Novartis Vs. The People Of India

Ivan Illich opened his seminal work, Limits to Medicine with the observation that ‘the growth of the medical establishment is a major threat to health.’ A large part of Illich’s work dealt with iatrogenic (meaning physician-induced) diseases. But to Illich, the ‘medical establishment’, also includes the pharmaceutical industry.

The recent Supreme Court verdict in the Novartis’ Gleevec (Glivec) patent case has generated a lot of heat and uninformed debate in the media. Novartis challenged the order of the Intellectual Property Appellate Board (IPAB), for rejecting a patent for its ‘old wine in a new bottle’, first in the Madras High Court and then in the Supreme Court. Novartis filed world-wide patents for its active molecule imatinib in 1993. In India, the company filed patent in 2003 for imatinib mesylate a beta crystalline form of the active ingredient, under the ‘mailbox provision’.

NOVARTIS Vs. PEOPLE OF INDIA

Novartis’ application for a patent for its beta crystalline form was rejected by the IPAB in 2006 on the ground that Novartis’ original patent application covered all forms of imatinib. The Madras High Court decreed that IPAB’s rejection of the application under Sec. 3 (d) of the Indian Patents Act as amended in 2005 did not violate Article 14 of the Indian constitution. This is now upheld by the Supreme Court.

The Indian Patents Act of 1970 did not recognize product patents but only process patents. However India agreed to consider patent applications filed from January 1 1995 for granting product patents pending amendment of its laws in line with the requirements of the WTO. The process was known as the ‘mailbox’ provision. Eventually India amended its patents law in 1999, to grant product patents with effect from January 1, 2005. A patent is an intellectual property which has a life of 20 years from the date of filing and which gives its holder exclusive marketing rights. The actual period of exclusive marketing depends on the company’s ability to develop the product for commercialisation.

R&D COSTS

In the pharmaceutical industry, Research and Development (R & D) is of course an expensive and risky process. A company begins with thousands of molecules and narrows down its search to a few (less than a dozen) for further experimentation. After initial animal experimentation to establish efficacy, safety and toxicity a candidate drug (known in the industry as New Chemical Entity or NCE) is selected for human clinical trials. A patent application is generally filed at this stage and approval sought for commencing human clinical trials. These are conducted in four phases before it is submitted for marketing approval by the regulators. It is called filing a New Drug Application (NDA). The process takes quite a few years. This means, although a patent is granted for 20 years a company gets to exclusively market it for the residual period after conducting clinical trials and obtaining marketing approval. Even after a drug is approved for marketing it is still tested in a process called, Post Marketing Surveillance (PMS) every year to find out if any hitherto unnoticed side effects come to light. The company has an obligation to market a product only to be used in conditions for which it is approved. However a physician may use it in other conditions if he finds it suitable. This is known as off-label usage.

There are varying estimates about the cost of research and development of drugs. Several years ago an article in the Readers’ Digest put it at between $ 100 and 200 million. Recent estimates vary from $ 500 million to 1 to 2 billion depending on the therapeutic category and method of calculation used, such as inclusion of capitalization and opportunity costs. This does not mean that the entire amount is spent by a company. There is public funding and tax write-offs on R & D spending, which is a not unlikely incentive for bolstering the figures.

Pharmaceutical companies quite naturally argue that they have to make profit out of successful candidate drugs because they have to incur huge expenditure on R & D, which is a long drawn and uncertain process. This is the reason they claim, new drugs cost so much.

MARKET RISKS

However pharmaceutical companies are aware there is an element of uncertainty in the business. For, even if a company is able to come up with a successful candidate drug, there is no guarantee that a rival company with a competing product might not upstage it. As an illustration, see the case of the first anti-ulcer drug cimetidine. It was introduced by the British multinational, Smith Kline & French (SK&F) in the mid-seventies when the only cure for peptic ulcers was surgery. The drug was indeed a boon for patients as it reduced the necessity for surgery in about 90% of cases. The drug marketed by SK&F as Tagamet entered the Guinness Book of World Records for maximum number of prescriptions received in a year. A few years later another British multinational Glaxo came up with an updated version of the drug ranitidine which it marketed as Zantac. It too entered the Guinness Book of World Records in the year of its introduction, and Tagamet lost 50% of its market share. As a result, many heads rolled in SK&F and its Chairman had to resign. The two companies merged in the mid-nineties to become what is now known as GlaxoSmithKline (GSK). (In its process of mergers and acquisitions, GSK has also absorbed several other companies like Beecham and Burrows Wellcome.)

The success of the first two molecules, in the class of drugs called H2 receptor antagonists, made other companies board the bandwagon and many variations of cimetidine were launched. These include famotidine, loxitidine, nizatidine and roxatidine. Of these molecular variations only ranitidine and famotidine could achieve significant commercial success, while the others remained small players. For the treatment of peptic ulcer, another class of more powerful drugs known as proton-pump inhibitors emerged with members like omeprazole, esomeprazole, lansoprazole, pantoprazole and rabiprazole, a few years later.

Wouldn’t it be unfair for a company marketing, for instance, roxatidine to claim the same pricing privilege as SK&F which has laid the groundwork for finding a drug for peptic ulcer? On the flip side could SK&F claim that, as there was every possibility of its market monopoly being upstaged, it should be permitted to recover its costs at the earliest? In view of this should the company be allowed to price a tablet of cimetidine at $100 a pill?

R&D – WESTERN BIAS

It would be unfair to see the Indian Supreme Court verdict as a triumph of left-liberal altruism against Western capitalism for several reasons. Firstly, US courts too held that derivatives of known substances are not eligible for patent protection under the ‘doctrine of inherent anticipation’. Also in the US a patentee cannot claim rights for more than one substance with identical claims, under the ‘doctrine of double patenting’. The third principle governing US jurisprudence in relation to intellectual property rights is the ‘patent misuse doctrine’, which prevents pharmaceutical companies from extending their patent rights by obtaining multiple patents covering essentially the same invention. In her extensively researched paper, Trials And TRIPS-ulations: Indian Patent Law And Novartis AG v. Union Of India, (Berkeley Technology Law Journal, Vol: 23. Mar 21, 2008. 281-313), Lynda L. Lee opined that the stand of the Indian courts ‘indicates that the objective of India’s Section 3 (d) is not a radical departure from international practices to regulate the patenting of derivatives and new uses.’ It must be noted that the article was based on the Madras High Court judgment and written much before the final verdict of the Supreme Court.

The reaction of Novartis to the Supreme Court judgement appeared a bit peevish. In a press statement, the company’s Vice Chairman warned that it will discourage R&D spending by multinational companies in India. This is a bit surprising as multinational companies may have been using India as low cost hub for manufacturing and conducting clinical trials but never seem to be bothered about diseases specific to India. For a long time the healthcare fraternity has been complaining that multinational companies focus on diseases prevalent in the western world for researching remedies. For example, we have not seen new drugs introduced to combat malaria and tuberculosis which are endemic to countries like India, in years. The incidence of both the diseases is seeing virulent, intractable forms. Today tuberculosis resistant to multiple drugs – multidrug resistant TB or MDRTB is quite prevalent. On the other hand new drugs for cancer, diabetes and hypertension and related diseases are introduced by the dozen every year.

R&D – ALTRUISM OR BUSINESS STRATEGY? THALIDOMIDE TO GATIFLOXACIN

Multinational companies which have been assuming moral high ground for their altruistic R&D efforts ‘to ameliorate pain and suffering of humanity’ have also been guilty of destroying the lives of millions of people for short term gains.

The introduction and withdrawal of thalidomide is a classic example. In the 1950s, Distillers & Co (the makers of Johnnie Walker whisky) purchased Grunenthal, a small German pharmaceutical company. Grunenthal developed a tranquiliser named thalidomide which was then believed to be so safe it could be prescribed to pregnant women to relieve them of morning sickness. It was introduced in several countries in Europe and freely prescribed for pregnant women. In the early sixties a causal link was established between the use of thalidomide and delivery of malformed babies. This property of a drug which causes foetal abnormalities known as teratogenicity, was unknown till then. By 1961 an estimated 10000 to 20000 thalidomide babies were born and the drug was withdrawn. 

The thalidomide story should have warned the managements of pharmaceutical companies to be extra careful in vetting and promoting their products. But alas no, drugs with serious adverse effects have been introduced by pharmaceutical companies with unceasing regularity. Here are a few examples, some of which may not be as lethal as thalidomide: Analgin (like penicillin) is known to cause anaphylactic reactions so severe a single tablet could kill a patient. Anti-inflammatory drugs like oxyphenbutazone and phenylbutazone have been known to cause blood disorders. However all these drugs were marketed by multinationals in India for a long time after they were banned in their home countries. The newer pain-relieving drug, nimesulide has been banned in several European countries but is still marketed in India (however not by multinationals, but by Indian pharmaceutical companies). Terfenedine, introduced as an advanced, non-sedating anti-allergic had to be withdrawn a few years later as it was found to cause heart-problems. The latest in the series of drugs to be withdrawn was the antibiotic gatifloxacin, which was found to cause cardiac problems. Illich mentioned in his book that the American innovator of chloramphenicol (trade name, Chloromycetin) marketed the drug for simple conditions like acne. Originally introduced for treating typhoid, the drug is known to cause bone-marrow depression. (The human body produces red-blood cells in the bone-marrow.)

PRICING DRUGS

An argument that was vociferously voiced in the television debates relates to pricing; especially that pharmaceutical companies which spend millions (billions?) should be allowed the freedom to price their products. And any regulation would be a disincentive for them to introduce newer products. This argument lacks substance because the pricing of drugs is not uniform even in the western world. For example the prices of drugs in Canada are far lower than the corresponding prices of drugs in neighbouring USA. In some cases the Canadian prices are about half of their American counterparts.

The marketing of anti-retroviral drugs (used to treat AIDS) in South Africa offers an object lesson for those who blindly take sides with the advocates of free-pricing. Indian companies like Cipla and Hetero Drugs offered to sell a combination of anti-retroviral drugs @ $350 for a year’s course. Four multinational companies challenged them in the South African Supreme Court, on the ground that these companies were infringing their patent rights. They were selling the drugs @ $10,000 for a year’s course. They had to withdraw their suit following worldwide revulsion. For, more than a third of the world’s AIDS population lives in Sub-Saharan Africa.

In the television debates, medical doctors representing Novartis claimed that the company has a scheme for providing the medicine free of cost to ‘below poverty line’ patients. This is not entirely true because the company stopped providing imatinib free after two Indian companies were permitted to introduce low cost alternatives in 2006. (See the research paper cited above.) Even if the company has been providing the medicine free to BPL patients, how does one define a BPL patient? Certainly a household with an income of Rs 50,000 per month cannot be considered BPL? If the household has a patient who requires imatinib, can it expend Rs 1.20 lakh a month? Besides, many cancers require multiple regimens of treatment, which include chemotherapy (drugs), radiation and surgery. The latter two are even more expensive than the cost of medicines.

TAILPIECE: By the by, the promotional or marketing budgets of pharmaceutical companies exceed their R&D budgets by a long chalk.   
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This article originally appeared in VOXINDICA on April, 04, 2013

'You Can Sell!'

Book Review

Khera, Shiv. (2012) You Can Sell. Chennai. Westland. Pages: 316. Price: Rs 275

For some strange reason, selling is referred to as the second oldest profession in the world. A number of other professions compete for the second spot including spying. Designating selling as the second might be an attempt at disdain, ascribing to it associative notoriety with the first. Notwithstanding the fact that sales people are generally unwelcome and viewed with suspicion, they do have a useful function in the society. A successful sales manager was fond of saying, ‘the only person in the world who prays for your long life is your insurance salesman!’ Quite true! The reason is simple. An insurance salesman receives commission on a life policy as long as the insured person lives, but his heirs bequeath his property when he ceases to.

The lighter side apart, every human interaction has an element of selling in it. It need not be selling goods or services. It could be selling ideas. The obvious implication of this idea is that to get ahead in life, one has to sell oneself. Quite often we find the same attributes or prerequisites listed as factors for success both in self-improvement / success literature and selling skills manuals. They are a pleasing personality, a positive outlook, an ability to forge harmonious interpersonal relations and good communication skills. Conversely this is the reason why for sales people success literature has been a first manual.

Napoleon Hill’s 16-lesson The Law of Success (1928) was one of the earliest tomes on the subject in modern times. This was followed by Dale Carnegie’s How to win friends and influence people (1936). Since then there has been a steady stream of success literature, the most popular in recent years being Stephen Covey’s Seven Habits of Highly Successful People. Some like Norman Vincent Peale’s The Power of Positive Thinking (1952) and Robert Schuller’s Tough Times Never Last but Tough People Do (1983) had religious overtones embedded in them. Parkinson & Rustomji’s Business is People, Walter Veira’s booklet on salesmanship, revised and updated as The New Professional Salesman and Spencer Johnson's The OneMinute Sales Person deserve mention in this context as they are precisely and very well written books on the subject. There are hundreds of others, including biographies of great sales people and fiction, which among them must have covered every aspect of selling skills.

Therefore there is not much new ground left for Shiv Khera to cover in his (new) book, You Can Sell. However one must give it to him for putting together a comprehensive manual for sales people which covers the entire range of mechanics from positive thinking to professional pride; from prospecting to selling; from goal setting to time management. There is also a chapter on ethics. He has provided an exercise at the end of each chapter for self assessment of readers as they go along. The book is peppered with interesting anecdotes. Old salesmen’s jokes have been skillfully used to make points. For people in the profession they might sound jaded but planted in a context, make for interesting reading. Even the Rotary Club’s four way test is planted in the chapter on ethics.

You Can Sell is highly recommended. For people in the business of selling it makes for a thorough revision of all that they have learnt over the years. For others it is a comprehensive, useful primer on the subject.

This review is part of the Book Reviews programme at Blogadda.com

Scammed - Confessions of a Confused Accountant

Book Review

Anonymous. (2011) Scammed - Confessions of a Confused Accountant. Bangalore. Grey Oak Publishers. Pages 175. Price: Rs 175/-

Auditing and business consulting cannot be combined just as oil and water do not mix. The reasons for this are simple. Auditing is retrospection. It deals with hard, cold facts. It advises against adventurism and advocates conservation. Caution is its watch word. On the other hand business consulting is prospective in nature. Optimism is its mantra. It functions in uncertainty. Its principle is gung-ho adventurism. It favours exploration of new ideas and new markets. ‘The only safe ship is the ship in a port’, business consultants wryly quote! Therefore the twain cannot meet. The split and demise of Arthur Andersen LLP is attributed to the firm’s overweening ambition to ride the dichotomy between auditing and business consulting at the same time. Eager to compete with its (own) business consulting arm, Andersen Worldwide in revenue generation, Arthur Andersen compromised on accounting standards, as a result of which Enron, the Texas-based energy firm sank. Along with it the original accounting firm Arthur Andersen broke up and its regional fragments merged with Deloitte Touche Tohmatsu, Ernst & Young, KPMG, three of the ‘Big Five’ Accounting firms (which included Arthur Andersen) and Grant Thornton. In order to ward off the stigma attached to the name Andersen, Andersen Worldwide is now renamed Accenture.

However auditing firms jockeying into business consulting is not new. James Oscar McKinsey a Professor of Accounting at the Chicago University founded McKinsey & Company in 1926. McKinsey was hired to turn around Marshall Field & Co a company manufacturing and marketing readymade garments that ran into the doldrums during the great depression of the 1930s. Many decades before words like ‘downsizing’ were heard, McKinsey proposed that Marshall Field & Co do exactly that to turn the company around. Unable to implement his radical suggestions the company brought him in as CEO and charged him with implementing them. McKinsey was initially successful but because of his overbearing nature, made potential enemies. As he ventured into areas he knew nothing about and his mistakes caught up with him, the pressures of work finally got him and at the age of 47 McKinsey died of pneumonia.

If we delve into the history of businesses and accounting firms, we are likely to come up with many more such cases. Do we learn any lessons from these stories? The answer is ‘no’ going by the experience of Satyam Computer Services Ltd. (Satyam) and its auditors PwC – well, the Indian ‘member firm’ of PricewaterhouseCoopers International Limited (PwCIL) anyway. The two were charged with fudging accounts for several years and a partner of PwC along with the Founder Chairman of Satyam and some others of the two firms were arrested on charges of criminal conspiracy to defraud the public. The charge-sheet ran into 55000 pages. Did the story of Satyam and PwC inspire Anonymous, the author of Scammed ­to write the novel? It possibly did. The setting of the novel is Hyderabad and Visakhapatnam. (The British, who could not pronounce Visakhapatnam, made it Vizagpatam and then shortened it to Vizag. For several years now the state has reverted to its original Telugu pronunciation but the author seems to have not noticed it. He insists on calling it Vizag). Its characters  ‘speak with a thick South Indian accent’! (What else would you have them do?)

There was a time when literary critics in the West dismissed fiction by authors like Arthur Hailey and Irving Wallace as pulp fiction, meaning really not serious literature. This of course leads to the question whether literature should really be as sombre as a Russian novel to be considered serious literature. While authors like Somerset Maugham were hailed by critics in their life time, others like Jane Austen achieved this distinction only with passage of time. Although Indians have been writing in English for a long time it was only in the last few decades that they have really made it big on the international scene. At the same time the Indian approach to learning, writing and speaking English has been dramatically changing. There was a time when people who could speak and write grammatically and idiomatically correct English were in a minority. The purists lament that as the numbers of English speaking and writing people multiplied, there has been a dilution of standards. There is less exactitude with regard to grammar and syntax. Fastidious adherence to the ‘English pure’ gave way to colloquial Indianisms. This is because the curriculum of English teaching in the country has also been changing. Instead of studying Shakespearean plays, Milton’s poetry and Johnsonese, students are taught, what has come to be known as business communications in English - writing letters, advertisements and notices etc.

In the literary arena, it all started (perhaps) with Shobha De who introduced Hinglish in her writings. She was not taken seriously (or kindly) by critics at first. But as her novels acquired popularity – from those readers who did not have a stomach for more serious authors like Nirad Chaudary, V. S. Naipaul or Salman Rushidie – her publishers recognised her as a saleable author. If one can say De marked a turning point in Indo-Anglican literature, she opened up the market for more authors who catered to the needs of a certain type of burgeoning English-speaking class.

The explosion of communications through the IT, ITES and off-shoring of jobs truly Indianised English and there is no looking back. Employees of the Business Process Outsourcing Centres (BPOs, popularly known as ‘Call Centres’) have created their own patois - different of course from what they were expected to speak with their customers outside. In short, the expansion and proliferation of the English-speaking elite (?) has resulted in a ‘dumbing down’ of standards. Shobha De did not have serious competition for maybe a decade and a half till Chetan Bhagat debuted. He found a winning formula by precisely identifying his target audience. If the (Indian) English-literature consuming market is largely populated by the information technology guys (and girls) why not directly address them? This he did and was an instant success.

Scammed is in the Chetan Bhagat mould. Its setting is the accounting / business management industry. Its protagonist Hitesh Patel was entrusted by his accounting firm to audit a motor car company in Visakhapatnam, where he espies a lot of white-collar crime and siphoning of funds in it. While making a report of it to the principal board members he finds himself making some useful suggestions for the expansion of business. To an outside observer his formula of forward integration may not be very appealing. For example if a motor car company wishes to diversify into car-hiring business is it necessary that it should confine itself to cars manufactured by the parent company, unless it was for captive consumption? Be that as it may, the director was so impressed with the idea that he offers him a job at five times his salary to implement it. As fate catapults Hitesh into the big league of five figure salaries, five star hotels and of course beautiful girls he also willy-nilly gets sucked into a vortex of organisational politics, political intrigues and financial wheeling-dealings and finally financial offences. The novelist seeks to paint Hitesh as a self-righteous manager with only a weakness for a few girls. How else could he plant those steamy scenes so essential in a formula novel?

In Indish, the adjective ‘homely’ has a cultural connotation, quite different from what the word means in general English, and qualifies a woman as dutiful, home-loving and not coquettish. Therefore high-paid eligible bachelors look for ‘homely girls’ in matrimonial advertisements. In this story too after Hitesh had had his flings with attractive but unfaithful girls he finds succour in his ‘homely’ personal assistant Payal, whom he had ignored for long. As she dotes on him as a mother-hen he finally finds his soul-mate. She lends him a shoulder to cry on when he is down and generally offers him solace and succour. The characters are too linear and colourless but the book may be a good travel companion in a short journey. The novel could have done with some editing and proofing - its Indish notwithstanding. But the last two chapters seem to have been written by a more professional hand.

This review is part of the Book Reviews programme at Blogadda.com 

A modern management seminar!

You'll find here all there is to learn from modern management wisdom. Follow its simple steps to ascend the management ladder. Not since Parkinson has management wisdom been imparted in such succinct and easy to follow form. It is not the usual ‘how to succeed’ stuff which requires you to be “a little more intelligent, a little more hardworking, a little more painstaking” to succeed. As Parkinson said, if you were all that you would not require a guide to succeed. So here’s to success and ascendance to the top!

.............................................................................................................

As always, Subbu barged in crying ‘Guruji, I need your help! I have to make a presentation at our annual sales conference next week. The boss wants me to make a presentation about how I plan to double my sales in the coming year. Top management will be there and if I goof up, it will be outer darkness for me.’ ‘No problem’, I said. ‘I have just returned from a management seminar myself and acquired all the wisdom there was in it………

In the post lunch session, a Senior Vice President has been droning on for over half an hour. Half the participants were dozing from the exhaustion of overnight travel and the effects of a sumptuous lunch. He was saying, “we live in a 24/7 world.” Yeah, at least I do. In fact 24 hours in a day are not enough for me even to browse through the torrent of communications I receive. I receive mails from my boss, his boss and the head office. EDP (electronic data processing department for the uninitiated) sends me enough paper to drown in. Lest I forgot its existence, ‘HR’ sends me communications. In the olden days it was ‘Personnel’; now ‘Human resources’ has a nice ring to it. The only thing I could make out of ‘HR’ was it regularly denies me the type of increments I feel I deserve. I receive circulars from ‘Logistics’ (in the days of yore it was called ‘Distribution’). I also receive communications from ‘Corporate Communications’. In the olden days the function of CC was mainly to produce the monthly in-house magazine and occasionally liaise with the press if there was a need. There were no pink papers and businesses did not make it often to the media. Now CC has a larger role. It is to see big-boss’ mug-shot appears in the newspapers at least once a month and he makes it to the television at least once in a quarter for his fifteen seconds of fame. The rest of the time CC throws its weight around and takes it out on ‘minions’ like us.

…“We must leverage our core competences for greater customer focus.” A colleague who was sitting next to me whispered, ‘oh yeah, his core competence is in placating the boss and flattering his wife. Leverage, certainly he does. Last weekend he was out playing golf with him. His wife was quite unhappy; nowadays he spends his Sunday mornings at his boss’ residence you know.’ The last part jerked me out of my reverie. So my colleague was a regular visitor at our boss’ residence. How remiss of me? Haven’t I lost my customer focus?

…“in order to take on competition, we will have to look for synergy within, benchmark our efforts with the best practices in the industry and think out of the box. Let us ask ourselves if we are able to achieve a strategic fit; if not we should revisit our game plan. I call upon you ladies and gentlemen, let us become more proactive.” Yes, be at the boss’ side throughout the seminar and bring him coffee and cookies during breaks. Carry a pack of his brand of cigarettes. It comes in handy when he runs out of his pack, which to be sure he often does.

…“let us empower our team members” (for some inexplicable reason, in modern management parlance, the word ‘subordinate’ is taboo; so ‘team members’ it is.) “We need to change our mindsets and expeditiously look for a paradigm shift; let us think win-win.” Yeah, for sure! We do all the donkey’s work and you promote your favourite acolyte. He wins and you win because you get promoted too!

…“As you all know the competition is breathing down on our necks. If we are serious about outpacing it, we will have to fast-track in enhancing our knowledge base. Let us come out of the loop and provide value-added service to our customers, for it is a result-driven world.”

...“don’t forget, the truth is at the end of the day, it is the bottom line that counts.” Yes Sir, we are looking forward to the end of the day. The bottom line is, that at the end of the day there would be dinner and drinks. Bosses would be around, so the party would begin on a cautious note but after a couple of rounds the lions within would come out.

… “Good Luck folks, God go with you, till we touch base again!”

The seminar made me wiser. I knew I have picked up the essence of management ‘Gita’. I gave Subbu a list of twenty five words. I suggested that he sprinkle these words throughout his presentation and presto, he would be a hit with his bosses. Here they are, in alphabetical order: “at the end of the day - benchmark - best practice - bottom line - client focus - core competencies - empowerment - expeditious - fast track - game plan - knowledge base – leverage - mindset - out of the loop - paradigm - proactive - result-driven - revisit - the truth is - think outside the box - touch base - strategic fit - synergy - value-added - win-win.” I told him, ‘don’t forget the most important of them all is “24/7”.’

The article first appeared here: A modern management seminar!

SUCCESS TIPS FOR FRONTLINE MANAGERS - 1

PREPARATION OF CUSTOMER LISTS

You will agree that the first step towards achieving sales success is to help your team members in preparing right CUSTOMER LISTs. You will also agree that the Pareto principle (also known as the 80-20 rule) is generally applicable to CUSTOMER LISTs as well.

BRANDELOQUENCE!

This article by U NARAYANADAS on branding in the pharmaceutical industry is the fourth in the series that was published by Express Pharma Pulse and appeared in its issue dated May 26, 2005

While “marketing” may not have absolute control on the communications which take place in the customer’s office, many factors influence the modes of communications through which brands communicate with their customers, feels U Narayanadas

An American general visiting forward troops during the Korean War, had to engage an interpreter to address them. The general, seeking to grip the soldiers’ attention, told an elaborate joke, which lasted several minutes. Then, the interpreter said a few words and the assembly burst into laughter. After the speech was over the mystified general asked the interpreter how he translated the joke in so few words. The interpreter informed him, with a sheepish grin, that there would be no point in translating the joke word for word, so he told the soldiers that the general just told a joke, and they should acknowledge it with laughter.

The story may seem inconsequential, but consider the constant tussle between marketing and sales about implementation of strategies - especially communication strategies. 

A familiar complaint from 'marketing' is that 'sales' does not faithfully implement strategies. 'Sales', returns the compliment by whining that 'marketing' does not understand the realities of the market place. While marketing’s uncouth brute and sales’ glamour doll spar at each other, sometimes communications assume strange forms. Sales’ perspective in the story is that the proof of the pudding, after all, lies in eating it.

While marketing may not have absolute control on the communications which take place in the customer’s office, many factors influence the modes of communications through which brands communicate with their customers.

Missing The Wood For The Trees

A product manager’s eagerness to score a hit may sometimes cloud his/her better judgement. As a result he/she tries to project what she sees as the benefit, not necessarily what the customer desires. One such product manager insisted on using the hologram on a pack as the brand’s USP. It might have worked for a while, when the hologram was a novelty, but it was not the brand’s innate strength. 

The holographic seal offers, at best, an indirect benefit by offering the consumer the genuine article. The benefit, if any, is to the marketer as his objective is to prevent piracy. 

Beginning With The End?

Secondly the pressure cooker atmosphere, in which a product manager works, forces him to think of a mnemonic or tagline the moment a brand is assigned to him and not after he thought through a brand strategy, drawing it from an audit of the strengths and weaknesses of his brand and its competitors.

This, to use a familiar cliche, is putting the cart before the horse. Once the cart is put before the horse, the rest follows by weaving the communication around the tagline with the unseemly expectation that the cart would draw the horse! 

A product manager wanted to use the tagline ‘A tribute to womanhood’ for an oral anti-fungal for vaginal candidiasis! He was dissuaded from offering such a ridiculous 'tribute to womanhood', but long before another company marketing an iron supplement paid the same 'tribute to womanhood'. The hallmark of a professional is his/her willingness to experiment and change. But, most creative people have this weakness: they fall in love with their work early on and are reluctant to change. 

Sauce For The Goose And Sauce For Its Gander!

Thirdly, a bit of amateur product management from the company’s power elite sometimes influences brand communications. A senior official of a company during a discussion on packaging material designs for a new brand insisted that they use the ‘Colgate Ring’ in the designs! He liked it in Colgate’s television commercials.

According to him, the brand offered a protective ring to the patient - it did not matter in which condition it was prescribed. 

When In Doubt Apply Rule No.1!

Brands are mainly extended either to cash in on their popularity to step into other segments or shore up revenues from plateaued/flagging brands. There may be a situation where, in the new segment, the original product may have only a subsidiary role while the add-ons play a more important role.

For example, if a cough syrup is launched as brand extension of a popular antihistamine, the antihistamine may at best have a subsidiary role in the extension. Most textbooks assign a placebo role to antihistamines in cough mixtures. Therefore in such an extension, there would be no point in highlighting the original brand’s efficacy irrespective of its popularity. 

A brand should deliver on its promise to be successful in the long run. That should be the eternal Rule No. 1. 

The primary objective of the brand extension in the above example, i.e. the cough mixture should be to relieve cough not allergy. When in doubt, Apply Rule No. 1 should be the guiding maxim.

Charles Revlon, chairman of the Revlon Cosmetics is reported to have said ‘‘We make chemicals in the factory, the retailer sells hope in the store’’. The chemical mixed and packed in the factory transforms into a brand, picking up en route a name, an image, an identity, a mnemonic, a tagline and - even a personality! (Brand personality may be more applicable in case of durable and some non-durable consumer goods.) And, the brand communicates hope!

Mnemonics And Gestalts

Integration and application of ideas developed by two independent researchers helped marketers along in their efforts in brand building. For a consumer to patronise a brand he should recall it in the first place.

The German word Gestalt is hard to translate into English but roughly means an 'organised whole'. Dr Frederick Pearls, a Freudian analyst, developed the principles of Gestalt psychology and employed them in psychotherapy.

But Gestalt theory’s more mundane application is in advertising. If people are shown a near incomplete circle and asked what they saw in it, nine out of ten people would reply that it was a circle. Readers of this article will have no difficulty in reading the following paragraph and understanding its meaning. We do not know whether such a research was indeed carried out at Cambridge but the paragraph is self-explanatory. 

‘‘Aoccdrnig to a rscheearch at Cmabrigde Uinervtisy, it deosn’t mttaer in waht oredr the ltteers in a wrod are, the olny iprmoetnt tihng is taht the frist and lsat ltteer be at the rghit pclae. The rset can be a total mses and you can sitll raed it wouthit a porbelm. Tihs is bcuseae, the huamn mnid deos not raed ervey lteter by istlef, but the wrod as a wlohe.’’

This could probably be the reason for some errors we see in print escaping the eagle-eyed scrutiny of the most intrepid proofreader.

The second important development was the Russian scientist Pavlov’s biological experiments. Pavlov set out to observe the effect of external stimuli on the gastric secretions of rats. The experiment was to ring a bell before offering rats their daily rations. The rats, conditioned to hearing a bell before their meals, continued to secret digestive juices in anticipation of food even when food was not served after the ring, for a few days. And in the process Pavlov stumbled upon the now famous theories of learning.

The principle behind development of mnemonics and logograms is a combination of Gestalt psychology and the results of Pavlov’s experiments. Its objective is to make people remember/recall a product or concept by looking at the proffered concept as an organised whole and remember it by association of ideas.

The writer is Marketing Manager, VINS Bioproducts Ltd, Hyderabad. E-mail: unarayanadas@yahoo.com 

BRANDING IS POSITIONING...

This article by U NARAYANADAS on branding in the pharmaceutical industry, the third in a series of four appeared in Express Pharma Pulse of February 03, 2005

One of the chapter headings in an interesting book called FORENSIC MARKETING is ‘Interrogate a brand till it confesses its strengths’! Should it not spur us to think, asks U NARAYANA DAS

..............................................

BETTER THAN SHAKESPEARE?

George Bernard Shaw captioned Caesar and Cleopatra’s preface with the poser: "Better than Shakespeare?" Shaw and Shakespeare may appear incongruous in an article on branding but consider this: poets and artists, playwrights and politicians all vie to have the public interested in their work. To achieve this, firstly their work has to have intrinsic merit and secondly it should have distinguishing features.

Bernard Shaw’s prefaces written in powerful prose are as popular as his plays. Shaw did not mean any disrespect to the Bard of Avon as the first sentence of his preface clarifies: “I shall be remembered as long as Shakespeare and Aristophanes or shall be forgotten a clown down the turn of the century.”

Bernard Shaw had merely positioned his play as different from Shakespeare’s. Some critics say that Shakespeare portrayed his male characters as weak-kneed and his plays had only heroines, no heroes. In contrast, Shaw’s delineation of Caesar was sharper and more masculine. Who would read Shaw’s play if it were to be in the same mould as Shakespeare’s and on the same subject?

MONA LISA A BREAK FROM TRADITION

Some art critics believe that Leonardo da Vinci’s Mona Lisa became as popular as it did because the ‘subject’ was a ‘departure’ from tradition. Divinity or nobility were subjects of art till then. da Vinci introduced a common housewife as his subject in Mona Lisa (She was the wife of a poor nobleman who commissioned the painting but could not pay da Vinci for it).

POSITIONING AND POLITICAL CONTENT

During the election 2004, Indian media was agog about political parties marketing their icons and philosophies as brands. The new age of marketing infected the media into branding (pun intended) political parties but political parties have all along been indulging in it explicitly or implicitly.

From Indira Gandhi’s 'Garibi Hatao' to the BJP’s (in)famous 'India Shining,' all such slogans have been positioning statements. India Shining was a case in point where a political party’s positioning statement did not find favour with its target audience and the brand was rejected. And in the US, presidential election campaigns are virtually conducted by Madison Avenue.

THE CONCEPT OF POSITIONING AND POPULAR PERCEPTIONS

The concept of positioning is closely inter-related with market segmentation, target marketing, product differentiation, consumer benefit and brand image. Brand image is what the consumer perceives of the attributes of a brand vis-à-vis brand identity - what the marketer intends to portray.

Chloromycetin is a good example of consumer perception as it is often confused with its generic content chloramphenical. Or the brand name Tossex, which is not a sex stimulant. The expression 'Ivy League' is often misperceived in India as standing for scholastic excellence akin to Harvard or Oxford. The facts are different: eight universities in the US north-east joined in a league to play annual sports tournaments. As the universities, which formed the league, have green ivy on their walls the tournaments are called Ivy League tournaments.

There are many definitions of positioning in marketing literature but the most apt seems to be the one given by Beckman, Kurtz and Boone in Foundations of Marketing: ‘Product positioning refers to the consumer’s perception of a product’s attributes, use, quality and advantages and disadvantages in relation to competing brands’. The operative part of this definition lays stress on the consumer’s perception of a brand’s attributes.

IF YOU ARE SURE, GO FOR THE ENEMY’S JUGULAR...

The note on H2 receptor antagonists in the British National Formulary mentions that cimetidine, ranitidine and famotidine have similar pharmacological and safety profiles. Cimetidine (Tagamet) the first to be introduced was a real chart buster and obviated the necessity for surgery for peptic ulcers by almost 90 per cent.

As the first to be introduced, Cimetidine had undergone post marketing surveillance by the time ranitidine made its appearance. For the introduction of ranitidine (Zantac), Glaxo needed a platform to overcome entry barriers and challenge the incumbent.

Side effects - especially its binding androgen receptors - observed with ’long term use of cimetidine in high doses’ (Goodman and Gilman qualifies its warning) came in handy to ‘knock its block off’, as the Americans would say in boxing parlance. Glaxo seized the opportunity and positioned Zantac as an anti peptic-ulcerant with a better safety profile.

The rest, as they say, is history! Tagamet lost 50 per cent of its market share in the year Zantac was launched. Zantac usurped Tagamet’s Guinness Book slot and the entire top brass including the Chairman of SKF the company that launched the wonder drug (that probably rendered many surgeons jobless), lost their jobs.

...OR CHOOSE TO BE A BIG FISH IN A SMALL POND

In India when Glaxo made a foray into the ‘vitamin B complex with C’ segment, the company positioned Cobadex as a ‘co-prescription B complex’. The suggestion inherent in the brand name seems to be the obvious explanation. (Interestingly, Nancy Powers’ pocket medical dictionary includes Cobadex as a steroid cream in its list of proprietary medicines marketed in Europe).

But a more logical marketing explanation would be the company’s intention to piggy ride with the antibiotic market, which accounted for 20 per cent of the pharma market (then). 

The company had to contend with a very strong number one in Becosules, followed by Surbex-T at number two, Becozyme C Forte, Beplex Forte and Stresscaps et al grouped together at a lower level.

Glaxo apparently sacrificed myriad indications (in which a ‘B complex with C’ could be prescribed) to be exclusively remembered as a co-prescription B complex. Pfizer launched an epic ’fight-back’, but was forced to make a course shift grouping Becosules and Terramycin together in all its subsequent promotions, a subtle acknowledgement of Glaxo’s positioning of Cobadex.

Glaxo’s aggressive entry however could not dislodge Becosules from its number one perch but achieved the company’s secondary objective of making the brand a big fish in a small pond. Marketing battles between the two - which may be called the Indian pharma equivalent of the famous Cola wars - expanded the market with Cobadex eventually settling at number two.

START A NEW CATEGORY

Jack Trout and Al Ries recommend in their 'Twenty-two Immutable Laws of Marketing,' starting a new category as the best way to launch a new product successfully. If it is not possible to start a new category, they say, start at least a new sub-category.

The advent of 'Schedule V' in the eighties brought about changes vitamin formulae. Zinc became a cameo as companies made a virtue of what they were allowed to include to compensate for trimming down vitamins. Similarly anti-oxidants was a successful attempt at sub-categorisation as multi-vitamin mineral supplements always had the few ingredients seen in anti-oxidants, but biotin and selenium, which were not considered important earlier, were assigned cameo roles in the new (sub) category.

THE PROOF OF THE PUDDING...

The objective of any positioning is to gain the elusive perceptual position in the consumer’s mind, often described as the black box.

The success of the strategy depends on the marketer’s ability to communicate the concept to the consumer and win instant recall. One of the chapter headings in an interesting book called FORENSIC MARKETING is ‘Interrogate a brand till it confesses its strengths’!

Should it not spur us to think? Taglines and mnemonics should emerge from a thorough audit of the strengths of a brand vis-à-vis competition.

The writer is a Hyderabad based practising manager and marketing consultant. Email: unarayanadas@yahoo.com

BRANDING BEGINS WITH A NAME!

This article by U NARAYANADAS on branding in the pharmaceutical industry, the second in a series of four appeared in Express Pharma Pulse of December 23, 2004 

A ‘Brand’ is considered to be a mixture of attributes some tangible, others intangible. All these attributes are condensed into and expressed in a trademark that differentiates it from others and is expected to create value and influence (buying) behaviour.

The perceived value of a brand depends on the viewer’s perspective: for the marketer a promise; for the consumer the delivery of that promise; for the business the security of earning profits; legally an intellectual property.

BRANDING BEGINS WITH A NAME!

The antecedents of branding may be traced to the days when cattle used to be tattooed with a mark to indicate their ownership. The objectives of modern branding are partly the same. A ‘Brand’ is considered to be a mixture of attributes some tangible, others intangible. All these attributes are condensed into and expressed in a trademark that differentiates it from others and is expected to create value and influence (buying) behaviour.

The perceived value of a brand depends on the viewer’s perspective: for the marketer a promise; for the consumer the delivery of that promise; for the business the security of earning profits; legally an intellectual property.

Additionally, brands aid customers to choose from a wide variety. Naming brands that pack so much value into them is a difficult exercise. It is not just coining a name but encrypting a concept that would unravel when the name is used. The famous positioning guru Jack Trout called one of his books ‘Get the Name Right’, but, essentially, it deals with encrypting a concept. Randall S Rozin, Global Manager of Branding at Dow Corning and an editorial board member of Journal of Brand Management, says that a good (brand) name is better than riches. In an instructive article on the dos and don’ts of creating names, he lists the interesting example of Chevrolet that wanted to name one of their cars Nova till someone pointed out that it means “Does not go” in Spanish. Similarly when Coca-Cola sought to name a citrus drink Urge in Sweden (Surge in other countries), it ran into legal problems as people with the same surname objected to it.

These examples may seem exotic, as Indian brand names may not encounter such problems at the moment. This may be so because we do not have any global brands (exceptions are few and far between). As the Indian industry looks towards wider horizons, hopefully, we shall soon create global brands. There is an entry in Drug Index listing Pamela as a brand of paracetamol and racemethionine. Let us hope that a Ms Pamela will not take umbrage at her name being bandied about associating it with an antipyretic.

THE WORKS BEHIND THE WORDS!

Carmaker Daimler exhibited the prototype of a new car to some of its dealers. One of them, an enterprising chap, offered to sell a third of the produce if the car was named after his daughter Mercedes. Thus was born the brand name for the most coveted automobile - Mercedes.

Here is a list of amusing and (maybe) instructive stories behind coining some other popular brand names. (See box.)

NAMING CATEGORIES

There are three broad categories into which brand names may be classified:

DESCRIPTIVE NAME: A name, which describes a product or service for which it is intended.

For eg: Abdec, Cetzine, Ostocalcium.

ASSOCIATIVE NAME: A name, which indicates a benefit or aspect of a product by association of an original or striking idea.

For e.g.: Acibloc, Mucolite.

FREESTANDING NAME: A name, which has no link with the product but has a meaning of its own.

For e.g.: A M P M, 11 P M.

The following may also be considered:

ABSTRACT NAME: A name that is entirely created and has no meaning of its own. Abstract names may also be classified as a sub-set of freestanding names as they too do not have any link to the product or service.

For e.g.: Avil, Zinetac.

COINED NAME: Any name that has been in some way created; such a name may be descriptive, associative or freestanding.

For e.g.: Allenburys, Kokkos (See below)

ACRONYM NAME: A name that has been coined by using an acronym of a larger unwieldy name.

For e.g.: Amul, Noida.

We find a majority of Indian pharma brand names falling in the descriptive category and few in the associative category. The two examples given above under the freestanding category do not strictly conform to the definition as they indicate the two times in the one case and late night dosing in the other. And it was difficult to find names under the other categories on a cursory examination of Drug Index. Occasionally, we find (mostly generic companies) prefixing or suffixing all their brands with a part (or full) of their corporate name.

This may be because we would like to play safe by giving the reluctant doctor a cue to remember our product, which limits our freedom to be creative. As we move into the next epoch, which does not permit copycats we might see more creativity in coining names that encrypt concepts.

THE STORY OF A GREEK SOLUTION

The writer was heading a marketing team that sought to introduce an amoxycillin and cloxacillin combination brand several years ago. The market was already choc-a-block with dozens of similar brand; some of them big names. The team’s objective was to launch its brand-successfully - into the crowded market. How does one do it without the doctor brushing it aside with: ‘Oh! Not another? I have enough of them’. With that the interview peters out and the field staff will not just lose morale but all interest in the product.

The team had many sittings to thrash out the issue. In one of the sittings the team went through the attributes of the product (which was not yet a brand) and decided to focus on its gram-positive spectrum, especially its ability to combat staphylococcal infections. The team tried the use of computer software that coined hundreds of names based on specified parameters. None of them was satisfactory.

An idea germinated when someone pointed out in one of the meetings, that the word staphylococcus emerged from two Greek words, staph meaning bunch and kokkos meaning grape. In fact, the microscopic picture of staphylococcus looks like a bunch of grapes. The explanation seemed to deliver a name. A concept began to take shape. The team decided that it would tell the doctor about shapes and Greeks. And, of course, solutions to his problems. (Else what would be the point in meeting him?) The interview would not be killed. On the other hand it would kindle the doctor’s interest. The company’s medical representatives were instructed to tell the doctor about ‘A Greek Solution for Coccal Infections’. The first page of the Visual Aid carried only the picture of a bunch of grapes and the caption: ‘A Greek Solution for Coccal Infections’. The brand was christened Kokkos. Doctors who would normally rush medical representatives through their detailing gave the story an interested hearing, were amused with its details and asked several questions or entered into animated discussions. Needless to say that Kokkos was a runaway success as a brand and far exceeded the company’s marketing objectives during the year of its launch. There were other components in the marketing of this brand and may be discussed elsewhere on occasion.

PRAXIS NOT THEORY

Book Review

HardKnocks For The GreenHorn (107+ pages with colour illustrations; price: Rs 599) and SuperVision For The SuperWiser Front-Line Manager (158+ pages with colour illustrations; price: Rs 799) by Anup Soans. Published by Asian Trading Corporation, Bangalore.