applicable to domestic giants as well after the govt action against fixed dose combination products. However, I do not consider this a rate limiting step for companies since they have the option of launching free-dose combinations or the single drugs on their own. Specifically for MNCs, a dry pipeline followed by uncertainty of monopoly in the Indian market (Sec 3(d)) and a threat of capped pricing is a far bigger needle mover in my opinion since MNC business models are copied from the western parent orgs and rarely if ever localized in the true sense. This brings me to the next challenge.
- Operating in a Gx market like an IP firm – Following western business models may add to novelty for a while but are rarely sustainable on scale. Dabbling in ‘new financing methods’ or other such may reflect the temporary genius of the MNC marketer but hardly does much for long standing issues of creating true access to innovative medicines or penetrating beyond Tier-3,4 markets. Again, opportunities to create meaningful legacy in a foreign land is all but lost.
- Non-evolving business models–
(i) In the context of MNCs, this challenge comes from the fact that the parent organizations do not consider the 4Ps very seriously when marketing an innovative product and very few MNCs market generics globally. Therefore, their prescribed business model remains very HCP focused and ignores opportunities to partner with other stakeholders. This despite the fact that there is enough literature to prove the considerable and certain shift in decision making from HCPs to HMOs/insurance payers, pharmacies, patient groups and caregivers.
(ii) MNCs also struggle with making sense of the digital space (one does not see this too much from domestic giants) and make their models very rep-centric. This allows a single channel to be maximized while all but ignoring multiple other channels of direct contact with HCPs and other stakeholders.
(iii) Utilizing alternative (non-rep) channels can be a good way to harness the increasing power of the patients and their caregivers while reducing the appalling asymmetry of information that plagues this industry.
(iv) Unfortunately, with the power of making conversations comes the great responsibility of owning up to mistakes. Not having to do so is a singular pleasure offered by monologues.
Of course, challenges are aplenty and hardly limited to the ones listed above. As the country moves ahead, these challenges, coupled with fierce competitive pressure, could further escalate, if not attended to with crafty strategies by companies keep up with the evolving business environment.