Drug producers or healthcare companies?
Hanno Wolfram
Innov8
The “history of pharma” which I personally overlook is the past 35 years. I have seen many changes over this time in company cultures, vocabulary, restrictive laws and regulations imposed, changes of approach and style. But one thing has remained unchanged until 2011: it’s still about “selling drugs”. Normal and rightfully one could say, because it is an industry. Whereas many other industries offer something different today: the car industry provides mobility, fashion industry offers desirability etc.
Despite the fact that many companies claim to be healthcare companies, their contribution is very much perceived as being nothing but providing (undoubtedly helpful!) drugs.
However, the surroundings, legal interferences and objectives of healthcare systems are driving paradigm changes, and pharma is about to follow and respond. Pitifully the industry mostly is reactive and not actively shaping their markets. In many companies and in many countries pharma are still just selling drugs.
Doctors, therefore, close their doors, governments and payers force prices down and reps are confronted with rejection. The poor reputation of pharma is continuing to worsen. Pharma don’t have the trust of their patients, let alone the normal public and yet: playing a more active role in healthcare appears very far off for many companies.
"Despite the fact that many companies claim to be healthcare companies, their contribution is very much perceived as being nothing but providing (undoubtedly helpful!) drugs."
We asked people in pharma and those who consult them, for their rating on a scale of 1 to 10, to which degree they believed that pharma companies “play an active role in healthcare, besides delivering drugs”.
The outcome
(n= 103) was quite interesting since people working in pharma HQs in Europe rated their active role in healthcare at 5.8. Those working in their local affiliates in Europe rated their active in role healthcare only at 4.6. There is a gap between HQ-perceptions and those in their local companies. Could this gap be driven by KPIs like revenue and productivity?
Those who work in countries like Poland, Russia, Bulgaria and Turkey saw the active role in healthcare at 6.1.
Digging a bit deeper into these data we found out that there is a variation in perception of pharma between those working in pharma and those looking from the outside-in. Those outside saw the active role in healthcare as only a 5 on a scale from 1 to 10.
Answers from Western European revealed that on a scale from 1 to 10 they assume the active role in healthcare only deserves a rating of 3.
"Answers from Western European people revealed that on a scale from 1 to 10 they assume the active role in healthcare only deserves a rating of 3."
Deliberately, during the survey, we refrained from revealing our idea behind “playing an active role in healthcare”. But it might be very helpful here to create a picture of “playing an active role in healthcare” to highlight what this could mean.
Imagine a population in Africa, suffering from the plague of the 21st century: HIV. There are a number of companies who not only know literally everything about HIV but as well have remedies to treat it.
Imagine that companies having synergistic drugs would join forces and resources (sic!) and work with governments (pharma giants could, many others cannot) to train physicians, nurses and teachers and deploy their joint forces into many small HIV-clinics across such plagued geographies and help to prevent, treat those affected and assist in educating the population. Of course this approach will create revenue for the company, paid by governments or even the WHO.
In this case, a pharma company would deliver support to those infected, assist the country or government to cure one big reason of poverty and the lack of perspective for a more prosperous future. They would play an active role in healthcare.
Imagine if such an approach could be transferred into Western Europe?
There are the first examples, like Janssen-Cilag (J&,J) having set up an integrated project to better detect and support the treatment of schizophrenia in the north of Germany. They share their knowledge, being subject matter experts on the disease, and are starting to get actively involved in healthcare. They do this via a fully independent service company, but at least they do it.
"They carry any insight necessary and still do not really share these competencies with those affected."
Where are the other experts? They call themselves research-based companies, know literally everything about the specific disease they are researching. They carry any insight necessary and still do not really share these competencies with those affected. Be it physicians not having enough time during consultation or be it patients with a huge demand for assistance and company.
Pharmaceutical companies not only have the knowledge, but they (still) have the economic power and a number of other prerequisites, for example professional project management skills.
Many of them are striving to improve the sales model, too few are thinking about the business model of the future.
Merging own experiences in a number of countries with the experiences from the answers given in our small survey, it appears that the pharmaceutical industry seems to have a structural problem.
Many companies still use the word “department”. Etymologically the word “department” does not come from cooperation but from early industrialization, when everyone did his or her job in solitude.
No one knows more about a disease than the pharmaceutical company with all their researchers in the biochemical through to clinical and therapeutic field. But research &, development brains appear not be linked to marketing &, sales people. In many cases they do not even know each other. The transfer of the huge know-how available inside the industry is not leveraged to create added value to those who daily deal with these problems in their offices or hospitals. The huge managerial know-how, like professional project-management skills and many other competencies are not shared with those struggling every day with non-adherence and other therapeutic pitfalls, driving cost of public healthcare up. As long as compliance-programs are designed and driven to improve sales, they will not really help nor add perceived value.
"As long as compliance programs are designed and driven to improve sales, they will not really help nor add perceived value."
What about if pharma would start shaping their markets instead of complaining and what if pharma would deliver improved quality of life to those affected, instead of selling drugs?
If their understanding of Key Account Management would be the same as in other industries, they will start to offer solutions and no longer just offer drugs. There is some light at the end of the tunnel in some companies, but to avoid the lights being those from opposing traffic, structures, processes and mindsets in pharma need to change.
About the author:
In 1975 Hanno started in pharma as a rep. Over the following years he took on various roles in the research-based pharmaceutical industry including Sales Manager, HR responsibility, Marketing Director and BU-Head in Switzerland, Area Manager Europe. In 1996 he founded Innov8 Software &, Training GmbH. Innov8 designs, creates and delivers implementation workshops, changing professional behaviour supporting the coherent execution of strategy in pharma marketing and sales in many countries.
Contact: Hanno@Innov8.de
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