Wednesday, February 29, 2012

Era of operations

Above image from here. The missing emphasis in many pharma companies is OPERATIONS. It is time to look at things anew - from the operations angle to regain the competitive edge!

In the dynamic field of pharmaceutical marketing, there have been distinct phases:

a) Upto the 1980s: it was production led marketing approach. Pharmaceutical companies vied with each other to offer quality products with a competitive fervour, and took pride in creating world class production facilities. However, slowly this backward integration was no more interesting in the clinic - nor did it lend any competitive edge ...

b) From the 1980s to late 1990s: there was a strong selling and marketing flavour in pharmaceutical company activities. The approach was to create a tantalizing bundle of satisfiers to target doctors and pharmacies, and this boosted sales and market share.

Now it is the era of operations in pharma...

With the rise of H & H, Mankind, Mcleods, Zuventus & Eris Lifesciences - who have burst onto the national pharma scenario - a new trend is on the rise. People think their success lies only on aggressive pricing, sales promotion (bonus offers) and customer relationship management (communication, sponsorships and freebies to doctors). The answer is yes and no to these points, yes - the above activities have mattered, yet there is more to their story ...

It is not just about manufacturing and quality, nor is it only about marketing, it is about these companies also having THE OPERATIONS EDGE, for competitive success.

What is operations?

Operations is about managing the operating core of organizations. It is about managing the activities related to creation, production, distribution and delivery of organizational goods and services (which matters a lot in pharma marketing). Operations management is using resources efficiently and meeting customer requirements effectively.

Operations is the process through which goods and services are created. It can be through self-owned factories or through third party manufacturing. It is interesting to note that Mankind and such other fast growing firms rely on third party manufacturing to a significant extent, the focus is on ultimately creating goods and services that satisfy wants of target audience. This emphasis has helped create a new energy in such firms and they are enjoying high growth thanks to their operations management, not just manufacturing, sales or marketing management alone.

Operations is defined as the process of changing inputs into outputs (goods + services) and thereby adding value to some entity; this constitutes the primary function of virtually every organization.

By focusing on operational excellence, fast growing pharma firms have laid emphasis on this primary function - hence they have gained lustre in the market. Operations can thus be understood as a conversion process. Operations converts resource inputs into useful outputs. The idea is to do it with least wastage ie., highest efficiency.

Operations produces goods or services in required quantities and of prescribed quality at a minimum cost - that has been the cachet of Mankind, Mcleods, Eris... To have operational excellence, the bedrock is planning. It includes product selection, process selection, facilities location, material handling systems, and capacity planning.

This is what such companies did. They went on investing only on those activities that yielded better market share and brand growth, verily, they succeeded through operations management rather than marketing or selling activity alone. Marketing focus of Mankind was a part of their overall operations management strategy. Today, Mcleods, Eris and such other companies are growing rapidly through their savvy operations management strategy. It is about keeping processes efficient, cost-effective, and yet meeting customer requirements ably.

CAVEAT: One may wonder whether above thoughts are random and without basis. As such, one can say the above thoughts are of a keen pharmaceutical practitioner and hands-on manager. However, it would definitely be nice if a deep management study of above companies is done by way of gathering data, analyzing their working and other parameters. Nevertheless, the plain truth is that such companies are growing fast, outbeating competition, and this cannot just come through plain marketing and selling (something that companies like Micro and such others should note) - it is the era of operational excellence now in pharma India!

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Anup Soans said...

Fantastic Insight.

Sunil S Chiplunkar said...

Dear Anupji,

Many thanks for reading my blog, surely your appreciation means a lot!

Thanks for the appreciation! No Hard Knocks here!

Sunil S Chiplunkar

Unknown said...

Hi Sunil Sir,
Nice article... Great insight on a core area...


Unknown said...

This is Ahmed , whom you had referred to SAMI Labs in 2004. Are you still in Himalaya? I am now based in USA working for Sami subsidiary Sabinsa Corporation.
you can reach me at