it's about time: first word pharma outlook 2013
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Big Pharma is rapidly expanding the use of digital marketing channels. What is driving this trend and what are the implications for traditional promotion? Several factors combined help understand the current innovative environment. This article will focus on market forces, technology and industry culture.TRANSCRIPT
40 All Contents Copyright © 2013 Doctor’s Guide Publishing Limited. All Rights Reserved
Pharma Outlook Q1 2013
It’s about timeBig Pharma is rapidly expanding the use of digital marketing channels. What is driving this trend and what are the implications for traditional promotion? Several factors combined help understand the current innovative environment. This article will focus on market forces, technology and industry culture.
Between 2011 and 2016, the global pharmaceutical industry is at risk of losing as much as $250 billion in sales from patent expirations. As if the threat of looming revenue reductions were not enough, the storm is made perfect as regulators and payers alike take a near zero tolerance stance towards the health outcomes and economic benefits of new molecular entities. Investors beware.
The era of blockbuster drugs is being written about as history, and with it big spending on sales force expansion and lavish marketing budgets. Data from market research agency Cegedim Strategic Data (CSD) show dramatic drops in sales force size in the major markets: Since 2010, sales rep levels
are down by 16 percent in the US and 13 percent in the EU 5 countries (Italy, France, Germany, Spain and the UK). Despite this, pharma marketing appears to be entering a new period of development and creativity with an emphasis on multichannel marketing and digital promotion. This isn’t merely an assumption based on tech industry hype and over eager Twitter “evangelists” willing it to happen. Rather, the evidence is in the numbers: CSD audits of industry promotional channels reveal a dramatic increase in digital channel spending, with the US seeing investment jump nearly 150 percent since 2010. The EU 5 was up more than 90 percent over the same period.
Source: Cegedim Strategic Data
Total FTEs% Change
Total FTEs% Change
79 402 73 764
- 7.1 %
66 713
- 9.6 %
86 327 84 658- 1.9 %
74 779- 11.7 %
MAT Q42010
MAT Q42011
MAT Q42012
USA Europe Top 5
MAT Q42010
MAT Q42011
MAT Q42012
Figure 1: Sales force rep equivalents (FTE) MAT Q4 2010 - MAT Q4 2012
Christopher Wooden ([email protected]) Vice President, Global Promotion Audits, Cegedim Strategic Data (www.cegedimstrategic data.com)
41 All Contents Copyright © 2013 Doctor’s Guide Publishing Limited. All Rights Reserved
Pharma Outlook Q1 2013
Market forces: Death of the sales force – greatly exaggerated.For good or ill, blockbuster drugs have defined much of the conversation around pharma marketing. And early on, much of the talk was about sales reps. By the late 90’s, the industry had entered a “rep race” as multi-billion dollar sales were at stake with each new drug approval. Mergers and acquisitions helped to consolidate portfolios, but improved sales force efficiencies were elusive and an exception. In the context of high sales growth and profits, there was little incentive to truly innovate marketing and there were few visionaries willing to challenge the status quo. The situation was clearly not sustainable, but change was going to be painful. More doctors were becoming “no see” as the marketing of “me too” drugs appeared to waste their valuable time.
And yet, only when product pipelines began to falter did initiatives to redefine the “share of voice” marketing model begin in earnest. Inevitably, cuts in sales forces started as the edge of the patent cliff came into view. Contrary to expectations, this period did not lead to the quick adoption of online, self-directed detailing or other cost efficient “multichannel” innovations. Furthermore, the sales force –albeit smaller – and the share of voice model remained intact, but now with a heavier emphasis on call value than ever before.
Nevertheless, the present and rapid shift to digital marketing does not mean replacing sales reps with “robots.” Instead it is a question of augmenting the traditional sales force with a richer, integrated “customer experience” Source: Cegedim Strategic Data
% of TotalSpending
% Change
0.2 %
Tota
l Spe
ndin
g ($
m)
0.3 %
+ 37.6 %
e-Meetings + 32.1%
e-Mailing + 43.1%
e-Detailing + 38.8%
% Change2012/2011
0.5 %
+ 38.9 %
MAT Q42010
MAT Q42011
MAT Q42012
$47 m $65 m $90 m
7
8
14
11
20
58
42
7
33
Source: Cegedim Strategic Data
% of TotalSpending
% Change
1.2 %
Tota
l Spe
ndin
g ($
m)
1.8 %
+ 51.4 %
e-Meetings + 14.0%
e-Mailing + 67.5%
e-Detailing + 73.9%
% Change2012/2011
3.2 %
+ 64.8 %
MAT Q42010
MAT Q42011
MAT Q42012
$353 m $534 m $879 m
368
452
59
212
270
52
140
156
57
Figure 3: E-Promotion – Europe top 5 total spending & trends on 3 years
Figure 2: E-Promotion – USA total spending & trends on 3 years
42 All Contents Copyright © 2013 Doctor’s Guide Publishing Limited. All Rights Reserved
Pharma Outlook Q1 2013
where a cohesive multichannel strategy assures that healthcare providers (HCPs) can easily obtain the information they need. But to accomplish this, the industry has had to wait for…
…Technology (and its users) to catch up
In the early 2000s as broadband became more widely available and HCPs – like everyone else – started using the Internet to find information, there were predictions that online based platforms would inevitably allow for significant rationalisation of sales forces. Expectations were high as marketing teams offered “content rich” websites with attractive “multimedia” offerings. Some pharma companies made progress and new, improved value was found in this area for CME, corporate PR and investor relations.
However, until recently, advances in developing a true multichannel offering could not be fully exploited due to several crucial and related factors: So called “Web 2.0,” or the non-static web has developed sporadically. Mobile devices, with enough speed and power could only leverage these advances in the past few years. The generation of HCPs (and pharma marketing professionals) that are entirely comfortable and conversant with these new tools and possibilities are only now in a position to adopt innovative ways of interacting.
Culture: Is it “about time?” Few would argue that the
pharmaceutical industry has built a reputation for the innovative use of the
internet in communicating its strengths, let alone as a PR or marketing tool. Rather, a conservative approach was the norm as communication continued to focus on HCPs who relied on sales reps as their main point of contact with the industry. As technology has opened up a conversation with all consumers, Big Pharma has in large part shied away in an attempt to avoid false steps, potential bad press and regulatory scrutiny.
As the data reveal however, a shift has occurred and communication is no longer a one way “pitch” - but rather HCPs are being invited to not only access the information they need anywhere, anyhow, anytime, but also to share their day-to-day experience among many stakeholders. Online physician communities, blogs, mobile apps and even general social media are now part of the user experience for many, if not all HCPs.
Truly innovative companies are now using multichannel strategies to leverage this on-going conversation and better position the value of their products and services. This is all the more essential as the “blockbuster” mentality gives way to “personalised medicine” and real-world data becomes as important - if not more so - than clinical data. Far from replacing reps, the industry is now enabling sales reps to offer much more than ever before. Indeed, the convergence of challenging market forces, evolving technology and a change in attitudes and culture has only reinforced the fact that building a strong value-based relationship with HCPs remains the key to success. It’s about time.