Generics In A Tight Spot

Pharma- How generics drug industry is facing stiff competition

There is a growing trend which has been noticed in the pharmaceutical industry for the last couple of years. The phenomena can be attributed to the growing pressure on the generics segment from both the originators( who develop the drugs) and the generics manufacturers who produces the drugs in a large scale after it goes off space. What is the phenomena?

There is a growing shift of interest towards the specialty drugs and biosimilars, away from the generic drugs. The shift is more pronounced in the European markets. The specialty drugs comprises inhalable products such as eye drops, certain injectable therapies and topical treatments. Biosimilars are follow on versions of original drugs produced after the expiration of the patents is supposed to have same effect on usage. The experts attribute this to mainly four forces - increasing cost pressure from the consumers, powerful distributors and pharmacies, sustained pressure on the free production of generics and finally, fragmentation of the generics industry.

The manufacturing of specialty drugs and the biosimilars involve complex processes. Even after the drugs go off patent, the originators strives to hold onto them using a mix of commercial, regulatory, legal and product development strategies and hence, it is difficult to be easily replicated by the generics industry. The percentage market share of the originators after the drugs have gone off-patent in the generics, specialty and biosimilars segments are 55%, 70% and 85% respectively. This shows how the originators are trying to hold onto the last two segments and this is where the fight is going to be in the coming years as far as pharma industry is concerned.





So, there are three strategic options available for the generics industry:-

A. Fight it out in the highly competitive and commoditized generics segment using scale as a leverage and better marketing and distribution strategies.

B. Go for the more higher margin and profitable specialty and biosimilar segment by investing more in research and development activity.

C. Be present in both the segments.

The generics industry can learn from other industries like airlines, textiles, electronics, steel etc. and implement a similar business model.

For example, the airlines industry has a relentless focus on costs.
* They are focused on point to point travel
* They have standard fleet of planes to reduce maintenance and operational cost
* They have introduced online booking and checking

Similarly, the generics industry on these lines can focus on

* Reducing the number of SKUs (stock keeping units)
* Standardize manufacturing processes
* Focus on online and quick regulatory approvals

In textile industry, the focus is on fast changing consumer trends.
* They have systems and processes in place to monitor and identifying changing trends.
* The processes can easily prototype the new development and role out new designs and offerings in minimal time

Similarly, the generic companies need to have systems and processes in place to identify the latest developments in the sector and forecasting the demands in advance can go a long way to ensure profitability and early mover competitive advantage.

References:
Kreid, & Reeves. (2014). Transforming Europe's generics industry. Boston Consulting Group

The Online Consumer and E-tailing Trendz!

You want to buy that favourite USPA Red T-Shirt? And now you are confused, whether you want to shop it online or want to go to the retail outlet to purchase the same. You might be thinking of the saving in time and energy if online and against that you can try the T-shirt if you visit the store. Trust me, we all face the dilemma! And it has been found by the market research conducted that the preference to get it online or visit the shop depends largely on the products and to some extent on the psyche of the consumer. Products such are clothing & footwear, consumer durables are bought at the retail outlets whereas items as books, stationery, educational courses etc. are ordered online. So next time your confused, do not blame yourself!

There is an increasing trend of webrooming (browsing online and then going to a store to make purchases) vis-a-vis showrooming (go to a retail out to check the product first and then going online and comparing brands and prices before purchasing). Webrooming is especially relevant for electronics consumers. Are you a webroomer or a showroomer?

A study by a consulting firm revealed that consumers get a better price online as it is easier to compare prices and product features online. Etailers also offer better visibility and offerings when it comes to promotions. So one feels the best combination would be a retail outlet with an online presence rather than pure-play retail or online stores. Evidence to this observation is the growing popularity of the “Click and collect” services offered by some retailers where consumers can select and book the product online and drop by the store to collect it.

It has been observed that online customer experience can be largely categorized into the following steps – research, selection, supply, use and support. An illustration is provided below where the five stages are tabulated against the channels comprising the web, point of sales and customer touch points, social network etc.

Well, the above methodology is not all challenging the buying process as explained by the marketing Funnel but it is an online variation of the tradition marketing concept with the emergence of Web and Marketing 3.0. One feels that in order for the online consumers to have that seamless shopping experience, information and services should be integrated across all the five stages.

Yesterday I had an experience with a Customer Service department of a reputed domestic airline which clearly brings out the lack of information flow and integration across all the customer touch points. Seeing a special offer flashing on the website of an Airline (the ad occupied almost 20-25% visible area of the homepage), I called up the customer service for some clarification but was shocked and later amused that they were completely unaware of the offer and when I pointed them to their website, their supervisor promised me a call back. And it has been 48hrs, didn’t hear from them. Though, I clarified my doubt though some other means, the lack of co-ordination and flow of information for an Airline of that repute was strange!

Bangkok Trip!

What's in an MBA ?

Well this piece of article is especially for my non-MBA friends. I have been getting queries from quite a few of them if quitting an existing job for a MBA program is really worth it. Now that I am almost nearing the end of my MBA stint, so thought of sharing some experiences here! These are entirely my opinions!

To start with as well all know, we need to crack the Common Admission Test (CAT) more popular as CAT. And of course, we have the XAT, SNAP, NMAT, CMAT etc. for some of the other reputed colleges. Once, you are into a B-School, your initial days would comprise outbound tours, bonding sessions, personality and effective communication workshops etc. This is more of the fun part when we meet new fellows from diverse backgrounds be it academics, nationality, work etc.

In tier I – III B-school the pedagogy is almost similar. In the first year one studies general management with topics like business statistics, fundamentals of management disciplines – Finance, Marketing, Sales, HR, Operations, IT, international business etc., Strategy, tools like Excel, ERP, databases, foreign languages and so on. The idea is to equip oneself with a generalized skill-sets required by a manager.

At the end of the first year, we go for a two-month long internship program. The area of internship is generally the specialization we want to opt for in the final year. Though, there are cases where students do opt for a different specialization after the internship experience. Your internship may or may not have a stipend depending upon the company you are in. This is where top B-Schools have an edge over tier II peers. Around 70% - 100% of the students get paid internships in the top ten colleges of our country. Good performance during the internship can help you bag a pre-placement offer from the company.
Post internship, when we are back, it’s time for our specialization. The batch is restructured into Finance, Marketing, Supply Chain (Operations), Human Resources and Information Technology (offered in some colleges). I will take you through the specializations.

One needs to keep in mind that during the middle of the final year, the companies start visiting the campuses. So, the first six months of the final year is the most crucial and the toughest part of your MBA program.

On academic front, if you have opted for Marketing – you would come across areas like sales, integrated marketing communication, consumer behavior, international marketing, online marketing & social media, services marketing etc.
In finance, one would study corporate valuations, banking, capital markets, financial derivatives, investment banking - Mergers and acquisitions, private equity, hedge funds, bonds etc.
Human Resources would help you study industrial relations, managing performance, talent management, organizational structure design, negotiation, conflict management etc.
In Supply Chain, one studies Retail supply chain, materials and quality management, procurement, warehouse management and so on. As I had told before, the course structure is very similar in most B-Schools, the subjects might have a different name here and there.
One also gets an opportunity to purse exchange programs where in you generally go to a B-school in Europe, Singapore or US for a six to twelve months stint.




Now coming to the most important part, placements and return on investment. The fees in a decent B-School (top 30) vary from 10 lpa to 18 lpa. The median salary would be from around 7 lpa to 13 lpa. If you are working in a company and earning 5 lpa, do not ignore the opportunity cost i.e. 10lakhs for the two years you invest in a MBA program. But yes, with a MBA you get a broader perspective and can rise up the corporate ladder faster. And yeah, you are friends with some 100-200 influential peers.
Having said that, some other things which a placement report might not say – you can consider these both as positives or negatives. Trust me, it varies from person to person.

• It is difficult for people with high work-ex (3 yrs or more) to change their domain. If one is hell bent, he/she may have to be contend with a salary given to a fresher.
• Mostly marketing profiles are sales oriented.
• Only a few handy people land up with a investment banking profile.
• In a college, HR profiles are provided the lowest CTC.
• There would be a sizeable bonus or variable component in your salary.
• There is considerable difference between MBA academics and industry. Hence, it is advisable to pursue live projects to bridge the gap.
• Very few people receive the highest packages.

Apart from the academics and placement, there are whole lot of things that goes in a B-school which turns one into a global professional. There are committees – Corporate, Public & Alumni Relations, Fest committees, Food Committee, Clubs which provides a great exposure other than academics.

Hence, weigh your options and make the decision.

For any queries, you can write to me at d.santanu1@gmail.com.
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