September 20, 2011
The New Reality of Rx Pharma and the Evolving Role of Marketing in our Industry
Can Brand Pharma Overcome a Changing Environment and Generics?
Dan Leger, Senior Director, Marketing, Lundbeck Canada Inc.
Allison Rosenthal, Vice-President Virology, Immunology Business Unit, Bristol-Myers Squibb Canada
Christian Roy, Vice-President Marketing, Primary Care Business Unit, Pfizer Canada
Mark Rus, Business Unit Director, GI / Renal, Shire Canada Inc.
Christian Sauvageau, Vice-President, Customer Innovation Business Unit, Merck Canada
Janice Selemba, Vice-President, Customer Strategies and Solutions, Sanofi-Aventis
Global environment. Rapid change. Private payers. How should Pharma forge ahead? At the first dinner meeting of the 2011-2012 season on Tuesday, September 20th, Joseph Atallah, PMCQ’s Vice President-Education, moderated a panel of esteemed industry leaders as they presented their views on these topics and more. A full house sat in rapt attention during the Lundbeck-sponsored event which focused on how our marketing practices meet, or need to adapt, to some of the major challenges facing our evolving business environment today. Panelists answered several hot topic questions pertinent to the industry.
What is the State of Our Industry’s Current Marketing Practices and its Level of Sophistication?
Over the past 10 to 15 years, Pharma marketing practices have evolved and major strides have been made, and yet, our level of sophistication has much to be desired.
“One of the biggest hurdles in today’s Pharma marketing environment is that the old model was extremely successful,” recalled Christian Roy. With blockbusters seemingly on the wane and the Vioxx withdrawal a big turning point, we have been at a critical juncture for the past 3 - 5 years. “We’re very efficient at using what is available and we use it effectively,” but, as Mr. Roy continued, “Our landscape has changed dramatically and more rapidly than our ability to change as marketers”.
Our industry is often viewed as conservative by insiders. “We’re not risk takers in general. Any company doesn’t want to be the one who does something radical or different,” Alison Rosenthal stated. We would like to be innovative, but often, as Mark Rus pointed out, “There’s an inherent tension between what we want to be and what we’re told we can be.”
So what’s on the horizon? An opportunity lies in marketing the industry and not the brand. To the chagrin of Ms. Rosenthal, Pharma is perceived as profiting from people’s illnesses. “We are vilified,” she commented. “We should be proud of what we do. People are living longer, healthier lives… because of the research we do.”
Mr. Léger agreed, “When are we going to scream from the mountain tops that this industry does more good than any other?” He continued by explaining that we have an amazing value story to tell, one that would go a long way in garnering respect for our industry - as long as average Canadians were made aware of the fact that they are in charge of their own health.
What is the Potential Impact of the Awakening Private Payers on the Pharma Industry?
The Pharma customer is evolving from physician to private payers, other health care professionals and patients. Christian Sauvageau believes this opens a huge door in the private sector, “But we need to sit down, work with them and (show) how to bring value to their equation… (then) they will not hesitate to partner with us… unlike the public sector, which is not open to business.”
This means determining private payer needs which are at near polar opposites to the public payer. Ms. Rosenthal elaborated that the public payer wants predictability, wants to manage a budget and wants to work within a short time frame. In contrast, private payers work within a business model and want to see profits and long term plans. They also think similarly to our industry in terms of preventing disease and what that can mean from an outcome perspective.
With a shrinking and aging workforce, the prevention of chronic diseases, decreased productivity and missed days become increasingly important to the employer. Mr. Rus sees an opportunity here for all of us to look at core workplace productivity metrics in a more consistent manner.
The private payer, however, makes some of us a little skittish and has been compared to a Pandora’s Box. Ms. Rosenthal continues, “What makes me nervous about private payers is if we go down the road of product listing agreements in the same way that it’s become standard practice with many of the provinces in Canada, it completely commoditizes our products.”
How Should We Market Locally in a Global Environment?
The general perspective we have on our industry is that we are unique in Canada, but, in fact we are not. Ms. Rosenthal clarifies, “The same challenges that we’re facing here are the same challenges that everyone is facing.” And because we are similar to Australia and the U.K. “united we can have a louder voice” adds Ms. Selemba.
Commenting on a recent trend, Mr. Sauvageau stated that global customers are no longer sensitive to our message, but to what we deliver. And what do other industries deliver? Mr. Rus commented that “GE uses the Centers of Excellence model, choosing to be excellent in 1 or 2 things as does Google… They still sell and market everything, but they choose to orient themselves around a few things and harmonize early in the process globally to be viewed as the leaders.”
Not surprisingly, Ms. Selemba suggested, “It’s critical to be involved in the discussions (with global) especially on the health economics side because the markets are so different… It’s also critical to be part of the regulatory process.” Essential to success is the answer to her question “What are the societal impacts that we need to measure in order to add value to those customers?”
According to Mr. Léger, “the fundamental problem with how our organizations are run is that we end up getting products way too late in game.” The solution to this problem? Go back to research and tell them what the market needs in sufficient time to make a difference.
Where is the Place of the Patient in all of this?
The end user is Pharma’s ultimate customer. We know that we are different from other industries — there are numerous intermediaries that influence the decision of the end user. Ms. Selemba elaborates, “They target the end user and partner with the intermediaries to affect decisions. If the patient is truly the end user, do we believe that they’re the decision maker? I don’t believe there is alignment on that in the industry.”
Mr. Roy’s belief is allied with Ms. Selemba’s, “Intermediaries won’t go away, but we can’t miss if we keep the end user at the center of what we do.”
Can We Compete with Generics and the Loss of Exclusivity with Blockbusters Going off Patent?
The prospect of generics in competition with our major product markets may leave us wondering if we are truly ready to face blockbusters going off-patent. For those meeting the challenge of generics, one issue to be addressed is the missing link of consumer brand loyalty. Finding the trigger, which is found in every other industry, is key.
Another important issue is “creating value outside of the chemical in a way that the price of the drug is not an attraction”, states Mr. Sauvageau. This creates “value beyond the price of the drug”. He added that we have 15 years before the patent expires to figure out how to deliver outcome and that we should think ‘outside the box’. If we do, we may be able to get more than a 10% share of the billions spent on health by the Canadian government.
With the strength of his convictions, Mr. Roy stated, “We’ve lost that (generics) battle a long time ago. We need to move on…Generics at 25% are here to stay… It’s a commodity market and it’s not going to change.” Continuing, he threw out a provocative statement, “I would much prefer to see that after patent expiry that you drop your price by 75% and agree that it’s part of the equation.”
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How should we respond to this changing landscape? Be aggressive in nature, innovative in thought and process, and risk takers with patients.
And, also, follow Mr. Léger’s advice: “We have to stop thinking everything has changed … We have to change our thinking.” A bold initiative indeed.
Olivia Kona (firstname.lastname@example.org)