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Pharmaceutical Processing News
News Release from: Frost and Sullivan | Subject: Europe's Evidence-based Healthcare Market
Edited by the Processingtalk Editorial
Team on 20 August 2003
Pharma rethinks traditional product
marketing
A resurgent disease management sector will compel pharmaceutical companies to market products as constituents of packages of care, re-directing their sales efforts towards planners rather than doctors
A resurgent disease management sector will compel pharmaceutical companies to market products as constituents of packages of care while re-directing their sales efforts towards planners rather than doctors, reveals a new analysis from international market consultants Frost and Sullivan A 'single product type' focus and traditional marketing practices are threatening to isolate pharmaceutical companies from current European healthcare imperatives
This article was originally published on Processingtalk on 7 Feb 2003 at 8.00am (UK)
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Most pharmaceutical companies are positioned at the 'single-product-type' level and are, therefore, limited to basic healthcare technology assessment (HTA) programmes to prove product efficiency.
However, healthcare providers are increasingly looking for evidence-based medicine.
To this end, companies will have to promote the use of their products in terms of the benefits gained from packages of care, rather than individual procedures.
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"Companies will need to re-enter the disease management sector with viable strategies, or else they could become dependent on a range of partners able to offer packages of care," cautions Mr Gordon Blackwell, Research Analyst with Frost and Sullivan.
Some companies are attempting to address evidence-based healthcare trends by evaluating their products against other rival offerings as well as placebos.
This practice would become mandatory if the EU were to include 'added therapeutic value' as a criterion for market approval.
Other companies are incorporating a service facet in certain disease areas such as asthma clinics run by GlaxoSmithKline.
Today, pharmaceutical companies are at a crucial juncture.
Traditional sales and marketing strategies appear redundant.
Simultaneously, current drug portfolios are proving inadequate to sustain growth, product pipelines are drying up and fewer drugs are gaining regulatory approval.
Business models that replace standard blockbuster drugs with targeted pharmaceuticals or tailored drugs are increasingly seen as a way to emerge from the present crises.
The concept of 'targeted treatment solutions' aims to treat patients with specific disease states.
Among its expected outcomes are new development techniques that reduce the gap between target identification and marketing, significantly reduced R and D cost and improved shareholder profits.
Advocates of tailored drugs are perhaps being unduly optimistic when projecting tripling of shareholder value by 2010 and a doubling of the growth rates experienced by the industry at its peak.
What is undisputed, however, is the fact that this new business model will require companies to carry out fundamental changes, employ new techniques to research, develop treatments and adopt fresh sales and delivery models.
Unfortunately, there has been little innovation in marketing and sales approaches so far.
"Rather than investing in solutions-based communications planning, companies appear to seek comfort in convention, using high-cost, low-risk strategies, but without achieving any significant effect in the marketplace," comments Mr Blackwell.
Marketing overspend has been widespread with promotional outlays often exceeding product sales.
Also, when selling to the primary care sector, most pharmaceutical companies have persisted with large sales force frequently "talking to doctors." It is perhaps a measure of the disconnect between traditional marketing strategies and current needs that returns on promoting to primary care physicians and patients declined from USD22.2 to USD17.0 between 1998 and 2001.
This was accompanied by a fall in overall R and D productivity and a spurt in merger and acquisition activity.
However, the merger route has not proven very successful in increasing corporate efficiency.
"For instance, GlaxoSmithKline (GSK) and Pfizer, the world's two largest pharma companies, both products of large-scale mergers in 2000, under-performed their peer group in 2001 in terms of promotional return on investment (RoI)," notes Mr Blackwell.
The extended product ranges resulting from such mergers are expected to offer only a short-term reprieve.
From a long-term perspective, companies will have to market their products as a part of integrated solutions.
They will also have to depart from the "selling-to-doctors" method to concentrate on promoting their products at the management/planner level.
"Without an effective relationship with planners to enable companies to have visibility of the planning process, it is possible for products to be excluded from use within a plan without the company being aware," says Mr Blackwell.
"Thus it is necessary to aim marketing efforts as far up the planning chain as possible, and to fashion messages in an appropriate language for the audience".
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