The future is here..time to prepare for new realitites of marketing
Jan/19/2008 07:11 Filed in: Pharma
Business
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The blockbuster, drugs with sales in excess of $1 billion, has been driving pharma drug development for quite awhile. This model has become a beast that needs more and more sales dollars to sustain itself but in doing so business planners have failed to take into account monumental changes within the environment in which we all market. Those changes are;
1. A healthcare system that is looking for ways to reduce costs as boomers continue to enter the health care transaction model.
2. The increasing power of patients in healthcare treatment choices.
3. The lack of transparency that has brought legislators down hard on pharmaceutical companies.
4. The change in information availability which is almost immediate.
5. The top drugs that are coming off of patent.
6. The increasing power of insurers to recommend generic medications over prescription medications.
7. Physicians who are now becoming more and more skeptical of drug company marketing.
8. Less emphasis on blockbusters and more emphasis on the "long tail" (more $500 million drugs).
Add all this up and one cannot remember ANY industry that has had as many challenges facing them as the pharma industry. As an executive in the R&D area of Lilly recent said "pharma companies are in deep trouble now". So get ready for a transformation of the industry. Here are some things that I believe pharma CEO's need to do to compete in the coming years:
-Smaller teams- the downsizing in pharma is going to continue and is going to hit across all functions from marketing to sales. The bloat has to cut so that companies can act faster and respond more quickly to market needs.
-Consolidation within the industry- I predict at least one really big merger and the continued acquisition of smaller biotech firms that have a promising pipeline.
-Head to head clinical trials are a must- When new drugs are introduced to replace aging blockbusters insurers are going to require head to head clinical trials against generics before adding them to formularies. Even if the drugs show some success they may be recommended as a second line treatment instead of widespread availability to all.
-DTC: sssshhhhh ! DTC is not in the mood to take risks and will continue but the FDA will now come down harder on implied claims as will Congress.
-Sales Force becomes less effective- How many salespeople can a physicians see? Do we really need that big a sales force and can we reach physicians through alternate channels?
-Marketing is seen more of an expense by senior management - Nothing will change this and a lot of DTC managers are going to spend a lot of time justifying their budget needs to management.
-Maybe the Web can help us cut costs? DUH !! Some will finally get it but most will continue to underfund this channel because they are afraid of it and don't understand the metrics.
So it's up to the CEO to set the course and become a fortune teller who can best predict how his company can navigate the new ocean of changes. Those that are up for the challenge will succeed but it is going to take time. CEO's must first get the buy-in of the board and other senior managers and ignore Wall Street's "instant gratification" philosophy. After all it was the greed of Wall Street executives that produced the current housing mess and led us into a recession.
Yes these are tough times for pharma but we also have a chance to be more proactive and transparent in what we do and thus better able to meet the demands of new marketing.
The blockbuster, drugs with sales in excess of $1 billion, has been driving pharma drug development for quite awhile. This model has become a beast that needs more and more sales dollars to sustain itself but in doing so business planners have failed to take into account monumental changes within the environment in which we all market. Those changes are;
1. A healthcare system that is looking for ways to reduce costs as boomers continue to enter the health care transaction model.
2. The increasing power of patients in healthcare treatment choices.
3. The lack of transparency that has brought legislators down hard on pharmaceutical companies.
4. The change in information availability which is almost immediate.
5. The top drugs that are coming off of patent.
6. The increasing power of insurers to recommend generic medications over prescription medications.
7. Physicians who are now becoming more and more skeptical of drug company marketing.
8. Less emphasis on blockbusters and more emphasis on the "long tail" (more $500 million drugs).
Add all this up and one cannot remember ANY industry that has had as many challenges facing them as the pharma industry. As an executive in the R&D area of Lilly recent said "pharma companies are in deep trouble now". So get ready for a transformation of the industry. Here are some things that I believe pharma CEO's need to do to compete in the coming years:
-Smaller teams- the downsizing in pharma is going to continue and is going to hit across all functions from marketing to sales. The bloat has to cut so that companies can act faster and respond more quickly to market needs.
-Consolidation within the industry- I predict at least one really big merger and the continued acquisition of smaller biotech firms that have a promising pipeline.
-Head to head clinical trials are a must- When new drugs are introduced to replace aging blockbusters insurers are going to require head to head clinical trials against generics before adding them to formularies. Even if the drugs show some success they may be recommended as a second line treatment instead of widespread availability to all.
-DTC: sssshhhhh ! DTC is not in the mood to take risks and will continue but the FDA will now come down harder on implied claims as will Congress.
-Sales Force becomes less effective- How many salespeople can a physicians see? Do we really need that big a sales force and can we reach physicians through alternate channels?
-Marketing is seen more of an expense by senior management - Nothing will change this and a lot of DTC managers are going to spend a lot of time justifying their budget needs to management.
-Maybe the Web can help us cut costs? DUH !! Some will finally get it but most will continue to underfund this channel because they are afraid of it and don't understand the metrics.
So it's up to the CEO to set the course and become a fortune teller who can best predict how his company can navigate the new ocean of changes. Those that are up for the challenge will succeed but it is going to take time. CEO's must first get the buy-in of the board and other senior managers and ignore Wall Street's "instant gratification" philosophy. After all it was the greed of Wall Street executives that produced the current housing mess and led us into a recession.
Yes these are tough times for pharma but we also have a chance to be more proactive and transparent in what we do and thus better able to meet the demands of new marketing.
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