IMS Asia-Pacific

Insight
Issue 2 | 2012

INSIDE THIS ISSUE

Pursuing Growth in the Age of LoE
Global Cost Containment Measures in Asia-Pacific
Chinas Consolidating Pharma Distribution Industry
The Changing Face of Pharma Sales Forces in India

2012 IMS Health Incorporated or its affiliates. All rights reserved.

Contents
Welcome Letter............................................................................................................................... 3
Pursuing Growth in the Age of LoE...................................................................................... 4
The top 20 multinational pharmaceutical companies in Asia will see an average of $950 million in sales become at risk
in the next 5 years due to the loss of exclusivity of their top brands. How can MNCs survive and thrive in this increasingly
genericized era?

The Impact Global Pharma Cost Containment Measures in Asia-Pacific ........... 10

Government cost containment methods in Asia-Pacific markets are as diverse as the cultures represented in the region,
so what global cost containment lessons will be leveraged in APAC? And what, in the end, are pharmaceutical companies
supposed to do about it?
The Changing Face of Pharma Sales Forces in India.................................................. 14
Sales force dynamics in India have changed drastically over the past 20 years, with overarching industry trends shaping
the optimal sales force structures. With new emerging trends on the rise, see how pharmacos in India are re-thinking
their go-to-market strategies.

Forging New Relationships in Chinas Consolidating Distribution Industry.... 18

The pharma distribution landscape is drastically changing in China, with thousands of independent distributors
consolidating into larger joint enterprises. How can pharmacos prepare for these changes?

IMS CONSULTING GROUP AT WORK IN ASIA.............................................................................. 22

IMS Consulting Group is at work throughout Asia on projects of intriguing scope and implications.
See the impressive reach of IMS Consulting Group capabilities across Asia and the world.

Dear Reader
The worldwide pharmaceutical market is at a crossroads. At first glance
the fundamentals seem strong: pharmerging market growth, ageing global
populations, the growing prevalence of chronic disease, and personalized
medicine all seem poised to spell renewal for an industry that has faced
its share of recent turmoil. Take a deeper look, however, and apparent
threats aboundnot just the widespread loss of exclusivity for originator
molecules, but cost containment initiatives at both the public and private
level that are forcing widespread changes in the way pharmaceutical
companies can and should develop and launch new medicines.
As this greater global drama unfolds, the Asia-Pacific region is making for some of the most compelling theatre. The juxtaposition of mature markets such as Australia, Japan, South Korea, and Singapore with some of the worlds most dynamic
pharmerging markets in China, India, and Indonesia underscores the need for tailored strategies across
geographies and reinforces the fact that there simply are no one-size fits all solutions. The rate of change
and degree of impact from global, regional, and local developments are, quite frankly, infinitely variable. The
companies that succeed will recognize the importance of treating every target market as its own distinct entity.
It is against this dynamic backdrop that I am pleased to bring you the second issue of IMS Asia-Pacific Insights.
In this edition, we address strategies for originator brands to maintain growth when facing loss of exclusivity,
outline the tools being adopted by Asian markets intent on containing pharmaceutical costs, explore the
strategies now being employed by thriving pharma companies, and identify key strategic imperatives in two of
Asia-Pacifics most vibrant markets, China and India.
Taken together, the stories represent the in-depth industry expertise of IMS Health throughout the region,
powered by our superior information assets.
Success in todays Asia-Pacific environment is by no means guaranteed, but ample opportunities prevail for those
companies that are well prepared. We at IMS look forward to working with you in the near future to identify
strategies, challenge assumptions, implement innovations, and measure success.

Andy Liu
President, Asia Pacific and China
IMS Health

Pursuing Growth in the Age of LoE

The facts are startling and incontrovertible: Over the next five years, pharmaceutical products collectively expected to generate an estimated $21.3 billion
in revenue are destined to go off patent, devastating branded sales in key APAC
markets. Among the top innovator multinational companies (MNCs) in the
region, four will see 30% of their overall portfolio value diminished by Loss of
Exclusivity (LoE). Ten more face related losses of between 10% and 30%. On
average, each of the top twenty MNCs in the APAC region look toward the
next five years as a time when some $950 million in sales will be at risk, thanks
to the LoE of their top brands.

The landscape has shifted so

significantly in the last several years
that today five of the top twenty
pharma companies in this region
derive just 10% to 30% of their total
portfolio sales from protected products,
says Morton-Small. Another six reap
less than half of their sales from their
brand portfolio. Innovator multinationals
have never faced a challenge of such
proportions. The risks are different,
the stakes much higher.
Weve tracked the products at risk
from generic competition in key Asia
Pacific countries since 2005, says
Amkidit Afable, an IMS Consulting
Group engagement manager in AsiaPacific. The numbers really do tell
the story. Between 2006 and 2011
alone, the value of products at risk has
grown from $2.6 billion to $5.1 billion. (see figure 1)

Value of products at risk 2005-2016

5.5

14

* 2015 APAC Sales ~ $195bn-$225bn

5.0

12

4.5
4.0

3.7

3.5

3.0

10

2.1
3.1

3.0
3.7

2.5

2.5

2.0
1.5
1.0
0.5
0.0

1.5

0.2

2005

1.3

2.1

2.1

2.6

1.2
0.5

0.4

0.6

2006

2007

2008

0.9

2009

% of prior years sales

0.5

1.4

1.8

1.6

0.4

2010

1.8

0.4

2011

Specialist driven

2012

2013

2014

2015

2016

% of prior years sales

Already, says Anthony Morton-Small,

Senior Principal, IMS Consulting
Group, Asia-Pacific, off-patent and
unprotected products constitute the
lions share of leading MNC sales, with
continued sales erosion from protected
product sales inevitable in the coming
years.

Figure 1

Over the next 5 years $21.3 billion in sales are at risk

from generic competition in the key Asia Pacific countries

Constant us$BN

Its a pressing issueand a demanding

one.

2
0

Primary care driven

Source: IMS Health MIDAS MAT JUNE 2011, RX-only; Markets included: Japan, India, Australia, New Zealand, Korea, Singapore, Hong Kong, China, Taiwan, Philippines
LoE Planning & Life Cycle Management

One door closes, another opens

But where one door closes, another
often opens, and such is the case for
companies operating in this increasingly genericized era. There is, of
course, no single strategy that will
ease the path for MNCs. But those
that take the time to analyze the
various markets and respond to
particular pressures and trends will,
says Afable, rise above.
The pace of generic penetration
varies greatly from geographic area
to geographic area, he says. Leading
companies are already recognizing the

value in post-patent strategies that are

highly market-savvy and -specific.
Consider China and India, two of
the largest emerging pharmaceutical
markets in the APAC region.
In both China and India, more
than two-thirds of pharma sales are
derived from generics, says Small,and
generic products gain rapid popularity
among both patients and physicians in
these countries.
The situation is different in both South
Korea, an advanced economy with a

relatively large reimbursed market, and

the Philippines, an emerging economy
with a significant dependence on outof-pocket sales. In Taiwan, Singapore,
Australia, and New Zealand, meanwhile, generic sales account for just
a third of the pharma market, and in
Japan, that number is even smaller.
Every countryand, often, territories
within countriesmust be separately
analyzed, assessed, and approached.

maceutical markets, branded products

typically experience rapid sales erosions
once they go off patent. Thats not the
case in the APAC region, where branded products have the ability to sustain
growth, even after the patent expires,
and where the life cycle of certain
innovator drugs can be extended.

We encourage our clients to take a

close look not just at the reimbursement and macroeconomic conditions,
Numerous emerging APAC mar- but at the relevant healthcare infrastruckets with relatively higher generic ture, demographics, and channel demand,
penetration lag behind their peers in says Afable. We help them address the
pharmaceutical spend per capita, im- key questions: How can innate differplying significant growth opportuni- ences between reimbursed and self-pay
ties given their large population base, markets be leveraged? What impact will
says Morton-Small. India, China, the growth of the middle class have on
Indonesia, and the Philippines all pharma sales in each country? How will
represent important opportunities for channel structures influence post-LoE
post-LoE volume plays.
growth? What influence will the evolving
healthcare structures have on pharma sales?
In Korea, a fascinating dynamic is A variety of external and internal drives
playing out as traditional big phar- must be factored into the LoE strategy.
ma companies battle against well- Risks must be balanced against potential
entrenched local branded generic rewards.
players for considerable potential
pharma dollars. Australia and Japan, Sanofi-Aventis is one example of a comfinally, offer significant absolute sales pany that proactively addressed the loss of
values (both at an overall and generic exclusivity of its platelet-lowering product,
level) as well as a high pharmaceutical Plavix (Clopidrogel), by launching a
per capita spend.
second brand of Clopidrogel in Indonesia.
Gaining ground in the post-LoE era
Success in the post-LoE era will, says
Afable, hinge on the ability of the
companies to ask and answer the right
questions. Companies need to be
asking themselves what the likely
performance of their key assets will be
in the market, he says. They should
also be asking themselves what strategies and tactics should be pursued to
maximize the value of threatened assets.
Such questions, of course, lead to a more
granular analysisa process that enables
companies to effectively segmentand
respond tothe APAC market.
Baselines are geography-specific,
says Morton-Small. In western phar-

Sanofi-Aventis made the decision to

market this second product separately
from Plavixpricing it in a way that
the company hoped would maximize
uptake without undermining existing
Plavix sales, says Morton-Small. The
ultimate impact of this defense against
the market-share erosion of Plavix postLoE continues to be evaluated. (see figure 2)
Sanofi-Aventis is not alone. In fact, several
organizations are considering new
approaches to protect the value and
volume of several key molecules across
various therapy classes in the APAC region.
The probability of second-brand strategy
success increases when the following
components are put into place:
A clear marketing and sales strategy
that disassociates the innovator brand
(i.e. Plavix) from the second brand to
avoid rapid cannibalization of the
core product;
Sufficient investment in building
brand equity among consumers;
A firm understanding of the key
influencers in the market who could
help drive the shift from other platelet lowering brands to a companys
second brand;

Sanofi-Aventis recently launched a second brand of

Clopidrogel to defend its market share against further
generic erosion in Indonesia

Figure 2

Representative
Clopidrogel value sales in
Indonesia (2006-10)
USD Mn
28
26
24
22
20
18
16
14
12
10
8
6
4
2
0

Clopidrogel volume sales in

Indonesia (2006-10)
SU Mn

LoE
48%

18.1
1.1
4.3

35%
12.2
8.8

1.3

0.6

4.3

2006

18

4.0

16

1.1
2.7

14

4.9
0.4

13.6
8.8

2007

10.3

10.1

2009

2010

17.6
55%

10

37%

Others (10 cos)

Big Pharma BGx

4.0

Top 2 local BGx

0.9

Sanofi-Aventis (2nd Brand)

2.3

Sanofi-Aventis (Plavix)

Top 1 local BGx

12.4
1.1
0.5
1.9

12

2008

LoE

7.3

6.7
6.7

0.6

26.7

3.9

4.8

1.1

3.9
0.6

3.7

0.4

3.9

4.8

5.6

5.2

6.1

2006

2007

2008

2009

2010

Both volume and value growth significantly expanded post-LoE, which is reflective of a broader trend of several key molecules across
therapy classes in the APAC region ramping up in volume and value sales after LoE. Pharmaceutical companies who have a clear
strategy and strong capabilities to leverage such growth are likely to emerge as winners
Source: IMS Health MIDAS data and analysis

Effectively segmenting the APAC market based on LoE

performance allows a firm to develop tailor-made/
cluster approaches to strategy development

Figure 3

Illustrative, Non-exhaustive

Post-LoE perfomance by relevant segment

Reimbursement
status

Macroeconomic
status

Healthcare
infrastructure

Middle class
growth

Channel
demand

How do post-LoE
product performance
differ in reimbursed
versus semireimbursed
versus out-of-pocket
markets?

How is post-LoE
product performance
influenced by broader
macroeconomic factors
(i.e. GDP, population,
etc.)?

How does healthcare

infrastructure
development influence
post- LoE
performance,
especially in
developing Asia?

How influential is
middle class growth
on the performance of
post-LoE products?

Do channel structures
play an integral role
in driving post-LoE
growth?

Segmenting the relevant LoE market appropriately helps a firm determine how to optimally allocate
its assets across multiple geographic markets in the APAC region

An optimal pricing strategy that

maximixed volume uptake without
negatively affecting the innovator
brand (i.e. Plavix) sales;
A set of cost-effective resources that
helped push second brand sales; and
A robust and effective second brand
launch campaign.
The Sanofi-Aventis second brand
campaign is but one option available

to multinational companies in the

post-patent era.

merger/acquisition
relationships
several commonalities will define success in the APAC region going forward.
Every company does its own analysis
and makes its own decisions based on its
existing infrastructure and long-term
goals, says Morton-Small. Still, we
see greatest success emerging from
those clients with strong marketing
and commercial capabilities, broad
investments in brand equity, a good
understanding of local markets and
stakeholder decision drivers, a firm
knowledge of pricing-volume tradeoffs, steady on-the-ground resource
management, and healthy launch
readiness.
Consider the life cycle
To all companies, Morton-Small
and Afable recommend that careful
asset-level evaluation and prioritization
be applied to every strategic option.
Companies need to remember that
every decision that is made has a
potential impact on the many interlocking components of the company,
says Afable.

Companies can and should be looking at a variety of value boosters. No

matter what alternatives companies
pursueproduct enhancements, defensive list price cuts, second brand
strategies, broad regional emerging
markets play, fortifying the company
with an adjunct generics division,
developing patient assistance pro- To help clients think through the
grams, or pursuing new licensing or ramifications of various possibilities,

Figure 4

Critical decisions need to be made impacting many parts of the organization

Years to Loss of Exclusivity

-5yrs

-3yrs

What generic erosion

should I expect?

Product
Performance

Product
Strategy
Options

LoE

+1yrs

+3yrs

How are competitors

eroding my product?

What are the parallel

import implications?
What LCM options should be
pursued? E.g., forms/
combos, purity, peds

Field Force/
Promotion

Should we
monetize our
assets/out-license?

Should we invest in use

trials for OTC switch?

Pricing &
Contracting

Should we license a
2nd brand/
authorized generic?

Are there additional

product enhancements
that should be pursued?

What regional/formulation specific products enhancements

should we launch pre/post LoE?
Whats our pricing strategy
pre LoE e.g., increases?

How should we optimize field

force promo near LoE?

What contracts should

we pursue?

What should we do with

our excess field force?

How will manufacturing volumes

change post LoE?

Manufacturing
IP/Legal

-1yrs

How can we continue to close

any patient loopholes?

Can we drive market access

with impending LoE?

Should we change
our messaging?

How should we drop price to optimize

share? How are generic competitors pricing?

How much promotion should

be continued post LoE?

What COGS reduction plans should we

implement to optimize profits?

Do we require
a discontinuation
plan?

How and where should we readjust

our promotion strategy?

Should we outsource
manufacturing production?

How can we enforce and monitor

for breach of patents?

Product Perfomance What will happen?

LoE Strategies What can we do?

LoE Planning & Life Cycle Management

IMS Health has generated an in-depth

roadmap. What, for example, are the
product performance teams supposed
to be thinking about three years ahead
of loss of exclusivity? What should
the manufacturing team be considering three years after patent loss? What
pricing and contracting considerations
should be assessed all along the way?
As complex as the process is, it can and
must be both determined and deliberate.

At the end of the day, loss of exclusivity

should inspire pharmaceutical companies to think through the overarching
life cycle management of products
to undertake a transparent yet rigorous
prioritization process that can ensure
a healthy future for the brands and
for the company. The benefits of such
planning are proven and clear, both from
a value perspective and from an organizational one.

(see figure 4)

We ask our clients facing loss of

exclusivity to think about four primary
things, says Morton-Small. How can
they optimize their portfolio? Should
they establish a competitive branded
generics operation? Should they be
exploring mergers and acquisitions?
How can they balance regional ambitions
with localized market strategies? Its dynamic, its interwoven, its new. But there
are plenty of opportunities out there, and
were helping clients find them.

Considerations for market participants

Given key considerations, there are several growth avenues that

market participants may consider for post-LoE growth

Optimize portfolio, pinpoint growth

oppportunities and execute

Establish competitive branded

generics arm

Explore M&A growth but tread

carefully

Balance regional ambitions with

localized market growth strategies

Ensure that the portfolio and

core capabilities are aligned
to take advantage of growth keeping in mind that optimal
portfolios and core capabilities
needed to succeed may differ
from country to country.

Establishing generic brands in

therapy areas that are distinct
and do not compete with the core
innovator product portfolio may
increase the likelihood of success.

There have been no documented

big pan-Asian success for branded
generic companies, although
several players have commanded
high growth and market share in
their home markets, M&A opportunities may exist but risks abound.

Establishing a balance with a

regional / pan- Asian post-LoE
growth strategy and geographic
market specific strategies will be
key to cornering post-LoE growth.
Source: IMS Insights and analysis

The Impact Global Pharma Cost

Containment Measures in Asia-Pacific
In the United States they call it gold carding, and already its in play among
a handful of healthcare payers who are offering providers the opportunity
to forego prior authorization in exchange for conformance to oncology
prescribing guidelines.
In Italy, France, Germany, the
United Kingdom, and elsewhere,
government agencies are rewarding
innovative, high-value products via
improved pricing opportunities, but are
requiring pharmaceutical companies
to demonstrate both the absolute
therapeutic benefit of the product as
well as the therapeutic benefit relative
to the existing standards of care.

and regulatory reforms in 2009all

of which are continually being augmented as implementation progresses.
In Australia, cost containment reached
a turning point in 2011 amidst widespread criticism when the Pharmaceutical Benefits Scheme (PBS) deferred reimbursement listing for 7 new
drug launches and required all new
reimbursement listing requests to be
reviewed by the cabinet for approval.
Meanwhile, pay for performance In Thailand cost-containment is now
schemes are hitting their stride. In so deeply embedded within its healthItaly, for example, the emphasis care system that various stakeholders
has been on payment for response. ranging from the Prime Minister, the
The United Kingdom, has negotiated Controller General Department, the
a number of arrangements that tie Government Purchasing Organization,
final payments to actual outcomes, as and the Ministry of Public Health are
well as dose capping, in which the now all involved in the process.
pharmaceutical manufacturer covers
the costs of drug beyond the expected National health systems are caught
treatment duration.
in a complex conundrum, says Marc
Benoff, VP of Pricing and Market
Its all part and parcel of an effort to Access, IMS Consulting Group.They
curb the rising costs of healthcare are motivated by a desire to improve
even as aging populations put new the lives of patients through quality
pressure on national systems and even service and treatment options,on the one
as the costs of new treatments continue hand. On the other, theyre challenged
to rise. And its not a phenomenon by escalating needs, expectations, and
limited to the developed markets, as costs, as healthcare expenditures as a
recent developments throughout Asia- percentage of GDP continue to soar.
Pacific make clear.
Given that pharmaceutical expendiIn fact, in countries as diverse as tures account for 17% of all healthChina, Australia, and Thailand, a range care spending globally, pharmaceutical
of regulatory changes and cost contain- companies must not simply be aware
ment measures are rapidly emerging. of the problem; they must actively
China, for example, announced a tally assert themselves as part of the solution.
of healthcare expansion improvements To achieve that end, manufacturers

10

need to understand just what is shaping national healthcare strategies. How,

for example, are various markets
viewing what is, as of this writing, the
more than 6,000 active products in the
global pharmaceutical pipeline? What
lessons are the markets leveraging from
early cost containment experiences.
And what, in the end, are pharmaceutical
companies supposed to do about it?
The environment is complicated
and the risks are many, says Benoff.
Todays healthcare landscape is
shaped as much by scientific ingenuity
as it is by the ability of pharmaceutical
companies to effectively navigate, on a
country-by-country basis, everything
from reference pricing and spending
caps to generic substitution and
clinical value assessments.
Taking a Closer Look at the
Asian Markets: Trends and Tools
Its not just China, Australia, and
Thailand where were seeing a new
era of cost containment take root.
Throughout both mature markets
which include Japan, Australia, South
Korea, Taiwan, Singapore,and less
mature marketsThailand, China,
the Philippines, Malaysia,Vietnam, and
Indonesiapricing
reforms
and
legislation aimed at making healthcare more affordable have been put
forward. (See figure 1).
Countries intent on containing costs
have many tools at their disposal.

Increased focus on cost containment in the region have

led to significant increase in price pressures

Figure 1

Select recent key healthcare strategy changes in APAC

S.Korea:
De-listing & price cuts (2011)
Reimbursement & pricing reforms (2009)

China:
Price cuts (2011)
Increased price controls

Thailand:
CSMBS budget cuts; stricter
spending controls (2010 & 2011)
Hospital audits 2010 & 2011
NLED delistings

Taiwan:
Second generation NHI reforms (2010)
Biannual price cuts
Health insurance premiums up (2010)
Philippines:
Price cuts (2009 & 2010)
Cheaper Medicines Act (2008)

Australia:
Reimbursement forfits (2011)
New price reference groups (2009)
PBS price reductions

Source: IMS Market Expertise

NHI - National Health Insurance; CSMBS - Civil Servant Medical Reimbursement Scheme;
NLED - National Listing of Essential Drugs; PBS - Pharmaceutical Benefits Scheme

Prescribing and volume controls are,

of course, an early line of worldwide
defense. But budget controls, price
management, and the promotion of
innovation have lately emerged as
primary. As one might expect, the less
mature markets are mostly focused on
price-oriented controls such as mandatory price cuts and international
price referencing. On the other hand,
the more mature markets tend to

treatments so that research and

development can remain focused on
true clinical improvements, he says.
At the same time, HTAs are resource
intensivedemanding
significant
funding, tapping new technical
skills, and requiring the input of
government, clinical, and industry
stakeholders. Its a trade-off, and
compromises must be made.
Price cuts, conversely, are easy to implement and relatively straightforward,
requiring little time and investment.
And yet, they too have their downsides, often negatively impacting the
entire healthcare industrya scenario
that has recently emerged in the
Philippines following the 2008 introduction of the Cheaper Medicines Act
and the announcement of maximum
retail prices.

take a more diverse approach, relying

on price controls, drug volume
controls, budget controls, as well
as game-changing approaches that
reward and promote true innovation.

Frequency of Use

Weve been keeping a careful eye

on the Philippines, says Miemie
Strydom, a consultant with IMS
Consulting Group Asia-Pacific. The
pervasive price cutting there has not
Each tool, says Benoff, comes with just negatively impacted sales for
its own set of benefits and hazards. local and multinational pharmaceutical
Weve seen Health Technology companies and severely affected sales
Assessment (HTAs) incent industry to for small and/or non-chain pharmacies.
invest in new and increasingly effective The price cuts have also affected the
health of the people themselves. We
found that the volume of sales of
Figure 2
cheaper generic alternatives did not
In Asian emerging markets, the sheer size of the task of
significantly rise and that patients
improving healtcare have expedited the rise in price pressures
particularly poorer patients or those
requiring specialist caresimply could
Cost Containment Pressures most used in APAC
not access the medications they needHigh
ed, despite the major price reductions.
Co-payments on
Most measures recently used
drugs
by healthcare authorities focus
Beyond that, the Cheaper Medicines
Price Cuts
directly on drug expenditure
Act discouraged foreign investment
No
and resulted in the withdrawal of small,
reimbursement
Price/volume
Prescribing
local multinational companies from
caps
Costguidelines
effectiveness
the market.
Reference price
requirements
systems
Costeffectiveness
requirements
Sub-population
limitations or
restrictions

Low
Low

Physician
prescribing
budgets

* An increased interest in the application of cost

effectiveness is currently observed and expected to
gradually increase its use as markets mature

Level of Agressiveness

High

An analysis of cost containment trends

in ASEAN suggests that history favors
the less complex set of tools, relative to
EU or even other Asia-Pacific markets.
(See figure 2).

11

Generic substitution, another popular

cost containment tool, helped grow
global generic drug spending to
US$234Bn in 2010 (27% of total
global pharma spend), up from $124Bn
in 2005 (20% of total global pharma
spend). By 2015 generic spending is
expected to grow to between $400430Bn, constituting 39% of total global
pharma spend. At its most aggressive,
generic substitution targets are set
by pharmacy associations and payers,
leaving patients who seek the brand
to pay for the privilege out of pocket.
In many places, pharmacists are legally
required to inform patients of the

12

Budget Control

Strategy

Spending caps
Generic substitution
Decentralization
Prescribing control

Price
Management

Promote
Innovation

Reference pricing
Parallel trade
Price cuts

Clinical guidelines
Clinical value assessment
Pay for performance

availability of lower-cost substitutions.

It is no surprise, therefore, that across
many developed markets, generics
growth significantly outperforms
overall
pharmaceutical
market
growtha trend that is expected to
continue. In fact, branded generics
manufacturers stand to gain the greatest
boost in sales as the region grows
given strong market affiliation and
patient trust in high-quality generics
manufactured by well established, local
generic players. (See figure 4).

Specific objectives

Budget
control

Manage healthcare expenditure by

implementing tighter controls on
the pharmaceutical budget.

Price
mgmt

Limit total drug expenditure by

directly managing product prices

Promote
innovation

Encourage efficent use of financial

resources by promoting higher
quality of care

Other cost containment tools that

have gained in popularity in developed
countriesclinical recommendations
designed to help manage both the
quality and costs of care, for example,
and Pay-for-Performance schemes
that actually tie payments to results
have not yet found fertile ground
within developing countries. Such
complex measures have a far harder
time gaining a foothold in the
developing countries, says Strydom.
(See figure 5). Its not just the complexity
of these initiatives that limits their
introduction, but the fact that these

Increasing consumer demand for more affordable drugs has

driven rapid growth of high quality generics across APAC
Sales Breakdown by Originator Status - APAC
80,000

Unbranded Gx

44%
70,000

Branded Gx

42%

Originals

% Mkt Sales from Originals

45%
40%

38%

60,000
24,184

50,000

23,645

20%
15%

20,160
16,886

10,000

35%
30%

26,873

17,204

14,027

40%

25%

19,518

20,000

36%

21,886

40,000
30,000

26,165

Figure 4

Segment
CAGR
MATQ1 2006MATQ1 2011

50%
% of total Market Sales from Orginals

Sometimes spending caps are levied

as part of an overall cost effectiveness
program. Sometimes they are used
to limit the amount of spend on the
treatment of each patient, or for all
patients, in a therapeutic area and in
Europe, weve seen these evolve as
far to even include payback schemes
as part of the cost-saving initiative.
Sometimes overspend in the public
health system can also subject
manufacturers to payback schemes.

Figure 3

Recently, with growing budget pressures,

markets are looking at new systemic approaches

TOTAL SALES (US$M USD/MNF)

Its abundantly clear that cost containment can only be effective when
introduced through a systematic and
coordinated effort, says Strydom. A
number of national health systems
including Thailand, China, Japan, and
Taiwanhave recently put forward
a variety of capping provisions in an
effort to keep spending down.
Taiwan, Japan, and Thailand have
introduced DRG-type (DiagnosisRelated Group) reimbursement rates
to cap the spend on patients and treatment, and talk of introducing the same
sort of measures has arisen in Indonesia.
At the hospital level, China and
Thailand are capping expensive drug
use to limit the number of prescriptions written and filled for expensive
drugs; Thailand has also instituted
capping programs for nine diseases
considered to have above-average
branded drug use.

11%

16%

10%

7,965

9,870

12,721

15,958

MAT Q1 07

MAT Q1 08

MAT Q1 09

MAT Q1 10

19,173

MAT Q1 11

5%

21%

0%

Branded Gx - Other brands

Originals - Original brands and licensed brands
Unbranded Gx - Unbranded and patent n/a
Source: IMS MIDAS Q1 2011. All APAC generics/branded figures exclude India and Vietnam

Total Market CAGR Growth:

21%

countries have to first address basic

needs and infrastructure pressures
before they can implement more
sophisticated schemes.
What Does it All Mean for MNCs?
Multinational pharma companies
seeking to set down or strengthen
roots in the Asia-Pacific markets are
clearly in need of guideposts.
Our clients have questions, says
Benoff. They want to know what is
working right now, and what will work
five years from now. What resources
can they put into place? What trends
will become fixed and most pressing?
The answer, says Strydom, is complex.
We are advising our clients to prepare
for greater shifts toward more
systematic and integrated cost
containment approaches ranging
from prescribing control and budget
restrictions to price management and
innovation, she says.

treatment a priority. Only then can we

shift our focus to compliance and the
standardization of clinical care.

Finally,
its
imperative
that
multinational pharma companies at
work in developing nations share
what they have learned from their
There are real opportunities to build experiences in developed countries.
bridges in this environmentto The companies that are getting
Multinational pharma companies offer the technical expertise that ahead have found ways to bring their
cant just sit on the sidelines and wait regulators and health officials are knowledge to the ASEAN countries,
for the forces to play out, says Benoff. seeking. Multinational companies says Benoff. These are companies
There are very real opportunities to with a strong local presence have the like those that have invested in
step in and work with payers to help chance to make a real differenceto specialty training for nurses requiring
shape long-term development plans strengthen the health of a country as IV infusion treatments in oncology
that can promote favorable operating well as their own position within it, and
rheumatoid
arthritis
care
environments. There are opportunities says Benoff. Weve seen companies environments. Companies that bring
as well for multinational companies to step in and work with payers in ways partnering solutions to governments
assert their knowledge and expertise that shape the future of healthcare in need.
Companies that take an
in the region and to become a valued strategies. Weve watched real partner- active role in industry organizations
resource to healthcare stakeholders.
ships emerge between manufacturers forging ties with peer companies to
and healthcare authoritiespartner- help create the right kind of changes.
Consider the recent concerns ships that include risk-sharing agreeexpressed by a public healthcare ments, price/volume agreements, and Everyone benefits when real
representativea regulatory advisor pay-for-performance schemes.
solutions are put forth, and its
who overtly recognizes the importance
incumbent upon these pharma
of incorporating cost effectiveness into There are also very real opportunities companies to see themselves not just
reimbursement decisions, but who has for multinational pharmaceutical com- as organizations with products to sell,
been thwarted by a lack of internal panies to align their local and regional but as organizations with important
know-how. We just do not have the strategies with the national health- lessons to share.
technical expertise to implement this care strategies by streamlining their
overnight and even if we did, which businesses, expanding their generics
disease areas and patients should take and branded generics presence, and
priority? she asked. Right now the adapting their commercial models to
best we can do to is to make quality better serve key accounts.

13

14

The Changing Face of Pharma

Sales Forces in India
In less than half a century, India has gone from a country in which patented pharmaceutical
products were essentially non-existent to a free-market economy in which patent
applications from both domestic and international pharma companies are on the rise.
Much of the shift can be credited to
the 1995 passage of a formal patent
structure, which precipitated the
annual launch of between 650 and 700
pharmaceutical products up through
2000and utterly changed the way
pharma companies went about doing
their business in India. Conservative
sales models were eschewed for
aggressive, innovative ones. R&D
efforts were magnified. Companies
grew at an astonishing rateand sales
forces multiplied. (See figure 1).
The new millennium ushered in even
more change. In fact, so aggressive was
the portfolio expansion across India that
the average number of newly launched
brands stood at more than 2,500 per
year between 2000 and 2005.

Its no surprise, of course, that pharma

companies continued to expand
amplifying and restructuring sales forces
so that they might better serve both their
products and broader geographical areas.
By the late 2000s, sales forces had been
extended to rural markets and, in a bid
to further increase revenue, innovators
began to proactively co-promote their
patented products and to engage in outlicensing arrangements.When companies
ultimately faced saturation in Indias
top-tier cities, newer, more efficient
commercial models and sales force
structures went into effectincluding
task forces, therapy experts, key account
manager structures, and contracted sales
operations.
The pace of change in India has been
nothing short of remarkable, says

Amardeep Udeshi, an engagement

manager for IMS Consulting Group. The
trajectory of the branded pharmaceutical
market in India has forced companies to
adapt quickly and to intelligently anticipate
the future.
The aggressive expansion of sales forces
has not hurt most companies ability to
maintain their bottomline, says Mohit
Bahri, a consultant within IMS Consulting
Group. (See figure 2). In fact, our financial
assessments demonstrate that sales force
expansions have historically borne
meaningful fruit, and we anticipate the
same to hold true going forward.
Today, with the industry boasting an
annual turnover of Rs 600 Bn and a
CAGR in excess of 15%, more change is
clearly on the horizon. In a recent survey
Figure 1

15

Aggressive expansion of sales forces has not

hurt most companies profitability trends
MNCs
40%

40%

35%

35%
30%

25%
20%

Operating Profit %

Operating Profit %

30%

25%

Indian Companies

Figure 2

of corporate hospitals, while the impending expansion in the corporate hospital

system will likely result in a structure in
which players not only require a hospital
sales force, but also a team of key account
managers who are trained to handle
relationships with purchase managers,
administrative staff, and nurses.

20%

The mandated prescribing of generics

by government hospitals in the future is
10%
5%
5%
0%
another key pressure point in the system
-5%
0%
a trend that is expected to strongly impact
2006
2007
2008
2009
2010
2006
2007
2008
2009
2010
-10%
the sales of branded drugsnot now or in
CIPLA
Ranbaxy
DRL
Pfizer
Novartis
Merck
the next five years, perhaps, but absolutely
Abbott
Aventis
Astra
Sun Pharma
Glenmark
in the long run. The mandated rise of
% Operating Profit = Operating Profit/ Operating Income
generics in the west has already led to the
Source: www.money.rediff.com
emergence of new sales models aimed at
conducted by IMS Consulting Group Patients are commanding what they want generics promotion.Pharma companies in
in conjunction with the Organization at the price they want it, where they want India may at one point need to collaborate
of Pharmaceutical Producers in India it and from whom, says Udeshi. The with government bodies like pricing
(OPPI), it is clear that the sales force demand is high for preventive treatment, authorities and approval committees as
strategies and hence structures of Indias not just curative care.The vaccine market, this trend gains momentum.
successful pharmaceutical organizations notes Udeshi, has become a true a case in
are once again on the verge of change.
point, with companies like GSK and MSD Another key area of shift and opportuprimarily targeting the end-user to elevate nity revolves around the surging OTC
Sales models are being reinvented and prescription levels and use. MNCs have sector and the role that the media are
redesigned all across the India pharma also been actively engaging customers by now playing in driving brand promomarket landscape, says Udeshi. providing disease management services tion and reaching out to mass audiences.
Streamlining operations and adapting to retail patients, by offering counseling, This has certainly been the case for
sales forces are initiatives that remain physiotherapy sessions, and diagnostic tests, Revital, Volini, Gelusil, Digene, I-Pill,
uppermost in the minds of those work- and by creating a series of patient-oriented Pediasure, Otrivin and Crocin, which
ing within the fourteen organizations outreach programs; Chiron Panacea, as one have built new channels including media
that we used for our study.
example, reaches out to its patients through promotion or in-store branding.
an SMS reminder service. Amplifying
Emerging trends in the
the strategic role of the patient in Indias OTC implies reaching out to patients
healthcare system
healthcare system is the rise of check-up and consumers without doctor intervenAccording to Udeshi, six key health- packages, media campaigns, and govern- tion and therefore necessitates a strong
care trends are likely to influence the ment initiatives in rural regions.
direct focus on the development of new
way pharma companies adapt their
distribution models, pricing, and
sales models over the course of the next A second key trend relates to the prolifer- consumer targeting, says Udeshi.
decade. Were going to see new stake- ation of new healthcare delivery channels. Healthcare FMCG companies like GSK
holders and promotional channels Were watching the hospital segment as- Consumer Health, Novartis and Abbott
arise, he says. These are trends that no sume a key role in the Indian healthcare are bringing dedicated medical detailing
company can afford to ignore.
sector, says Bahri. Private and corporate field forces to doctors and nutritionists to
hospitals have grown at a 15-20% on a promote their brands as well. We expect
First, says Udeshi, its clear that patients year-on-year basis, and we expect this many more companies to go this route
will become increasingly strong stake- trend to continue well into the next five over the next ten yearswhich means, of
holders as the years unfold, thanks years. Investment by private equity firms course, that pharmacos will need to adopt
to greater education, awareness, and into the burgeoning hospitals space bears new approaches to their own customers.
income, not to mention a growing testimony to this trend. Penetration in
national focus on healthy lifestyles.
Tier II cities coupled with medical tour- Likewise, the rise of the organized retail
ism is expected to further boost growth pharmacy chains signals new pressures

16

15%

15%
10%

and opportunities for pharma companies

working in India. Pharmacy chains like
Apollo, Guardian, and 98.4 are forcing
pharma players to think differently about
the growing power of newer distribution
channels,says Udeshi. By many estimates,
organized retail pharmacy chains already
account for nearly 5% of pharma sales in
India, and that share is dramatically increasing.These chains simply cannot be ignored
any longer. Pharma companies may need
to think about how to engage with these
chains to deliver more and more services
to their patients.
The final emergent, if futuristic trend
that must be monitored and reflected in
the commercialization models of India
pharma companies is the increasing
power of health insurance companies to
determine which drugs will or will not be
included on re-imbursement lists.

current sales models are either sustainable

or optimal.To consider innovative means
of adapting to the new environment.
Leading companies recognize that
adapting current sales models to future
pressures and opportunities is the key
to survival, says Udeshi. Key account
management, hospital task forces, channel management, therapy specialists, and
media promotion, among other things,
are already being incorporated by innovative, forward-leaning companies. So are
dedicated teams for rural markets. While
its far too early to predict the success of
these models, each clearly points toward
a targeted approach to new stakeholders,
and each evolves the commercial model
from mere touch points with customers
to actual engagement with patients.

e-doctor meetings, and online awareness

campaigns will drive patients into the
healthcare system. Thus, KPIs for the sales
forces may evolve as well.
Harvesting newer touch points with
patients will be part and parcel of the new
environment, and this wont just affect the
sales model; it will also impact portfolio
choices. One executive in the IMS study
made special note of this, suggesting, Key
account management will have increasing
importance for those MNCs with pipelines
of patented products, and strategic partnering initiative will also impact sales models.

In the meantime, the Indian pharma

industry will need to develop sales force
competencies and enable sales force excellence (SFE) strategies to take center
stage, a process that will require systemPharma sales structures will slowly wide support and careful implementation.
move toward a more scientific dialogue Going forward IMS forecasts the increasWe expect the total population covered between the sales force and the doctor, ing importance of SFE teams, whose role
under health insurance to increase from a pharmaceutical executive at a leading will evolve from supporting sales teams
2.3% in 2007 to 20% by 2015, says Bahri. pharmaco noted during our conversa- to developing and managing entire sales
The possible emergence of a drug re- tion. This will require highly trained strategies and their implementation. That
imbursement list by Indian insurance sales forces that are committed to engag- will not only include reporting, but also
companies cannot be ruled out, and this ing with doctors more effectively.
multi-level training, periodic reviews of
may eventually lead to the dictation of
sales force structure, size, detailing, and
business terms by insurance companies to The ability to manage patients together customer targeting, and much more.
pharma players. Companies like ICICI will clearly emerge as a success factor in
Lombard are already eyeing disease specific the coming years. Delinking the role of Our work within the India pharma
insurance, while companies like Sanofi- sales force from stockist management will marketand the conversations we are
Aventis are partnering with insurance help sales teams improve their exclusive havingsuggest that companies dont
companies to insure their Arava patients, focus on customers, says Udeshi. just understand the importance of
should casualties result during product use. Engaging multiple stakeholders through enhancing sales force competencies and
multi-channel promotion and touch-points excellence, says Udeshi. They are also
Adapting New Commercial Models
will be crucial. Segmenting customers from taking the first steps toward advancing
Emergent trends in healthcare delivery are the current Potential-Support Model to their own sales forces within this dynamic
clearly forcing pharmaceutical companies more evolved models like Behavioral pharma ecosystem. Its an exciting time to
to once again re-think their go-to-market Segmentation
will
provide
the be doing business in India.
strategies (See figure 3). To ask whether their cutting edge, while e-detailing, e-seminars,

Emerging trends are driving companies to re-think their go-to-market strategies

Smaller field
forces:
removal of
mirrored field forces
Right sizing:
each rep seeing
30-40 doctors
more often

Account based
selling: managing
groups of prescribers
based on % effort and
not reach & frequency
Key Account Mgt:
relationship rep can
call in specialized
personnel as needed

Figure 3

Prescriber Knowledge
Opportunity - Accessibility - Responsiveness

The Sales
Model of
Today

Organizational Models
Therapy focused - Team based - Outsourcing
Specialist - Key Account Mgt.
New bonus and compensation models

The Sales
Model of
The Future

Patient Flow - Local Guidelines/Bodies

Influence to Diagnose & Prescribe

Portfolio Treatment Pathways & Influence

17

18

Forging New Relationships in Chinas

Consolidating Distribution Industry
Slightly more than a year ago, in August 2010, Chinas Ministry of Commerce
unveiled a draft plan designed to help effect a major restructuring of the
countrys drug distribution system. The goal, according to the plans authors,
was to reduce what until recently had been some 16,500 pharmaceutical
wholesalers and 140,000 retailers to no more than two multi-regional large
distribution companies and less than two-dozen regional large distributors.
Improved efficiencies and economies of scale were forecast. The elimination
of secondary distribution markets was likewise anticipated.
While not the first time such lofty
goals were elevated, a series of
mergers and acquisitions among
Chinas
distribution
companies
began to reshape the landscape
even before this plan was finalized.
In January 2011, for example,
Shanghai Pharmaceutical finalized its
acquisition of China Health System,
Ltd, following a series of smaller
acquisitions of other distributors
across the nation. Sinopharm, likewise,
carried out a series of deals that have
considerably broadened its national
sales network.

recent IMS Consulting Group study

provides a sound framework through
which pharmaceutical and medical
device companies can approach these
evolving, strategic partnerships.

Our in-depth conversations with

32 individuals from across the broad
MNC spectrum make it abundantly
clear that distributors are now seen
as strategic partners that canand
indeed shouldbe complementing pharmaceutical companies, says
Guagenty.
Distributors have the
capacity to support MNCs in managing pricing and market access. They
The reshaping of the pharma can maintain strong relationships with
distribution landscape throughout hospitals and secure product listings.
China has widespread implications They can create a logistics and
for multinational (MNC) pharma storage infrastructure equipped to
and medical device companies. Still more deeply penetrate the country.
in its earliest stages, the trend is also The ongoing phenomenon of
raising numerous questions. Our distribution consolidation is, in many
clients are watching the situation ways, a force for gooda means of
closely, says Matthew Guagenty, reducing the number of distribution
Managing Principal, IMS Consulting tiers, improving services, and redirectGroup, China. They want to know ing investments into as of yet unmet
what to expect in the short- and middle needs.
term, and what they can do to prepare
It is widely believed that consolidafor the coming changes.
tion of the distribution system will
Of course, the partnerships and pave the way for lower logistics and
alliances of tomorrow will be forged storage costs. Experts within IMS
on a case-by-case basis. Still, a Consulting Group believe this trend

will enhance the ability of MNCs to

reach patients beyond the largest cities
and into the third-tier markets, long
an objective of many. The rationale
is two-fold: 1) consolidation within
the distribution industry will extend
networks to truly create nationallevel reach, and 2) as costs come
out and inevitable margin pressures
increase, the cost effectiveness of
doing business in these distant
markets becomes more realistic.
And yet, it is important to note that
such consolidation will not happen
overnight. In fact, most believe it
will take significant timeperhaps as
much as ten yearsfor the anticipated
benefits to actually accrue.
Its true that the top three distributors
have aggressively pursued M&A
activity in response to governmental
pressures, notes Guagenty. But
for the most part, those acquisitions
remain unintegrated. The acquired
entities are continuing to operate
as beforeand sometimes without
efficiencies due to the lack of
management attention.
Medical device companies face
slightly
different
environmental
pressures than pharma MNCs. The

19

policy reform framework for the

medical device industry is simply not
as evolved as that of the pharmacy
MNCs, says Guagenty. Weve found
that the primary focus of health
policy reform in China today is on
increasing access and affordability;
medical devices, for their part, have
not yet become a high priority, given
their relatively smaller contribution
to the overall cost of healthcare in
China.

citing expansion into fee for service

value-added offerings such as
contract sales and marketing that
complement MNC capabilities and
thereby form separate revenue streams
that dont necessarily qualify as
distribution margins.

Over the medium term, pharma

MNCs must better understand the
intentions of larger distributors that
maintain and distribute their own
in-house pharmaceuticals (branded
The bottom line is that there is no and unbranded generics and inexternal push or incentive driving licensed products). MNCs will also
consolidation in the medical devices want to work with distributors to
distribution space. In the short- focus on facilitating greater market
to medium- term, medical device access and expansion as well as
distribution will remain dealer driven. creating
new
services
that
complement such traditional pharma
Still, says Guagenty, those included strengths as sales, marketing, and
in the IMS Consulting Group survey maybe even localized R&D and
believe that consolidation in medical clinical efforts.
devices distribution is inevitable in
the long run and will result in several MNCs should also be looking to
benefits to both manufacturers and distributors to improve current
the healthcare industry as a whole.
offeringsin terms of both services
and pricing structures. Logistics costs
Getting a handle on the near- to
and lead times are significantly higher
middle-term distribution scene
in China, when compared to global
The first thing MNCs and medical standards. At the same time, distribudevice company executives need to tors are commanding a proportion of
understand is just how profound an price irrespective of their inherent
impact distributors have on the sale cost structures.
of medical products in China. In
distinct contrast to developed Medical device distribution, for
countries, large distributors in China its part, is expected, as has been
play a direct role in selling products, noted, to remain fragmented in the
says Guagenty.They take on a greater medium term. Hence, medical device
risk assuming the credit risks of companies will have less leverageless
Tier 2 level and below distributors, ability to persuade distributors to
provincial tendering, hospital listing, clearly separate their core distribution
and the like. They therefore command offerings from value-added services
a significant premium compared to that are not of immediate relevance
the global distribution industry.
in medical devices. Over the medium
term we expect the change to be slow
Given the governments focus on in medical device distribution. There
reducing overall distribution margins simply isnt a significant catalyst for
to control healthcare costs, these change.
premium margins are bound to come
under pressure. We see distributors Medical device companies should,
adapting their business model to however,
continue
to
push
offset this pressure, says Guagenty, for differentiated services that

20

cater to their differentiated business

environment and stakeholders. The
truth is that, particularly in high-end
medical device distribution, there has
been a lack of attention on behalf of
distributors in China, says Guagenty.
Frankly, there has also been a
general lack of the kind of talent that
is needed to fulfill some of the
complex roles required by MNC
device companies. In many cases these
are complex devices, being used in the
operating-room environment, where
surgeons need to be working with
product experts from the company
or its partner to ensure a successful
and satisfactory result. Ultimately the
talent gap will require new innovation
on the part of value-added service
suppliers as well as those MNCs
that hope to be successful in China.
Examples of this include unique
collaborations across the pharma
and medical device spectrum and
agent/distributor models that are not
exclusive one-to-one arrangements,
but one-to-many.
Gearing up for change
Clearly, were talking about new
kinds of partnerships hereabout the
benefits that can and must be realized
in this new era of consolidated
distribution. Simply entering into
agreements of convenience is not
enough anymore, especially as MNCs
and medical device companies move
on past the Tier 1 and 2 (the largest
200+) cities of China.
Weve identified four stages in the
evolution of strategic partnerships
between distributors and MNCs/
medical device companies, says
Guagenty. There are, to begin with,
those agreements of convenience,
in which both parties are tactically
required to work together and seek a
short-term benefit. The second stage
involves the actual development of a
partnershipa relationship in which
both parties work toward mutual
benefits. In the third stage, both

than do traditional pharma companies,

given the last mile dependencies on
these agents, says Guagenty. Think
of McDonalds without motivated
franchisees
crossed
with
the
complexity of selling SAP to a
corporate customer. MNCs are
looking for partners that can fairly
represent their goods and associated
value propositions with their ultimate
Such partnerships must be built against
a backdrop that will remain but vaguely Finally, its essential to remember that consumers, while driving consistency
articulated for many years to come. MNC medical device players in China and
commercial
operational
On one hand, the largest distributors have not seen any material changes, excellence into their business for
are actively seeking mergers and yet alone benefits. The white space the long term.
acquisitions that create truly national for engagement and improvement is
players. The largest of these are State significant, but it will be challenging, No one expects the road to be short
Owned Entities (SOEs) that have as has been noted. Medical device or easy. IMS Consulting Group does,
substantial access to the capital companies depend on local, highly however, expect that it will be
required to continue such activity skilled resources who can engage with interestingand well worth the
and further the consolidation of the physicians regarding the technically investment of time required by both
pharma MNCs and medical device
distribution industry.
sophisticated equipment.
companies as they prepare themOn the other hand, while reach is Similarly, the agency model in medical selves for this new era. Greater access
valuable, it is clear that the pharma device
companies, whereby
a to more physicians and patients is at
industry is also seeking and in fact companys products are not only stake. So are improved efficiencies.
requires greater levels of partnership distributed but also marketed in a And so, perhaps, is a better ultimate
to enhance their ability to do business. certain captive area, introduces relationship
with
governmental
Technology-based
solutions
and nuanced complexities into the agencies whose search for more
capability enhancements on behalf manufacturer/distributor relationship. cost-effective business models and
of distributors will be key to making
opportunities will not dim any time
meaningful lasting change going We would argue that medical device soon.
forward. Similarly, MNCs will have to companies require closer cooperation
parties define a common strategic
vision, articulating and holding to a
true win-win partnership model that
is supported by significant investments
from both parties. Finally there is
what we call the mature strategic
alliance, which is grounded in a clear
and complementary set of capabilities.

look beyond exclusive relationships,

instead seeking maximum leverage
across offerings and capabilities.
This harkens back to days when the
automotive industry partnered with
its suppliers to drive innovation and
cost saving adaptations while sacrificing some of its demands for proprietary
relationships in doing so, says Guagenty.

21

IMS Consulting Group at Work in Asia

IMS Health is at work all throughout Asia on projects of

intriguing scope and implications. Among those engagements
recently on our desks are the following.
22

The acquisition question

A multinational company considering an acquisition of a large Indian company sought the assistance of IMS Health
to evaluate the candidate company and to assess the value it might generate upon acquisition.
In a matter of 8-10 working days, IMS Health provided an insightful analysis into the candidates performance and
identified additional value generation opportunities. We built a proposed acquisition strategy that reflected our
in-depth knowledge of the Indian pharma market and the candidate company and converted all of these inputs into
a highly flexible valuation model. But for IMS inputs, such an evidence-based analysis would have been impossible,
particularly within the tight timelines.
In pursuit of growth
IMS Health was asked to help the client understand the opportunities for inorganic growth in Indonesia and pinpoint
where value creation was possible given Indonesias market characteristics.
Through measured examination and analysis of Indonesias strong-potential healthcare market, IMS identified
opportunities for the acquisition of a company focused on branded generics, thereby laying the groundwork for
a more localized portfolio. IMSs strong on-ground relationships with key players in the market, paired with the
application of globally tested learnings, set us apart as we delivered the answers the client needed.
Optimizing a corporate structure
IMS Health delivered an in-depth analysis as well as a series of country-specific recommendations to a multinational
company seeking a new commercial model to serve its growth within four Asia-Pacific and EMEA markets.
Combining a variety of interviews and facilitated workshops with deep analyses of product performances within
selected markets, IMS Health was able to identify the ideal size and structure of the sales force and additional roles.
Comprehensive, well-structured, and evidence-based, the project ultimately established a regional and global governance
system that ensures quality and consistent delivery across all markets.
Integrating sales teams in the wake of an acquisition
In the wake of a clients major acquisition, IMS Health was commissioned to help the multinational company
seamlessly and effectively integrate its respective sales forces in markets across Asia-Pacific.
IMS Health first analyzed options for sales force structure and size for the combined sales force.
Final recommendations were based on analyses of product performance and promotional response. Ultimately, the
territory structure was re-configured to align with the recommended sales force structure, and members of the sales
team were deployed across the respective territories.
Providing a commercial operating performance diagnostic
When a merger and subsequent reduction in a clients sales force size began to negatively impact sales, IMS Health
stepped into diagnose the cause of the sales decline and to identify the key drivers of sales force productivity.
Competitive intelligence, IMS internal knowledge and best practice information, and a comprehensive sales force
effectiveness framework all provided the client with a thorough and insightful assessment of its current performance and
yielded essential new information to support the business case for sales force improvement.
Achieving sales excellence
Believing that First Line Sales Managers (FLSM) could play a pivotal role in transforming a companys commercial
capabilities from good to great, a multinational company engaged IMS Health to improve FLSM capabilities.
IMS Health began its performance gap analysis with a series of interviews culminating in a leadership workshop that proved
pivotal to developing the baseline FLSM excellence framework. Next, IMS Health developed the definition for FLSM
competency (as well as performance assessment measures) that will be utilized across Asia-Pacific and Japan.The IMS Health
repository of best practices in sales force effectiveness proved key to providing the client with a comprehensive foundation.
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