The above image is that of Indian sweets. Variety is not only the spice of life, Indian sweets are also available in a rich variety! (I got this image from here). If a customer visits an Indian sweet stall, he will be so impressed by the variety, a sort of melting pot of sweets, he or she is bound to purchase something - a prospect will get converted in to a customer because of the variety, and a customer will purchase at least one item. The wide variety is responsible for the success of the sweet shop. The ability to cater to a wide variety of tastes and different customers is important. We pharma marketers can learn from this concept!
When we were kids we used to read a lot of Asterix and Obelix comics. There was this interesting character, Getafix – the druid in these comics. This wise old man used to create potions in his cauldron – a melting pot – with diverse herbs. One of his unique products was the magic potion that gave the drinker immeasurable strength. Today pharma giants are in search of such a potion that can give immeasurable strength to their product portfolio!
John Mack, the pharma consultant and blogger from America, has written about this product portfolio dilemma in a humorous way where he brings to focus the drying product pipeline of big pharma companies.
Product portfolio challenges
Products are the bread and butter of companies. Products are the identities of a company in the market. It is through the product range that a prospect or customer gets to know the company – the products are a point of contact between the target audience and the company. So product portfolio management is a most critical task of any company as all revenues are hinged on it.
With respect to new products, traditional pharma has been single minded: Identify a molecular target, synthesize/extract and screen a new drug candidate to modify the molecular target for patient benefits; establish the safety and efficacy of the new molecule through clinical trials. That is, see if the new molecule can be established as more effective and safer than contemporary medicines, patent the product, and market it. Basically, the new product should have projected annual sales (from the first year) of at least 500 million US dollars and fetch at least 70% net margin. This was the well trodden R & D path, which cost the pharma company for new product R & D (including clinical testing costs) at least 880 million dollars and the time- to- market being about 14.7 years. Traditionally pharma companies either invent the new molecule, or license it from innovator pharma companies or buy up the innovator company or outright purchase the technology. This traditional approach has been based on molecular biology and understanding the biochemistry of the disease process. True, this approach provides fodder for the new product cannon.
However – rofecoxib changed this product pipeline strategy forever. Rofecoxib was touted by Merck as the revolutionary highly selective Cox 2 inhibitor, which was very effective for pain relief; it was promoted as a drug that did not have any side effects on the tummy (ie. creating hyperacidity) or on the respiratory tract (ie. causing broncho spasm). But the celebrations were short lived. Phase 4 clinical trials established that rofecoxib caused deaths due to adverse effects on the cardiovascular system. Rofecoxib was withdrawn. Perhaps after the thalidomide tragedy no other pharma event has shaken the pharma industry to its very roots.
The rofecoxib product market tragedy was followed by the 800 million USD torcetrapib failure AND Exubera – the world’s first inhalable insulin was also withdrawn from the market. No new blockbusters were visible on the new product horizon. (The benchmark for any new product introduction is that it should have a minimum annual sales projection of 500 million USD from the first year. And there were no products fitting this criterion. ) Risks were too too high. The product pipeline strategy of many a company was at peril.
The biopharmaceutical product pipeline
However, biopharma companies like Amgen and Genentech are in a better shape. These companies have new introduction products that generate annual sales of at least 300 million USD. So a glimmer of hope has come from the biopharma segment. Hence, Merck is betting big on its vaccines range and Pfizer is reinventing itself as a biopharmaceutical company. In fact, the acquisition of Wyeth has been on these grounds.
Remember, Pfizer is a symbol of America. If it had not purchased Wyeth, one more icon of America would have weakened. So the purchase of Wyeth gives Pfizer a new hope.
The latest fad of product pipeline strategy is to have a set of biopharma products
Biopharma has gained traction due to an interdisciplinary approach to new drug R & D. New biopharma products have a connection to the field of genomics (identifying, understanding, and functional characterization of genes), proteomics (study of proteins in the body) and in turn computational biology (applying IT in biology - the leader company here is IBM).
The biopharma game started with the Human Genome Project (2001). This project and Celera (a private company) characterized the 30000 genes in the human body. Thus, it was now possible to identify defective genes and create new therapies that correct the genetic problem. Genes also contain coded information for protein synthesis. Proteins are ubiquitous and are made up of amino acids. Enzymes, antibodies, and most hormones are proteins. Proteins are involved in the structure of cell, inter-cell communication and functioning of cells. Proteins also undergo a process called protein folding which is important and is considered while creating therapeutic proteins. Biotech companies reseach and manfacture therapeutic proteins that correct disease processes. For instance, lack of erythropoietin (which is synthesized by the kidneys) is responsible for anemia in kidney failure patients. Amgen launched a biotech product - alpha erythropoietin. This is now a blockbuster pharma brand.
This goes to show biopharma products are important for a robust product pipeline and product portfolio.
Ranbaxy is acquired by Daiichi Sankyo
The Ranbaxy purchase by Daiichi Sankyo is a marriage of convenience to both parties. The challenge of having a robust product portfolio can be met by having a strong generic portfolio. This is the bet by Daichii Sankyo. Many companies buy competitors to strip off their resources and weaken them. However, this Ranbaxy purchase appears to be an important synergistic acquisition for Daichii Sankyo. On the other hand, Ranbaxy's promoters were having some debt and the company did not have any promising blockbuster molecule(s) that would take it to greater heights. Hence, the marriage took place. And mind you this integration is a very strategic one. There are no sobs of job cuts - pure harmonius synergy - like a Japanese poem - HAIKU!
Having a generic drug portfolio is important to have a melting pot product portfolio that can withstand technological stresses.
Wellness product portfolio is an evergreen one
A product portfolio that is evergreen - is one that can seemingly sell forever without the fear of technological obsolescence. There are such lucky products. For eg., Ayurvedic brands belong to this class. Liv 52 (#5 in the Indian pharma market ) a decade back was about Rs. 18 crores sales per annum, and now it is about Rs. 100 crores sales per annum. Revital - a nutritional supplement from Ranbaxy with its OTX (prescription plus over-the-counter) product promotion is such an evergreen product. Becosules Z a vitamin brand from Pfizer is also an evergreen wellness brand - and is a constant topper brand of Indian pharma market.
The moral: a strong wellness product portfolio is a must to strengthen pharma companies. This is one reason that pharma biggies in India like Merck, Piramal Healthcare, and Mankind are having electrolyte energy drinks with patient value in their product portfolio.
P & G has an interesting product portfolio
Procter and Gamble is one interesting company that does not believe in gambling in the product marketing game! They have put their eggs in many baskets!! This interesting company has detergents, personal care, fast moving health goods like Vicks, fast moving consumer goods - soaps etc, and even PRESCRIPTION PRODUCTS in its product portfolio. Yes - they address the exciting chronic orthopaedic prescription markets like osteoporosis and osteopenia through its brand Actonel (risedronate). Actonel is positioned to increase BMD in postmenopausal women (even with a once-a-month therapy - that is something that no woman would grumble about and surely one can convince a woman to buy it!). There are lots of lots of things to learn from P & G's product portfolio game. It has products from FMCG point to FMHG point and even a prescription range. Talk of bulletproofing! Johnson and Johnson is a similar company. Some companies that come close to P & G in their business approach is the Ayurvedic major of India, Himalaya; Zydus Cadila - of course has some products in its FMHG segment and many in the prescription segment. Mankind is trying to grow and gain market share in the Ayurvedic and FMHG segment - it is already strong in the prescription segment.
By the way, the herbal and Ayurvedic pharma market is now catching the attention of pharma marketers. One reason is Patanjali Chikitsalaya and its success. This institution created by Swami Ramdev has about 800 doctors all over India, and they see some 50000 patients every day (all over India). Their sales turnover even though the products are very economical is near abouts Rs. 20 crores plus per annum and growing steadily (not bad for a new company).
Pharma marketing is tricky
Let us say you have Rs. 100 to spend on pharma marketing. Now, how will you divide and where will you focus these monies? On which product and which strategy? This is the question that constantly grapples pharma marketers. On which product will you bet on - so you get the best ROI? That question haunts many a pharma marketer. One guide is to have a MELTING POT PRODUCT PORTFOLIO STRATEGY for best bulletproofing from unfavorable market conditions.
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