Management skills to succeed in pharmaceutical emerging markets (updated to 2022)
As we mentioned in our post 3 years ago, top pharmaceutical companies have been consistently losing market share at the expense of companies from countries under development (SEA, LATAM, MENA, East Europe), despite they have been internally selling significant growth outcomes. The COVID-19 and Ukraine war had even worsened the situation as the business trips have been dramatically reduced and therefore the possibility to interact face to face with local partners. It is true that most companies in Europe and the US have speed up their digitalization process, and the use of Teams or Zoom is nowadays much frequent that it was three years ago, but the interaction with other cultures where physical contact is key, particularly in business, has become much more complicated in the present environment, even when travelling is coming back. Business trips have become more expensive and stressing due to the distancing measurement put in place in many Emerging countries, not to talk about risks to be trapped in other lock down in places like China or Korea, just to mention two of the zero case policy followers. ??
In summary, "developed pharma" grows but less than "emerging pharma".
Market share of Indian, Chinese, Korean, or Taiwanese companies in the developed markets continue growing. At the same time, leaving apart the vaccines business, with a different dynamic, Emerging markets are still been growing at a higher speed than developed ones if we put out exchange currency differences, and market share of local companies or those from other Emerging markets in their own domestic marketplaces is also growing. In summary, "developed pharma" grows but less than "emerging pharma".
There are many reasons that may explain why global pharmaceutical companies are less effective in emerging environments, but the core one is that they are not always prepared to adapt themselves to much less controlled environments.
Big companies, and pharmaceuticals are not an exception, develop a common standard way for controlling and reporting that is normally used in all their affiliates worldwide. Very little adaptations are made in the case of emerging markets. On the contrary, it is expected that the regional management will ensure that everything is done according to these rules coming from headquarters. For this reason, companies use to hire regional/country managers able to fill the gap between affiliate and central offices, but with the accent placed in the last one. At the same time, the company will expect that the regional/country manager fix goals and execute plans to achieve or exceed them. Any other thing will drive to distrust and increase on pressure over the team.
However, when the top executives from headquarters come back from the yearly/ semester trip, managers have to face the everyday work on a very different environment than their peers abroad, in a much less controlled situation, facing lack of reliable information, unexpected changes in regulations affecting the business, natural disasters... etc. In the business as usual, less regulated markets where common rules to limit unethical practices such as bribery are not always followed by all team players can represent a first level challenge that require a very focused and experienced hands-on local team capable to get results without vulnerating the company code.
"One of the most complicated tasks of the regional/country manager in these moments is to protect his team and at the same time make it shine"
These people may or may not fit on the standard project manager from developed markets, with excellent presentation skills and impeccable suits. It might be that he/she is a brilliant professional with local experience and outstanding creativity to find solutions where no other can see, but not in terms of explaining, in a two hours review, all the circumstances to top guys coming once a year. One of the most complicated tasks of the regional/country manager in these moments is to protect his team and at the same time make it shine. Sometimes it is not possible, in particular when forecasts are not aligned with end results. It doesn't matter if such objectives are not met because they were poorly designed, maybe by a former team, because some unexpectable events happened, such as COVID-19, because the information was not accurate, etc. It is team responsibility... and that is all.
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"when the number of uncontrolled parameters increases and available information is not fully reliable, applying such an only-end-results-driven model may not be the best way"
In a developed environment, this approach may work as forces teams to recheck data and estimations before presenting the plans. However, when the number of uncontrolled parameters increases and available information is not fully reliable, applying such an only-end-results-driven model may not be the best way. Making teams responsible for factors that they can't control will only lead to demotivation and a considerable increase in human resources rotation with the consequent disruption of activities and loss of expertise. In many regions, South East Asia in particular, increasing pressure above a certain level can be deeply counterproductive.
However, we must agree that without objectives fixed and a sound follow-up system in place, it would be very difficult to get results. The key success factor is to find the right mix between results-driven approach and understanding scenarios less manageable. Here is where the regional/manager skills will play the core role.
Are requested management and leadership capabilities the same to succeed in emerging markets as they are in developed ones?
This is an open question, but our experience suggests that some skills are common to any other project on modern business structures, in particular leadership capabilities, with special emphasis on outstanding communication skills and of course integrity and managerial attitudes. However, there are some specific elements that, although very useful ever, are a "must be" in emerging environments. These are:
Currently there is a lack of professionals specifically trained for developing successful projects in emerging markets. Some important business schools have detected the need of training programs focused on risk management and highly uncertain scenarios, but it's still 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.
Partly fueled by the pandemic, the world is changing at an unprecedent speed. Managing new tools available may not be enough, now is necessary to master them, especially in the international expansion strategies, where distance and cultural differences are important issues to consider. Some companies learned to work remote, to use VC instead of face-to-face meetings, increased their digital presence and effectiveness, while others were just waiting for things to come back. Obviously, the first group is much more ready than the second, however, these only bring some technical improvement. The most important change has to come from the ability to understand the new markets from a human point of view, and it means to adapt internal sometimes extremely rigid structures and to build bridges. There is an aphorism attributed to Gandhi that says "Life is not about waiting for the storm to pass, but in learning to dance in the rain" that could perfectly be applicable.?