Dear Colleagues! This is Asrar Qureshi’s Blog Post #893 for Pharma Veterans. Pharma Veterans aims to share knowledge and wisdom from 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 asrar@asrarqureshi.com for publishing your contributions here.
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Though the desire of smaller companies to do better than the competition and become big quickly, but they often adopt wrong strategies. The time moves forward rapidly and the organizations which do not play along are left behind. Pakistan market is littered with low performing organizations, both old and new, who are struggling to survive.
When an organization is left behind, it is not just the business owners who suffer, all employees, vendors, suppliers, creditors suffer with them. I receive news every day about companies which are up for sale. The ad gives detail about land, building, sections, license status, and most importantly, number of registered products. I don’t know how many deals are finalized really. In a market where many are trying to sell, neither the price nor the opportunity enhances.
It has been oft repeated fact that Pakistan pharma market is extremely unevenly divided; 90% business is with top 50 companies, while the rest about 700 companies are trying to get some share out of the 10% business left by the top 50. It is a difficult situation, to say the least. However, it is the doing of both businessmen and the regulators. The entrepreneurs are enticed by the market size (almost a trillion rupees), the lines of patients in the pharmacies, and the rising prices of medicines. What they do not see is how this business is developed.
Pharmaceutical business is unlike other businesses because consumer is not the actual customer. Pharma industry customer is doctor who prescribes medicines to patients who then go and buy drugs. Pakistan pharma companies sell over 3 billion units (packs) of medicines in a year, some are sold on prescription, some over the counter as self-medication, and some through quacks or unqualified doctors. This is another area where bigger companies beat smaller companies. With their marketing expertise, knowledge base, and deep pockets, they do not let smaller or newer companies poach their customers.
This preamble was necessary to show who will compete with who? A company at the rank of 230 should not compete with a company ranked 23, not because the 230 is inferior, but because they operate in different markets. Strategies are designed according to ground realities, not by the book recommendations.
I would like to focus on smaller size companies for this discussion, not the larger, top ones. Here are my recommendations.
Understand the Market in Which You Operate
Pakistan Pharma market is segmented in several ways. There is a known urban-rural divide which everyone knows. However, during the last couple of decades, more and more qualified, postgraduate specialists have opted to go deeper into rural areas, either because they belonged there, or they saw greater potential there. Therefore, straightforward rural-urban divide is not entirely applicable to pharma industry. Your divide your market on different parameters. Doctors’ specialty is one parameter, location within the city is one, size of the practice is one, age of doctor is one, position in the field is one, and so on. The first important factor is understanding which is your market (or should be your market).
Understand Who You are Competing With
As I mentioned in the opening, one must compete with their match; uneven matches are rarely won by weaker ones. It may sound selfish, but it is better to compete with slightly lesser ones because it is the nature’s principle; the stronger eat up the weaker ones. It is admissible because it is about business only, you are not going to kill the other person. Do consider that every player who is surviving in the industry is doing so because it is getting enough business for survival. Do research and see where they do business, and how they do it. Another important point is to focus on products which are used more often, are cheaper, and are taken for a few days; these will sell early, and your team shall not face many question.
Understand Your Strengths
It is customary for us that look towards the weaknesses of others rather than identifying our strengths. Do remember the rule that we win due to our own strengths, not due to weaknesses of others. Even if your competitor is lying down, you cannot do anything if you do not know your strengths, and do not know how to use these. Your strengths may be in your supply chain, manufacturing facility, manufacturing process, quality parameters, distribution network, and your people; people come first. For example, if you are competing in tender business, your supply chain and manufacturing shall make you successful. In other market segments, your other strengths shall be used.
Know Your Tools
What tools do you take to the market? It is important to know these. Tools are the instruments which help you to secure business. Look at these situations carefully.
- If you are competing in tender business, or any business where price is the only winning factor, your costing is your tool. If you have detailed costing of your product, you will know the limit to which you can go down and how and not kill yourself. Too many companies do not have correct costing and they quote low prices rashly and then suffer loss of money or credibility or both.
- If time to supply is the winning factor, your tool is your supply chain. Only they can ensure that even miracles could be performed. They will move suppliers and vendors and will make supplies within desired time possible. You need to know how to use this tool.
- If you run projects with tight timelines, and under stressful situations, your tool is your people. If you take them along, give them space, recognize them, value them, appreciate them, and reward them, they will achieve for you which even you would not believe.
These are just a few examples, and the list can go on.
Sum Up
Pharma market is intensely competitive, and only the fittest survive. Fitness here is physical, mental, psychological, and financial. To survive, become successful, and outperform competition, use practical strategies that are relevant for you. Another thing to remember is that no one becomes big by copying the big ones; you become big when you grow yourself.
Concluded.
