Dear Colleagues! This is Asrar Qureshi’s Blog Post #631 for Pharma Veterans. Pharma Veterans welcome sharing of knowledge and wisdom by Veterans for the benefit of Community at large. Pharma Veterans Blog is published by Asrar Qureshi on WordPress, the top blog site. Please email to firstname.lastname@example.org for publishing your contributions here.
February 2022 marked my completing 47 years of working in Pharma Industry. Allah be praised. I am still working. My journey of near half century is also the journey of Pharma Industry in Pakistan. Great changes have occurred in this time and a lot could be written about it. In my blogs, which were started about four and a half years ago, I have covered several topics related to Pakistan Pharma Industry. This multi-part series shall do and review the SWOT – Strengths, Weaknesses, Opportunities, Threats – of the Pharma Industry.
It is now time to strategize, as this was the purpose of this long exercise.
Strategies are made on these parameters:
- Strategies based on Strengths
- Strategies to mitigate Weaknesses
- Strategies to exploit Opportunities
- Strategies to avert Threats
We shall follow the same line of thinking. We have completed Strategy Recommendations based on Strengths and Weaknesses.
Strategies to Exploit Opportunities
- Contract Marketing – may be defined as marketing products which are not your own asset. These are acquired under long term contract and marketed as own products.
- Contract Marketing applies to both taking and giving products. We take up acquiring products first. In the recent years, the fastest growing companies have made it through marketing of large number of new products. New products have always been lifeline of Pharma business; however, the emphasis has been on registering own products and marketing them. During the last several years, two major regulatory changes were implemented. One, DRAP kept on increasing emphasis on ‘dedicated’ manufacturing areas for production of specialty products. Antibiotic classes, Penicillin, Cephalosporin, Carbapenem, need dedicated manufacturing sections having separate entry for personnel and materials, and separate warehouses. Steroids, hormones, anti-cancer drugs also have stringent requirements for dedication and isolation of manufacturing sections. Prior to this, all kinds of tablets and capsules and injections were manufactured in the same area. Most old plants did not have space to develop new manufacturing sections, or they did not have resources to invest, or the’ return on investment’ did not justify it. This meant that they had to stop production of certain specialty drugs. Two, DRAP made it mandatory that CTD – Common Technical Document format dossier will be submitted for registration. Previously, product registration was applied on a simple format of Form-5. Most information was copied from here and there and put in a file which no one ever read. Product registration could be obtained in few weeks. On the other hand, CTD dossier takes about a year to develop and prepare, and product development work must be done to include data in the dossier. It has a big cost in terms of time and expense. Thirdly, after the historic tussle which erupted between pharma industry and the MoH after they registered over a thousand products from a single party in one meeting of registration board, the MoH went deliberately slow on the registration process. The delay caused a large number of applications to be pending for 2 – 3 years. Even today, DRAP is almost two years behind schedule. All these factors have led to severe shortage of new registrations. Contract Marketing is a solution out of this situation.
- The other side of contract marketing is giving out products for marketing. During the long years when the drug registration was quick and cheap, every manufacturer got many products registered which they never developed or marketed. Now, they are encashing their old treasure by offering the products to those who are marketing. Even small manufacturers had 150-200 registered products lying idle. It is not just about old products; some companies are focusing on developing and registering new molecules also so that they can offer these for contract marketing. The manufacturers who have strong marketing muscle, and the marketing companies have the opportunity to negotiate and get products on contract to expand/enrich their portfolio.
- Contract marketing is a win-win situation for both parties. The manufacturer offering products will do manufacturing and supply to the acquirer for marketing. The manufacturer thus gets his business running while the marketer gets his product(s) for marketing. It helps both businesses and is therefore win-win for both. The products that make it big in the market become a boon for both. Similarly, the marketer is spared the hassles of procuring materials, manufacturing, quality assurance etc., the manufacturer is spared the huge cost of marketing the products. In this manner, this is also a win-win for both.
- Contract marketing has also opened the avenue for going beyond pharmaceutical drugs. Alternative medicine, nutritional supplements, nutraceutical, and cosmeceutical products have gained huge popularity worldwide; our market is no different. These products are being prescribed by specialists and consultants also. By regulatory restrictions, these products cannot be manufactured in a pharmaceutical manufacturing plant, it needs a separate, dedicated facility. However, these products can be acquired by a pharmaceutical company and marketed along with their pharma range. All major companies have realized the potential and fast growth of these products and have added these to their portfolio. The process started several years ago when the alternative medicine manufacturers were not regulated at all. They could put up a plant anywhere and manufacture any product. The DRAP rose to the occasion reluctantly and started ‘enlisting’ these manufacturers and their products. However, the process is still simple, easy, and short. The quality of manufacturing units has gone up and products are also being regularized. The best thing about these non-pharma products is that their prices are not controlled. Anyone can keep and charge any price, and in most cases the prices are exorbitant and exploitative. From marketers’ point of view, these are highly profitable and add to bottom line significantly.
- The irony is that the entire activity of contract marketing has been happening at a massive scale for many years, but DRAP does not recognize it as legal. There is no regulatory framework to regulate it, and therefore the product givers have the guarantee that they hold ownership of their products, but the acquirers have no security. Even if they sign a contract between two parties, it has no assurance. In case of dispute, the aggrieved party (acquirer) shall go to a civil court where the case shall drag for years without relief. So far, no major foul play has been reported, but as the brands grow bigger and stronger, the risk will also grow that the product owner may fall into adventurism and run afoul. It is high time that DRAP rises to the occasion and regularizes this business, establishes its norms, and secures the interests of both parties.
Contract Marketing is certainly an interesting and lucrative opportunity for both parties: the product owners/manufacturers, and the acquirers/marketers. For pharma companies pursuing fast growth, it offers good support in volume and profitability.
To be Continued……
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