Which ONE WORD describes the biggest challenge facing the pharma industry right now?

Pete West

Vox Marketing Limited

This question was posed by Paul Tunnah on the pharmaphorum page of Linkedin recently. It provoked a flurry of responses, not all of them fit the criteria of being ONE WORD, but all were valuable contributions. If nothing else, it demonstrated that this is a complex question to answer (in addition to underlining the usefulness of the hyphen).

This is not only a complex question but a very important one too. It’s apparent that the pharma industry faces many significant challenges right now. Is it possible to describe those in ONE WORD?

Let’s start by looking at the responses that were received. I’ve taken them as posted, trimmed them down a little perhaps, but allowed the same words to be repeated to give a sense of which words occurred most commonly. The words were:

Affordability, Leadership, Credibility, Humanity, Ethics, Communication, Innovation, Change, Market Access, Personalisation, Trust, Ethical code of conduct, Transparency, Patents, Evolution, Engagement, Innovation, Whistle-blowers, Patents, Trust, Talent, Innovation, Pipeline, Model, Evolution, Patient-power, Connectivity, Products, Real-alignment, Transparency, Perspective, Perspectives, Habit, Change, Genericisation, Patient-power, Being smaller, Faster, Investor satisfaction, Change, Humility, Promising, Government, Unproductivity, Soul, Consolidation, Adaptability, Technological challenges, Ethical challenges, Value, Heritage, Opportunity, Conventionality, Confusion, Diffuse, Adaptation, Customers, Brevity, Options, Competency, Trust, Transformation, Biosimilars, Adaptation, Re-invention, Approval, Value, Patients, Compliance, Fear.

“It’s apparent that the pharma industry faces many significant challenges right now.”

Where to begin?

I began by mind-mapping the responses to identify common themes. There are a number of references to things financial, words like affordability, being smaller, consolidation, investor-satisfaction, value. There are references to the regulatory environment in which pharma needs to operate, words like Market Access, Ethical code of conduct, Patents, Whistle-blowers, Government, Compliance. Perhaps the strongest theme emerging from this list is to do with change, Innovation, Change, Evolution, Adaptability, Transformation, Re-invention. And there’s also a strong theme emerging about the way pharma is seen to conduct itself, something I grouped together under the word communication, words like Leadership, Trust, Transparency, Engagement, Connectivity, Humility, Soul.

There were a few mentions specific to products and customers. But it’s almost like we are saying, it’s not a product or customer specific issue we are dealing with – it’s broader than that.

Let’s see if we can top-line the issues then, under the broad themes of financial, regulatory, change and communication.

Financial

This is a good starting point I think. If a business, any business, cannot successfully commercialise its offering then there is no business eventually. For the pharma industry, this has traditionally meant bringing new products to market and achieving profitable returns on their investment. It has also meant maximising the returns from currently marketed products, up until the loss of patent exclusivity.

The problem is: it has become far more difficult to discover new molecular entities (NME’s) and get them through the registration procedure. (And this is before we even get to the pricing and reimbursement hurdles).

There were fewer new molecular entities (NME’s) launched during 2010 than at any time in the past decade. In fact, just 21 NME’s were launched globally in 2010. More worryingly, in the 5-year period leading up to 2010, only 5% of global pharma sales were from new product launches.1

So, if NME’s are not going to be the driver of financial returns – what is?

The answer must be “the currently marketed products”. But herein lies another problem for some major pharma companies especially – many face significant losses to their revenue streams as a result of products losing patent exclusivity over the next three years.

Should the loss of patent-exclusivity be the point at which pharma waves the white flag and admits commercial surrender?

In the past it has appeared so, perhaps because pharma had other “bigger fish to fry”. The situation isn’t quite like that anymore. Pharma has to address the declining productivity of the R&amp,D pipeline and be more effective at maximising returns from its currently marketed portfolio.

“Perhaps the strongest theme emerging from this list is to do with change…”

Regulatory

We touched on some of the regulatory issues earlier, in relation to bringing NME’s to market. However, I want to try and capture other than “Market Access” here – important though that is. By “Regulatory” I’m referring broadly to the rules and regulations within which pharma must operate.

We have seen big changes in the regulatory environment over recent years, reflected in more stringent codes of conduct and new legislation. On both sides of the Atlantic, codes of conduct have been upgraded and this isn’t just about banning branded pens and mugs. It has touch-points at every junction where pharma interacts with healthcare professionals.

These include more stringent requirement for training and certification of staff to ensure laws, regulations and code of practice and ethics are met, more rigorous standards regarding Continuing Medical Education (CME) and restrictions for speaking and consulting arrangements with healthcare professionals.

In June of 2010 the UK introduced a new law, The UK Bribery Act. This act makes it an offence not just to commit an act of bribery, but to be found guilty of intention – even if the act didn’t take place. An act of bribery is described as offering an advantage in some way to another person or institution and it doesn’t refer only to financial advantages.

These changes are to be welcomed and the challenge ought not to be one of compliance, but it does impact on how pharma will conduct its business.

For example: Some pharma companies have already acted to remove budget previously assigned for sponsorship to support travel and hospitality of healthcare professionals at various meetings.

Starting in 2012, pharma companies will need to record all payments to healthcare professionals for any services rendered and declare these from 2013.

“Should the loss of patent-exclusivity be the point at which pharma waves the white flag and admits commercial surrender?”

Change

There were more comments about the need for pharma to change than for any other category. It begs the question, “change from what – to what?” Change is not an easy thing to achieve because, even if the need is clear, there are barriers to progress. Some respondents speak of “Re-invention” others speak of “Adaptability” – these are two very different things. It generally goes against most business teachings to make a quantum leap in terms of the core business of an organisation – but we are seeing the changing environment beginning to impact on the way some pharma companies view their core business.

For example:

We are seeing increasing interest in the development of branded generics, more in-licensing deals being struck, more focus on emerging markets, increased collaboration between companies who may have previously been considered arch-competitors, greater emphasis on commercial input at an earlier stage of product development and renewed interest in maximising revenues from existing portfolios.

There is a need for pharma companies to think “value” and to be able to communicate that effectively both internally and externally.

Change always brings “opportunity” – one of the words used by our respondents. It also brings “fear” for some.

“There is nothing more difficult to take in hand, more perilous to conduct, or more uncertain in its success, than to take the lead in the introduction of a new order of things.”2

So change and risk go hand in hand. But the same author also said that to achieve constant success one must change one’s conduct with the times.2

And the times they are a changing.

Communication

Whilst the pharma industry has been coming to terms with a changing business environment there has been something else going on around us that changes the landscape for everyone, including pharma. That is the changing social environment and the way that we communicate with each other.

“It generally goes against most business teachings to make a quantum leap in terms of the core business of an organisation”

We are experiencing a digital revolution.

The digital channel provides a tremendous opportunity for pharma to better engage with its customers, but that depends on what pharma sees as being its communication objectives. If the objectives are to communicate promotional information then I believe that to be of limited value. If the objectives are to engage with customers in a meaningful way, to observe and take insights and provide a valuable resource of information, then that is far more likely to be successful.

Many respondents referred to things like Transparency, Trust, Credibility, as challenges that need to be overcome. Mission statements about ‘being for the benefit of patients’ isn’t enough. Actions speak louder than words.

Pharma has the opportunity to really engage, through digital media, with its customers and change some of these perceptions. But this is about membership, not necessarily, ownership.

Conclusion

So, what is the biggest challenge facing pharma right now? And can it be described in one word? I think this article demonstrates that there are many challenges that can’t be described in one word. But at its root, for me, it is about “commercialisation”. And successful commercialisation in a changing environment needs strong leadership and a focus on opportunities. It needs open minds, a willingness to try new ways of doing things. It requires partnership, risk-sharing and collaboration. Above all, it demands pharma to be a valued member of an increasingly connected global society.

References:

1. CMR International, Pharmaceutical R&amp,D Fact-book. 2010.

2. Adapted from The Prince. Niccolo Machiavelli. 1532.

About the author:

Pete has spent over 25 years in the pharmaceutical industry and held senior level positions in sales, business development, country management and strategic marketing. He was formerly a Senior Marketing Director at Wyeth, with responsibility for Europe, Middle East, Africa and Canada.

In 2010 he set up his own strategic marketing consultancy, ‘Vox Marketing Limited’, to provide commercial input to pharma strategy. He has a special interest in emerging markets and is currently engaged in developing digital online communities.

Pete can be contacted at petewest@voxmarketinglimited.co or via Twitter @VoxMarketingLtd.

Which ONE WORD describes the biggest challenge facing the pharma industry right now?