China and the Emerging Markets Challenge - Pharmaceutical Executive


China and the Emerging Markets Challenge

Pharmaceutical Executive

Making the unpredictable—predictable

Understanding what type of strategy is required is one thing—executing it is another. To deliver on a shaping strategy, pharmaceutical companies must become adept at two broad sets of behaviors. The first set we call adaptive orientations, practices that enable a company to respond effectively to uncertainty. The second set are shaping orientations, practices that help the company influence industry development.

When it comes to adaptive skills, pharmaceutical companies need to develop five key capabilities:

Signal advantage. This centers on the company's ability to pick up and act on critical—but not easy to detect—trends and developments in the market. This is made possible by ensuring you have access to the right data on things like the development of emerging channels and markets, the intentions of regulators and competitors, and patient behavior. It also requires paying close attention to mega-trends such as the impact of digitization and technology on healthcare in emerging markets. Companies must also be able to recognize patterns in such data and be agile enough to act upon them.

At the same time however, it is important to recognize data can be unreliable, especially in emerging markets. As a result, relationships matter, in particular connections with key people who have a good read on what is occurring on the ground.

Experimentation advantage. Adapting hinges in part on experimentation, the ability to test different approaches and to build on those approaches which succeed. This may include, for example, experimenting with alternative commercial models that are less reliant on traditional field force expansion and more focused on innovative approaches to communicating with and delivering information to physicians. This can also involve evaluating how marketing should move beyond traditional prescriber communications and incorporate more payer-centric and patient-centric outreach.

Experimentation should also be used to tap into the innovation occurring in emerging markets. R&D models need no longer be centered around developed world operations but can be more integrated into emerging markets which are more likely to become commercial and innovation hubs.

Organization advantage. This capability centers on creating an organization that has the ability to adapt to rapidly changing market dynamics and needs. Teams in local markets must have a willingness to embrace change and encourage cognitive diversity and constructive dissent. Leaders must determine what functions and capabilities they will need to create an organization that can read and respond to change—and then move to build those capabilities. And efforts to create a flexible organization should be grounded in the dynamics of the culture of the local market—what makes employees tick and drives company success differs from one market to another.

Systems advantage. It is often advantageous in responding to extreme change to develop a powerful network of partnerships and alliances. These can buffer risk; supply a diversity of skills and perspectives; act as a long-range antenna for change signals; and promote dispersed, parallel innovations. For multinational pharmaceutical companies, this can involve the development of a network of formal agreements and informal connections aimed at delivering comprehensive solutions for patients and doctors. Multinationals that are able to orchestrate a network of products and service providers to create programs aimed at addressing these diverse needs will be well positioned. To have a real impact on the future of the market in emerging nations companies must build relationships across the industry—with regulators, payers, and patients. Creating collaborations that deliver a win-win proposition for all parties is the best way to participate in the market shaping process.

Eco social advantage. Companies must adapt not only to shifts in the market but also to the broader forces at play in society. It is not enough to focus exclusively on the business itself in emerging markets—companies must also demonstrate that they can contribute to addressing major social challenges, as indispensable players in the healthcare system.

In markets where chronic diseases like hypertension or diabetes are exploding as major healthcare threats, companies can bring significant resources to bear in confronting those problems alongside policymakers. Carving out that sort of role will not only allow companies to respond more effectively to changes in policy but will also enhance the company's credibility and standing as insiders in the respective healthcare systems.


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