Pharmaceutical Business in Pakistan (Part 12) – Blog Post by Asrar Qureshi

Dear Colleagues!  This is Pharma Veterans Blog Post #198. Pharma Veterans shares the wealth of knowledge and wisdom of Veterans for the benefit of Pharma Community. Pharma Veterans Blog is published by Asrar Qureshi on WordPress, the top blog site. If you wish to share your stories, ideas and thoughts, please email to asrar@asrarqureshi.com for publishing your contributions here.

Dear Pharma Veterans. This series of Blogs is to have a summary view of Pharma Business in Pakistan. It will be a series spread over several parts covering the entire spectrum of Pharma business.

Pharma Business – Sales – CUSTOMER MANAGEMENT

We shall roughly divide Sales Management into following broad categories.

• Sales Planning
• Sales Operations
• Sales Team Management
• Sales Performance Management
• Customer Management
• Sustainable Business Growth Management

CUSTOMER MANAGEMENT

There was the time when ‘customer’ used to be a passive receiver. It was so across all businesses, all commodities and all continents. Then things started changing. And the change was not started by the customers; it was done by businesses. Some smart business started taking care of customers in some new ways. It felt good to customers and they expected other businesses to do the same. The competition started. It is so interesting that the customers did not even have to think what kind of services they wanted; the businesses thought about it, planned it and presented it to them. Look at any business and you will see the same story. It is a ‘Buyers’ Market’ now; no more a ‘Sellers’ Market’. Pakistani car manufacturers (Toyota, Suzuki, Honda etc.) are desperately trying to keep their market to be Sellers’ Market, and they are aided and abetted by corrupt and incompetent governments. This will also change; it is just a matter of time. For everyone else, it has changed already.

Pharma business has passed through similar stages. During 60s and 70s, sales promotion was limited to few detailing folders and fewer samples. The MNCs received some small gifts from the parent offices couple of times a year and distributed these to small selected number of doctors. Because these were few and far between, these were cherished and kept and enjoyed for long time. Then gifts were developed locally and distributed lavishly. Very soon, the companies found that the space on doctors’ table cannot accommodate more gifts, and that their gifts were likely to survive for few days to few weeks at best. Pharma marketers enriched their gift portfolio and offered expensive, exotic, imported, exclusive, personal, personalized, and family items to improve the longevity of gifts.

Until early 1980s, the only ‘service’ offered was sponsorship for organizing medical conferences, and to selected customers for participation. Sponsorship of international medical conferences was a premium offered to the selected, few, top of the tops customers; and only by MNCs. The conferences and their organization sprawled, and the expectations for sponsorship rose; the industry was quick to oblige. Besides international conferences, Pharma companies arranged their very own CME events at attractive locations, from Southeast Asia to Central Asia to Middle East to Eastern Europe to Balkans to wherever they could. Literally, planeloads of customers were hauled around the world. Some high-potential customers traveled 8-10 times in a year. This activity cooled down a little bit after several years and became somewhat more sensible.

Other ‘services’ are virtually an endless list; which is as far as the imagination can go. New additions are done every day to make customer service more interesting.

The point is, what has all this yielded? The marketers and entrepreneurs may be reluctant to face this question. As an observer, I see that the ‘customer services frenzy’ has led to the development of following concerns, notwithstanding the benefits to stakeholders.

1. All medium-to-high-cost drugs prescriptions have been linked with services, the scale of which is determined by the value of future business to be generated. In business terms it is called ‘calculation of ROI (Return on Investment)’. If the ROI is acceptable, the investment is feasible. While it benefits the doctors directly, it may not negatively impact the patients because logically the prescription will be issued on need and merit basis. However, this is a grey area in which the activity continues but the outcomes are still being debated. Meanwhile, doctors and industry get a lot of negative publicity on this account.
2. The tendency to use high-potency, high-cost drugs has grown, ostensibly on account of drug-resistance. In fact, drug resistance is a spiraling monster; use more potent drugs, give pathogens more exposure and chance to develop resistance, and then find something even more potent. Drug resistance is a worldwide problem and there are no easy solutions. In Pakistan, the policy makers at any level haven’t even started thinking about it. It is commonplace now to give 2-3 antibiotics simultaneously, thereby increasing the cost to patient manifold. The space for ‘customer services’ also increases proportionately.
3. Probably for these reasons, Pharma market grows by double digit every year. True that factors like awareness and access certainly contribute as well. The attractive growth of Pharma market attracts more new venture-capitalists who come, invest in manufacturing and then find out the reality, to their peril. It is too late by then to exit. Out of desperation for survival, these companies are willing to do anything, literally anything. Their negativity makes business environment toxic for entire industry.
4. Cost of doing Pharma business has increased significantly. Pharma companies are being squeezed from both sides; cost of production goes up steadily due to material prices, rupee devaluation, increased utility bills and higher labor cost – cost of selling goes up more rapidly so as to tackle competitors and gain more market share. The hue and cry about price raised by Pharma companies is based on real issues. Interestingly, when the governments increase prices of everyday use items such as electricity, gas, petrol, they don’t talk about ‘Awam’. Drugs are not everyday use commodity, but any price increase becomes a big political issue. This is hypocrisy at its best, or worst?
5. The regulatory agency (currently DRAP) has never taken up the customer services matter. Probably, it is outside the scope of their working, though the Drug Act does have guidelines on this aspect. DRAP cannot do policing of Pharma industry; it is neither practical nor desirable. They can certainly gather the stakeholders and broker a practical code-of-conduct which should be followed by all. Let us see if and when it happens.

Customer Management has other, more desirable aspects which we shall see in the next post.

Continued…….