Interview

Towards a new paradigm

From innovation in field force strategy to the need for markets free of price control, Ranjit Shahani, Vice-President and MD of Novartis and President of the OPPI,talks about a host of issues and prospects for the pharma industry to Deepali Gupta.

Where is the Indian pharma industry headed? Are companies considering organic or inorganic growth strategies?

The Pharma Industry is on the go following implementation of product patents from January 2005.

A few MNCs that had left the country such as Merck and Bristol Myers Squibb have made a comeback. Eisai, a leading Japanese company has made a foray into the Indian market. Other Japanese companies are firming up their plans for entering the Indian market. More MNCs will launch their innovative molecules to the benefit of Indian patients.

There will also be a lot of consolidation following the patent law. Some companies will be looking at brand acquisitions, there will be M&A potential, but clearly they need to fit in terms of market strategy and the long-term plans of the company. I expect this area to hot up soon. In terms of areas of specialisation, each company is distinctive.

At Novartis, we lead in pain and inflammation, cardiovascular, CNS, oncology, immunosuppressants and transplants, and we will be focussing on these segments. If there is any potential synergy for an attractive brand or local company, we will definitely evaluate it.

The other area of growth of course is in-licensing of products. By 2010, 50 percent of the global market will comprise in-licensed products. Many leading companies such as Ranbaxy, Dr Reddy's and Lupin are investing in cutting edge R&D to launch their own newly discovered molecules in the near future.

Sourcing of APIs or formulations by MNCs' affiliates for their group headquarters and for Indian companies to international markets is an additional growth strategy.

Novartis was the first to receive Exclusive Marketing Rights under the new patent regime. Will that be challenged? What are the marketing plans for the drug?

The case is sub-judice so I cannot comment. However, as far as Glivec is concerned, we have a great program called the Glivec International Patient Assistance Program (GIPAP), where we give the product completely free to patients who cannot afford it i.e. those who are non-reimbursed and have Chronic Myeloid Leukaemia (CML) or Gastro Intestinal Tumours (GIST).

We follow this global model for the drug. India is a big beneficiary of the program. In India, not many patients can afford it and thus it is not a profit generating drug here. In fact, we sell it to just 45 patients whereas 4,878 patients receive Glivec completely free.

Is pharmacogenomics a thrust area for Novartis in the future?

That area holds a lot of promise, but is still to be proven. The operations and research are global and a lot is happening on that front. The reality is, the dictionary is there, the phrases are yet to be strung together and the book has to be written. It holds a lot of promise and for the patient its significance is substantial.

In genomics, as in any research, there is success on the way and there is failure. However, there will be some breakthrough I am sure.

What is your strategy at Novartis to optimise field force?

Field force is a critical aspect of any pharma company because they interface with the customer: the doctor. A lot of time and effort is invested in training and upgrading the force's skills. We have specialised therapeutic segments and the training for representatives in each area is unique and specifically tailored.

The relationship between doctors and patients is changing but the relationship between pharma companies and doctors is still the same. We need to change the paradigm. The doctor is looking for a value-add. The standard canned presentation can therefore no longer work.

Therefore, the added value that the representative brings in the two minutes which the doctor gives him/her is very important. The field force has to be skilled in conducting educational meetings for doctors where the latest advances in his field of specialisation are discussed by opinion leaders from India and abroad. Many companies are now using IT enabled services including e-reporting, e-ordering and e-training to improve field force productivity.

As the President of the OPPI how do you ensure the industry abides by the ethical marketing code laid down by the organisation?

International Federation of Pharmaceutical Manufacturers Association (IFPMA), Geneva, of which OPPI is an active member has developed a "Model Code" which enumerates principles considered basic to ethical behaviour in pharmaceutical marketing. OPPI has adapted this code to the Indian marketing environment and all our member companies abide by it. A marketing ethics guideline cannot be legislated. A lot of it is self-regulation. A code can exist in book form but it has to be followed in letter and spirit. What we need to see is if it would be accepted if it were on the notice board. I think if the leading companies follow it, others will be forced to abide by the code. In fact, right now the Medical and Marketing Committees of OPPI are in the process of updating the code to meet the new marketing challenges.

What is your take on the recent New Drug Policy draft by the Sandhu committee?

Both the Pronab Sen committee as well as the Sandhu committee have been actively engaged in taking inputs from the industry associations, OPPI, IDMA and IPA.

Based on their recommendations, the Department of Chemicals & Petrochemicals has announced Part A of the National Pharmaceutical Policy 2006, on December 28, 2005, in draft form. The industry associations are studying the policy and we shall get back to the government with our suggestions and comments. Our aim is to collaborate with the government to improve access to medicines.

The Sen committee proposed de-branding. It does not feature in the current proposal. What is your take on that?

De-branding isn't acceptable to the industry. It will create all kinds of complications and nowhere in the world is there an example of de-branding.

If the government encourages sales of products in generic names, it will lead to chaos in the market. The selection of the product will shift from the doctor to the chemist. And this will be very dangerous for the patient, because the chemist will always dispense the product which gives him a greater margin.

This will also lead to proliferation of counterfeit products. Also, companies will not need large field force to promote their products, leading to redundancy of employment opportunities for freshly qualified science and pharmacy graduates. De-branding will harm both the industry and the consumer.

What about the proposal of freeing more funds for research?

It is a positive and good beginning because we all know that R&D is expensive and there is a high degree of failure on the way.

However, the government cannot support the entire R&D budget for the industry. The funds have to be generated by the industry itself and for that, the government has to free industry from price control. The pharma industry has now evolved to a level where there is severe competition, which by itself keeps prices under control. The government should only "monitor" the prices and allow the industry to generate enough surpluses to invest in their R&D activities.

What about drug price control?

We are actually hoping they will issue a price monitoring system rather than price control, because competition is a great price leveller. A study done by ORG / IMS clearly shows that prices of pharmaceutical products have actually fallen in the last few years. Price control benefits neither the industry nor the patient as the manufacturer exits the category under price control and availability suffers.

What would be the ideal growth strategy for pharma companies today?

Market growth is single digit now. It used to be double-digit a few years ago.

So companies will have to expand to newer markets, go from A class and B class cities to C and D. They should also involve themselves in formulation of policies with the government to improve access.

The prices, right now, are low but only 35 percent people have access. Pepsi and Coke are available in small shops, but not a paracetamol tablet. There is need for the government to build the supporting infrastructure of doctors, primary healthcare centres and hospitals to take modern healthcare to the rural areas.

We need to develop the OTC segment so that patients can resort to responsible self medication for minor ailments. A company could decide to do rural marketing. Distribution and logistics is the biggest managerial expense for pharma companies.

I had once suggested that we distribute OTC drugs through the post office. It is a project that we need to work on as every village is connected to a post-office and it will be a novel marketing channel.

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