The draft guideline of UCPMP restricts pharma companies from a lot of traditional marketing practices, however, it opens new doors of opportunity to leverage digital platform
Indian pharmaceutical companies spend a substantial amount of their annual budgets on promotion and other marketing activities to influence and update healthcare professionals about their company’s brand. However, often there have been allegations of unethical practices such as to luring and bribing healthcare professionals through cash and kind, to further their products and brands. In a bid to curb these unethical marketing practices in the pharma industry, the government is in the process of enforcing the Uniform Code of Pharmaceutical Marketing Practices (UCPMP).
The UCPMP guidelines refer to services that pharma companies offer to doctors such providing gifts, sponsorships to conferences, hospitality and cash or monetary grants. It also restricts pharma companies from giving away free samples of drugs and promotional material such as mailing journals. It also mentions, “Where there is any item missing, the code of MCI as per Indian Medical Council (Professional, Conduct, Etiquette and Ethics) Regulation, 2002 as amended from time to time, will prevail.”
The guidelines demand a major mind-set change from the industry begin with.
Dr Arun Mitra, Sr Vice President, Indian Doctors for Peace and Development, Member Core Committee Alliance of Doctors for Ethical Practices and Former Chairman, Ethical Committee Punjab Medical Council explains, “So far, some pharma companies have been saying that they have to give freebies or extra profits to doctors selling branded generic drugs because their sale will be affected otherwise. They may find transition phase difficult. But in the long run this will be beneficial.”
Moreover, with the implementation of UCPMP, pharma companies will face increased government scrutiny – something that the private sector abhors. The draft rule of UCPMP guidelines gives government the power to control company activities such as production, supply and distribution, there is no saying where it will stop. Identifying the key areas, companies see its direct impact on pharma companies and in-direct on medical representatives. And if pharma companies fail to adhere the given guidelines, then they may have to face bigger repercussions.
Therefore there are many who oppose these guidelines.
For instance, Salil Kallianpur, Principle Consultant, Digital Transformation Lab says, “For the first time in the country, senior pharma executives are likely to come under the government scanner if activities that are done by their sales staff are in violation of the law. The industry has opposed outright this ‘draconian’ nature of the law and has sought relief from the Ministry of Chemicals and Fertilizers to soften the nature of penalties. However, while the UCPMP may soften them, the Essential Commodities (EC) Act is quite far reaching, and its application can have adverse consequences. Chances of companies challenging penalties will always increase since EC Act applies more to commodities and products while the UCPMP refers more to company conducts and services.”
BG Barve, Managing Director, Bluecross Laboratories cautions, “Companies should take serious cognizance of the draft order because of the quantum of punishment it prescribes. Any violation of the draft code may result in the confiscation of stock of the highest selling brand of the company and suspension of marketing activity for the same brand for at least a quarter of a year.”
These are some of the challenges which pharma companies are likely to face after the draft becomes mandatory, there might be more once its gets implemented.
Moreover, implementing the guidelines would be no easy task either. There are several challenges that need to be overcome and the industry has raised several concerns about UCPMP’s implementation process.
Sanjit Singh Lamba, Managing Director, Eisai Pharmaceuticals anticipates, “Like any new initiative, there will always be some grey areas which would require further discussion and deliberation. Based on the initial discussion among various committees, it seems that more clarification is required with respect to sampling of products, gifts. Most MNC pharma companies have a stricter internal compliance code which is complied with. I feel, in certain instances, physician samples have to be provided for which more clarification is needed. However, we welcome this initiative by the authorities.”
Anwar Daud, Managing Director, ZIM Laboratories, too highlights, “In a crowded market with several local, regional and pan Indian players competing with each other for the attention of the prescribers, it will be very difficult to eliminate practices, which have been part of the conventional marketing arsenal and almost considered part of acceptable business practice.”
Mitra, on the contrary, is in favour of stringent rules and offers a counterview, “Money spent on giving freebies should not be covered under the expenditure for the purpose of tax deduction and should be taxable. It may sound difficult initially, but in the long run, the unhealthy, cut throat type of competition will get reduced and there will be fair play.”
Progress with R&D
Before an innovative drug reaches the market, it takes years of relentless efforts by research scientists. Yet, often pharma companies invest heavily in promotions and other marketing activities than in research.
Kallianpur emphasises, “Indian pharma companies are not known to invest in R&D except some notable exceptions. That said, an analysis of the top seven pharma companies in the country — Cipla, Dr Reddy’s Laboratories, Lupin, Aurobindo, Cadila Healthcare (Zydus), Sun Pharma and Glenmark — shows that their expenditure on R&D as a percentage of their operating income has increased from 5.8 per cent in 2011-12 to 9 per cent in 2016-17.”
He continues, “According to a report in the BMJ, for every $1 pharma companies spend on ‘basic research,’ $19 goes towards marketing and promotion. These are of course global estimates, but it is safe to say that while the proportions might differ, Indian companies also spend much more for marketing than they would for R&D.”
According to Daud, “On an average, large pharma companies spends about 8-11 per cent of the total turnover on R&D, while SMEs would spend far less in the range of 3-4 per cent.”
Dr Tathagata Dutta, Managing Director and CEO, Etico lifesciences informs, “Companies like Sun Pharma, Dr Reddy’s Laboratories, Lupin, Aurobindo, spend about 16-20 per cent on R&D while smaller companies and unethical companies like Mankind spend less than one per cent on R&D against marketing.”
Ushering research in marketing
The role and need of marketing is very huge and significant. However, there is a need for more research and study to improve the efficacy and impact of marketing and to implement them in an ethical manner. The people undertaking these activities should also be more knowledgeable. Mitra says, “It is important that information about the new medicines is passed on to the clinicians by the pharmacologists instead of the medical representatives who are good at marketing but have little technical knowledge of the products. Since these days the promotional activities are carried out by the medical representatives, their sole aim remains to get profit for the company. The information in such cases may be biased sometimes.”
Barve suggests, “R&D departments can act as advertising wings in the right market. R&D strategies let companies create highly-effective marketing strategies around releasing a new product or an existing product with new features. A company can create innovative marketing campaigns that match the inventive products and increase market participation.”
So, before the UCPMP guidelines become mandatory, pharma companies need invest time and resources to understand how marketing will transform in the coming times and gear up to be ready for these changes.
The digital era
So what is the way forward? Many feel that it is going to be digital.
Priti Mohile, Co-Founder and Managing Director, MediaMedic Communications replies, “Digital platform offers some unique opportunities to break the clutter, reach in different ways and tailor the message. Utilising these in the right manner by integrating them correctly with the offline activities can ensure larger success. For this, the marketing personnel need to gear up.”
Highlighting the benefits of newer means of communication, Kallianpur says, “The aim of pharma or any marketing practice is to create loyal customers and to serve them well in order to retain their loyalty. Even with large armies of representatives, companies have barely reached to more than 30 per cent of the doctor population in India. With technology, this number can go up 3X at a fraction of the cost of hiring the number of reps to treble coverage.”
Mitra says, “Digital marketing will reduce the expenditure on promotional activities. This will help cut down cost of drugs. However, for any new product, person to person contact is always beneficial at the initial stage.”
Thus, digital technology platforms can offer pharma companies to reach healthcare professionals much more efficient way than doing it simply through large sales forces.
However, Indian pharma companies are not tech savvy and restricting themselves from adopting digital platforms.
Role of ethics committee
There will be a committee for handling the complaints names as Ethics Committee for Pharma Marketing Practices (ECPMP) in each of the associations. The Committee will have three members represented by the Executive Head of the companies or a nominee from the Executive Head, but not below the rank of Directors in the Board of Company. And their role is going to oversee and restrict any unethical practices before it reaches the next level.
Identifying the reasons, Kallianpur says, “Pharma companies have faced self-limiting challenges as they move to digital platforms. Practising managers cannot convince themselves that digital platforms can engage their customers in ways that their medical representatives can. So, they often hide behind the shield of regulations. In western countries, regulations are much tougher, yet companies have successfully demonstrated that digital platforms successfully engage doctors and help to sell their products better.”
Singh also highlights the slow pace of adoption of digital marketing practices and says, “The role of digital pharma marketing practices in creating awareness about medical products to doctors is quite significant, unfortunately not much progress made by Indian pharma industry, we are at the nascent stage even now. The various stages of digital marketing are: Beginners, Conservatives, Explorers, Reactioners and Disruptors. IPM is still at a nascent stage.”
To overcome this hurdle, Kallianpur says, “I would suggest that companies begin with very basic digital offerings such as the use of emails to drive customer traffic to websites that host great content such as infographics, snippets, videos, gifts and text. This content holds the attention of the doctors, makes them come back and over time helps to differentiate the company. The trick is not to replace the representative with this, but to augment their doctor calls with these channels.”
Mohile adds, “Pharma companies might need external support to educate them in a much wider way. Most pharma companies have faced challenges as they move to digital platforms. It begins with getting the right employees to run digital as well as the right agencies. A well prepared team who understands all the nuances or is trained in it can help reduce the challenges. Unfortunately, most try to apply print principles to digital which can lead to failure. Many try to undertake activities in-house, which can give sub-optimal results since this media is multi-faceted and needs in-depth understanding, especially when it comes to use of social media. Additionally, regulations in pharma have to be understood and taken care of even when using social media. When they are unable to meet all this, one tends to blame the media and shy away from using it. Some companies are fearing to take the first step even today.”
The adoption of technology will not only reduce marketing cost and help pharma companies to increase their bottom lines, but can also help in updating healthcare professionals about all communicable and non-communicable diseases.
Mohile says, “In India, there are a lot of disease areas that requires visibility and awareness. While chronic conditions like diabetes are very important, it is the under-diagnosed and neglected conditions that need visibility. This will help grow markets too.”
Many pharma companies are focussing on specialising their presence in niche areas which needs better attention.
Kallianpur informs, “This increase correlates with companies shifting their focus to speciality and differentiated drugs such as biosimilars and super-generics. R&D to improve formulations of these medicines help to differentiate them and seek a premium in a crowded market. However, investment into R&D pales in comparison to marketing spends.”
Improved patient engagement is an another benefit of digital platforms. Barve explains, “Digital marketing allow more engagement with patients, the focus on communication remains firmly with doctors. Given the time constraint of doctors and changing demographics, digital marketing with healthcare professionals are beneficial, because more and more healthcare professionals don’t want to see sales representatives, but would prefer to see company products at a time that suits them. Successful digital marketing involves a combination of elements that need to be considered as part of a healthcare company’s digital strategy.”
Digitalising corporate branding
The shift in marketing approach will also help companies in corporate branding.
Creating a credible corporate brand to compel the prescriber to prescribe a family of sub-brands based of quality/ value for money etc. will help companies in the long run.
Barve finds a perfect example as he says, “The highly–regulated nature of the pharma industry has led to a very cautious approach to using social media. But those companies who have been willing to invest in this new approach have found that it has given them a competitive edge over traditional digital marketing techniques.”
How did it all begin?
The drafted rule of UCPMP was designed in 2011 by the Department of Pharmaceutical (DoP) and after immense discussion between industry stakeholders and governing bodies in 2015, it had been decided to make it mandatory under the Essential Commodities Act. However, the Law Ministry rejected the UCPMP draft claiming that it did not align with the requirements of the Essential Commodities (EC) Act under which, the UCPMP was supposed to become formal legislation. The ministry also sought to understand whether the draft was similar to the code of conduct as mandated for doctors by the Medical Council of India.”
Kallianpur also says, “For some strange reason, pharma companies never thought it to be beneficial in building trust with patients. Despite being the consumers of its products, the industry never thought it important to be in direct touch with this group through trust building activities. This can only be attributed to pharma’s unhealthy obsession with promoting its brands at every chance it gets (the government forbids drug advertising in India) rather than engaging creatively with its stakeholders to build trust and loyalty. Hopefully, it should be in consideration as pharma explores digital pathways and the possibilities that they provide.”
Thus, UCPMP guidelines is set to change the way pharma marketing is done and digital technologies will have a major role as the industry undergoes this transformation. Industry experts should anticipate the changes and gear up to deal with them effectively. They should also develop strategies to help them turn challenges into opportunities and stay ahead of the game.