Right Way (eBook)

Why Should You Read My Book and Rely on My Experience?

You may be wondering to yourself: “Why would I want to listen to his experience?” You may be wondering what credentials I have that would inspire you to sit up and listen.

Let me illustrate this for you.

I inherited Africa as an export territory that had failed to deliver for three successive years after the merger of Astra with Zeneca. The merger demanded greater velocity of operational success, an ambition that had to be delivered across business units and their functions. The business was no longer tolerant of “we try to do what we can in Africa”, which was a synonym for underperformance and inability to deliver the numbers.

The brief was to assess this distributor business across 18 markets of Anglophone (English-speaking) Sub-Saharan Africa (SSA) and recommend what needed to be done, to invest for growth given that the Board passionately believed there were opportunities that we were not leveraging. I was given six months to make those recommendations.

Not surprisingly, after visiting all my key markets and spending a week in each one, my recommendation was to invest for growth.

Why?

Because what I saw were largely situations that I had the influence and power to change, namely:

• The choice and terms of commercial agreements were poorly negotiated.

• Marketing was anorexic.

• New products had failed to make an impact and their launches and post-launch activities were poor with poor sales results after significant investments.

• There was too much reliance on the business being in the hands of distributors (a bad mistake).

• The distributors had had it too good for too long.

• Distributors had no accountability for delivery.

• Distributors would continually cite that our prices were too high. Or they would say the competitors had been stronger influencers on prescribers with greater marketing spend and they had more reps, demanding that I should spend even more money on a business that was not meeting budgets!

• Distributors blamed the poor results on the company, never on the distributor.

• Performance management and accountability were absent.

• Perversely, staff received year-on-year pay raises and bonus payments for not delivering budgets!

Does this resonate with you?

Well, take consolation. You are not alone. There are more companies in this situation than you can imagine. But very few have turned it around. I am going to show you in this book how you can do that and turn it around.

Looking at the portfolio of products registered in my markets, the product mix was poor. There was too much business in old mature products. This exposed a major weakness. These mature brands were declining in worldwide volumes. This meant their cost-of-goods (COGs) – what it costs to make them – was rising year-on-year while global volumes were decreasing, which overshadowed any growth in Africa’s volumes for these mature brands. This had driven the margins lower and lower. Compensatory price rises were out of the question when the prices were already considered too high for most patients. The business was suffering from a downward pressure on gross margins.

In any R&D innovator company, the pricing of the products, reflecting the development costs and risks, meant that the prices were only affordable to a narrow group of patients. In my case, this meant no more than 10% of the population in each country, and for some therapy areas, such as cancer and oncology, probably 3-5% of the population. I found that the business had been positioned as trying to be all things to all people. By this, I mean distributors wanted to operate in the high-volume low-margin segment at the base-of-the-pyramid population (the poor and vulnerable populations) as well as the wealthy middle classes who could pay more and wanted to pay more for reliable European-manufactured brands to avoid the risk of fakes and counterfeits that are prevalent across distributor and emerging markets and African countries.

Penetration into the base of the pyramid population was ridiculously small.

My personal belief is that no company can straddle two stools like this – being positioned for the poor people who drive low prices for access and simultaneously positioned as a premium price company for the wealthier middle classes.

Indeed, some company seniors straddle these two stools as corporate policy in Africa. I am unconvinced by the rationale of such seniors. It will only be a matter of time (in my view) before a change in senior leadership will bring a profound change of model to become either access-driven with low prices, as a philanthropic not-for-profit model, or a model based on premium pricing for optimising profit through a much smaller, wealthier segment of the population.

As if these situations were not enough to raise the hairs on the back of my neck, there was also an absence of any sound control mechanisms and business processes.

When I visualised what I saw in those visits to each of my major markets, the analogy appeared of a pilot getting into a plane with a throttle and stick but no gauges or dials or instruments! Some of the windows were blacked out, obscuring the pilot’s vision from the cockpit!

The pilot was flying by sight at an altitude where this was simply not possible as if he were flying the aeroplane blind from several thousand miles away from a glorious office block.

For so many companies, this is how they run Africa – at arm’s length from a comfortable office chair in the UK or Dubai or Turkey or South Africa, and some are even based in Singapore!

I assessed that the business I had inherited had been on its deathbed for the previous three years. However, the sickness was not terminal, but recoverable. A dramatic recovery and turn-around strategy would be required, and it needed to focus not on one area but several areas simultaneously.

These areas of focus included:

• New commercial deals.

• Repositioning the business to focus on the wealthy middle classes who can afford premium high-quality European manufactured products instead of pricing them down to an incredibly low base-of-pyramid population price. I honestly believe that you cannot ride two horses in this business. You need to be clear and focused. Either go for the wealthy population or go for the cheap pricing for the poor populace model. But you cannot target both. Having a foot in two camps is not a strategy. It is indecision. And indecision claims seniors’ lives in this game – the lives of the very folk who many argue are paid to make good decisions!

I describe such seniors as:

“They used to be indecisive, but now they are not so sure!”

• Tighter controls and adoption of sound prospective business planning processes.

• Training in skills. This is a vital investment so long as it is done well. Otherwise, it is an absolute waste of money. I had been a Sales Training Manager at Zeneca UK before the merger with Astra, so I knew I could design the best, most productive training and development interventions that could create a step-change in productivity and results. I knew behavioural-based training very well over the often ‘death by PowerPoint®’ training provided by providers across Africa that did nothing to change behaviours and change the skill levels of the audience.

• Restructuring the sales teams and field forces on product mix and customer segments. The focus on the portfolio was ill-thought-out and needed dramatic restructuring and realignment.

• Creating a laser-sharp focus on planning and preparing the markets for launching new higher-margin (more profitable) products. We needed to change the shape of the portfolio and increase the percentage of business coming from the newer (high-margin) brands.

• Implementing financial and activity targets on a monthly and quarterly basis underpinned by high accountability through rigorous target setting and the necessary business review processes.

The investment paid off. Sales were transformed.

I delivered stretching P&L targets year-on-year for seven tough demanding years for an equally tough and demanding senior executive boss with high double-digit growth ahead of budget year-on-year!!

Allow me to share some figures which demonstrate why I am qualified to author this book and why readers should take heed and learn from me.

My 5-year Compound Annual Growth Rate (CAGR) at Constant Exchange Rates (CER) for sales was 18% per annum versus a Budget of 11%. At that time European markets for the pharmaceutical industry were growing at low single-digit rates as was North American (2-4%). Japan had negative growth. The MDs of many pharmaceutical companies in Japan could grow volume by low double digits but show only low single-digit value growth!

My Profit CAGR growth was 35% per annum versus a budget of 17%.

My Sales CAGR growth was 18% per annum versus a budget of 11%.

My Cost CAGR growth was 3% per annum versus a budget of 7%.

I was growing sales and profit faster than costs! Because the growth in values was at CER, this meant value growth was created through volume growth, not currency exchange rate fluctuations. In other words, for a prescription-based pharmaceuticals business, I was finding new patients for my brands....