Is the pricing model in need of repair?
Jan/24/2007 07:33 Filed in: Pharma
Business
In the near future a lot of blockbuster medications are going to be coming off patent and lower cost generics will be readily available. Pharma companies can chose to conduct clinical studies that show new products are more effective than the older generics but benefit and program managers are under increased pressure to control costs. Why prescribe Cymbalta for depression when generic Fluoxitine may do just as well? Want to use Celebrex? Well according to a letter I received from my insurance company store brand Ibuprofen works just as well and costs up to 80% less.
With so many blockbuster medications coming off patent I am sure that more and more insurers are going to recommend that patients be prescribed the generic medications by their physicians. In some HMO's physicians have to write generic medications or go through a lengthy exception process for branded medications. As baby boomers get older they are going to strain a healthcare system already in trouble. Pharma cannot continue to ignore this reality and has to adjust the way they do business. Promotional and DTC spending are all likely targets for cuts and Pfizer's announcement that they are laying off 10,000 people may only be the start of consolidation within the pharmaceutical industry.
The Possible Future of Pharma Marketing & Sales?
Most brand teams within pharmaceutical companies are bloated with people. If you look at consumer packaged companies there usually is one product manager who is assisted by cross functional teams within the company. It's time for pharma to take a serious look at this model and determine if it can work with healthcare marketing. Physicians don't have time to meet with drug company representatives who have become high priced delivery people for samples and chatchkeys. Younger physicians entering proactive are well aware of the benefits of technology to stay on top of new trends and reduce costs within their office. eDetailing continued to grow every year and physicians now want to be able to interact using consumer generated media.
The bottom line is that change is coming to the pharmaceutical industry. As Mr Kindler, the new CEO of Pfizer said this week;
Mr. Kindler made clear that he aims to slash bureaucracy inside the world's largest drug maker by sales. But he acknowledged that he faces a daunting task. "Change on this scale is not easy," said Mr. Kindler. "It takes time to get it right."
It won't be easy but this is what separated leaders from followers. The challenge will be to ensure that these cuts don't effect the organizations ability to compete in a changing marketplace. This, after all, is why CEO's get the big packages. Let's hope they succeed this time and have the vision to ride out the storm.
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