Past into the future?

Shailesh Gadre, MD, Gencoval Strategic Services shares his views on some of the key revolutionary/ evolutionary alterations in the pharma industry

The heading ‘Indian pharmaceutical industry faces growth pains’ caught my attention, not only because it dealt with my interest area, the Indian pharma industry, but also for the sharp contradiction to an almost constant feature of this sector. In my last 20 years of being in this industry, I had almost got used to double digit growth in this domestic market. In all my strategy workshops that I held for corporate marketing teams, the aspiration never rested at matching the double digit growth but always aimed at surpassing the industry momentum. Today I see this very youthful industry reeling under pressure of multiple stress situations arising from pricing constraints, tighter regulatory scrutiny, competitive forces of patented molecules, GST compliances and generic threats, to just name a few. Generous, time tested strategies of geographical expansion, CRM models of doctor enticement and trade push industry are somehow failing to help tide the industry through these changing times.

New game, new rules

I strongly believe that the industry is at an inflection point of transformation and likely to go through a complete structural change. In line with this, each and every aspect of the existing structure will get questioned and challenged. My endeavour is to put forth my views on some of the key revolutionary/ evolutionary alterations in the industry through a series of articles. Today, I am going to take up one of the most important, strategic point – territory prioritisation and expansion, which definitely calls for moulting ahead of the others.

While the complete environmental spectrum is going through an overhaul, the territory potential mapping strategies seem to have stuck in the past. How else can we explain the following ‘real’ observations –

• Top 100 cities account for more than 80 per cent of the therapy potential, but field numbers exploding over 1,000 in numbers and 30 per cent or more are deployed beyond the top 100 cities.
• Large companies have expanded into cities beyond top 100, which swing as per the therapeutic segments, but missed out on the top 100.
• Many of the national level brand leaders are not at the top in over 50 per cent of high potential cities.
• Limited patient consumer overlap. Pharma market is not aligned to growing consumerism and infrastructure progress
• Target setting is still skewed, it is based on past performance within the territory and not on the potential of the territory.

Let me support my view of the frozen strategic mindset prevailing across companies by giving a simple analogy. Ask a brand manager to define the potential for the market, instant will be the response of quantum and growth from audits. Ask the regional sales manager about the market potential of the city and he will draw our attention to the number of medical representatives of competitors. Ask the area manager and he will tell us that the number of doctors and chemists within the territory determine the territory potential. Undoubtedly, these datapoints have more or less driven results in the past, but are they exhaustive enough to steer the future? Increasingly, when the game itself has taken up a new outlook, the rules of the game are bound to change. Will these drivers alone be able to hold onto the growth trajectory across changed turfs?

Does the equation driving territory potential hold true in current times?

High potential territories = fn (stronghold cities of self + highly deployed cities of competition + city doctor population)

This equation sums up the territory potential mapping exercise for most of the companies. The variables in the potential equation are decisive but surely not exhaustive. This statement is backed by my experience of working with data and data sciences to scrutinise the growth patterns across geographies for multiple therapeutic categories and brands. Our analytical offering ‘Contour’ helped me to dissect the emerging patterns and also dismantled my strong perceptions viz. larger the target population of the doctors, higher is the value potential of the territory. Market share of the new molecule is largely dependent on the existing market of the older molecule. Growth of a market is directly proportional to the demographic profile of the consumer.

I wouldn’t underestimate the acumen of the marketing teams to gauge the need of going beyond the obvious for reinstituting the territory potential equation but lack the analytical tools, expertise and experience to scientifically connect the dots.

Increasing volumes of data but depleting insights is the emerging scenario across most of the companies. With building costs pressures, I believe that one of the quick fix which would have a significant impact on both top line and bottom line is to redefine the territory focus backed by strong territory potential algorithm.

Bringing the past into the future

The pharma industry is witness to the reality of the most popular maxim of all times – “It is not the strongest of the species that survives, nor the most intelligent that survives. It is the one that is most adaptable to change.” By bringing the past into the future, we create a future just like our past. It is time that we let go of the past to create the future. Territory potential mapping is just one of the many aspects which surely need a revisit.

Let me put in a few questions from my antidiabetic market Contour Insights to you as food for thought –

“Will Indore continue to be half of Coimbatore for the gliptins market when both score almost similar in population size, the city potential and identified as a ‘smart city’”?

Why does Calicut stands at 28th position and Kochi at 49th position for the industry inspite of a similar population, but yetare almost similar in size for the gliptins market?

What are the key factors impacting the current growth, adoption and evolution of the gliptins market across the cities?

The list could be endless. The intent is to drive deep the thought that one needs to go beyond the past to tackle problems of the future.

In my subsequent articles, I will bring forth my views across other aspects that need to be rebuilt as we tread the path of uncertainty.