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Continued from Previous……
The situation about spread is evolving daily, if not hourly. It is being updated on various media. In Pakistan, the official updates may be somewhat slower to come, but the concerned people are trying to do their best. Unfortunately, nothing like Corona Virus had come before; not on this scale.
Four major areas pose imminent challenges. The managers need to tackle these urgently. Following suggestions may help in handling the situation and coming out of it with less damaging effects.
- Health and Morale – If one of the employees gets infected, from any place, the entire staff will crumble with fear. It is therefore necessary to be responsible towards employees.
Responsibility towards Employees – the first thing to do is to promote and ensure employees safety and protection. Several Pharma companies have issued similar instructions for taking protective measures along with financial support for such measures. Work from home has also been seen in few companies while most companies are wondering how to do it. These are all good gestures and it is hoped that these will not be overridden and ignored in order to maintain business somehow.
Staff should be educated and continued to be educated about the problem on a daily basis. Awareness messages and steps to be taken should be posted at prominent places.
Public gatherings of any kind should be stopped. Physical appearance for every small little thing should be stopped. Use of phone and digital media should be done rather than physical contact.
Physical support such as hand sanitizers and masks should be made available and their use encouraged.
Care for community sentiment must be promoted to make people more careful all the time.
Wherever possible, work from home option should be used. If worked out carefully, many such options can be worked out. Some jobs can be flexible, coming to office for short period thereby reducing exposure time.
Work from Home (WFH) or forced holidays must not mean cut in wages. It will be too much pressure and people will hide their illness and insist on working and multiplying the infection rate.
The usual treatment of employees varies greatly from one to other organization. Whatever the situation on ground, effort must be made to make the best of it.
- Supply Chain – Restrictions on air travel mean less flights plying, means air shipments are directly affected. Sea shipments will have similar issues. Pharma is more reliant upon air shipments for APIs and excipients. Even the local API manufacturers have to import intermediates from abroad. Supply chain is already feeling pressure due to this. Production is part of supply chain. So far, the Pharma plants have not shut down, but it may become necessary if infection gets to some of the staff. Majority of production labor and operators come from low income bracket and are more liable to get infected due to lack of adequate hygiene and resources.
Supply chain should review inventories carefully. While they try to arrange materials to the best of their effort, some amount of rationing may be necessary to keep the products available all over the country.
Supply Chain should also consider converting available materials into finished products as per their sales trend. It is better to be busy now than not being able to do later. Production should go on till the time it cannot; even overtime may be considered.
Supply chain may also have to devise some innovative logistic plans to keep getting the shipments.
- Business – Revenue streams are very likely to be affected. Aggressive growth plans will be disrupted. New launches will suffer. The race for ranking and market share will become much fiercer after life returns to normal. But what is normal? And when will the normal come? These are unpredictable times and definite plans cannot be made
The overall business will be affected. The patient turnout has reduced. If the government closes the outpatient departments, it will go down further. People will not go to doctor unless it becomes inevitable.
Protection of Business is surely on the minds of all business managers. They have committed certain targets and have made investments accordingly. As per their plan, they were to receive the results which got disrupted for the time being. This is for all industries. Pharma may still see lesser impact because chronic and serious patients shall not stop taking medicines. Imagine consumer items such as clothing, shoes, perfumes, even cosmetics and how big a hit they would take. The biggest impact is on travel, hotel, restaurant, entertainment, and tourism industries. And they may not recover this loss even in long term. In fact, the hit is already here. The malls are closed, shops are deserted etc.
Pharma is expected to recover much more quickly than other businesses. It is due to the nature of business. The same may be said about other industries such as food and services such as logistics.
These measures may be considered.
Business managers are advised to monitor the situation closely but not change the plans entirely. It will be too early to take drastic decisions. Some waiting is highly recommended.
Contact with key customers must be maintained, even from a distance.
Product promotion may be done in more discrete manner.
Contact with hospital administrations and offering assistance in some way may be considered. It will build long lasting relations.
New strategy discussion should be started now. The impact of COVID19 shall go beyond the remission of active infections. The biggest challenge will be to get money from a market which has lost a lot of money. Spending more heavily into market may not be a good idea, as it will be akin to putting fuel on dead fire. Nothing will happen.
During low activity period, sales teams may be given training through Skype or videocons. It will keep them busy and engaged and they will be in a great shape when it is time to run.
A lot of cool-minded analytical work may be carried out in the available time. We pray that it would be over soon, but a couple of weeks are available anyway.
- Finance – While inflows shrink, the outflows may stay the same or even increase. It will be a sticky situation for finance managers. Very few Pharma companies are cash rich; most run on day to day basis living on daily inflow from distributors. For reasons of market slump, movement restrictions, low patient turnout, possible stock shortages, the daily revenue will get a hit. Financial management will become crucial in this situation. Spending must be curtailed and rationalized immediately.
Among family owned businesses, it is customary to draw the last drop of money as it comes. The business owners would do well to think about adding money rather than drawing money at this time.
CFOs in many companies are restricted to do just accounting; financial management, which is a crucial part, is done by the owner CEO. Since it has been going on for quite a while, the CFOs have become rusted in the skill of financial management. They are qualified however and must take active part in it.
Crises require decision making; some urgently and some long term. COVID19 is no exception. Immediate issues would be disruption of supply chain, reduction in production output and a decrease in revenue from sales. What will happen in the long term will have to be decided after the pandemic is over, although various scenarios may be developed in the meanwhile. For now, decisions are required for short term, everyday matters. What should be held? What should be expedited? Agility is the key word here. The promptness with which decisions are made will make the difference between more-affected and less-affected. Decision making in smaller, and even some larger, family owned companies is highly centralized. The instructions are always awaited from the top. Of course, this will not change due to Corona Virus, but the management layer must keep nudging for required decisions and leading these in the right direction.
For now, decisions should be focused on very short term. As the situation is still persisting with no quick remission in sight, some short terms decisions may also be considered. Longer term focus may not be much at this point, and therefore may be saved till greater clarity arrives.