I GOT THE ABOVE IMAGE RELATING TO BIOSIMILARS FROM HERE.
The key word in economic transactions is TRUST
CONSUMPTION depends on TRUST. When a person buys a strip of a pain reliever like Crocin or Dart, there is a factor of trust involved in the transaction. The customer trusts that the product will meet a certain level of performance – ie., will relieve his headache (also known as cephalgia). When a person purchases a financial product like say an insurance product, the customer trusts that the product will meet a certain performance level in terms of services and money-back. When the performance claims are not authentic – when untruths are promised, and/or the promises are reneged, the cycle of trust is broken, and consumption comes down.
There are many factors affecting consumption – purchasing capacity, credit availability and support, need for the product or service, price of product or service etc. However, the root of all the reasons for consumption is TRUST. The basic trust – HERE – is that the product or service will fulfill the consumer’s need or want or desire. The trusted product should deliver the expected value or make the customer FEEL GOOD. If a customer is going to feel conned and feel bad about a transaction –ie., he does not trust the transaction, the consumption will not take place. The core of marketing is increasing consumption of the marketed product or service. Thus, it is logical to conclude, that the root job of marketers is constantly building trust between target audience and the brand.
When the economy becomes sluggish, ie., when consumption comes down, demand stifles, and production stagnates… recession sets in. There are a lot of triggers for recessionary forces to gain speed; however, the major catalyst is MISTRUST, lack of faith. The cycle of trust gets broken down – consumption comes down, consumption growth retards and recession sets in. And every one runs for cover. Spending habits become conservative because you do not know what is waiting round the corner, and there is a negative cycle of mistrust.
Just like trust can be infectious, mistrust too has a butterfly effect. After all economic behavior of people is basically human behavior, and is guided by emotions and not logic alone. When the housing mortgage crisis started in US, it generated a lot of mistrust - about the actual demand - consumption patterns in society. And when people realized one cannot trust situations, financial figures and statements, and CXOs - stock markets started melting and economic recession gained speed.
The rofecoxib story & mistrust
When rofecoxib 'failed' (in terms of safety) causing a huge financial loss to Merck, the reverberations were felt in the entire pharma field. Managements and US FDA became conservative with respect to 'go-to-market' decisions on new drugs.
Mind you, introducing a new drug is not easy. It requires the new chemical entity (NCE) to go through a battery of preclinical and clinical tests before getting commercialized.
It is rare for a NCE in modern times to fail on the grounds of safety. The reason is the clinical trial process. Any promising NCE cannot enter the human clinical trials unless safety is established in the pre-clinical animal testing stage. In the US and EU, clinical testing in humans is given a high level of importance.
In Phase 1 clinical trial stage, of 1 to 3 years duration, the drug's safety profile is mainly vetted on about 100 patients.
In phase 2, which is of 2 years duration, the safety of the drug is established in a larger pool of patients (about 100 to 300) suffering the disease targeted by the drug. In phase 2 clinical trials, the efficacy of the drug is also checked if it is statistically significant.
In phase 3, which is of 3 to 4 years duration, not only is the effectiveness checked for the target indications, the safety profile is continuously built and the side effects monitored. Phase 3 studies involve several hundred to several thousands patients. Two pivotal trials are required to be positive in this phase, for the drug to get marketing approval.
When in phase 4, the marketing of the drug can be taken up, however, post marketing surveillance studies are continuously done to check for the safety and efficacy of the drug. It is at this stage that rofecoxib's cardiovascular side effects became public. And caused the burial of the drug.
IT IS AMAZING THAT DESPITE A ROBUST CLINICAL TESTING PROCEDURE, AS DESCRIBED ABOVE, ROFECOXIB BECAME A COMMERCIAL FAILURE. The root cause for such failures resulting in a massive loss of trust on pharma R & D, is that managements' are forever on the hunt for patented blockbusters. This means one can make a lot of money by ruling a LARGE market. Each blockbuster product launch should fetch at least 500 million USD with 70% net margin - that is the game plan.
Why is pharma said to be relatively recession proof?
The main reason is that one needs medicines come what may - recession or no recession. But it also indicates that there is a lot of trust on those medicines - physicians trust them, patients trust them and the society trusts the pharma products. If this trust was not there, during a period of recession, when money is scarce, people would think twice to spend on medicines too. If pharma in any country feels a big pinch during recession, it is indicative that people there do not believe the medicines are value for money and they are waiting for alternatives.
Trust: the reason for Baba Ramdev's success
Baba Ramdev's Yoga, healthcare, functional food and Ayurvedic pharmaceutical strategies are successful, because his programs and story telling are authentic - they are winning the trust and word-of-mouth of people. Trust is the foundation of his success.
Biosimilars and trust
Biosimilars is the buzzword of the pharma industry, today. This amazing field is seeing a lot of trust and hope. Pharma CXOs trust that a lot of growth in sales and profits is possible through launch of biosimilars. Merck and Pfizer are getting deeper in to the biosimilars and biopharma game. However, if any company has to succeed here, again it is TRUST that needs to be won. Biosimilars is a premium game in the pharma business today. Any biosimilar should prove itself as worthy as the innovator brand - and it requires a lot of robust clinical trials - or the brand will lose trust - even if a small side effect occurs that does not occur with the innovator brand. While the financial pot of gold is alluring to the biosimilar entrepreneur, there are a lot of risks that can cause the initiative to go bust. IN A RECESSIONARY WORLD, WHERE MISTRUST REIGNS SUPREME, WINNING TRUST IS THE KEY. In the case of biosimilar marketing, the mindset of the marketer needs to be different, as compared to marketing of chemical generics.
Striking the right chord
Obama is proving to be a leader of high mettle, he has directed the US govt to find out about the monies lying in Swiss banks. His intention is to get the idle cash in to the system in USA - this will certain build confidence and TRUST. IMAGINE IF THE INDIAN GOVT. DOES THIS - IT IS ESTIMATED THAT INDIANS HAVE STASHED RS. 50 LAKH CRORES OF RUPEES IN SWISS BANKS. THE CENTRAL ANNUAL BUDGET IS RS. 20 LAKH CRORE RUPEES ONLY! IF ALL THIS MONEY FROM THE SWISS BANKS GETS IN TO INDIA, IT WILL CREATE AN ECONOMIC AND HEALTHCARE MIRACLE OVERNIGHT BECAUSE THE TRUST ON THE ECONOMIC SITUATION WILL INCREASE, THE PURCHASING CAPACITY AND DEVELOPMENT WILL ALSO RADICALLY INCREASE!
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