Project Success in Highly Uncertain Environments: The example of Pharmaceutical Emerging Markets
Probably one of the few positive aspects of crisis is their capacity to show us which of our mechanisms of approaching problems are becoming obsolete. However, last years the “updating need” looks to be accelerating on an unprecedented way. Best seller authors Nicolas Taleb, Tim Harford or the Nobel Prize Daniel Kahneman brilliantly explained that, due to our brain configuration we are limited on our capacity to accept the exponentially increasing complexity of the world we are dealing with.
Pharmaceutical Industry is among those with a higher level of uncertainly and a stronger tradition on using –and abusing- of predictions. If forecasting is a difficult task “per se” even in developed markets, when moving to emerging markets the level of complexity increases many folds: market research data are not always available, and when they are, figures are barely reliable, regulatory landscape is subjected to diverse and many times unmanageable circumstances, property rights are not always guaranteed, local companies may be benefited with local government protectionism in detriment of foreign ones, etc… plus a lack of local expertise and a high rate of political and economical uncertainly. In this scenario, filling a template with future “expected” sales is a little bit more than a lottery guessing exercise.
However, 70% of market growth during the next five to ten years is expected to come from emerging markets, while developed ones will do on low single digits. Assuming this fact, being out of these markets is something most of us can not even consider.
The big question is how to do: how to deal with highly uncertain complex environments with limited access to reliable information. What should be the right strategy? How can we ensure a minimum level of risk management? What management profiles are more appropriate for these markets?
"In summary, a successful strategy in Emerging Markets should consider the following key elements: be capable to work with low levels of reliable information, develop a failure acceptance culture, manage risks through a diversified sum of activities, create self learning highly adaptable structures using cross functional and cross cultural team capabilities to overcome increasing complexities, keep close to the field and be patient".
Answering these questions is a quite challenging but necessary exercise. Let’s look strategy first. When working on Emerging Markets, we should assume the fact that probably never will have access to a comparable level of information and market understanding as we had in the developed world. However, it doesn’t mean we can’t work effectively. It is just that we have to do it on a completely different way. We can get a very good example by looking what doctors do in comparable circumstances. Many times, particularly in developing countries, physicians’ single available information is patient symptoms. What they do on these circumstances has been called “empiric approach”. After identifying possible diseases compatible with clinical symptoms a treatment is prescribed carefully balancing risks and benefits. Among available products decision is made based on patient & environment conditions: broader spectrum over more selective drugs if the origin of the disease is not clear, less side effects drug if the patient is taking many medications at the same time, easy to take drugs if suspecting bad treatment adherence, etc … Sometimes the first option is not the right one. Through a close patient follow-up strategy can be adjusted until a positive outcome is achieved. By working on an essay-error basis and measuring carefully following steps, the patient is permanently controlled and risks minimized. Although empiric treatment will never compete with a powerful diagnostic department, in absence of it becomes the best available option and get reasonable results.
Like in medicine it is possible to apply an “empiric entry” to emerging pharmaceutical markets, and it is most cases the best alternative when access to information is limited. A “do and see what happens” strategy may be very effective on risk controlling. No need to say that this approach requires a careful monitoring of “the patient”, meaning a permanent presence on the market at local level.
A second key factor is closely related with the first one: development of a strong failure acceptance culture. In the context of “testing with limited information” even a first successful experience should be considered just as luck. The normal situation is that success comes after many failure experiences followed by several corrective measures. After a training period, gains will overcome losses and the project will achieve its break-even. In fact, by the acceptance of failure as part of the process, organizations learn to make better choices and to adapt faster to changes, as well as to move under circumstances of high uncertainly what is to say the most probable scenario today and in the future.
Accepting mistakes doesn’t means showing kamikaze behavior. Randomness is unpredictable, but risk is manageable. The key word is diversification. By putting in place not one but many initiatives on different timeframes, we limit the effect of single failures. Additionally, the company should be trained to learn quickly what is working in order to apply on next steps. As emphasized above, a close work on the field is critical success factor to build a successful strategy in Emerging Markets.
Another critical element to succeed on highly uncertain markets is the ability of adding community efforts and interests on the same objective. Within increasing complex environments, individual capabilities are by themselves not enough to ensure project success. The ability to create and lead cross functional and cross cultural teams becomes one of the most important elements, necessary to build a self-learning highly adaptable organization.
Last but not least, results shouldn’t be expected on a short one or two year scenario. Pharmaceutical Industry learnt to manage long product development periods of 10 to 20 years by creating portfolio-pipeline strategies, and same approach should be used for emerging markets. A 5 to 10 years scope is realistic, always combined with geographically diversified strategy to help compensating punctual project failures, unavoidable in a highly challenging scenario.
In summary, a successful strategy in Emerging Markets should consider the following key elements: be capable to work with low levels of reliable information, develop a failure acceptance culture, manage risks through a diversified sum of activities, create self learning highly adaptable structures using cross functional and cross cultural team capabilities to overcome increasing complexities, keep close to the field and be patient.
Just to end up this article, let’s try to identify the optimal profile for succeeding on project development in emerging markets. Some skills are common to any other project on modern business structures: leadership capabilities are mandatory, with special emphasis on outstanding communication skills and of course integrity and managerial attitudes. However, there are some specific elements we summarize below:
• Controlled risk taking capacity (or should we say entrepreneurial spirit?)
• Capacity to work with a high level of autonomy
• Strong respect for other cultures and different problem approaches (open minded)
• Strong team worker (most of achievements will not be individual)
• Coaching and motivational (moving people, resources, getting commitment)
• Enthusiasm and strong commercial capabilities (most of the time the job will be an exercise of breaking internal and external resistance to change)
• Stress controlling (one of the things that more increases level of stress is lack of available/reliable/manageable information, what will be the usual scenario)
It can be said that there is a lack of professionals specifically prepared for developing successful projects in emerging markets. Recently some important business schools have detected the need of specific training in risk management and working effectively in highly uncertain scenarios, but the issue is far to be solved. Until now companies are using young professionals and people from local teams to fill the gap, although they are every day more aware about the need to get specifically prepared professionals.
From -75 to +25, 100 critical weeks on a Product Launch in Emerging Markets
Product launches in Emerging Market are becoming more and more important within the global strategy of big pharmaceuticals. Ten years ago, launching in not developed markets was a late staging intend to expand as much as possible product life cycle. Property rights concerns and arbitrary delays in local approvals, as well as limited market potential were the reasons to this marginal approach. The situation has changed and will change even more dramatically in the next five to ten years
Factors fueling the importance of Emerging Markets in Global Strategy
• Pricing pressures in Developed countries as a result of the Crisis are braking growth expectations on these markets
• Low pipeline productivity in the last years is forcing big pharmaceuticals to diversify in order to improve risk management
• Property rights protection and regulatory processes have dramatically improved in Emerging Markets
• In these markets, significant GDP domestic increases on the last decade are raising healthcare expenses and need of pharmaceutical products, not only the traditional acute primary care ones but every day more specialized highly innovative drugs.
According to IMS, delays between developed and first emerging markets approvals have reduced nearly 1 year in the last decade. There are recent examples of products approved in Brazil just three months later than in the US and, according to internal sources consulted, companies are considering that launching first in Emerging Markets might be a good idea in some cases.
Launching in Emerging Markets is a similar process than launching in Developed countries, but while once the product has been approved by FDA or EMEA, the local approval is usually a bureaucratic and, more or less, standardized process it is not the same in EM.
An effective way to work from -75 to +25
A very effective way to complete all the premarketing activities is creating a cross-functional local-global task force, leaded by a highly motivated strong professional with empowering abilities and a smart capacity to deal with conflicts.
Cross functionality means that every significant department involved on the launch should be present through somebody with executive capabilities and power enough to move things on the respective department.
Local and global participation in the task force is critical to ensure “think big and act small”. The local approach will deliver right understanding of specificities that would block or delay the project and the global participation should ensure the right resources from the company are allocated on the project and also the right objectives are put in place.
To keep the task force operational meetings should be restricted to the real needs (basically follow-up, next step definition and progress communication) and driven via TC or VC most of the times, particularly in the first 50 weeks. Right frequency should be fixed based on the project. Every two weeks can be a good approach between -75 and -25
In the operational prelaunch -25 to 0, frequency should be increased (from -25 to -4 a weekly approach would be appropriate, from -4 to 0, a even daily approach might be necessary). During this period, some F2F meetings at global and local levels are recommended to reinforce commitment.
After launch, the task force meetings can follow a similar scheme: every day/2 days the first 2 weeks, every week until month 3 and every month from week 12 to week 25
Bottle Neck Approach
The BNA is a very common sense method to improve effectiveness of task force daily activities. In essence, the core issue when dealing with a cross-functional team, assuming the right level of expertise and commitment, is avoiding internal conflicts based on perceived differences on priorities. If the team members are equally ranked in the organization (what is advisable), conflicts will arise when priorities and next steps have to be fixed: in some occasions a department will try to speed up while other will be concern about risks and willing to slow down to avoid mistakes. Here the ability of the team leader to fix project priorities without letting personal conflicts develop is critical.
The bottle neck approach basically acts as focusing cross-department criteria: once the bottlenecks are identified (defining bottleneck as any element that is blocking or delaying the project), the team will drive its effort to solve it, being responsibility of each member those actions related with his/her department.
Communication wise dissemination to the task force participants and to management and other stakeholders is critical to keep momentum and capitalize the positive outcomes. Once again, the team leader role is essential for success.
Important considerations when launching in Emerging Markets
As in case of Developed Markets and according to IMS survey, only 20% of launches were able to change the trend when not successful on the first 6 months after launch. That mean we have to carefully monitor the 0-25 weeks windows
Once the product is launched, few things can be done except slight modifications on execution. It is too late. To be sure of success, a pre-entry of 18 months (75 weeks) should be carefully considered, in particular on Emerging Markets where usually two additional circumstances are expected to occur: lack of information and lack of expertise
The -75 question list
Let`s say the regulatory department is forecasting launching dates in 18 months, what is the average timeframe after dossier submission (assuming it fits all requirements and we are talking about a strong clinical development). The core questions we have to address are summarized below:
Do we have the budget expenses defined?
Do we have an idea of the country potential and specific objectives?
Do we have information about how the disease is treated, who do what and where?
Do we know about the influence nets?
Do we have the right access to healthcare professionals (PCPs, Specialists, Nurses, etc…)
Do we have a enhanced patient profile?
Do we have a pricing strategy defined?
Do we have determined the market niches (Big payers and out of the poket) and how to address pricing negotiation?
Do we have local teams? At what level?
Who is doing the regulatory follow up?
Where will be the product manufactured? When will be all facilities in place?
Do we have enough resources on the medical department for Data support, KOL management at local, regional and global level. visual ads review, medico-Marketing strategy, labeling?
If not, where can we find the necessary resources?
What about the sales team? Is hired (if not, do we have the profile?)
What about manufacturing /distribution / marketing issues:
How we will deliver the product (presentations, etc)?
How we will deliver the samples (if any)?
Who will do what at pharmacy / store level
Who and how will be the selling ads developed? Locally or Globally? What will be the single selling proposal?
How we will introduce the products in the 20% of top centers?
Which part of the process should be externalized?
We should ensure to have answered all the questions with a yes (and a “readiness OK”) between -75 and -25, as the last 6 months prior launch should be fully dedicated to ensure execution plan details