The factors influencing the state of Poland’s pharmaceutical industry were investigated using the PESTEL tool, which considers political, economic, social, technological, ecological and legal factors. The findings of the author’s research indicate that the greatest impact on the development of the pharmaceutical sector is currently being made by changes in law and technology (Table 1), and this is likely to remain the case for the near future. The regulatory framework applies to all actors and processes involved in the Polish pharmaceutical sector’s supply chain. Given the health hazards that its products may pose, it comes as a matter of fact that the industry is commonly regulated, with stringent and detailed rules imposed at all stages—from production to delivery to end consumers (patients). Industry-specific rules regulate not only the production and sales of drugs, but of dietary supplements and cosmetics as well. Further, there are by-laws that can also immediately affect the market pertaining to the circulation of such products, involving the POM reimbursement regime or permits issued to specific businesses or types of businesses. Poland’s pharmaceutical sector is essentially governed by the Act of September 6, 2001, Pharmaceutical Law (further in this chapter referred to as “UPF”) (Journal of Laws, 2008, No. 45, item 271, as later amended). The law lays down the following: rules and procedures for the sale of medicinal products, regulations for the conduct of clinical research and the making of medicinal products, requirements to be met by pharmacies, pharmaceutical wholesalers, and non-pharmacy channels (outlets), organization of the system for control and assurance of medical product safety, terms of reference for Pharmaceutical Inspections, standards for the advertising of medicinal products. At the same time, national legislation governing the pharmaceutical sector must be regularly reviewed and amended for compliance with EU regulations. The blend of EU regulatory influence, the goals of government social policy, and the recurrent government budget process make the sector extremely vulnerable to legislative changes that can have an immediate impact on its profitability as a whole or at least of some of its segments. The detailed requirements to be met in running a pharmacy business are set out in the Regulation by the Minister of Health of September 30, 2002. Polish, as well European, legislation also addresses a very broad range of aspects involved in wholesaling, specifying the detailed responsibilities of a pharmaceutical wholesaler (PwC 2013). The sale and advertising of pharmaceuticals is subject to supervision by the Main Pharmaceutical Inspectorate [Główny Inspektorat Farmaceutyczny—GIF]. At the same time, a medicine may not be marketed over-the-counter unless permission is granted by the Office for Registration of Medicinal Products, Medical Devices and Biocidal Products [Urząd Rejestracji Produktów Leczniczych, Wyrobów Medycznych i Produktów Biobójczych—URLP]. Other important actors in Poland’s pharmaceutical market include: the Polish Chamber of Physicians and Dentists [Naczelna Izba Lekarska], the Polish Pharmaceutical Chamber [Naczelna Izba Aptekarska], the Polish Chamber of the Pharmaceutical Industry and Medical Products POLFARMED [Polska Izba Przemysłu Farmaceutycznego i Wyrobów Medycznych POLFARMED], and the Polish Association of the Self-Medication Industry [Polskie Stowarzyszenie Producentów Leków Dostępnych bez Recepty—PASMI]. The so called “Reimbursement Law”—the Act of May 12, 2011 on Reimbursement for the Purchase of Medicines, Special Purpose Foods, and Medical Products (Journal of Laws, 2011, No. 122, item 696)—came into force on January 1, 2012. The law introduced new rules for the reimbursement of pharmaceutical purchases, including regulated prices and margins for publicly funded medicines as well as restrictions on pharmacy advertising. The pharmaceutical law does not allow drug manufacturers to target advertisements for prescription-only medicines directly at patients, while it is possible to target these at physicians. Then law became more strict at the beginning of 2012 when a complete ban on advertising by pharmacies came into effect. The issue of Internet advertising for OTC drugs closely parallels that of alcohol advertising. Since the legislation does not address the new online medium directly, there are no explicit guidelines, such as those governing TV or radio commercials. This leaves much room for interpretation. As a result, regulations intended for other media are applied but prove inadequate or unintelligible in the context. Practices are therefore diverse, with each company endeavoring to do online whatever their law departments or firms deem acceptable (Loedl 2015). An area that appears critical to the growth of online pharmacies is legislation on e-health, for example, on electronic prescribing. At the end of 2015, there were ten European countries that had already had some experience with e-prescriptions for reimbursable medicines, but Poland was not among them, thus there was an absence of legislation and links between the health care system and pharmacies. A concern that has just recently afflicted the pharmaceutical market is that of parallel exports—a term denoting uncontrolled flow of pharmaceutical products to countries where they can be sold at a considerably higher price, resulting in a shortage of medicines in Poland. To mitigate the problem, on May 7, 2015 amendments were enacted to the UPF law. The amendments require companies to report their stock levels and sales figures daily, and impose an obligation to inform the pharmaceutical inspection authority of any intent to export pharmaceuticals (UOKIK 2015). In parallel, EU member states are working on regulations to prevent drug forgery, and Poland is not an exception here. Technology advances constitute another major group of factors influencing the leadership development goals examples of the pharmaceutical industry. Advances in genetics, biotechnology, nanotechnology, and other sciences will remain key drivers of growth in the sector. Simultaneously, the Internet revolution has triggered the emergence of e-commerce as a new drug marketing and distribution channel, including access via mobile devices, such as smartphones. In Poland, between 2004 and 2014, the total e-commerce market increased from PLN 2 bn to PLN 29 bn (interaktywnie.com 2015). According to the Centre for Retail Research, in 2015, online sales represented 3.3% of retail sales nationwide. This is still below the average for other European countries, where e-commerce contributes 8.4% of total sales (and at the higher end: 11.6% in Germany and 15.2% in the UK). However, the e-commerce segment of Poland’s market is now catching up very quickly. Since 2010, its growth has run at an impressive two-digit rate, and is commonly believed to have further growth potential. In 2014, Poland was ranked 24th among the 30 European countries covered by the PI Research (2016) in terms of the expansion of e-commerce, primarily because most Polish customers continued to refrain from buying online. In a survey focused on the e-commerce sector and conducted at the request of the Chamber of Digital Economy [Izba Gospodarki Elektronicznej] only 55% of Polish Internet users admitted to having hands-on experience of online purchases. In terms of private sector digital services, digital competences of staff, and the quality of e-government, Poland stands as low as 28th place in the PI ranking. At the same time, it is one of the fastest countries to catch up across Europe (PI Research 2016). The key economic factors are the following: GDP growth rate, inflation rate, average personal income, policy toward parallel trade, drug prices, and drug reimbursement rate. Prior to 2010, the pharmaceutical sector showed growth dynamics exceeding the annual GDP growth rate (Fig. 1). A decline in the sector’s financial indicators was observed in 2011–2012 and was associated with changes in the drug reimbursement regime. Its condition improved in 2013–2015. A social factors on which the development of the pharmaceutical sector is contingent are demographics, including population breakdown by sex, age, residence, as well as average life expectancy. In the future, Poland is going to increasingly see the overlapping of two trends: the average lifespan becoming longer on the one hand, and the ageing of society on the other. Compared to mid-twentieth century, the average life expectancy in Poland is 17–20 years longer, depending on sex, approximately 74 for men and 82 for women. Furthermore, elderly persons represent a larger proportion of society each year. It is estimated that, in 2035, 23% of Polish people will be above 65 years. In 2050, every third Pole will be above that age. Surveys performed by GUS show that each year is marked with an increase in the number of patients suffering from chronic diseases. The prevalence of hypertension grows at a rate of 2%, and of diabetes—at 2.5% annually. Cardiovascular diseases account for nearly 27% of deaths below the age of 65 and for 24% of work disabilities. These factors obviously incur significant medical, social, and economic costs. More than 76% of Polish people use drugs and dietary supplements, of which 40% take painkillers; nearly 40% of the adult population do not use the services of physicians, half of whom indicate time constraints as the main reason, while the other half—long waiting-times for healthcare services. This means that this social group purchases OTC medicines. Opineo.pl has established that Poles take four pills per day on average. The French are the only nation across Europe to surpass Poles in their dependence on medicines. Among political factors, it is the incumbent government’s decisions that make the greatest impact on the pharmaceutical industry, such as those on the future evolution trajectory of the healthcare system, including the public health insurance fund (NFZ). In addition, the Polish government has to implement regulations defined at the EU level. As with other economic sectors, the pharmaceutical industry must make more effort to conform to natural environment protection regulations and requirements. At the same time, specific weather conditions or changes of seasons tend to have adverse effects on health, causing illnesses and complaints and hence boosting demand for medication. There is also the issue of waste, unused and dumped out-of-date medicines, as well as disposal of pharmaceuticals returned to pharmacies requiring the management of reverse flows.
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If you run with eagles, you get to fly. If you run with dogs, you get fleas. That is, when you spend your time with people who can’t help you grow, you start to think like or get perceived as being that kind of person or company. So, don’t be associated with those people (or businesses).
Be associated with those people who are good examples of thought leadership and can be an inspiration for growth. We’re so focused on quality at Sea Smoke that we don’t want to talk to people who want to visit our winery. We make exceptions for those who know wine—why talk to people who don’t understand wine quality? Sounds harsh! Ego, Generals’ and Presidents’ Four star General Douglas MacArthur, the supreme allied commander in the Pacific during the WWII, graduated first in his class from West Point. The supreme Allied commander in Europe was Dwight David Eisenhower. He was 61st in his class at West Point twelve years later. Harry S. Truman fired MacArthur. Eisenhower went on to become President. The difference? Eisenhower had no ego, and MacArthur had the largest ego on the planet. MacArthur had to have special cigars, special whiskey. Eisenhower said, “Don’t bring me anything.” When he defeated Hirohito in Tokyo in 1945, MacArthur took over the Imperial Hotel so he could look into the Emperor’s headquarters across the river and dominate him, intimidate him. He couldn’t get his ego out of it. He took from the people. So MacArthur was fired by Truman. Four years later, Eisenhower became President of the United States. All because of the difference between the two of them. Even though Eisenhower was in the middle of his class at West Point and MacArthur was one of the highest scoring leaders in the history of the school. MacArthur had the ego, Eisenhower did not. The problem is the ego. Why are certain presidents such a disaster? Because their egos are bigger than they are. They fail because their ego is disproportionate to their skill set. The rarest commodity on the planet is “leadership without ego.” Equality No one is special; everyone is special. You really need to understand that everybody is the same in a business culture. Everybody, as a human being, has the same value. Where people go awry is when they think that because they’re more educated or more talented that they’re more special. They may have better upbringing or they have assets, something that makes them slightly special. And as soon as they get that inkling that they’re special, they’re not. In order to collaborate and make decisions together as a team, we need to be on an equal footing with each other. That’s the only way everyone will trust one another. Excuses Bill Harrah said, “There’s room at the top of every market.” How do we fight to get at the top of the market? Elevate the quality. I had enough resources that when employees needed something I would never second guess their decision. If I made the decision for them, I gave them the excuse to be used against me for the rest of their life that “I couldn’t do it right because he did this.” They now own the problem—not me— directly. The good news is there’s never any compromise in quality. The bad news is: there are now no excuses. I took away their excuse by giving them all of the tools they need. Evil I see so many people who, when they were given the opportunity to receive power, they took it. They have a secretary who gets their dry cleaning. They decide they’re going to have a special office. They’re going to have a special desk. They want to have a company car. That’s the road to evil. When you apply a different standard to yourself from the people you’re leading, then you are no longer a leader. You just gave up your chance at respect. You need to understand that you are no different from the people you lead. You have the same value in the organization; you just have a different assignment. Exit to Start The place to start your business plan is with the “exit” part of the plan (how to get out if you are successful). I always kept in mind: “The time to sell is when someone wants to buy” Fun Killers: Vice-Presidents VPs and other senior executives can be an obstacle to a great culture. This level of management is rarely really needed (Lee Iacocca at Chrysler lowered his salary to $1/year and fired every senior VP to garner union support to turn the company around) and they think they can “manage” morale. In reality, it is the CEO who has the final decision that controls morale (see Real Job of the CEO) but the VPs can take fun from the culture when they think that they have the power of leadership but really don’t. It adds a layer of management that insulates the person who can improve morale. Generalities Be vigilant against generalities. If somebody says, “I’ll have it done next week,” ask which day in the following week. When they give you the day, ask if that will be morning or afternoon. If they say afternoon, ask what hour. Get the commitment, make them own it. And then, because people always think they are better than they are, give them more time than they ask for. You want to create success, not failure. At IGT, I would hire young engineers and give them a simple first project so they could first taste success; they would see tough jobs soon enough. When doing a performance review for a person who reports to you, avoid generalities. The worst thing you can say is “you are a good employee” (a generality). Be specific: “Your presentation was good, especially the budget page. The breakdown and format are clear.” When they hear you say that they are a good employee, they think that you are not paying attention to them, you are not helping them grow. They know they made mistakes. You did not notice and help them correct them. So you must not be watching. Be specific. As human beings we’re always trying to do a better job communicating, so it’s little surprise that we want our machines to do the same. In many ways machines do a much better job communicating with each other than we humans do. Getting two machines to communicate is fairly easy, as demonstrated billions of times a day across the Internet. You may experience packet loss from time to time, but data typically transfers without a hitch. Human beings on the other hand are always struggling to reach a greater understanding. If you can get someone to totally understand ten percent of what you’re saying, you’re a master communicator. The main challenge is that we can't communicate with machines in the same way they communicate with one another. Thankfully we are not like Neo in the Matrix; we don't have a port in the back of our heads that connects us directly to the network. For machines and humans to communicate, the machine must do a better job of existing in our world.
To enable machines to converse with humans, AI programs use natural language processing (NLP). If you’ve met Siri, Alexa or Cortana or used speech-to-text on your smartphone, you’ve already experienced NLP. As you speak, the computer identifies the words and phrases and appears to understand what you said. Natural language processing in digital media strategy makes the interaction much more human. For example, if you need a waffle recipe, you might google “best waffle recipe,” but with NLP, you could say something like “I'm cooking breakfast. Can you give me a good recipe for those big fluffy waffles like the waffles they serve at the Breakfast Nook?" Creating an expert system that could anticipate this question, figure out what the person wanted and deliver one or more recipes for great Belgian waffles would be impossible. An artificial neural network, however, could handle the job. It might pick out a few key words, such as “breakfast,” “recipe,” and “waffles,” and give you a recipe for waffles. Or it might focus on “Breakfast Nook” and rattle off a list of local restaurants. Or it might key in on “recipe” and “big fluffy waffle” and figure out that you wanted a recipe for Belgian waffles. It might even ask for clarification and respond with a question like “Would you like me to search for a Belgian waffle recipe?” If the neural network delivered the wrong answer, the person could simply say, “No, I need a recipe for Belgian waffles,” and the neural network would learn that the next time the two of you had a similar conversation, it should retrieve a recipe for Belgian waffles, and not a list of local restaurants. Many organizations interested in artificial intelligence also offer free communication services, and they use machine language to analyze conversations. They aren’t interested so much in analyzing what you say, but how you say it. Google has access to anonymized versions of your email and voicemail. Apple offers iMessage. Microsoft has Skype. These services give their AI programs a treasure trove of different types of human communications. They can use machine learning to identify patterns and draw conclusions about how humans use their natural language. Natural language processing isn't just about understanding the words; it's also about understanding the context and meaning. A few years ago one of the top Google searches was, "What is love?" At the time, when you plugged that question into Google you would get a long list of results. Most of them were about pairing rituals and the importance of feeling connected. This was the kind of response you'd expect from a network that's just matching keywords across a database. Natural language processing gives machines the ability to better understand the larger world. Now if you ask Siri or Alexa “What is love?” it understands that you're probably more interested in romantic notions of love, so you’re likely to get a range of more poetic and philosophical answers. And as you converse about love with these artificial neural networks, they’ll begin to learn more about what you really want to know. The Internet of Things (IoT) The Internet of Things (IoT) refers to the large and growing collection of everyday objects that connect to the Internet and to one another. These devices include smart thermostats that learn your daily habits and adjust automatically to keep you comfortable, smart watches that can track your daily activity and let you know when you’re meeting your fitness goals and smart refrigerators that can order groceries when supplies are running low. Some devices can even monitor your health and let you know when you need to see your doctor. Certain devices can also communicate with one other. For example, your smart watch can tell your smart locks to unlock the doors when you approach your home or turn on music when you enter your living room. As you can imagine, these smart devices generate massive amounts of data, and this data can be very valuable. As a result, many IoT companies invest heavily in AI programs. With AI, organizations can analyze this data to identify patterns that enable the organizations to react quickly to problems or to take advantage of emerging opportunities. An IoT car coupled with AI could monitor the car’s operation and identify patterns that indicate when the car needs to be taken in for service. You can now purchase an electrocardiogram (EKG) sensor that is nearly as accurate as the ones in your doctor's office. These devices can check your heart's electrical activity. They’re inexpensive enough that many companies are embedding them into smartphone cases and watches. Using AI, these companies can identify patterns in the data using unsupervised machine learning on a neural network. The network can review the EKG data of thousands or even millions of different participants to find patterns that might accurately predict if someone has an impending health issue. With these sensors, AI may not yet be able to discover breakthrough preventive measures or cures for serious illnesses, but they can identify patterns that provide doctors with additional insights to help them come up with preventive measures and cures. These devices can also notify you when your data matches an alarming pattern, so you know to check in with your doctor before your health condition becomes more serious. Remember that neural networks operate in a black box. No one except maybe the network really knows how the machine identifies patterns. We can create intelligent machines, but we still don't completely understand how they “think.” |