Pharma Acquisitions On Hold? – Narayan Gad – Panacea Biotech Formulation Marketing Chief . Narayan Gad

December 1, 2010 6:18 pm – Narayan Gad is a tough man to understand & knows his game plan very well. He is always known to be an aggressive & fiery marketing guy & a tough man to deal with. Those who know him very closely like me will say that he has always listened to his heart & is always straightforward & frank in his approach whenever it comes to pharmaceutical business as he is bold enough to say that the year 2010 made a distinctive mark in the healthcare industry as three major buy-outs dominated the healthcare sector in a rather unprecedented & unreasonable in market values as he says “I don’t see much happening on buyouts till 2015. Reason being aspiration of prospective sellers has gone sky high with the valuation given by Diachi and Abbott. However, once we return to reasonable valuations, there will definitely be such activity between 2015 and 2020”… The prospective sellers will be (A) : Companies which find it difficult to manage ‘size’.( B )Companies where next gen may not be adequate.

In an exclusive interview to Satya Brahma, Chairman & Editor-In-Chief of Pharmaleaders Group, Narayan Gad, CEO, Formulations of Panacea Biotech answered some of the direct questions which others choose to ignore as he said on a question on Panacea’s foray into other markets in the second quarter of the new millennium “Panacea is no exception. Every R&D driven company will aspire to bring new molecules. I would be very happy to see ‘discovered in India’ label on some brands before 2020 !”.. On asked why will he dream to be different in 2020 he said “I dare to dream. However, there will also be a need to dream of innovative ways to fulfil THE dream”. Gad’s tryst with Indian Healthcare Industry is very long as he has seen working with giants like Dr Reddy’s, Wockhardt, Nicholas etc. The notable feature of Gad’s style of leadership is evident from the fact that he speaks his mind & listens to his heart unlike others.

Pharma industry will have to enlist TODAY the unreasonable expectations likely to come up by 2020 and have a plan of action to deal with them. 2) With knowledge and information being available at the click of a button, doctors will have information overload. They would expect pharma companies to customise this information for their specific needs. The rule will be n = 1. We cannot say we have n number of customers. We will have to say, we have n number of information needs to fulfil, where n = 1. 3) In the urban area, the intensity of competition amongst doctors will become very intense, because of density of doctor population in a given geography. Doctors would expect pharma companies to drive footfalls as well as enable them to come up with loyalty programs for patients. He added.
Excerpts from the Interview :

NARAYAN GAD takes the direct questions from Pharmaleaders & answers the same in his own inimitable style. The previous press release headline was the views from Pharmaleaders & the present release deals on the various aspects of the industry’s dynamics answered by Narayan Gad, CEO, Formulations, Panacea Biotech Ltd in response to the questions posed by Pharmaleaders

: Excerpts from the Interview :

PL : Why do you think that 2020 will be different from this decade?
NG : While sitting in 2010 and I visualise 2020, the following images come to my mind;

A) Customers
1) Will move from being demanding to being completely unreasonable (in every other industry, be it industrial products or consumer products, unreasonableness has already begun and doctors as customers of pharma will follow suit.). When I say unreasonable, I am talking about the way it appears to us at that moment. Very soon what was unreasonable becomes a legitimate expectation. Pharma industry will have to enlist TODAY the unreasonable expectations likely to come up by 2020 and have a plan of action to deal with them.

2) With knowledge and information being available at the click of a button, doctors will have information overload. They would expect pharma companies to customise this information for their specific needs. The rule will be n = 1. We cannot say we have n number of customers. We will have to say, we have n number of information needs to fulfil, where n = 1.

3) In the urban area, the intensity of competition amongst doctors will become very intense, because of density of doctor population in a given geography. Doctors would expect pharma companies to drive footfalls as well as enable them to come up with loyalty programs for patients.
PL : Will you change your strategy of appeasement to straightforward Domestic Marketing?

NG : Much as we may wish, financial appeasement will never go. Doctors are increasingly becoming aware of their POWER in creating brands. Hence, would become increasingly demanding. If ‘all’ companies do financial appeasement, the competitive advantage to company will be lost ! Competitive advantage will come from combining financial appeasement with appeasement through ENABLING a doctor to survive (competition), grow and build a loyal patient base.

PL : Do you think e-marketing ( e-detailing) will be the order of the day?

NG : Nobody can undermine the importance of digital marketing. It will only grow in its importance. However, no medium, digital or otherwise will replace human contact. So e-detailing / digital marketing will be an additional medium which companies will be forced to use.
PL : Will Panacea bring some new Molecules in the next decade

NG : Panacea is no exception. Every R&D driven company will aspire to bring new molecules. I would be very happy to see ‘discovered in India’ label on some brands before 2020 !

PL : Do you buy this idea that smaller companies will be bought by the big giants?

NG : I don’t see much happening on buyouts till 2015. Reason being aspiration of prospective sellers has gone sky high with the valuation given by Diachi and Abbott. However, once we return to reasonable valuations, there will definitely be such activity between 2015 and 2020.

The prospective sellers will be :

a) Companies which find it difficult to manage ‘size’.
b) Companies where next gen may not be adequate.

PL : Will you dare to dream or dream to dare?

NG : Obviously dare to dream. However, there will also be a need to dream of innovative ways to fulfil THE dream.

PL : What are the challenges you are facing in fiercely competitive domestic market?

NG : Fragmented market shares, weak brand loyalties are the challenges. And they will not go away by wishful thinking. They are here to stay.
PL: What are the opportunities?

NG : With pipeline of new products drying up, product life cycles will become longer. This provides the opportunity to invest in brand building.
PL : There appears to be a consensus that the commercial model for biopharmaceuticals has to adapt to stark changes in the external environment. Do you agree? What are the new benchmarks for superior performance?
NG : I guess the reference is to Biosimilars. It’s a nascent business. The critical success factors will emerge in the next few years.
PL : Isn’t the very definition of “customer” changing into something much broader?
NG :The word customer will have change to stakeholder. And in our business that would include doctors, patients, patient counselors and deliverers to patients.
PL : What does this mean for the ability of companies to compete successfully for market share?
NG : Each company has to understand the relative importance of each stakeholder relevant to that company. Accordingly, spends have to be organized. Managing competition is all about managing spends to ensure return on every buck spent.