Keeping pharma relevant in 2016
The pharma industry must step out of its traditional ways and reinvent itself around the needs of patients. Superior value for patients means superior returns for shareholders, argues Hanno Wolfram.
There is truth in the phrase ‘self-fulfilling prophecy’. Things end up as we anticipate. Our habits and outlook shape our actions. This applies to the pharmaceutical industry as well. Pharma companies’ behaviours shape the marketplace in which they act.
The recent past and immediate future will see more changes imposed on drug makers by politicians and governments. One highlight of 2015 was the publication of a World Health Organisation (WHO) report, entitled: ‘New WHO report shows that transparency and cooperation help to reduce high prices for new medicines’. Imagine: the world’s most powerful political body asks countries to unite their efforts to get drug prices lowered. Imagine what this means for pharma. Where would you put this in your SWOT analysis?
Since the pharma industry is failing to create trust and build real brands, most of the interactions with external stakeholders are about cost, prices and rebates.
Few pharma companies appear to be working to present a specific and differentiated brand image, visible and trusted brand values and a clear brand statement to establish trusted brand perception. Many are doing nothing about their narrow and short-sighted focus on simply selling boxes of pills.
Pharma’s curses: ‘benchmark’ and ‘best practice’
Across generic and innovator companies the practice of benchmarking is still applied widely. The one consequence of ‘best practice’ is that everyone does the same as everyone else.
This neglects all the basics of the marketing world around us, where every other industry and company is trying hard to act, look, and smell different to the next. Take, for example, car brands: technically identical, but carrying different names, different images and conveying different brand messages. This is what car owners are buying in to, not merely the transport from A to B.
Whenever something new appears, the first question resonating along corridors and in management meetings is, ‘Where is the benchmark?’ This question conveys many fatal messages to people in the organisation. It stops formerly bright and reflective people or teams with an entrepreneurial spirit contributing novel ideas. They turn back to pharma’s old mindset: Our industry is different and we had better do what all the others do. We will not make mistakes and if we miss our goals it will be blamed on politicians or other external circumstances anyway.
Selling undifferentiated drugs, similar, or even identical products, of chemical or biological origin, moves pharma to irrelevance. Payers, politicians and patients alike, believe that price is the only differentiator.
Status quo: relevance is lost
Most pharma companies are becoming less and less relevant to healthcare in general. Discussions focus only on cost and prices. When did you last hear a question like, ‘What is the value we add to healthcare?’ Pills do not carry a value by themselves. In just a few years Europe’s largest drug market has become one of the cheapest, with 80% of all prescription drugs being interchangeable generics. They are sold through tenders, with rebates said to be as high as from 80% to more than 90% on list price. Even innovative treatments like biologicals are already following this short-sighted pathway: rebates ensure volume.
If the focus on producing and selling pills is increasing the industry’s irrelevance, why are so few turning towards new horizons?
The automotive industry may serve as an example. Today, we buy mobility concepts, not cars! All car manufacturers offer a wide range of financial packages to their clients. The price includes different services and, on top of this, every car company represents a true brand. We are ready to pay considerable amounts of money for intangible, individually different and important values.
An essential problem of all healthcare systems is omnipresent inefficiency. Symptom assessment and the resulting diagnosis represent a hard-enough medical process and often the correct procedure is bound to standard pathways.
A patient’s diagnosis is followed by an effective, often drug-based, therapy. But experience and research outcomes show that drug therapy, and even behavioural or lifestyle changes are not accepted easily and are often explicitly rejected by patients. Secondary adherence to drug therapy is less than 50%. This means that half of all healthcare efforts are worthless.
So pharma must search for, identify and provide values beyond or around the pill. Simply put, pharma must get actively involved in healthcare.
The doors and windows of opportunity are open, but companies must find an individual approach. The time of copy/pasting ‘best practices’ is gone.
First movers already exist
There is light at the end of the tunnel: pharma is starting to cooperate with IT giants, and there are many operational projects on the way. Pharma field forces are starting to support care delivery; they are helping physicians, supporting patients and aspiring to more consultative, rather than ‘selling’, roles.
Some are beginning to differentiate and create their own interventions to improve patient outcome.
Some first movers are establishing ‘innovation incubators’ for third-party start-ups and others even ask their own employees to share their ideas and innovative concepts with senior executives.
Field forces accumulate years of insights and know-how on market mechanics, the habits and needs of healthcare providers and, of course, knowledge of all those networks, formal or not, that have a huge influence and specific agendas on care delivery.
Fast and necessary changes can be established easily when pharmaceutical reps are involved, asked their views, and their answers leveraged. Quantum-leap evolutions could be triggered by something as simple as listening to your own employees. Ask them, make their voices heard and draw appropriate conclusions before you decide the way forward.
One great, internally-developed concept is the bold move to break traditional structures and get the same pharma reps talking to physicians and pharmacists. This attempts to embrace the patient journey and put the patient at the centre.
If you deliver superior value to patients, you deliver superior value to shareholders – not the other way round!
About the author:
Hanno Wolfram is the founder and owner of www.Innov8.de, a Germany-based firm offering consultancy for pharmaceutical companies. He is the author of ‘KAM in Pharma 3.0’, an international textbook about Key Account Management in pharma.
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