Sunday, May 09, 2010

The elementary in emerging markets

What categories have the most potential?

What kind of competition exists in these markets today?

What future competition will there be?

How do people behave and what is the best way to talk to them?

These all seem like fairly benign market entry questions; however, the paths of entry into emerging markets are strewn with the futile investments and broken branded bodies of initiatives who failed to fully heed the answers to these questions.

Knowing the questions is only half the battle. Getting the right answers is the other half of the fight.

Everyone knows the classic mistakes, like when Chevrolet launched a car in Mexico that meant Doesn’t Go (Nova) or when P&G launched soap in Japan that showed creamy bubbles in a tub (Camay) when Japanese bathers don’t put soap in their tubs.

You have to think that Chevrolet and P&G had on-the-ground partners who did the research and developed the campaigns that would help them enter in the market. But, nonetheless, they missed the linguistic and cultural train of successful entry.

For pharmaceutical companies looking to leave the slowly growing old world and enter the faster growing new markets, a different but still rigorous analysis is needed.

Here the questions involve matching the therapeutic areas of interest against a comprehensive profile of the market. It means understanding, in a given country,

Disease burden

Diagnosis

Treatment algorithms and patient flow

Prescription trends and availability of medicines

After starting to build a landscape of the market, a company needs to develop an understanding of the dynamism of the country. How is the country itself growing? Will the government invest in healthcare? Are the Ministries open to approval? Is reimbursement private or public and to what extent?

In order to get the background to these questions, it is important to interview government agents, regulators, payors, physicians, hospital and pharmacy directors, and trade bodies.

Then you can start to match the market against the company’s product portfolio and begin to make discreet choices.

It may sound elementary but it is anything but, dear Dr. Watson. Sherlock Holmes once said, “When you have eliminated the impossible, whatever remains, however improbable, must be the truth?” The goal here is to get to the truth of what will be the best course of action for a company, however improbable it may seem.

Saturday, April 17, 2010

Emerging Markets: What Columbus Didn't Do

EMERGING MARKERS CHECKLIST

Too often when companies enter into emerging markets, they frequently fail to fully characterize the value chain. Yes, those markets are growing. Yes, they represent a population with newly minted coins clinking in their pockets. Yes, the government is encouraging investment. Those Old Developed Markets look much like they looked to Columbus as he said good-bye to Spain and set for the New World.

Talent pool

When Christopher Columbus landed in America, he thought very little about the local talent pool. He assumed the locals knew little of the sophisticated technology that he was going to bring. But the question for Columbus was how much was he going to spend once he got there? How much of his R&D was going to be coming from the old world or was he going to invest adequate resources on the new ground?

When entering emerging markets it is important for companies to understand how much intellectual capital they are going to import and how much they are going to generate locally. There is always a certain amount of comfort in knowing that the home fires are being stoked and the fruits of the scientists from the main office will be coming into the new territories.

However, understanding and tapping into the local talent pool is often a valuable cost-effective of accessing smart lower-cost labor. Quite often local talent is hungry to get the imprimatur of a foreign capital company on their resume, and may be dissatisfied with the opportunities available in local companies.

Accessing this R&D talent pool is also an excellent way of gaining critical on-the ground understandings of the ins and outs of local regulations.

Collaboration with Universities/Research Centers

As real estate agents say, location, location, location. Accessing that local talent pool also goes to where facilities are located. The closer the location to major universities and other research operations, the easier it is to attract talent. This location fact is true whether a pharma company is planning to be in New Jersey or in China. Many of the big multi-national pharmaceutical companies, e.g. AstraZeneca, GSK, Novartis, Roche and Pfizer, have R&D centers located in Beijing and Shanghai where it is easy to attract local scientific talent. While these companies also have operations in other cities, the critical mass achieved around these two major cities.

Regulations

Understanding local regulations are critical to safe, sound, government-improved operations. What kinds of permits are required for laboratories? What kind of inspections need to be done to start and to maintain facilities on an on-going? The essence for operations is being able to comply with on-the-ground oversight, and this compliance can be even more challenging as local regulations evolve.

Patent Laws

Many companies shy away from establishing cutting edge research operations in emerging markets because of concern about loosely filed and loosely followed patent laws. Losing control and ownership of innovations that rightly belong to the company continue to be a major concern. One way that companies address these issues is by using R&D to make incremental improvements to existing compounds and products rather than developing something entirely new. In so doing, the risk is less because the products are generally protected elsewhere, and yet the development team can still contribute to the innovation of life cycle management process.

By understanding these critical components, companies can best maximize their allocation of scant resources and live more productivity off their new markets.

Saturday, April 10, 2010

Indecent Exposure

How do you feel about the security of your data in your Personal Health Record?


I heard a someone comment today on doctors dictating their work while performing an operation so they don't have to take notes later. The only problem is when the doctor says "the patient suffers from a contextual contusion" and it becomes "the patient suffers from sexual confusion." This comment goes into your Personal Health Record and someday you have to explain to an employer's insurer looking for pre-conditions or the Government Agency that is considering you for a Presidential appointment, you really had a hematoma and not an identify crisis.


When it ended its service, Revolution Health said that it will destroy all PHRs on file. If a patient has watched the television criminal dramas, NCIS or Law and Order, believing that electronic records are fully expunged is akin to believing that the Tooth Fairy aids good oral hygiene.


Credibility and security is crucial. One small, apparent success is the partnership between Google Health and the Cleveland Clinic. Doctors input patient data into PHRs that patients can import into their own secure Google Health account. Ideally, if patients move away from the Cleveland Clinic, they could take their health records with them. The issue of standardization for Health Care IT (HCIT) still remains. Like the infamous technical VHS vs. Betamax or more recent Blue-Ray vs. HD-DVD wars, aligning on a technical standard must Darwiningly happen.


For anyone interested, the opportunities for HCIT implementation are ensuring patient engagement, developing easy, time-saving but robust graphical user interfaces, and providing a common secure technical platform.

Saturday, April 03, 2010

RIP Revolution Health

The American Reinvestment and Recovery Act (ARRA) made available $26 billion for Health Care Information and Technology Systems (HCIT) and the advantages to companies in productivity and optimization of profitability are well recognized.

However, challenges come in exploiting this information to ensure better patient outcomes and to create engaged and enhanced physician-patient partnerships. What happens when the best technical finery is set up for the dance and the partners fail to fox trot?

The recent demise of Revolution Health is a good example of what happens when hundreds instead of millions of patients sign up to fill out their Personal Health Records (PHRs). Founded with great fanfare by Steve Case of AOL fame, the PHR aspect of Revolution Health failed to gain any patient traction. General Manager Marjorie Martin said that “most patient rely on their physicians to do their record-keeping. They don’t feel the need to make a change. And it is still a fairly laborious process.”

Facilitation of HCIT will also involve developing access portals that go beyond checking CPT (Current Procedural Terminology) diagnostic codes and utilizing cutting edge mobile hardware (viz. IPads and Smartphones). Educating physicians is also critical. According to the American Medical Association, 50% of US physicians are 55 years old or older and will be at retirement age in ten years. As these doctors age into retirement, the US could have 40,000 less doctors for, according to current demographics, a burgeoning population of 42 million more Americans. The burden is creating a system for that will enhance productivity for a smaller medical delivery cohort.

Sunday, March 28, 2010

10 SMART Questions for Commercial Development

Have you ever played “Truth or Dare?” The first player asks “truth or dare.” If the second player says “truth,” the first player asks a question, usually risky. If they reply “dare,” the questioner asks them to do something, also usually risky. In drug development, biotech and pharmaceutical companies alike play this game internally every day. Do we move this product into Phase III? How much is this market segment really worth? Will physicians use this product and, if so, how? Are the clinical endpoints meaningful enough for physicians to use the product vs. another standard of care? Will it be reimbursed? And no senior manager wants to take the risk of not having answers to these questions in front of the FDA, the Pharmacy and Therapeutics Committee (P&T), a payer or even senior management.

All these questions need to be answered in a world of limited resources. No pharma company, no matter what its size, has an infinite amount of money and resources to stream all its assets through its pipeline. For individual compounds under development, the challenge is to identify early assets that will fail so resources can be reallocated as quickly as possible. For an entire portfolio, whether it is for a specific therapeutic area or an entire company, managers need to understand how their decisions to invest in one product versus another affect risk and value.

The challenge is to answer all the necessary questions to gain the human and financial resources that keep a project moving forward as well as answer all the necessary constituencies. No one gets a perfect SAT score here. No one has the time and the staff to even list them all, let alone, answer them all.

To assist with these kinds of analyses that help understand the Opportunity, the Market and the Value, Manu Bammi and I have developed 10 Smart Questions that must be asked in order to truly understand opportunities from a 360 degree perspective.

Would you be interested in an article like this? If so, please write me at mrovner@smartanalyst.com

Sunday, February 28, 2010

Cell Phone App Convenience Is Not A Strategy

I was in Barnes & Noble the other week shopping for books. Not a big deal, but I also have a Kindle and are an Amazon Prime member. Yes, there are some real paper books that don’t come on e-readers but that wasn’t the nature of my browsing.

I was interested in science fiction or a mystery, just kind of felt it after reading Moby Dick. As I had 30 minutes to kill before seeing Jeff Bridges in Crazy Heart, I decided to browse. I saw a book by Henning Mankell. It sounded interesting. So I scanned the bar code with my Droid cell phone’s bar scanner and emailed the title to my RemembertheMilk.com task reminder account. There was Ender’s Game by Orson Scott Card. Scan, click, email. Now I had two new books on my reading list.

I felt bad for Barnes & Noble. They were providing me with a very pleasant in-store browsing shopping experience but they weren’t going to receive any of my commerce that day.

So what do you make of cell phone retailer buying applications? It is great if you are in Bloomingdale’s and they don’t have your size. You scan the bar code, go to the store’s web site and order the size you want while you are right in the store. The New York Times notes that Wal-Mart, Disney, Kerr Drug and Crate & Barrel are testing this technology.

IBM has developed Presence that detects the “presence” of signed-up shoppers as soon as they enter a store, which allows the store to immediately send promotions to their cell phone. Cisco has Mobile Concierge that allows you to locate items within a given store, a must-have app if you are browsing in a Wal-Mart Super-Center or a Target. And Motorola is developing a cell phone app that puts a net-connected loyalty card on your cell phone.

All these technologies are wonderful. They make the shopping experience easier and hopefully increase a customer’s shopping basket. And they well may do so, but only to a limited point.

As David Ogilvy rightly once said, convenience is not a strategy.

Consumers have to want the product first. They have to appreciate its features and benefits and recognize the value. And then they will buy.

A product’s sales can increase when you make the buying experience easier, provide more information about the product itself and facilitate the actual purchase process.

Just like that old promotional truism of placing a product at eye level on a store shelf does.

But ultimately that does not make a product winner.

That’s why understanding and identifying the real consumer insight is so important. Technology itself is not the end; it is one element of the means. And it cannot replace the fundamental basics of sound product development.

Now, excuse me, I have to go to a friend’s house for dinner and I don’t know which wine to bring so I am going to scan some bar codes on my cell phone at Zachys liquor store.

Monday, February 15, 2010

Now Really! Chasing out the horrors in oncology drug development

In continuing to think about emerging issues in oncology, regulatory will play a critical and significant role.

In the UK, you just have to wonder what to do when the National Institute for Health and Clinical Excellence (NICE) rejects Novaretis' Afinitor for second line therapy in renal cell carcinoma and recommends against using Novartis' Tasigna and BMS' Sprycel for the treatment of patients with chronic myeloid leukaemia (CML) who are intolerant to Glivec. Why? There was that little thing about insufficient clinical evidence vs. other treatment options, but, oh by the way, if Novartis or BMS are willing to risk share and compensate for their price, well then, that's okay.

Oh, really? Now really! As Seth Meyers and Amy Poehler might say on Saturday Night Live. That's really NICE!

Just how long is it okay for any of us to live if it is too costly for the government? The next thing you know the NHS will be calling up the Inuit to buy some ice floes for cancer patients so they can push them off into the North Sea. Or maybe they can get that ice from Iceland which is in enough financial trouble as it is.

The basis point is that, for companies to succeed with regulators, Overall Survival (OS) and for how long life goes on remain the key endpoint.

All in all, a focused commercial development strategy in oncology requires a tightly defined Target Product Profile (TPP) in order to win with regulators and to aid physicians in understanding their treatment choices. This narrowed approach could enable companies to get their drug on the market faster, enabling oncologists to understand how they best may employ it along with other treatment options.

Of course, after you have figured out first what you are going after, a Life-Cycle Management (LCM) strategy needs to be built off that narrowed initial indication. Here it is helpful to complete all Phase I/II studies even prior to first approval with a full Phase III plan already in place.

As these plans are being developed, it is also important for companies to understand how this asset and its development plan aligns with other drug programs in the portfolio.

Many companies get caught up in the value of one particular drug programs without fully appreciating its value on everything else going on, a major point of understanding in a world of limited, expensive resources. A company needs to be able to value its "real" portfolio as opposed to making a decision about one stand-alone asset.

The key is to understand drug program inter-dependencies around technical, revenue and cost factors. An optimized portfolio that takes into account all these factors can actually yield significant economic benefits for a company over time vs. a stand-alone portfolio of individual assets. In an optimized oncology portfolio, a company can draw on identified synergies in research, clinical and targeted synergies to maximize the overall cost of commercial development and launch.

There are so many different considerations to be successful in oncology, it can make the head spin like Linda Blair in The Exorcist. However, by carefully and diligently, laying out basic strategies and developing an integrated series of approaches that involve not just one compound, but all the others in development, internally and competitively, oncology commercial development does not have to be a horror show. The demons can be exorcised, and a happy life can be lived by patients, physician and company managers.

Saturday, February 06, 2010

Sound Strategies Needed in Oncology, Just As Much As In Smartphones

Last week it was about sku management of smartphone applications. This week, it is how do you think the commercial implications of oncology commercial programs.

Oncology is the fastest growing therapeutic areas, going from $48 billion in 2008 to $80 billion in 2012. For the pharmaceutical industry, oncology is an intense area of activity with 1,000 clinical compounds in development and over 2,000 pre-clinical compounds being considered.

As in many other business areas, like smartphone apps and other fast moving consumer goods, the oncology disease space, spurred by new pathway discoveries, is becoming increasingly fragmented with the identification of different patient and disease sub-segments. It isn't just prostate cancer, it is six different variants of prostate cancer.

In targeting the commercial opportunity, companies can benefit from a differentiation strategy that goes after well-defined patient segments, with those definitions aided by the use of bio-markers to help call out cancer indication.

As a result, discovery is increasingly focused on targets vs. tumors, with the opportunity for the same compounds to address multiple different kinds of tumors. Then, with even greater success, in many instances, cancer treatment has the opportunity to evolve into a chronically managed disease, like diabetes and high cholesterol, with the use of adjuvant and maintenance drug therapies.

As these sub-segments develop, companies also have the possibility of facing less competition when they are focused on very narrowly defined indication sub-segment and lines of therapy. This focus could also allow the company to realize a premium for its drug given a lack of other efficacious and safe alternatives. Here, as in many product developments, early to market strategies are critical and novel partnerships may be required, especially given combination therapies.

That said, good sound commercial strategies, applicable across a broad range of industries, and understanding the target audience and the delivery process, are critical to success in the market, whether it is a cancer drug or a smartphone application.

Sunday, January 31, 2010

Online SKU Management: Apt Stores for the App Stores

So where do you go shopping for applications on your smartphones?

Apple of course has its App Store with over 140,000 apps.

Google has its Market with 20,000 apps and growing. So does Research In Motion for its Blackberry. And Nokia has its just launched Ovi Store with apps coming.

Now if you are the proprietor of these online supermarkets, how do you manage your sku's?

All good category managers on the manufacturer side are continually reviewing their assortment to match consumer needs, variety, profitability and shelf space. And they partner with retailers, who are concerned about similar issues, to offer an optimal assortment for the consumer. They discuss (argue?) number of sku's, placement, pricing, inventory, etc.

Unfortunately this discipline seems to be woefully absent online. You can make categories of apps. Offer free trial versions. Provide provide Private Label apps like Verizon does. This approach is particularly complicated when you have hundreds of small developers. Apple does exert control and supervision. But all in all, these marketers are missing a real apparent understanding of consumer needs and optimal profitability.

And if you are a consumer, how do you know which ones to sample and buy. Well, the free ones require only the time and effort to download. But there is a cost to that.

Consumers can use online reviews or watch the AndroidStats Market Place rankings to see what apps are going up and what are going down in regard to downloads.

Consumers can also look to see the number of downloads that a particular apps has and the number of star ratings (similar to what CNET also provides for its downloads).

But marketers are here dealing with a totally different type of sku experience and run the risk of really confusing consumers.

According to Flurry, a market research firm that tracks mobile phone trends, the average consumer only has 5-10 apps on their phone. And that is with +100,000 apps out there. The numbers between actual consumption and the wasted online space is huge. But I guess that is what the internet can do profit per space when space is limitless.

Apple says it makes money on its App store. But you have to believe that smartphone manufacturers are leaving money on the table because they are not actively managing the consumer experience and presentation.

Now there has to be an app for that.

Friday, January 22, 2010

To sleep, perchance to dream

When Hamlet said that he was just echoing the fervent wish of millions of people around the globe.

Cephalon recognizes the issue, hence its application for Nuvigil as a pill for counter-acting jet lag. But what about the flip side. Diphenhydramine (nee Benadryl) certainly offers a safe, effective remedy but it does have some side effects.


But at what price does sleep come? In working with Nicholas Hall, I note the following critical facts:

Wide-Spread Prevalence and Rising

Insomnia is reported to affect 24%-65% of the population in the focus geographies. Since 2001, its prevalence has increased by 13% in the US alone. This rising prevalence translates into market growth for companies applying for Rx-to-OTC switches.


Consumer Preference for Self-Medication

Consumers in the focus countries are increasingly willing to self-medicate and have proven themselves to be responsible users in the past. Self-medication will only rise as health awareness among consumers increases, and this will benefit companies going for OTC switches.


Accident-Risk/Productivity Loss

Around 28% of automobile drivers in the US have fallen asleep while driving. Another study estimates 10,000 to 20,000 avoidable casualties due to accidents caused by drowsy driving in France annually. This risk to public health can be avoided by providing the public easier access to OTC insomnia drugs.


Financial Burden on National Systems

The annual cost of insomnia in the US is $42bn in direct and indirect costs. The corresponding cost for France was $1.4bn in 1999, and a similar financial burden is estimated in other countries. Easier access through OTC switching will make its prevention easier, resulting in reduced indirect burden.


Government Policy Could Reduce Its Cost Burden

Governments in developed nations have taken proactive measures to reduce the healthcare burden by switching prescription drugs available on insurance to OTC. The UK government has specifically pledged to double the number of switches in a year to ten.


The easy answer: Balanced well-regulated Rx to OTC switches. It would be great to be able to switch short-acting Ambien. Explore the possibilities of Lunesta or Rozerem.


However, the pharma and consumer healthcare would never derive the true benefits until regulatory agencies really get serious about switch. They worry about the cost burden to the government and understandably the safety aspect. But there are tools, programs and efforts that can be made. And yes, Virginia, there is an even a case for Viagra.


But, before we get active, let’s start with something we all need to function. A new, refreshing way to sleep.

Saturday, January 09, 2010

Cleaning Up In Emerging Markets: Heinz and Unilever

As we start the New Year, where else does one start but with emerging markets?

The math is simple. You go where there are more mouths to feed and more rising household incomes.

Before, those rich, developed markets of the US and Western Europe carried the coal for so many multi-national firms from the 1950’s even until the 1990’s, a tremendous forty year run.

But even those great commercial dynasties eventually run out of steam. Look what happened to the Soviet Union after 68 years.

Now every business worth its salt wants to sit at the top of the table and build a new house of business out of BRICs (Brazil, Russia, India and China). And a critical way to the feast is through product quality.

Take that humble condiment: ketchup.

Mexico consumes more ketchup in the world than eight other countries. Heinz used to have a less than 1% share of the Mexican market. Odd, yes? Especially since Heinz makes really good ketchup. So what does the company do?

It buys a private label supplier of ketchup to such outlets as Domino’s Pizza, Burger King and Kentucky Fried Chicken, gains a toehold in the business and then goes on to demonstrate its product superiority. Most Mexican ketchups contain starch. So you go around doing a demo where you drop a drop of iodine on local ketchup and it turns black. Then you put a drop on Heinz ketchup and it stays red. No starch fillers. Quality wins. Heinz now has a 12% share of the market.

When I was marketing director for Unilever in Japan, we launched Domestos, the first bleach toilet cleaner. All the other toilet cleaners in Japan were acid cleaners. We did a side by side demo, running an acid cleaner down one side of a soiled tile and Domestos down the other side. The Domestos side was whiter than the streak down a skunk’s back. The other side, not so clean. Domestos became a market leader.

The lesson: The way to win in emerging markets is by demonstrating superior quality to markets hungry for better qualities of life.

Friday, January 01, 2010

A New Year's Toast To Brands

Alas poor Saab, I knew it well,

an auto of infinite pleasure, of most excellent driving,

he hath borne me in its seats a thousand times;

and now, how abhorred in my imagination it is!

My gorge rises at it. GM is to close down Saab.


When I lived in California, I used to drive my 900 Saab convertible car up into the Orange County hills and survey the David Hockney-lit valleys of opulence. I even bought my daughter the short-lived four-wheel 9-2X to navigate the frozen roads of Ann Arbor to Zingerman’s on a frigid Sunday morn.


How sad it is when a brand name dies. How many millions upon millions do companies put into the value of a name only to see it sometimes die on the vine of commerce?


In 2010, though, we will most likely see more and more value placed on brand names. Kettle Chips sells for $700 million. P&G pursues the freshening scent of Ambi Pur. Kraft looks to gorge itself on Cadbury chocolate, while Cadbury itself, like any lover of chocolate, longs for an even richer aficionado of its sweet sales.


Wherein lies the value of such names. Well, surely, a great deal of it lies in the goods it delivers, whether it is quirky driving, convenient air scenting, crispy potatoes and crème eggs. These elements go into the essence of the brand and help define it.


I was struck the other day by the comments of a friend of mine who is looking for a job. I asked what he had learned about flogging himself on the job search. He replied: be unique and be focused. A truer definition of branding has been rarely been stated. Now all that remains is for him to spend tireless energy on promotion and millions on advertising and he will land somewhere, as will Cadbury and, we hope, Saab. We feel emotional attachments to our brands, our friends, and their personalities. And that makes their value all the more dearer.


As we enter 2010, let’s hope it is a year in which brands and friends receive their just due, their well deserved value and the stewards of those brands have the wisdom and the money to carry them forward.