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Marketing pharmaceuticals

Hugh Wilson and Javier Marcos Warc Best Practice December 2011

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Marketing pharmaceuticals Hugh Wilson and Javier Marcos Warc Best Practice December 2011

Marketing pharmaceuticals
Hugh Wilson and Javier Marcos Cranfield School of Management This month, Professor Hugh Wilson and Dr Javier Marcos of Cranfield School of Management describe how pharmaceutical companies can rethink their customer relationships and renew their promotion efforts.

The biopharmaceutical industry spends almost twice as much on promotion as on research and development - more than $ 12 billion a year in the US alone. How can these vast budgets be spent for maximum effect? You would hope for some pretty good evidence on this question, given the money at stake, not to mention the well-being of all of us. Yet the industry is pretty poor at evaluating promotional effectiveness. There is, however, a modicum of decent, peer-reviewed evidence on the efficacy of different promotional instruments in this sector, which we summarise here. SWITCH TO CONSULTATIVE SELLING What's known: Sales force visits to physicians, nurse prescribers and so on have, until recently, been the dominant tool in the commercial director's armoury. The good news is that they do positively impact on market share. The bad news is that their effect is pretty small. So the sales force may even cost more than it generates. As one might expect, rep visits are more effective if the product has some genuine advantage in efficacy or safety, if the materials are good, and if the therapeutic area is one where physicians are less well informed already, such as skin diseases. In many companies, though, reps still tend to visit large prescribers, irrespective of whether they are the physicians who respond positively to being visited. Implications: The days of the travelling rep opening their laptop to deliver a canned presentation are long gone in every other sector, and only lasted as long as they did in Pharmaceuticals because firms could be as inefficient as they liked in sales and
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marketing and still turn a profit. Sales forces are needed if and only if there is a significant problem to solve through detailed, face-to-face interaction. Nowadays, we have better ways of getting information than listening to a speech. The industry term detailingfor sales visits is a giveaway of the underlying attitude which remains far too common. Smaller, professionalised key account teams are needed to consult on service design issues in which they build genuine, validated expertise as prescription policy is centralised. WORK WITH CONSUMERS TO GIVE THEM THE BENEFITS THEY SEEK What's known: Direct-to-consumer advertising is less effective, on average, than promotion to physicians in influencing market share. However, unlike physician-targeted activities, it does act to increase the market size as it drives patients to see their doctor. Implications: In some therapy areas and countries, direct-to-consumer advertising isn't an option; in others, such as some over-the-counter drugs, it's the only game in town. So pharmaceutical marketers need to develop traditional skills in consumer communications planning and evaluation. But far more effort needs to be expended on stimulating product usage. Frequent reminder messages can provably help consumers to get the benefits they seek, whether delivered by direct mail, telephone calls, or technology. Pharmaceutical companies can look to maximise value-in-use - and create new revenue streams - by developing the CRM expertise that this requires. Another creative way of helping consumers, where it is allowed, is enabling peer-to-peer support networks using social media. HARNESS THE NETWORK OF SPECIALIST OPINION LEADERS What's known: Studies of word-of-mouth across sectors consistently find it to be at or near the top of the list of channels influencing purchase. While best evidence in this sector is thin, one study found the effect of opinion leader prescriptions to be 100 times greater than the effect of detailingon prescriptions by regular physicians. Implications: In the meantime, while more data is desperately needed, investing in relationships with key opinion leaders makes eminent sense. It is worth remembering both clinical leaders, who generally have a track record of research and are reputable within a therapeutic area, and market leaders, who are prominent practitioners in peer networks who build a reputation through patient satisfaction and practice management. A common approach is to sponsor opinion leaders to speak at seminars: this provably affects attitudes and behaviour, though the long-term impact hasn't been tracked. Involving specialists in clinical trials, as one might expect, increases their use of the trial sponsor's drugs. DON'T FORGET JOURNAL ADVERTISING What's known: Advertising in practitioner journals has a positive effect on market share. While this effect is lower than that of sales visits, it's nonetheless greater, on average, than the impact of direct-to-consumer advertising. As with sales visits, its effectiveness varies by sector, with skin diseases best and inflammations worst. Implications: Journal advertising and its variants should stay as part of the mix. A touch of science, though, wouldn't go amiss in evaluating its effectiveness.
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ENHANCE LEGITIMACY THROUGH OPENNESS What's known: Life sciences firms tend to brief representatives to present only favourable information about their brand in their detailing calls. This reduces the willingness of hospitals and physicians to see salespeople at all, let alone listen to them. There is some evidence that communicating unfavourable information enhances the salesperson's legitimacy, which may deliver sustained physician access, increased trust, and thereby long-term return on investment. This is consistent with research in other sectors. Implications: Representatives cannot plausibly transition to consultants without a shift in culture towards delivering best practice advice. Other sectors such as IT are showing the way, with firms such as IBM and Xerox acting as valued advisers on the integration of products from multiple providers in solving the customer's problems. This leads to our next issue. EXPLORE NEW CONTRACTING MODELS What's known: Contracting on the basis of solutions rather than products represents a rapidly increasing proportion of business-to-business trade. While this expands the profit pool within which providers can play, as manufacture becomes commoditised, not all players gain in these business model shifts. Innovators or early followers generally do best. Implications: We can expect much experimentation on the basis of contracting over the next few years. For example, firms have traditionally charged simply on unit sales. Service contracts might become common to maximise outcomes for the client, such as patient compliance, reduced treatment service costs and patient satisfaction, while negotiating on price on a relational basis. MEASURE OUTCOMES The commercial director of a large European pharmaceutical company recently complained to us that he had no idea what the value of his large sales force was. But when we offered to help by setting up a randomised trial in which some GP practices would not be visited for a year, he declined on the grounds that if it transpired that the sales team generated less incremental revenue than they cost, he might lose his power base. Pharmaceutical firms are strangely schizophrenic. In R&D, they represent the leading edge of science, not just in medicine but also in statistical evaluation. And yet in marketing, considerable sums are spent on a whim. If pharmaceutical marketing was a drug, it wouldnt stand a chance of getting a licence. And the life sciences need more life as well as more science. If evaluating the impact of marketing on revenue is patchy, evaluating its impact on patient welfare is almost non-existent. Doubtless, sometimes it helps patient outcomes, but perhaps sometimes it hinders them. If a pharma advertises a patient support group for incontinence, thereby indirectly advertising their brand, or helps a prostate cancer group to lobby for their agenda, are they helping patients to take professional advice and comply with it? Or are they causing unnecessary and expensive switching from generics as fired-up patients lobby their doctor? Or encouraging counterproductive screening programmes? Crucially, no-one is checking. Equally, outcomes for physicians are ignored. Some have forgotten that marketing, too, needs an active ingredient; something in the conversation with the customer that actually helps them to solve their problems. Otherwise, why would the customer
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want to talk again? Talk to physicians about their day and they are at least as likely to mention throughput rates or frustrations with patients who find it difficult to lose weight as they are to talk about drug limitations. Talk to some pharma and you hear about campaigns in which the objective is not to listen but to bombard. Marketing is a conversation. But all too often, one party isnt listening. To be fair, we find some pockets of excellent marketing practice. And there is no doubt that pharmaceutical marketing at its best can act as a substantial force for good. But consistent improvements are likely to be driven by the customer through purchasing practices and regulation. When even the representatives physical attractiveness provably influences physicians, a good start would be for doctors to admit that they, too, are influenced by accepting a sponsors offer of help with conference attendance or having a quick cup of tea with a rep. Pressures on health budgets are beginning to remove the vast inefficiencies of todays pharma marketing model. The challenge for companies is whether they shrink to commodity producers, or grow to service providers who are valued and trusted partners.

Further reading on warc.com The Informative and Persuasive Components of Pharmaceutical Promotion An Argument for Why the Two Can Coexist, Rod Michel, Serena Saunders (2009) International Journal of Advertising, Vol. 28, No. 2, 2009, pp. 313-349 Pharmaceutical Advertising: Communicating Effectively with Doctors and Consumers, Admap, February 2004, Issue 447, pp. 13-14 Other recommended reading Generalisations on the Effectiveness of Pharmaceutical Promotional Expenditures, International Journal of Research in Marketing, 25, 234- 246. S Kremer, T Bijmolt, P Leeflang, and J Wieringa 2008 Marketing of the Life Sciences: A New Framework and Research Agenda for a Nascent Field, S Stremersch and W van Dyck, 2009, Journal of Marketing, 73(4), 4-30

ABOUT THE AUTHORS Prof Hugh Wilson is Professor of Strategic Marketing at Cranfield School of Management. hugh.wilson@cranfield.ac.uk Dr Javier Marcos-Cuevas is a lecturer in sales performance at Cranfield School of Management. javier.marcos@cranfield.ac.uk

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