Customer centric marketing strategy : from traditional marketing to customised marketing in the pharmaceutical environment

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Customer Centric Marketing Strategy

From Traditional marketing to Customised marketing in

the Pharmaceutical environment

A Company Project for

Sun Pharmaceuticals

Full-Time MBA Program 2017 -2018

STUDENT NAME: Gunjan Jatinder Gupta STUDENT NUMBER: 11863315

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ABSTRACT

The aim of this project is to enable the enhancement of a comprehensive framework to build a customised marketing strategy for current and future innovative products within the company- Sun Pharmaceutical Industries Limited. The broader aim of this thesis is to be able to apply this framework to pharmaceutical companies in the same league as Sun Pharmaceuticals for successful marketing of innovative as well as generic products.

Marketing in the pharmaceutical industry has not changed significantly on an industry wide basis. Though more and more pharmaceutical companies are now using complex CRM systems in order to support their sales representatives during regular doctor visits, the industry still uses mass marketing strategies. Such blanket operations adopt the same marketing message irrespective of performing extensive analysis on market segmentation.

This thesis uses theories mainly from Strategy, Marketing and Consumer Behaviour in order to come up with a five step integrated framework that would enable pharmaceutical companies to shift from the traditional mass market approach to the more effective niche market approach. This paper integrates the results of the interaction with the doctors and patients resulting from multiple channel interactions - both direct channels such as print, direct mail and symposiums and indirect channels such as social media and websites.

The framework would enable companies to gather insights from the interaction between doctor and patients and doctor and sales representatives, that would then be fed back as strategic inputs. This would enable the organisation to create customised marketing strategies that could be used effectively on a specific segment of doctors with similar decision making journeys or even on a one-on-one basis.

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From the very beginning, pharmaceutical companies have been bombarded with regulations which makes it challenging to create effective customer oriented marketing and advertising campaigns. The industry is highly regulated and competitive, and further, consumers worldwide are more aware and want to be well informed about various aspects of their everyday lives - especially their health. The pharmaceutical industry is now more than ever, facing the same situation that organisations in various other industries have faced where they have been forced to reinvent their marketing strategies in order to become more customer centric in their respective business environments. While companies in other industries and the pharmaceutical industry specific giants such as Janssen and Janssen, Novartis and Merck have understood the need of a hybrid customer oriented marketing and sales strategy and are moving towards making changes in their organisational structures, some other major industry players like Sun Pharmaceuticals are still trying to find their footing in order to create and maintain their competitive advantage.

Even now, pharmaceutical sales, marketing and distribution models are extremely traditional in their approach. There are large sales forces that are extremely push oriented and product focussed. Sales representatives are trained to be product centric and emphasize the benefits of the drug across a broad audience of Key Opinion Leaders (KOLs) and physicians. Every doctor receives exactly the same information. Also, the most used channel of interaction is still direct meetings or detailing where the pharmaceutical sales representative visits the doctor and imparts all the information he or she has about the new drug. The information includes scientific evidence, clinical trial reports, list of side effects, benefits and adverse events. While this is exceedingly important, doctors today are hard pressed for time as the doctor-patient concentration ratio (i.e. the number of patients handled per doctor) is increasing. Thus, sales representatives do not get a large amount of time with the doctors and the traditional mass market approach where doctors are given a complete overview of the drug will not work as effectively any longer. This is because, most of the targeted doctors might have participated in clinical trials and are knowledgeable about the side effects and

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them to prescribe the product. Additionally, doctors are increasingly digital and now prefer searching for information online. In such cases, a coherent and concise customer oriented model must come into play where the doctor hears not only what he or she wants to hear, but also understands the patient’s needs.

Marketing in the pharmaceutical space is extremely challenging due to strict regulations on the content and channels of advertising. This thesis expands on creating customised, customer-oriented marketing campaigns by providing enhancements to the existing framework used by the company that will be used as a guiding parameter in designing customised marketing plans for present and future innovative products. It elucidates how pharmaceutical companies like Sun Pharmaceuticals can obtain significant Return on Investment (ROI) on innovative drugs by creating value and maintaining a strong competitive advantage through implementation of such a targeted and customised customer oriented marketing strategy.

Marketing customisation occurs when the same marketing message is first tailored to the specific requirements of the customers and then relayed to them [9]. In essence, the same product is marketed to customers who are themselves implicitly defining the information they want to receive about the product. Through customisation, the usual broad based and obvious target segments can be further segmented to create segments within segments. Thus, in effect, there is differentiation; not in terms of the product that is sold but more on the way it is sold with the addition of a service. In this way, products and services when sold together create new touchpoints throughout the customers’ journey with an organisation.

The idea of customised marketing has been around for decades with multinational companies in various industries reaping the benefits associated with its implementation. The basic idea behind customer centricity is a shift in organisational mindset from being focused on competitors to being focused on customers [10]. While brand loyalty is important, customers and consumers are willing to shift their loyalties to organisations that provide holistic services as long as their effort is reduced.

Thus, in the current scenario, not only must the patient-physician relationship change, but also must the physician-pharmaceutical company relationship change.

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The traditional route of healthcare has been a kind of ‘push system’ where the pharmaceutical company prescribes and pushes medication to the doctors who then further push the medications to their patients. But with digitisation on the rise and more and more consumers becoming exceedingly health conscious, there must be a fundamental change made to this approach. Thus, the traditional approach must be supported by digital strategies in order to create a sustainable marketing strategy that would not only increase profitability, but also improve overall brand image.

The paper is structured in the form of eight sections. Section II constitutes the industry background to provide a picture of the pharmaceutical industry that includes the customer base, the main drivers as well as challenges the industry faces. Section III contains the company background. Section IV introduces the business scope and elaborates the methodology used in the project. This section also introduces the research question. Section V comprises the literature review that substantiates on the relevant literature that surrounds and answers the research question. Section VI includes the company analysis through a SWOT analysis and also an industry analysis through Porter’s Five forces model. Section VII elaborates on the application and enhancement of the framework. Finally, Section VIII comprises the conclusions, limitations and recommendations

The framework will elaborate on an incremental enhancement process that Sun Pharmaceuticals can use in order to create and maintain a successful competitive advantage.

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II. INDUSTRY BACKGROUND

The Pharmaceutical Industry encompasses drug manufacturing companies, biotechnology companies as well as distributors and wholesalers. The industry is responsible for the research, discovery, development, production and distribution of drugs and medical equipment for the treatment of various diseases. Although there are long timelines from the time of drug discovery to production and distribution i.e. time-to-market, it still remains an extremely fast paced industry.

Think back to a time a few decades ago, when diseases such as Plague, Pneumonia, Tuberculosis, Chicken Pox, Small Pox, Typhoid, and Yellow Fever to name a few, were life threatening. Continuous research and advancement in technology has enabled us to now live in a world where there is a solution to almost all health related issues. These diseases that were sure indicators of death are no longer threats and can be cured within days. Moreover, early detection and specific treatment can also cure a large number of cancers and stymie and sometimes reverse the rapid progression of chronic illnesses. Thus, we can see how the industry as a whole has increased life expectancy and provided a better quality of life.

A. The Pharma Customer Base

The Pharmaceutical Industry has a two tier customer base. The first tier comprises the direct customers consisting of doctors, medical practitioners, key opinion leaders and prescribers. The second tier is the patient or end consumer. For the purpose of this paper, I will from hereon interchangeably refer to ‘customers’ when I speak about doctors, medical practitioners and key opinion leaders and ‘consumers’ when I speak about patients. I make this distinction between customer and consumer as follows [1]:

Customer: A person who purchases the goods (in this case drugs).

Consumer: A person who consumes or uses the goods (in this case drugs).

From the above definitions, it follows that in the case of Over The Counter (OTC) drugs, the patient becomes the customer as well as the consumer as such drugs do not need to be

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prescribed by the doctor. However, for the scope of this paper, I will be talking about innovative products that require prescriptions.

B. Main drivers and Challenges faced

The main drivers [14, 15] that impact the Pharmaceutical Industry can be external and internal to the firm. The growth drivers that are internal to the firm are the cost and effectiveness of the salesforce, speed to market, R&D and Marketing divisions. The external drivers come from regulations, government policies and the consumers themselves.

To make their mark and remain successful, pharmaceutical companies must invest significantly in Research and Development (R&D) of new molecules or branded products. Thus, R&D is one of the most significant drivers of firm performance and firm image. Once the drug is approved, the return on this R&D investment comes from the sales of these products to a large number of patients. This involves the other major drivers - Sales and Marketing. In terms of speed, consumers now are unwilling to wait decades for cures. They want instant gratification and disease prevention. Thus, the pharmaceutical industry has the additional overhead of improving their drug discovery process to ensure smaller time to market. Consumers are more and more taking control of every aspect of their lives and thus consumer centricity is of high significance for this industry as well, which is extremely hard to implement due to strict regulatory laws described below.

Marketing activities in the pharmaceutical industry are bound by strict regulations and are thus mostly directed towards the customers, especially for prescription drugs. Further, marketing of prescription drugs is not allowed on conventional channels such as social media, television ads and print ads. Advertisements pertaining to prescription drugs can be made available in Medical Journals but even so, there are a number of rules governing the type of advertising that is allowed. Sales and Marketing in the Pharmaceutical Industry follows the general path of direct selling. Medical representatives are the channel between the company and the customers. In the age of digitisation, the majority of the Pharmaceutical Industry is still apprehensive about using mass media communication channels in order to promote their

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products mainly because of the threat of patients reporting adverse effects of drug usage and also due to constant rejections from the regulatory board.

The Pharmaceutical Industry can perform targeted marketing activities towards the patients or end consumers for OTC drugs; but even then there are a number of regulations about what can and cannot be included in the advertisement. This is called Direct-To-Consumer Pharmaceutical Advertising (DTCPA) [2]. Currently only two countries- USA and New Zealand- allow DTCPA while the European Union is strictly against the same. The European Federation of Pharmaceutical Industries and Associations (EFPIA) [3] provides a code specifying the do’s and don’ts in pharmaceutical advertising. For example, according to this code, any advertisement even to customers, must contain the list of side effects along with benefits. Moreover, the benefits cannot be a direct comparison with competitors’ products and sales representatives are required to promote the product without being biased. This is very different from marketing in the FMCG industry for instance, which is much more relaxed and companies, especially in the consumer goods space, can make claims without the provision of detailed proof. This cannot be done in the Pharma sector as companies have to provide detailed reports and scientific evidence for the claims they make. Thus, there is relatively much more scope for innovative marketing campaigns in other industries as compared to the pharmaceutical industry.

The industry is also driven by a large number of “Me-too” drugs that are being formulated for diseases that already have cures [16]. A “Me-too” drug or a “Follow-on” drug in essence imitates the actions of an existing drug. Pharmaceutical companies usually prefer to develop such molecules because the costs while high, are significantly lower than developing a completely new innovative product. Thus, there are a number of medicines that treat the same illness. Continuous improvement of existing drugs is of course extremely important as some of these “follow-on” drugs perform much better than the pioneer drug. They also cater to different patient segments that respond better to one specific drug than the other. Hence, while the benefits of “Me-too” drugs are that they provide a substantial choice to physicians and patients and their sheer number and competition will drive the prices low for these drugs, there is a significant amount of R&D investment even in the discovery and development of

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such drugs. Thus, the preference of pharmaceutical companies to focus on developing “Me-too” drugs has caused the innovative product pipeline to continue to dwindle.

Additionally, the global population is on the rise and there is an increase in life expectancy which means that the ageing population will increase in the years to come. Not only this, the increase in overall population and increase in the number of people in all age groups taking a keen interest in their health has increased the pharmaceutical market scope. Changing lifestyles, pollution and changes in the environment are the cause of new diseases that haven’t been heard of and are also exacerbating existing chronic illnesses. Consumers now want better overall healthcare solutions. Thus, the Pharmaceutical Industry will only grow and effective customer and consumer centric business practices need to be in place.

Another significant driver is the change in patient behaviour. Technology and digitisation have made consumers accustomed to instant gratification. There is now a new kind of healthcare consumer - the impatient consumer [17]. Such consumers are increasingly cost sensitive, skeptical about far reaching claims, highly aware, time-poor and highly individualistic. They expect to be treated with respect and take efficiency and fast turnovers as a matter of right. Thus, the industry has to shift its focus from being largely inside-out to becoming more outside-in, in its approach to patient care and profitability.

The industry faces challenges in terms of regulations, patent expiration, increase in the number of cases of chronic diseases, price sensitivity and an increased focus on disease prevention by Governments [11]. Further challenges it faces are due to diminishing product pipelines (as explained above), high costs associated with R&D, high failure rate due to lack of regulatory approvals and an increasing geriatric and emerging market population that is extremely price sensitive [12]. Apart from these, there is an increase in the usage of internet for self-medication, where patients are exposed to tonnes of information online and have started to demand medications as per their symptoms. With an increase in the number of patients going to medical practitioners with a diagnosis rather than their symptoms, there is a risk in terms of patients being exposed to incorrect and misleading information [13].

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A large proportion of drugs that are being developed do not get approved. Subsequently, this puts an added overhead on the marketing and sales divisions as the costs associated with the drugs that do not see the light of day must be covered as well. This interlinked dependency between the R&D and marketing divisions is not only a cost overhead, but also a revenue generator for all Pharmaceutical companies. The other main factor that affects the performance of all firms within this industry is the strict regulations with regard to the patents, clinical trials and tests and marketing of drugs - prescription drugs in particular.

The Pharma companies spend a lot of time on researching and developing the drug - sometimes 10 to 15 years or even more. Billions of dollars are spent and Pharma companies have to make a profit by selling as much as they can during the patent period. After the patent period, the branded drug then becomes a generic drug and can be sold by other companies as drug knowledge is no longer protected. Thus, in terms of patent expiration, the pharmaceutical companies have only a limited time in order to cover their significant R&D costs and make a profit.

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III. COMPANY BACKGROUND

The company is Sun Pharmaceutical Industries Limited, which is an Indian multinational pharmaceutical company with primary operations in India and the United States of America. It currently lacks significant footprint in Europe. Known globally as a provider of speciality generic medicines, the company is number one in India and number thirty globally [6]. It is now repositioning itself to also include a more versatile portfolio of innovative products in its already established Dermatology segment with a keen focus to further its Oncology segment.

Sun Pharmaceuticals is very well known in its country of origin. The main differentiating factor of this company is that it started out with a keen focus on few niche chronic therapeutic areas of psychiatry and gastroenterology. Today, it also has an important presence in other therapeutic areas such as neurology, cardiology, orthopedics, ophthalmology, and nephrology [18].

The company has grown globally through select strategic mergers and acquisitions. Its biggest acquisition till date has been that of Ranbaxy, that made it a market leader in India. The acquisition of DUSA Pharmaceuticals and URL Pharma has made it the leading Indian pharmaceutical company to operate in the US. Apart from these acquisitions, the company has also acquired firms that have competencies in R&D, generics and speciality medicines globally.

The growth strategy followed by Sun Pharmaceuticals is through relevant mergers and acquisitions not only of other pharmaceutical and biotechnology companies, but also, specific drugs. One such acquisition is the innovative product discussed in this paper called Odomzo which is used to treat an advanced form of Basal Cell Carcinoma called Locally Advanced Basal Cell Carcinoma (laBCC). This product was acquired by the company from Novartis and has been approved to be sold in the US, European and Australian markets which makes up about 30 countries.

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IV. RESEARCH QUESTION, BUSINESS SCOPE AND METHODOLOGY

A. Business Scope and Research Question

The world is changing every second. With life expectancy increasing, there is an increase in geriatric population. Also, the adverse effects of climate change and global warming are the cause of a number of ailments and chronic conditions. Consumers are more and more turning to the internet in order to get more information about health, lifestyle and diseases - especially chronic conditions [4]. They look at the wealth of information online on patient forums and company websites, to find out more about the medications they are on and the disease that they are suffering from [5].

Currently with respect to sales and marketing, Sun Pharmaceuticals is not technologically at par with industry giants such as Johnson & Johnson and Novartis. There is no single data repository and most information is unstructured. A lot of time goes into collating important information from different sources such as from sales representatives, from doctor feedback, from patient responses and direct marketing. This information is then analysed most times in silos in order to come up with some insights that could potentially boost sales performance. Thus, the marketing strategy for the innovative products is extremely traditional as it is a ‘push system’ as shown below:

Figure 1:_{Traditional Sales Strategy in Pharmaceutical Industry}

The company pushes all the product related information and a small amount of competitor product information to sales representatives. Similarly, the sales representatives push the same information to the doctors who then push the information to the consumers who then

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have no choice but to buy the product. What is lacking in this model is that relevant information about the product and competitor product from the customers and the necessary consumer (patient) response about the product is not relayed all the way back to the company. Thus, it is entirely a push system that creates a thick wall between the pharmaceutical company and its customers and consumers.

The market for innovative drugs is highly demanding but also extremely niche. This is because most times, certain chronic diseases affect a very narrow portion of the population and innovative drugs are developed for such diseases that are not extremely rampant - such as rare forms of cancer and advanced mutations of other diseases. Thus, for such innovative products to become revenue generators, there is an increased focus and pressure on the marketing of these products. Traditional routes of push marketing while important, have to be supplemented by feedback loops and information from other sources so that the company can make an informed decision about its strategy. Thus, the Marketing division would become a functional unit within the organisation that would be focused on providing holistic value.

Sun Pharmaceuticals however has an extremely strong doctor - sales representative relationship and an extremely strong generic portfolio of blockbuster generic drugs. Thus, although their sales and marketing strategy for generic products works well for them, it is still traditional and cannot be applied to their innovative product portfolio. Once this situation was identified as a roadblock to further the innovative product portfolio at Sun Pharmaceuticals, the company realised that there must be a change in approach to its existing strategy. They understood that what is currently working in their generics division will not necessarily work for their branded innovative products division.

Thus, in order to become more customer centric, the main business issue faced by Sun Pharmaceuticals revolves around the following:

● Ensuring an innovative method of a 360 degree collection of relevant data from consumers, customers and sales representatives by creating a collaboration platform where sales representatives can exchange ideas with each other and also learn important information about customers and consumers.

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● Bolstering the sales representatives with customer and consumer specific data in order to enable them to yield higher returns and convert prospective customers into loyal prescribers.

● Further, Sun Pharmaceuticals envisions creating an effective structured method in which to create a sustainable marketing strategy for its growing innovative product portfolio.

With colossal amount of information available online about clinical trial results, drug side effects and disease related information, it is becoming ever so important to shift from a product centric viewpoint to a physician (customer) and patient (consumer) centric viewpoint. My focus for this thesis is to use a combination of physician and patient related data obtained, in order to extract key insights so that the marketing strategy can then be built and improved around those insights.

As mentioned before, all industries are moving towards customer and consumer centricity and this increase in the digital footprint calls for incorporating digital and traditional insights such as those that have been incorporated by the FMCG industry and major pharmaceutical industry players such as Janssen & Janssen and Novartis. Consumers are now used to the fast pace and immediate product delivery model in the other industries such as FMCG, automotive and retail and they expect the same from the pharmaceutical industry as well. The main focus of Novartis and Janssen & Janssen [53, 54], is to meet unmet medical needs through advanced analytics of data from online forums, highly advanced CRM systems, cross industry collaborations, lean processes and a strong innovation funnel. They have an increased focus on reducing the lead times in creating innovative products and selling them at affordable rates globally. Through analytics and Agile methods, their focus is exceedingly on patient centred care which makes overall healthcare extremely easy to reach. Also, Janssen & Janssen was the first company to set up a YouTube channel to stay connected to patients. These two companies have been able to adapt to and implement digital transformation that has taken place across other industries, within the boundaries set by regulatory authorities in the Pharma industry.

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Although these two companies are inspirational examples of pharmaceutical companies that have used digitisation to their benefit, the other companies within this industry are extremely apprehensive of taking the digital route. But with the increase in customer as well as consumer awareness, majority of this industry’s players must make advances to be able to reap the benefits of digitisation within the boundaries of regulation. The industry can no longer just keep pushing the doctors to prescribe the drugs that have been formulated. This brings me to the overarching research question -

“What should a comprehensive framework to build marketing strategies for current and future innovative products within the company look like in order to make it more customer oriented.”

By innovative product, I mainly focus on prescription drugs. The stage is set for the Oncology product Odomzo that is used to treat Locally Advanced Basal Cell Carcinoma (laBCC) which is a specific form of a rare skin cancer. Odomzo has only one competitor that reigns in the market called Erivedge. This research question is mainly used to improve and enable dynamic enhancements by providing relevant insights and information to sales representatives, so that the company could implement customised customer oriented marketing strategies, to basically transform the traditional Pharma company from a product based company into an end-to-end solution provider.

B. Methodology

The research was conducted by collecting information for qualitative and quantitative data analysis. As defined by Bryman and Bell, 2007 [43], qualitative research emphasizes data obtained from face to face and live interactions that cannot be analysed numerically and quantitative research refers to data analysis that can be quantified i.e. given numeric substantiation. Together, qualitative and quantitative analysis would provide deeper insights and understanding that is crucial for decision making.

For the internal company analysis, the senior managers and sales representatives were asked to provide information. For external company analysis with respect to competitors and

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market positioning, sales representatives were asked to gather information about whether customers recognised the product Odomzo as compared to Erivedge which is a product by Roche. This was done in order to understand how customers perceive Sun Pharmaceuticals as a brand and also understand the place Erivedge had in the eyes of the customers for a competitor analysis. The company reports, epidemiology data (Appendix 2), presentations, clinical trial studies and product documents were used to gain insights and extract unique points of value for Sun Pharmaceuticals in order to gain distinct advantage. In addition, desk research was conducted in order to analyse the data gathering processes, analyse the market position and the resources, capabilities and core competencies, to determine whether there could be a competitive positioning of Odomzo with respect to Erivedge.

The research was conducted by analysis of information collected from the following sources: 1. Multiple interviews with all five sales representatives who are responsible for selling Odomzo to the targeted customers in Germany as well as France. This interview was conducted in order to understand the sales lifecycle and specific insights gained from the customers in the different regions of the two countries.

2. Multiple interviews with three senior managers in the Branding division and the Head of Generics division in order to :

a. Understand how data is collected.

b. Understand their current approach for analysis.

c. Understand how they generate insights in order to make informed strategic changes to their marketing plan.

d. Understand and perform analysis of the position of the company within the industry including the strengths, weaknesses and opportunities.

3. Information from desk research and analysis of current company data and gathered sales data.

4. Information about the company as well as the disease available on its website and other online sources.

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V. LITERATURE REVIEW

In order to answer the research question, I will use theories largely from Marketing Strategy, Strategy and Consumer Behaviour. This section reviews the underlying theories and frameworks relevant to the research question.

A. Theories related to Customer Oriented Marketing

Philip Kotler, the father of modern marketing, defines marketing as below [55],

“The science and art of exploring, creating, and delivering value to satisfy the needs of a target market at a profit. Marketing identifies unfulfilled needs and desires. It defines, measures and quantifies the size of the identified market and the profit potential. It pinpoints which segments the company is capable of serving best and it designs and promotes the appropriate products and services.”

The American Marketing Association defines it as [19],

“Marketing is the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large.”

According to Peter drucker in his book People and Performance [7],

“Marketing is so basic that it cannot be considered a separate function. It is the whole business seen from the point of view of its final result, that is, from the customer’s point of view.”

From the above definitions, we can see that all the marketing gurus have defined marketing as having an underlying focus on the consumer. Pharmaceutical companies are still extremely product focused and with the advent of the digital customer and consumer, there needs to be a shift from just product centricity to customer and finally consumer centricity. This shift in focus will break the barriers of divide that are omnipresent within this industry.

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While marketing strategies can be centralised or decentralised, a singular approach will not be effective. A company cannot be completely local or completely global in its marketing strategy. It should strike a balance between the two approaches. The article by John Quelch and Edward J. Hoff [20] published in Harvard Business Review talks about how Global marketing has operational cost advantages through economies of scale and also promotes synergy, as company wide ideas for marketing can be leveraged. According to the article, in order to tailor global marketing strategies, synergies must be created through building relationships, increasing cooperation and increasing communication between different organisational units scattered worldwide. Thus, since Odomzo has been launched in the US as well as France and Germany, a collaboration tool in order for the sales representatives to exchange ideas and information among each other is very necessary to promote synergies. Another article by Nataly Kelly [21] warns about common mistakes that could take place while creating a global marketing strategy. What is required is coordination between global headquarters and local subsidiaries through open communication and sharing of best practices. This cooperation will enable the company to understand the local customer’s needs and wants in order to tailor the marketing strategy accordingly. Sometimes, a target market with specific similar characteristics and behaviour can be spread globally. Thus, it becomes easier and more economical to promote the products to such geographically spread target groups once there are synergies.

Another traditional yet important and relevant theory related to marketing is regarding Market Segmentation. The Segmentation, Targeting and Positioning (STP) model by Kotler [29] can be used to systematically analyse and choose the correct market segments.

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This is a customer focused model and enables marketers to deliver relevant marketing messages to the identified segments. Segmentation refers to dividing the total market pool into smaller segments by relevant criteria such as geography, profession, age, culture, demography, behaviour and so on. Targeting includes identifying and zoning into the most appealing or promising market segments. Positioning refers to value creation which is the point of differentiation or the unique proposition that is different from competitors. As and when more information is gathered from customer insights, there will be changes reflected in the STP framework.

After segmentation, targeting and positioning, it is necessary to create an effective and engaging pharmaceutical marketing message. This can be done by using the AIDA (Awareness, Interest, Desire, Action) model created by E. St. Elmo Lewis as shown below:

Figure 3: _{AIDA model (Source: [51])}

In the Pharma environment, the AIDA model [52] can be used to create engaging marketing messages to customers through direct mail. The direct mail should constitute all elements of the AIDA model in order for it to be successful. The model is described as follows:

A → Awareness / Attention: The message needs to grab the user’s attention I → Interest: The message has to be relevant and provide the advantages

D → Desire: The message needs to communicate the positive differentiating value elements A → Action: The message needs to include an action item from their side (eg: set up a call / appointment)

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B. Theories on Competitive Advantage

Competitive advantage is the edge a company has over its competitors. Porter [45] talks about the importance of combining technology and customer service in order to differentiate an organisation’s product offering. In 1980, Porter identified three generic strategies in order to create sustainable competitive positioning that would successfully outperform industry rivals. The strategies are overall cost leadership, differentiation or focus as shown in the figure below.

Figure 4: _{Porter’s Three Generic Strategies (Porter 1980)}

According to Porter, a firm’s target could be the entire market or a niche segment of the market. If the firm chooses to target the entire market, then its competitive advantage could arise either from a differentiation strategy or a low cost strategy. Alternatively, if the firm chooses a niche market, then it must focus on catering to that segment much more effectively than its competitors. In 1985, Porter refined this model to introduce a four strategy model that included the sub categorisation of the “focus” strategy into cost focus and differentiation focus and further refined this model to include three more strategies namely: variety-based, needs-based and access based to create a seven generic strategy framework as shown below.

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Extending this model, H-C. Moon et al [46] went on to connect the dots and defined an integrated framework that comprised of eight generic strategies that could be used for obtaining unique competitive advantage as shown below.

Figure 6:_{Integrated Framework - Eight Generic Strategies}

In comparison with Porter’s generic strategies which explained how to compete in terms of the sources of competitive advantage and what to compete in terms of broad or narrow range of products, the extended model, introduced one more criteria of competitive target that is product or customer, that helped define how to sell what to whom. By using this model, a firm is able to create a unique positioning within the market that would bolster its value proposition. This choice will lay the foundation for all the strategic decisions that will be taken with respect to marketing the product to the chosen target group.

C. Theories on Strategy and Value Creation

According to Michael Porter [22],

“Strategy is about being different. It means deliberately choosing a different set of activities to deliver a unique mix of value.”

Michael Porter talks about strategy as a process of differentiation and positioning through value creation for the customer. According to The Strategy Handbook [24],

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Value creation refers to the value the organisation creates for its customers through its products and services. ‘Uniqueness’ refers to how differentiated the product is and ‘sustainable’ refers to how inimitable the product and service is. Within the pharmaceutical sector, sustainability is high due to drug patents lasting 14 to 20 years. For a sustained unique competitive advantage, the paper by Kim and Mauborgne [25] describes how an organisation can strategically position itself in order to be truly differentiated by creating what is known as a “Blue Ocean”, which is about creating a new market where one can set the rules. The authors go on to talk about how Blue Oceans are usually created from Red Oceans (high degree of competition based mostly on price). According to Blue Ocean Strategy, value creation is possible by using the value innovation principle of high value and low cost. This principle can be used by Sun Pharmaceuticals in order for them to create value elements the industry has never offered, while driving down costs or increasing revenue.

Figure 7:_{Value Innovation (Kim & Mauborgne 2005)}

An article written by Paul Verdin and Koen Tackx [39], talks about the Value Creation vs Value Capture (VC2) matrix, which is a perception of the value created in the eyes of the customers and consumers and the value capture in terms of return on investment (ROI). Once an innovative product has been created, the challenge is to convert it into a profitable product. In essence, the position of a firm within this framework must be able to show a clear picture as to whether the value created by the firm has been effectively captured and what more could be done in terms of strategic changes that could generate more value capture.

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Figure 8: _{Value Creation - Value Capture (VC2) matrix (Source: Verdin, Tackx 2015)}

The “Dream” situation occurs when companies are complacent and become very comfortable with the profits they are making. This quadrant showcases companies that are low in terms of value creation but high in terms of value capture and refers to successfully entrenched (monopoly) companies who are strongly positioned in the market. Such companies are blind sided and do not see the threat of new competitors and, even if they do, they believe that the value that has been created is sufficient enough to tide them over tough situations. They believe that customer loyalty towards them is infinite.

The “Hell” situation arises when the company in the “Dream” quadrant finally realises that it no more has a strong footing in the industry. Companies in this quadrant usually panic and take the route of cost cutting in order to retain customers as they believe that lowering the cost will bring customers back and create customer loyalty. This quadrant showcases low value creation as well as low value capture and most times, such companies dwindle their resources and end up bankrupt.

The “Nightmare” quadrant of high value creation and low value capture sees companies who have self destructive business models. They are managing to give a lot of value to their customers but not able to reap profits because of unsustainable business models.

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Climbing out of “Hell” and “Nightmare” quadrants into the “Heaven” quadrant will require a company to understand objectively exactly where it stands. This involves re-focusing and changing the business model and increased focus on the customer. Thus, both value creation and value capture are achieved. Of course once this stage is reached, there is a risk of companies again being pulled into the “Dream” quadrant which companies must avoid at all costs. This framework is useful as it gives a coherent picture of the current strategy implemented by the company and enables strategic decision making in dynamic markets.

D. Theories on Industry and Competitive forces

Understanding a firm's market position with respect to its competitors is extremely important. In order to comprehensively analyse the industry competitors, Porter’s Five Forces framework [26] can be used. This framework acts as a guideline to understanding the five competitive forces and how they influence each other. This tool can be used as a micro level analysis tool for a specific product and would work well in the scope of this paper as there is only one competitor for Odomzo. The use of this tool would enable us to shape the marketing strategy and change it according to the dynamic trends in the industry by keeping an extremely close track on how the competition is working and how the company product Odomzo is positioned as compared to the competitor product Erivedge. Thus, the use of this model would help shape the strategy in accordance with the competition and boost profitability as well as increase market share.

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E. Theories related to Customers and Consumers and their mindset towards healthcare

Digitisation has been the cause for customers and consumers to expect information on the go. Instant gratification and fulfilling and engaging experiences that they receive from other industries are what the two customer tiers are looking for from the pharmaceutical industry. According to an article published by PwC [47], consumers are no longer just passive, compliant receivers of healthcare treatment, but are active participators and have unique expectations and demands of increased overall customer experience. While some Pharma companies have provided this integrated customer experience, where consumers feel more part of their healthcare decision making process, other mainstream pharmaceutical companies have to still hop on the bandwagon.

No matter how superior the product is, if the experience with the company is not satisfactory, then customer attrition will increase. This holds good across industries. In the article, “The Truth about Customer Experience” [28], the authors emphasize on how creating end-to-end customer journeys would reduce customer attrition and build brand trust. These customer journeys are the series of touch points where the customers and consumers interact with the pharmaceutical companies. In the case of Sun Pharmaceuticals, interactions with the consumers is extremely limited. Hence, more number of touchpoints need to be created between the consumers and the pharmaceutical companies. Interactions with customers however, is through sales representatives during sales calls and also with the pharmaceutical company at symposia and through print journals and email. Thus, there are a very limited number of touchpoints present and creating an end-to-end journey right from product development phase to sales and after sales has not been the focus of majority of the players within this industry.

With digitisation, both customer tiers are exposed to surplus information available online through various online communities and blogs. Pharma is more product centric and enforces a push system where it just provides communication to the customers which is most often, not significantly relevant. The main reasons behind this necessary transition towards

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becoming customer centric is highlighted by Denish et. al in the paper “The Path to Customer Centricity” [27]. The authors talk about five trends, namely, increase in pressure from all stakeholders, market diversity in terms of the needs and expectations of the customers as well as the consumers, increase in competition, well informed customers and consumers and technological advancements. What usually occurs in the pharmaceutical sector is that customers are bombarded with information that they may not really deem as important or significant but then, such information becomes increasingly important to consumers. Thus, although there could be increase in the sales force, if the information is not relevant, then the organisation will lose face in front of its customers.

F. Theories related to CRM

Today’s consumer is well informed and keeps abreast of all that is happening around him or her. Digitisation has seeped its way inadvertently into all industries. Consumers have choices galore and are always trying to find companies that provide the best value for their money. Taking this into account, customer and subsequently consumer centricity is the need of the hour. Especially so for the Pharmaceutical Industry which is product centric and very distant from its customers and even more so from the consumers. There are many reasons for this distance. The main reasons are lack of transparency and high prices. Another common industry perception is that it has lost the social aspect of its vision and is only concentrating on profit margins [8]. How then can these perceptions be changed to view the pharmaceutical industry in a good light? The article “Customer Relationship Management (CRM) in Pharma” [30] talks about the amalgamation of traditional approaches with Informational Technology to bring about the necessary customer centric mindset that the industry currently lacks.

Marketing involves creating relationships with the customers and consumers. In the book Principles of Marketing [50], the marketing process model shown below emphasizes the need to understand the customers, create value for them and capture value back from them in terms of revenue. In the figure below, the first four steps are consumer centric where companies need to understand consumers, create value and enforce customer relationships. The final step shows that by creating customer value, a company will be able to reap the rewards in terms of profits and long-term customer equity.

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Figure 10:_{Model of the Marketing Process (Source: Kotler & Armstrong, Principles of}

Marketing)

Through CRM, marketing customisation can go one step further to one-on-one marketing. A properly implemented CRM system, will help forge relationships between the customers and the organisation by removing sole dependency on the mediating sales force. This is because CRM would bring about a kind of design thinking while focusing on the needs of the customer as well as the consumer. In terms of consumer centricity, design thinking through CRM will help in improving drug development processes and also enable Pharma companies to build long lasting relationships with the consumers through healthcare portals, mobile applications and so on. In terms of customer centricity, the article by Dennis B. Arnett and Vishag Badrinarayanan [49], talks about forging and improving customer relationships through the use of information technology in order to extract insights to predict what the customer wants and provide those services before they ask for it.

G. Theories on Multichannel strategies

The article by Roosenbloom [31], is written keeping business-to-business markets as the focus. This can be applied to consumers as well. The article predicts that multi-channel strategy is the norm and also highlights a number of issues; the most important issues are those related to synergies, integration, increase in customer base, optimal channel mix and strategic alliances.

With regard to the pharmaceutical industry, the direct channels of print and direct interaction with customers during symposiums and sales calls is what is rampant. Multi-channel marketing in the pharmaceutical space will include involving the channel of choice such as

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The article “Multichannel Excellence Europe” [44] talks about how doctors are increasingly becoming unavailable to sales representatives. Instead of meeting with sales representatives, more and more doctors are looking online for ways and means to help patients. Pharmaceutical companies have understood the significance of connecting with physicians on channels of their choice. Once the physicians have been contacted through one of these channels, it then becomes important to customise the marketing message relayed to them by ensuring that they see and hear exactly what is relevant to them. The study goes on to talk about integration of the 3 C’s of multichannel excellence:

Figure 11:_{Three C’s of multichannel excellence}

1. Customer Insights

Pharma companies must understand the decision making process of the doctors. This can be through feedback provided to sales representatives by the doctors. It could be done by asking specific questions to the doctors and also by ensuring that the sales representatives are able to see the trends that are shaping the decision making in doctors. Thus, predictive modeling and data extraction are key to understanding the customer.

2. Channel Orchestration

Pharma companies need to find the best possible channels that could be used to rope in individual physicians. The relevant and appropriate channel mix in order to provide doctors with customised targeted marketing messages is extremely important.

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Then comes creating a relevant customised dialogue in order to create a customer journey. This will be where the true value creation occurs, thereby building brand trust and loyalty.

H. Theories on Big Data and Marketing

Big data constitutes the structured and unstructured data for complex analysis. A paper written by Hofacker et al. 2016 [40] talks about how big data has the potential to help us understand the consumer decision making process. From the figure below, we can understand the process much better and the implications.

Figure 12:_{Consumer Problem Solving (Source Hofacker et al. 2016)}

The figure essentially shows the behaviour of the customers as well as consumers. Nowadays, they search for answers to all their queries online. The kind of information they want to read is easily visible in the kind of search queries. However, big data does not give the cause but can only help us generate insights from patterns found. Also, through social media listening of relevant online channels, marketers can understand the real-time discussions doctors are having regarding a disease or product and thus will be able to implement a quick turn around in case of any problems that arise. Big data and analytics will also help in judging the real feel in the market towards the company’s products and that of its competitors. Thus, big data analytics means more behavioural information in order to enable marketers to make informed decisions and execute customised marketing campaigns. The model explains the journey of a digital customer / consumer as a series of steps involved in

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searching online to understand what the problem is and learn as much about it as possible, then it goes to the company’s end where patterns are discovered and purchase patterns are identified, then it goes back to the consumer end of the spectrum where the consumer makes the final evaluation. Of course, the limitations of big data are that we do not know why the consumers did what they did and a lot of insights are based on assumptions. The data comes from the past and has to be of supreme quality in order to be able to predict the future trends. But, these limitations can be overcome by substantiating representative data through test theories and tools.

Another paper by Fan, Raymond and Zhao [48], talks about the use of big data in market intelligence through the 5P (Product, Price, Promotion, Place and People) marketing mix framework as shown below.

Figure 13: _{A marketing mix framework for big data management (Source S. Fan et al.)}

As we have discussed, there has been a transformation from traditional passive customers and consumers to digital customers and consumers. This framework gives a guideline as to how marketing decisions can be made using big data analytics. The figure shows the logical sequence of various sources from which data is gathered, analysed and converted into market intelligence which is then used to apply to the different aspects of the marketing mix framework.

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According to an article “Transforming Pharma industry with Big Data” [49], the new way forward for Pharma is precision medication which involves use of big data in order to tailor the entire dosage and treatment that is the best fit for consumers.

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VI. COMPANY AND INDUSTRY ANALYSIS

The first and foremost step would be to analyse a firm's internal and external environment in terms of resource competencies and competitors. This section of the thesis will use the SWOT analysis and Porter’s Five Forces model in order to obtain a comprehensive view of the current organisational situation. The focus of this thesis is external, that is, market driven. Companies must thus concentrate on the outside-in approach but also ensure not to ignore the inside-out approach of strengthening their core competencies. The results of this company and industry analysis will provide insights on the gaps where internal competencies are not matching with the external requirements and environment.

A. Company Analysis

Step one of the framework comprises two parts:

1. A SWOT analysis that maps out the company’s internal strengths and weaknesses as well as external opportunities and threats.

2. A competitor and industry analysis using Porter’s Five Forces model to help us understand how the competitive forces act together to determine the market position and attractiveness.

1. SWOT Analysis:

The results of the SWOT analysis below, are the insights and information gained from desk research about the company from the company website [18] and also from interviews with the senior managers and sales representatives about what they believe the strengths and growth points are. This desk research performed was to gain insights and pull key points from historical and current growth parameters of Sun Pharmaceuticals as compared to the industry competitors at large.

Strengths:

● Expertise in strategic identification, acquisition and turnaround of companies that are underperforming. Sun Pharmaceuticals has always entered different countries through mergers. The reason behind this is supported by the paper

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written by Meyer et. al [56], that explains why companies choose mergers and acquisitions over wholly owned subsidiaries. The main reason is that through acquisitions, the company will have access to more ingrained resources for a strong competitive advantage. This explains the unprecedented growth of the company worldwide as this vertically integrated organisation is easily able to penetrate new markets through such acquisitions.

● Successful in the seven identified therapeutic areas namely - psychiatry, gastroenterology, neurology, cardiology, orthopedics, ophthalmology, and nephrology.

● Successful in low cost generic segment.

● Growing fast in chronic therapeutic areas which has always been a focal point for the company. For example, they entered US through an oncology product for colon cancer.

● Strong brand presence in US through acquisitions of DUSA and URL and India through acquisition of Ranbaxy.

● Strong R&D, marketing and sales force especially in generics.

● Strong in negotiations of new molecules / drugs from leading companies. Odomzo is a drug that has been acquired from Novartis for about $175 million [34] which is significantly lesser than the costs of actual R&D which we know definitely runs into billions.

● Complex drug formulations that are difficult to imitate.

Weakness:

● Strict regulations and government policies in the EU. ● Drug price control.

● Long time-to-market for branded drugs. ● Adverse side effect reports from patients.

● Patent expiration. Although the long patent periods are a strength, it is difficult to obtain return on R&D investment that runs into billions especially for niche innovative drugs during this time period.

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● Customers and consumers in this sector do not have a brand preference. Hence building the brand image is increasingly important.

● Lack of optimal use of digital channels for marketing and advertising.

Opportunities:

● Increase in health awareness, income and standard of living in emerging economies.

● Further global expansion into foreign untapped markets through acquisitions. ● Increase in life expectancy and ageing population.

● Growing number of incidences of chronic diseases

● As the company focus is to expand in the EU, the absence of internal trade barriers is a growth driver.

● There is an increase in the number of biotechnology startups in the home country. Thus, these companies can be bought over depending on their strengths and offering.

● Zoning on unmet medical needs.

Threats:

● Growing competition in generics where other brands are easily able to deliver low cost generic drugs.

● Sudden changes in the regulations and policies.

● Governments are increasingly focused on prevention of diseases.

● Although spending power of consumers is increasing, they are more sensitive to paying for drugs as they do not understand the significant costs associated with R&D.

● Strict patent regulations.

B. Porter’s Five Forces

Now let us continue to part two i.e. analysis of the competition using Porter’s Five Forces model. The insights used to provide this analysis come from desk research as well as interviews with the senior management.

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Industry Competition:

The pharmaceutical industry is highly fragmented. Thus there is no specific market leader that moves the industry in a particular direction. The industry is growing at an unprecedented rate and is highly competitive. Also, fixed costs of setup are low but the working capital required is very high. Smaller Pharma companies stand at an advantage because of their concentrated efforts of marketing and distribution in a particular region.

Bargaining power of Buyers:

As mentioned before, the industry has two customer tiers - Customers (Doctors) and Consumers (Patients). The bargaining power of the consumers is very less as they are forced to buy the product that the customers prescribe. When it comes to customers, their bargaining power could be high when it comes to generics where they have a large number of choices and prices are competitive. But, for prescription based innovative products, their bargaining power is low because often, there is just one drug on the market.

Bargaining power of Suppliers:

The main supplier to the Pharma industry is the chemical industry which again is highly competitive. Thus, bargaining power of suppliers is extremely low due to price wars among each other. Thus, the switching costs incurred are negligible and Pharma companies can easily switch between suppliers.

Threat of Substitutes:

Demand for drugs will never cease. Smaller biotechnology companies are able to formulate molecules at comparatively lower prices and could have higher profit margins. Since patents are in place for a number of years, the threat of substitutes could be considered low for innovative products but extremely high for synthetic generic products.

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Figure 14:_{Application of Porter’s Five Forces model to Sun Pharmaceuticals}

Analysing competitors is extremely important as the organisation needs to understand its position in the industry. But building strategies around the competition would negatively affect the company and it would not reap in the benefits. According to the article by Tara-Nicholle Nelson [35], while knowing what your competitors are doing is important, companies must refocus on their customers. The article talks about how the situation becomes the competition. This loosely translates into the fact that specific hurdles that prevent a company from fulfilling its vision or what it stands for are the main competition. What usually happens after a competitor analysis is that companies try to do better than their competition. The article stresses that if the focus is on competitors, there is no more focus on the customers and consumers and thus there would be a strategic convergence of “me-too” products and imitation strategies. The article further goes on to give a methodology on how to unfocus from the competition. Essentially, your competitors are selling products for the betterment of the consumers, thus they are not the actual competition. In fact, the competition would be anything that prevents the betterment of consumers. This would then help the organisation to think

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largely from the consumer point of view while also understanding its position in the market which is all a competitor analysis should be.

Another article by Nalebuff and Brandenburger [36] supports the above view and talks about coopetition and again how to focus on _{not trying to beat the competition but} instead to create win-win opportunities. Thus know your competitor but don’t revolve around them. This would then enable the company to change the game instead of allowing the game to change the company.

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VII. APPLICATION AND ENHANCEMENT OF CURRENT MARKETING FRAMEWORK

The current strategic marketing framework is shown below. This figure also includes the enhancements made to the traditional model used by the company. In the capacity of this paper, the wireframe consists of a combination of concepts and steps that can be classified as components of the framework that when used together, will define customised marketing strategies for each segment. The framework is robust as it allows for changes and enhancements to be made in a timely and efficient manner.

Customer centric marketing strategy : from traditional marketing to customised marketing in the pharmaceutical environment