PharmaThought.com (PT) interview with Ms. Anita Tang (AT), Managing Director of Chicago-based Royal Roots Global Inc. (www.rroots.net), a management and investment consultancy focusing on U.S.-China business activities. Royal Roots specializes in formulating and implementing strategies, building and managing networks of contacts, and conducting business negotiations. Its services optimize the advantages of the cultural differences and opportunities of two great entrepreneurial nations.

 

PT: The first year of your “Globalization of Innovation: China, India, and USA Pharmaceutical Markets” symposium attracted 200 high quality participants, bringing together top executives from leading organizations such as FedEx, Goldman Sachs, Microsoft Corporation, and Pharmaceutical Executive Magazine. Anita, you were a Co-Chair of the event and Royal Roots was a co-sponsor. As an expert on the US-China business corridor, what did you learn from event?

 

AT: I have learned from the event that there is a great deal of cooperation and collaboration going on in the global pharmaceutical market. China is already an important player and will continue to grow in that direction. In my opinion, the China market may look quite different from the pharmaceutical market that we are familiar with. It is going to be an East meets West market with use of Western medicine and techniques and also great emphasis on Traditional Chinese Medicine (TCM). It will push for TCM being a preventative medicine and healing practice as well as a remedy.

 

PT: Given the global economic downturn, do you think this presents opportunities for Chinese enterprises to expand in the international market, including the United States, via business acquisitions?

 

AT: Quite possibly, and in selective areas. For example, acquisitions can be in the medical device sector where the Chinese may look for patent, technology, sales and distribution channel. The benefits of the acquisition can be multiple: (1) take advantage of the lower cost of production in China to manufacture the device, (2) expand the R&D talent pool and speed up the process by working around the clock (different time zone), (3) enhance the value chain by linking the manufacturing and the distribution cross border, resulting in a lower cost structure and making its products even more competitive in the market, and (4) secure a bridgehead in the U.S., the world’s biggest pharmaceutical market. Chinese enterprises will also look for strategic targets to invest – companies and products that can enhance their existing offering, to make the cake bigger or to expand their market share.

 

PT: Every MNC is now expected to have a China expansion plan. However, Royal Roots has been doing business in China since 1999, long before it become in vogue to do so. During the past nearly 15 years, what key changes have you seen in the Chinese business environment?

 

AT: Back in 1999, it was mostly about Chinese entities offering attractive terms to work with incoming foreign firms – getting their investment and technology and in returning offering them the huge China market. In the past, we mostly helped U.S. entities to go to China and work with Chinese entities. Since a few years ago, especially after the 2008 financial crisis, we spend more time working with Chinese government and business entities; not only are we there helping bridge our Chinese clients and their foreign partners, we may simply be helping the Chinese side put together its domestic business strategy by taking into consideration what the incoming foreign companies may do competing in their home turf. We now see that Chinese businesses are more confident about their success and are not shy to negotiate for terms that they want in a deal. Having the opportunity to look at things from behind the other fence, we are now in an even better position to help non-Chinese clients to understand and work with their China counterparts because we have truly been in their shoes.

 

PT: The Chinese drug market is predicted to exceed that of Japan in 2013 and the U.S. in 2020 to become the No. 1 drug market globally. This based on the industry growing at an estimated compounded annual rate of 25% between 2010 and 2020. Do you share this optimism regarding the future of the Chinese life science market?

 

AT: If I put on the Western cap to look at it – using the Western medicine standard – no, I am not sure if China will take over the U.S. in 2020; however, if I put on the Eastern cap to look at it – putting TCM in the mix – yes, it is quite possible. It is my experience that non-Chinese companies need to understand the premise and the need of the China market before they can apply the right strategy and find the right sweet spot to thrive in China.

 

PT: Thank you Anita for your time. We enjoyed the discussion and appreciate your insights.

 

For more information on Anita and Royal Roots Global, visit: www.rroots.net

 

The Center for Healthcare Innovation’s first annual “Globalization of Innovation: China, India, and USA Pharmaceutical Markets” symposium held in Chicago, Illinois, USA was a tremendous success. We had extraordinarily high quality speakers, moderators, and panelists. We also had an audience of well over 150 accomplished professionals. We were able to bring together top executives from leading pharmaceutical companies and partner organizations such as FedEx, Goldman Sachs, and Microsoft Corporation.  Attached is the symposium overview. The symposium has received over 100 media references, including being picked up by Xinhua News, the giant Chinese new agency:

http://news.xinhuanet.com/english2010/china/2011-10/08/c_131179257.htm

We will be doing the symposium next year on Thursday October 11, 2012 in Chicago, Illinois, USA.

Mr. Mark Kwatia, Assay Design Expert

At the Center for Healthcare Innovation, we continue to be proud of our CHI Strategy Group, which is composed of top life science entrepreneurs and thought-leaders.  Mr. Mark Kwatia, who works in Diagnostics Assay Design at Abbott Laboratories, is a Founding Member of the CHI Strategy Group.  Early this year, Mark gave two Invited Speaker presentations.  The first was at the Forum for Advanced Bioprocessing meeting sponsored by Pall Life Sciences in San Juan, Puerto Rico, in February, followed by a second presentation in Nice, France, at the BioProcess International European Conference in April.  Both talks focused on the identification and evaluation of new technology that could be used to cut product and process development costs and time.

 

The title of the talk in San Juan was: “Building Quality into Design – Developing Robust Cell Culture Processes in a Tale of Two Scales”. The title of the talk in Nice was: “Development of Robust Models at Small Scale to Ensure Predictive Large Scale Outcomes in Antibody Production”.

In addition to his speaking responsibility, Mark also chaired a session on bioprocessing.  Mark’s thought-leadership at these international conferences is consistent with the Center’s goal of becoming the world’s number one source of independent thought-leadership for the global life science industry.  We thank Mark for representing the Center for Healthcare Innovation [and Abbott Laboratories of course] in such an exemplary manner.

The future has bewildered mankind ever since it walked the Earth. The absence of the ability to see the future forced us to learn from history. Observing events unfolding in chronology and consequence can teach us to expect what tomorrow may hold for us as a consequence of our doings today. As more lies at stake, our eagerness to know increases many fold. This phenomenon gave rise to an entire industry which now capitalizes upon that basic need. Aptly called business intelligence, it is an oxymoron to few and inconsequential to others. However, to the majority of business leaders, it serves as a vital crutch.

The pharmaceutical industry has billions of dollars at stake in India and analysts estimate the size of the opportunity to accommodate tens of billions more as diseases and disorders threaten human life with pain, discomfort and death. From this springs the bewilderment of what the “Pharma Future” will hold for the industry in the days, weeks and years ahead. Conclaves are one way to assemble the more knowledgeable executives of the industry and pool their wisdom of the past and understand how they see the future unfold. At one such conclave, titled Pharma Future Knowledge Conclave, 2011 organized by Indegene Lifesystems, at the Four Seasons hotel in Mumbai, interesting insights emerged as executives who have over two decades of experience bounced off ideas and insights with young and eager ones who will eventually receive the baton of the industry in a few years.

Disappointingly, most executives believed the future would not be too different from the present especially since nothing much changed over the last two decades. The pharmaceutical industry in India is considered a slow adopter of new technology, new media and – simply put – new ways of doing things. The inertia is more obvious on the commercial front given the dynamism of its customer-facing nature. On the more strait-jacketed back-end, the industry has been fast to adopt best practices in functions such as managing the supply chain and formulation R&D etc. After all, reverse engineering and the expertise that India demonstrated in producing low-cost and high quality products and services resulted in rapidly making it the chosen destination for manufacturing, R&D and medical value travel (also known as medical tourism).

Does this mean that while the Indian industry is quick to improve on existing processes, it is not so quick to establish new ones? That India is a unique market has been stated ad nauseum by industry leaders at almost every forum. Despite this, little progress is seen to leverage the uniqueness. Emerging markets is a buzzword at global headquarters of every MNC. Yet, every business model developed by every company looks and feels the same. Foray into branded generics, expand into the rural hinterlands and expand sales forces to increase reach. Hardly anything novel here, excepting that novelty will lie in execution. Companies, when faced with the same environment, challenges and opportunities chose to react to it in almost the same way. The actual execution of those plans will set the grain apart from the chaff.

So, if field forces expand and companies bring in more generic brands instead of novel products will that not mean more pharma reps discussing more brands with the same doctors? This means a sharp reduction in access to doctors as they restrict the number of days they would see reps and the number of reps they see on those days. How should pharma react? Should it adopt technology? What role will technology play? Will companies reduce field forces as cost effective alternatives to technology? Will e-detailing and e-marketing replace pharma reps? Not quite it seems. Access to the clinic is limited. Access to mindshare is not. If companies demonstrate a willingness to work with doctors to improve outcomes for their patients, doctors are likely to accept the company as a partner and not view it as an infringement on his time and decision making. This seems idealistic just yet as this approach is a long drawn one. Doctors in India seldom practice in groups. Every doctor, even when attached to private hospitals, is an independent consultant. This increases the complexities of the partnership equation as each doctor has unique needs and requirements. Can pharma evolve to a mass customization model? If so, how quickly?

From its current focus on products and productivity the transition of the pharmaceutical business model to one that bundles products with services, customizes offerings to each individual customer and leverages technology to reach out to many more customers than now opens up the need for vast amounts of data. How much data is enough? Data, sometimes, never seems enough. Most often data that gets you to a “yes-no” decision is enough. Can executives differentiate when to ask for more and when to use what is available when business models move from being product focused to becoming customer focused? The critical difference is between data and insights. We may sometimes have an overload of data and a deficit of insights. Knowledge of the customer and insights that you derive from that knowledge can never substitute business intelligence tools, however sophisticated. In-depth understanding of customers can only happen from more and more face-to-face interaction requiring human intervention. Technology therefore, will augment the sales force effort and not substitute it.

Yet why is technology adoption so poor in the Indian pharmaceutical industry? Most business practices that have been adopted in India have at some point been tried and tested in the West. Does this make India a wait-and-watch market? Even if it does, technology has been tried and tested in the West for many years now. So, let’s just go ahead and adopt it. If we do, does that make us seem as if we’re simply following the West? Should iPads be used as detailing tools in India just because reps in the West use them? The point here is that technology should be used only if it makes sense. There is little to gain if we tweak existing and time-tested processes that continue to deliver results, just for the heck of it. Technology is simply an enabler, not a means in itself. Ask yourself how long the novelty of detailing with an iPad last if the content on it remained stale. Now ask yourself how easy it becomes to quickly update the latest clinical data on the iPads of the sales force using technology.

It seemed from the discussion that the Indian Pharmaceutical industry did not expect too much to change. Whether or not it allowed its processes to be technology enabled, its focus on core marketing, alliances, M&A and other ways to create more value for the patient was heartening. The little or no demonstration of understanding technology and imagining the wonders that it would help create across the continuum of patient care was disappointing. The use of genomics and personalized medicine (despite Pfizer being close to launching Crizotinib, its first personalized drug for lung cancer) was completely overlooked.

The focus lay too much on discussing the adoption of technology rather than on what new processes would evolve from path-breaking technology. Despite India being the capital of chronic diseases (CVD, diabetes, smoking) there was little or no discussion on how health leaders will become agile caretakers of interdependent networks (referral physicians, tertiary care specialists, pharmacists, fellow-patients, colleagues & peers, family, friends etc.) that grow smarter as they get to know and support each individual patient. Both the young and the old are developing chronic diseases in record numbers, leading to explosive growth in the consumption of resources that is driving up spending and creating liabilities for future generations (ask survivors of cancer patients). It is widely accepted that chronic diseases are associated with behavioral, socio-economic, and genetic factors that are not within the control of today’s medical delivery system. There is a lot that the pharmaceutical industry can do in this relevant area considering that one of the ways in which the Indian market is unique is that it is a self-pay market.

The pharmaceutical industry can explore robust value creation and revenue generating opportunities in areas that will help prevent onset of chronic diseases or assist chronically ill patients manage their disease in cost efficient ways. What is happening to healthcare is no different from other industries—the power of the individual is increasingly influencing how healthcare is directed and delivered, enabled by the technological and the virtual world we live in. And this is by no means a Western phenomenon. This is the future of the pharmaceutical industry in India. The Pharma Future.