April 2017: Marketing in a generics-rich environ

The above image from here: Yellow bulbs!

There is never a dull day in the pharma marketer’s life!  Respected Mr. N Modi, PM of India, has sent shivers down the spine of pharma marketers - on 17.4.17 at Surat during a hospital inauguration: Mr. Modi announced in his speech there that the central govt. will bring in a law to ensure doctors prescribe generic drugs (Ref.: The Times of India, page no. 1 headline, Ahmedabad edition).  The reference was that doctors should write unbranded generic drug names on prescriptions ie., for example, doctor will not prescribe Dolo 650, he has to prescribe paracetamol 650 mg! 

Now let us remember, almost entire of Indian pharma market is the branded generics market, which is promoted to doctors.  Pharma companies have built their fortunes and gained huge shareholder value on the basis of pen habit of doctors to prescribe branded medicines (me-too products) and earned profits.  This has helped pharma companies to recruit field personnel to expand operations, ensured market penetration of quality products to the nook and corner of Indian pharma market; this has helped pharma companies build manufacturing set-ups, and export products to almost every country of the world.  And pharma companies have also started R and D endeavours.

Overnight, with the PM's announcement, this pharma business model is under threat by the envisaged law.  No more will a doctor prescribe Taxim, he will write cefixime 500 mg, it is upto the patient and pharmacist to ensure the consumption of this drug, either unbranded generic or any one of the branded options available with the pharmacist.

Now, if the law that is to come, allows the doctor to prescribe both paracetamol 650 mg and his recommended brand in brackets eg., (Dolo 650), then there is some steam left in the branded generics pharma market space promoted to doctors.

Background

During 1950s, the medical representative (MR) visit was a most welcome entry for the doctor.  Probably he would get one medical representative visit every day in urban areas, and in semi-rural and rural visits, if at all a MR would visit, the doctor would get a MR visit may be once a week.  Hence, the MR with his product updates and samples was a welcome presence to the doctor.

From 1970s, with product patent regime being abandoned (thanks to the Indian Patents Act, 1970), (the product patent was re-introduced in 2005), me-too product manufacturers and marketers burgeoned.  More medical representatives started entering the doctor’s clinics, bonus offers earlier unheard off…became a rage, pharmacies also started pushing brands that offered better margins or free goods (sales promotional offers).  As the number of medical representatives started increasing, the leverage was with the doctor, and he started gratefully accepting various quid-pro-quo gifts from pharma marketers.  Those who were aggressive in gifting grew rapidly…this story continued into 1980s.  However, there were also some pharma marketers who were not gifting or providing sponsorships adventurously.

The late 1980s, and 1990s saw the earlier conservative companies, shed their shyness, throw their ethics out of the window, since they saw their counterpart companies who provided gifts and bonus offers growing humongous, and got into the gifting and sponsoring of doctors gameplan.  Various wannabe biggie companies also started playing with penetration pricing to garner market share.  CRM (customer relationship management) was the core of pharma marketing.  PCD (propaganda cum distribution) companies started taking root and gained traction in the first decade of 21^st century.  The party has become bigger and bigger.

Doctors are splurged; several unconfirmed legendary CRM activities make rounds during marketing “gupshup”:

a)   After the formal cocktail dinner launch of a breakthrough brand of antiulcerant, important doctors were given keys to a luxury car… and prescribers who were gifted their four wheels left broadly smiling

b)      Another leading doctor working for psycho-somatic health of patients, was given enough cars by various companies – one car for each day of the week!  And the day the doctor takes out a certain car, on that day the pharma brands belonging to the car gift-giver would roll out of the pen of the doctor

c)   Sponsored foreign tours for families and other indulgences in the foreign tours engrossed doctor fraternity and brands paraded in their minds

d)     Sponsorship of get-togethers, cocktail dinners and various other meetings masqueraded under the garb of CMEs (Continuing Medical Education)

And it goes on and on and on…each pharma marketer vying with each other to give and take…for mutual gains with the medical fraternity.

WHY DO PHARMA MARKETERS ‘GIVE’ TO THE DOCTOR?

Consumption of medicines is decided by the doctor, in the current situation, it is by prescribing the branded generic.  If a doctor prescribes brand X, the patient buys it.  The patient has implicit trust on the doctor (the medical professional earlier definitely had a demi-God status in Indian society) and obediently goes with the doctor’s brand recommendation.  The result is pharma marketers who take care of doctor’s needs enjoy better sales outcomes and profits.

In this business, the patient does not make any choice between brands with the same generic drug.  It is the doctor’s business to choose the pharma brand for the patient.  But the payer is the patient!

Ignorance of brand options with same generic drug, lack of will by patient to exercise brand options, and non-encouragement by the environment to choose alternative brands or unbranded generics are the main reasons why patients go along obediently with the doctor’s brand recommendation.

This pussy footing by the patient provides an opportunity for the doctor to use his influence with patients and encourage consumption of his favoured brands.  And this gives an opportunity for the doctor to strike quid-pro-quo relationships with pharma brand marketers!  And both the pharma company and doctor enjoy the benefits of pharma brand sales, thanks to a very co-operative attitude of the patient.

WHY DO PHARMA MARKETERS PROMOTE PRODUCTS TO DOCTORS?

Pharma brands are built by the doctors prescriptions, if a doctor gets 1000 to 2500 patient visits per month (average of 40 to 100 patient visits per day; 25 working days per month), and prescribes an average of four assorted pharma brands per patient, then, 4000 to 10000 pharma brand purchases have happened (it will not be 4000 to 10000 different brands, there will certainly be a number of repeated overlapping brands) - a doctor after all, may be able to remember maximum 100 to 200 different pharma brands? 

So the idea for the pharma marketer, is to be among the 100 to 200 brands or so,  which a doctor remembers (certainly some brands are etched permanently in the doctor's mind ‘non-volatile ROM brands’ and others are ‘volatile RAM brands’, the latter are the brands that float in and out of the doctor’s mind, depending on the regularity of product promotional activity). 

It is then vital to gain patronage of the doctor, and ensure the promoted pharma brands sell.  Thus, prescribing the pharma brand name is key to commercial success of a pharma company.

GENERIC PRESCRIPTIONS: death-knell for the pharma brand business

The ruling BJP party and Mr. N Modiji are focused on winning elections, the next big one is the Lok Sabha elections of 2019.  To gather votes, they need to say a story of doing good to their voters, mainly the middle class and poor sections of society.  Capping the prices of stents has endeared the govt. to the masses.  Now ensuring purchase of unbranded generic medicines, which are available at rock bottom rates will further make the government voter friendly.  There is a good talking point here for the ruling party.

Generic drugs (non-patented) are of three varieties (click here):

a)    Branded generics promoted to doctors (these carry maximum premium (high MRP) and are hugely prescribed by doctors)

b)      Branded generics not promoted to doctors, sold by pharmacies to patients, and also purchased by dispensing doctors who sell them to patients

c)  Unbranded generics not promoted to doctors sold by pharmacies to patients, and also purchased by doctors who sell them to patients.

In developed countries, the patient is not ignoramus.  The doctor has to justify his recommendation to patients.  Normally, prescriptions are for unbranded generics in developed countries.  Many of these unbranded generic medicines sold in developed countries are manufactured in India and marketed abroad.

However, in India, it is a time-honoured practice to manufacture and market, branded generics and the prescriber chooses to patronize certain brands of his choice based on the doctor’s experience with the technology and quality of the brand, and marketing inputs provided by the pharma marketer.  The Indian patient is ignorant of his ability to make a choice between branded and unbranded generics.

ARE PHARMA BRANDS EQUIVALENT?

The answer is yes and no!  Brands of the same category are chemically equivalent (contain the same quantity of the active ingredient).  However, there can be important differences.  This is with the excipients and the manufacturing process parameters of the brand.  For example, if you compare the dissolution profile of albendazole tablets, you may be surprised; Zentel from GSK is said to have the best profile.  Similarly, Advanced Crocin has certain excipients to improve dissolution and consequent absorption of paracetamol into the bloodstream, when ingested.

Pharma brands are also presented in unique differentiating ways that improves patient acceptance and brand salience.  The shape at the mouth of bottle in oral pharma formulations may aid pourability, use of certain permitted colours and flavouring agents also enhances patient acceptance, use of Alu-alu pack by certain pharma brands (may not be used by plain vanilla unbranded generic medicines) enhances patient compliance and patient acceptance.  Pharma brand marketers work on differentiating their products through value added excipients to improve organoleptic qualities (improved patient acceptance through mouth-feel, flavour, texture, odour, colour and taste); these are not a consideration in plain vanilla unbranded pharma products.

Though brands may be chemically equivalent, or even proven to be bio-equivalent, yet brand performance may not be same; and brand acceptance at patient level will not be same.  Furthermore, doctor’s confidence will not be same on each brand.  It depends on the doctor’s experience with the brand, technology used in the brand, and patient feedback to the doctor on the brand.

IS IT RIGHT TO DO ‘DEBRANDIZATION’ (brand-bandi in doctor's prescriptions) OF INDIAN PHARMA MARKET? 

Patient health, recovery and well-being are paramount for medicine marketers and doctors.  Quid-pro-quo relationships are at one level, but patient recovery & well-being (public health) is the non-negotiable foundation where pharma marketers, doctors and other stakeholders such as regulatory agencies agree to be on one page.

So the fundamental question to ask is, whether promotion of unbranded generic medicines - will improve public health?

The merits of ‘debrandization’ in pharma market:

a)      People will come to know of availability of unbranded generic and branded generic medicines (which are not promoted to doctors), so this option will gain traction; and patients can exercise this option if they wish

b)      Doctor-pharma marketer relationship will become “cleaner”

c)   PCD (propaganda cum distribution) companies who are known to offer robust services to doctors in exchange for their prescription or purchase support, will end

d)     Accessibility will improve

e)      Cost of therapy will come down.

The demerits of ‘debrandization’ in Indian pharma market:

a)      The current pharma marketing business model will collapse

b)    Shares of big pharma listed companies whose business depends on pharma brands will fall steeply

c)      Industry turnover will fall

d)     If the doctor stops prescribing branded medicines, medical representatives will not meet them, many medical representative jobs will be lost

e)      Companies will reduce jobs in marketing (particularly field jobs)

f)     Field personnel will focus on chemist retailers than doctors, offer incentives and freebies to retailers to stock and push their products (as per the Times of India, 19.4.17, page no. 19, Mumbai edition, retail margin on drugs may be as high as 1000%, this will stress pharma marketers, as they have to offer competitive margins and offers, this will erode financial strength of pharma companies)

g)   Innovation and technology improvements will not occur, all pharma companies will go for manufacturing the plain vanilla formulations (without any improvements), it will become a commodity game

h)      Quality will become a question issue.  For instance drugs (APIs) and excipients are available at various crystalline purities, and the manufacturer will go in for lowest acceptable crystal purity (only economy will weigh on the mind of manufacturer)

i)        Packaging will be passé and will not offer any improved benefits to patients

j)    With profit margin squeeze, companies will not have adequate surplus monies to invest on geographic expansion, export ventures, product development, R and D, new molecule research, social marketing etc

k)   Companies will reduce emphasis on launch and marketing of modern medicines, they will prefer to invest on nutraceuticals and Ayurvedic formulations.  These will not be affected by the proposed law (in fact, Himalaya Drug Company and other such companies will go laughing all the way to the bank, while rest of pharma will be stressed).  Besides Ayurvedic formulations and nutraceuticals can be advertised.  We will lose our standing, competence, global edge and knowledge of manufacturing and marketing of modern medicines

l)      In case of branded formulations containing multiple ingredients such as Becosules Z, it will be virtually impossible for the doctor to write names of generic drugs or vitamins/minerals included in the formulation on his prescription

m)  Monitoring the implementation of this ‘generic name only law’ for prescribers is nearly impossible…let us say there are about 10 lakh active prescribers (across India), and let us assume, every working day these 10 lakh active prescribers write about 50 prescriptions each.  This means 5 crore prescriptions per day!  And for 25 working days, it is 125 crore prescriptions per month!!  Are you going to monitor this?!!

n)      If a doctor writes some brand names, and in India where there is a situation of less number of doctors, and more patients, what punishment are you going to administer?  Prevent them from practising?

o) If medical representatives and field personnel lose jobs, in a country where under/unemployment is high, is this initiative worth it?  Please remember marketing creates more jobs than manufacturing or R and D (in pharma field)

p)    Doctors may give oral recommendations for brands, or unsigned slips containing brand names, or pharmacies will push certain brands on oral recommendation of doctors … there are ways to beat this law…

q)  There could be legal challenges to this ‘debrandization’ as it takes away the freedom to promote branded products and recommend them

r)   Patients may be unhappy with the generic name prescriptions since the doctor is not prescribing “quality brands” (it is a matter of freedom of choice and many patients want quality brands…brands are the covenants of trust)

s)    Patients and patient attenders may be upset with the tongue twister and complex generic names of medicines, in comparison to cute, easy to recall, easy to pronounce and easy to remember brand names of medicinal products.

HOW MAY PHARMA COMPANIES MANAGE THE NEW CHALLENGES?

PESTEL standing for political, economic, social, technological, environmental and legal environment is always in a state of flux, depending on the various happenings on the PESTEL front, pharma organisations will respond in various ways: 

a)  Some will adopt the wait and watch, others will lead a counter response through various forums like IDMA and KDPMA; few others will use their good offices with various authorities and present their viewpoints.  Some others will present their take on social media and talk to the media

b)    Companies will start investing on new marketing technology to strengthen their patient-centric communication, and strengthen CORPORATE EQUITY and PRODUCT EQUITY at patient-level.

c)      There will be a rise in OTX (over-the-counter and prescription) route of marketing (including communication/advertising/digital messaging to patients) to strengthen sales outcomes; also OTX products will be launched in a rush: ayurvedic, dental, nutritional powders, nutritional supplements, health soaps, and other nutraceutical products (including in unique packaging like Tetra Pak based products or products with unique concepts like virgin coconut oil)

d)  A chemist-focused and dispensing-doctor focused working will be emphasised to ensure product availability

e)   Companies will go in for umbrella branding, umbrella brand colour concept, and uniform packaging for creating market identity for their products; so that chemist/pharmacy retail-push/pull will start; pharma marketers will also go in for launch and pushing unbranded generics and branded generics (low cost, that are not promoted to doctors)

f)     Companies will increase no. of medical representative calls to pharmacies (eg., 15 per day) and reduce doctor calls (to say 5 per day)

g)      Companies will probably rationalize field personnel count and coverage, and consolidation of divisions/SBUs etc., to reduce costs

h)    Companies will invest more on chemist coverage, example: paying chemists/pharmacies to book shelf space for their products, offer freebies to chemists, & having field personnel to cover more chemists/pharmacies and dispensing doctors

i)   Some companies with deep pockets may start their chain of pharmacies (for eg., Cipla pharmacy), and will also emphasize online pharmacy marketing toos
j)   Companies will invest more to make patented medicines, products with novel drug delivery systems or products that do not have many me-too products...

What may the Govt. do?

a)      Govt., may tighten doctor-pharma marketer relationships with new laws

b)      Govt., may ask doctors to write generic names only on prescriptions

c)   Govt., may ask doctors to write the generic names and the brand name alternative (in brackets), so that the patient will have an option to buy the generic name product if he wants or go ahead with the doctor’s choice of a branded product or the patient may choose another branded product, a company of his choice.

It would be prudent to go the option C, since it meets governmental requirements, patient psychology, doctor’s confidence and liberty, and Indian pharma industry traditions.

Thanks for reading this blogpost, please read other posts by scrolling down, and click on older posts to read further; kindly recommend this blog to your acquaintances!