The Globally Integrated Pharma Enterprise: Value of DTC to the Globally Integrated Pharma Ent...

The Globally Integrated Pharma Enterprise: Value of DTC to the Globally Integrated Pharma Ent...: I am no marketing guru especially when it comes to Direct-to-consumer (DTC) advertising but I most certainly believe there is a balance w...

The Globally Integrated Pharma Enterprise: Value of DTC to the Globally Integrated Pharma Ent...

The Globally Integrated Pharma Enterprise: Value of DTC to the Globally Integrated Pharma Ent...: I am no marketing guru especially when it comes to Direct-to-consumer (DTC) advertising but I most certainly believe there is a balance w...

Value of DTC to the Globally Integrated Pharma Enterprise

I am no marketing guru especially when it comes to Direct-to-consumer (DTC) advertising but I most certainly believe there is a balance we need to strike across the three key areas it influences – health, economic, and social.

As Ian Read, Pfizer’s President and CEO argued at the Cleveland Clinic last week, DTC advertising “is a fundamental right in the U.S.,” and denying the right of Industry to speak directly to patients through drug advertizing “leads to ignorance and inability to judge”.  Seems like a fair argument that would appeal to, and be consistent with, our broader country ideology and market principles.

Pharma DTC spend has increased significantly over the past decade.  In many cases, it has been found to be more effective than the alternative – the direct pharma sales force – and has provided a reasonable ROI to the industry.  And given that, physicians and caregivers have significantly reduced the time they spend with sales reps, especially over the past couple of decades, it has also become a powerful medium of awareness and education.

But then, what does this all mean to a consumer like me?  First, you interrupt my American Idol viewing with an ad.  And then, you give me information about a medication I can neither prescribe nor buy.  Maybe you can serve me better if you combined forces with the rest of the pharma companies and pooled resources to educate people on awareness of under-diagnosed and under-treated diseases.  And one more thing, with so many warnings in the final 30 seconds of that ad – which I know the FDA mandates you to provide – you may have scared me more than what you did to motivate me in first 30 seconds.

Finally, as a lot of folks in my network (many of whom work with Big Pharma) will tell you, they’re all done with the erectile dysfunction (ED) type of ads on family-time television.  They get enough of that spam on their emails and do not see a pressing need for ongoing education in this area, so please save them the embarrassment.

The GIPE Challenge: Attracting and Retaining a Skilled Workforce

It is widely recognized that our longer-term success in the 21^st century is contingent on our ability to build, attract, and retain a skilled workforce.   Ironically, despite the relatively high rate of employment in the US over the past few years, the pharma industry is still dealing with skill shortages.

Is our public education system doing enough to align skills and prepare us for the new economy? The popular answer is a ‘no’.   The truth, however, maybe a little different.

Let’s take my home state as an example.   New Jersey, in some regards, is the pharma capital of the world.  It is home to the headquarters of more pharmaceutical companies than any other state in the country, and for that matter, any other country in the world.  Per the FDA, New Jersey-headquartered pharmaceutical companies have discovered and developed more than 1/3 of the new drugs it has approved.  The demographic is telling:  A third of the workforce is involved with basic research, clinical and quality systems.  More than 50% of the scientists have a doctorate or a master's degree (per the 2005 Census, only 6% of Americans have a master's degree).  Not surprisingly, most of the pharma manufacturing and R&D establishments are close to research institutes in our state.

Now, let’s take my country of birth, India, as another example.  India ranks 4^th in terms of volume in global pharma markets and has attracted a lot of attention from pharma majors like Pfizer, Novartis, Glaxo Smith Kline and more recently from the likes of Abbott.  The country is home to 20,000+ manufacturers and several other companies focused on active pharmaceutical ingredients (APIs) or formulations.  Ease of recruiting patients for clinical trials, presence of qualified investigators, lower cost of living, permissible concurrency of Phase II and Phase III trials, etc.  have made India an attractive investment opportunity for US pharma majors.  This in turn has fueled the supply of skilled professionals.

When it comes to retention, I believe happy workers stay longer.  Some of the best places to work for in the US offer epic perks – onsite childcare and health clubs, free meals, free laundry and yes, climbing walls.  The list is sizeable and when it comes to perks – size matters.   Each time we tighten the belt, it takes some air out of the perks our corporations can offer.   And all of this will has an impact on our ability to attract the best and brightest.  So though we may continue to top the chart on innovation, research and development and productivity, we may not necessarily be doing enough to retain our talent.

The churn in our industry will continue to increase.  One obvious way to stem the loss is to continue to invest in the pipeline coming out of educational institutions.  

For now, I’ll continue to live in the great Garden State and continue my analysis on how workforce challenges will impact the globally integrated pharma enterprise (GIPE).

What is the mandate for the Globally Integrated Pharma Enterprise (GIPE)

I often struggle to rationalize the mandate for the Globally Integrated Pharma Enterprise (GIPE).  Is it greater supply chain effectiveness, optimized global commercial operations, ability to attract a skilled globally dispersed workforce, offshoring, improved operational effectiveness?   Is it a combination of some or all of the above?   Or, it is just the new buzz?

Regardless of my specific point of view, one thing is for sure – the explosive growth of emerging markets is not something that can be ignored by any Big Pharma.   The landscape is complex, confusing, and lacks trend consistency for the most part.   

China with an R&D spend of less than 2 percent, has made it a top priority to lower drug price.  The National Development and Reform Commission (NDRC) has reduced prices for 150+  drugs earlier this year – majority of them were antibiotics and cardiovascular drugs.  

India, on the other hand, with its burgeoning middle class and explosive growth has been an insignificant contributor to the global pharma market in terms of value.   The fiercely-competitive generics-based market with a fifth of the world’s population contributes to less than 2% of the world’s pharma market value.  Regardless, consistent with growth of the overall economy, pharma sales projections are poised for arguably the highest growth rates -- a projected 9 percent till 2016.

Closer to home, Brazil is the largest pharma in Latin America and is ranked after United States and Canada.  Although, the growth of generics poses some similarities with India, the over-dependence on imports combined with its currency woes highlights the challenges and, in turn, underscores the opportunity.

The global marketplace is likely to become more complex in the coming years.  The independence of the physician is decreasing as the policy makers dictate what doctors can prescribe.  Patients are increasingly researching treatment options and debating with their doctors. Regulators are becoming more risk-averse and governments are focusing more on prevention versus treatment.  All of this will require a more integrated strategy and approach towards pharma R&D and commercial operations and will necessitate the combined brainpower of academic and research institutions, care providers, payors, and, of course pharma enterprises.  

With the right firepower behind it, pharma companies will transform from producing medicine to managing outcome.

That, to me, is the mandate for the GIPE.