In Europe, the pharmaceutical industry spent about Ä11.8bn on pharmaceutical marketing in 2007, according to new information from healthcare market research company Cegedim Strategic Data (CSD). The key markets of France, Germany, Italy, Spain and the UK represented the main focus of this investment, while around Ä2.5bn went towards the promotion of medicines across the rest of Europe.
Average marketing spend in the top five European markets rose slowly but reasonably steadily between 2004 and 2006, except in Germany where promotion expenditure dropped by nearly 10 per cent over the period, possibly driven by low returns in the face of strong generic competition. Growth in Europe was apparent but a discernible change in the trend has emerged; France and Italy show marked drops from 2006 to 2007, and Germany shows the largest fall in marketing spend for several years. Even in Spain, where a buoyant economy had created a receptive environment for pharma's promotional investments and has led to a spending rise of more than 30 per cent in the 2004-2007 period, the 2006-2007 phase marked a relative increase which was distinctly diminished compared with previous years.
Other than the moderate growth continuing in Spain, looking at the European market in general, spending has been fairly flat recently - certainly compared with the level of investment put into salesforces three-to-four years ago, comments Christopher Wooden, regional vice-president at CSD.
In the years 1998 to 2005, there was an 'arms race' of sorts among big pharma, with increasing salesforce sizes year-on-year; 2005 unofficially marked the end of the blockbuster era but, where big brands were still out there, pharma had been piling resources into the salesforces to milk them for all they were worth. Since then, salesforces have reduced in size along with a related reduction in marketing spend.
According to CSD, in the middle six months of 2007 marketing spend plummeted by more than 21 per cent across Europe.
Despite the recent declines, general wisdom remains that European pharma companies continue to invest significant resources in product marketing and related physician/patient support services, often more than they spend on R&D; which the 2008 PLoS study confirmed was also the case in the US.
Why do international pharmaceutical companies spend so much on marketing, and why do they frequently invest more over a year in promoting existing products than researching new medicines? Questions such as these are posed by the public, or at least by authorities purporting to act on its behalf, on a cyclic schedule. Yet the answers so often get buried in subsequent dialogue concerning the costs of developing new drugs, from concept to market. This is unfortunate, as there are good answers to these questions.
What comprises pharmaceutical 'marketing spend' in Europe, and which activities claim the largest proportion of companies' budgets must first be established.
According to the latest data provided by CSD for Pharmaceutical Marketing Europe, e-promotion has become one of the foremost marketing choices in the region, particularly in several of the key top five markets. Since 2004, spending on e-promotion for medicines has risen in excess of 31 per cent in Spain (to around Ä9.9m), by nearly 45 per cent in France (to about Ä4.2m) and has soared by more than 100 per cent in the UK. As organisations start to refocus in favour of specialised, niche products - thereby pursuing cost efficiencies and cutting back on primary care salesforces - the emergence of digital marketing as a key communications tool was anticipated, given its targeted nature, efficiency plus ease and accuracy of evaluation.
The use of e-promotion has increased dramatically in some parts of Europe, yet the trend may falter unless the digital community provides improved benchmark indicators to clarify and unify costs and returns across the various aspects of practice. Currently, many marketing and brand managers are unclear about how much they should pay for e-promotion, as there is a wide discrepancy in costs between service providers. This, in part, is why its permeation through Europe has fallen short of initial expectations.
Indeed, over the past four years, e-promotion outside Europe's top five markets has fallen by more than 41 per cent (to around Ä3.7m), while even in Germany its use dropped by more than a fifth (to Ä2.9m) during the same period and continues to fall, albeit through a series of peaks and troughs.
MEETINGS AND EVENTS
Pharma's use of medical meetings/events as platforms for marketing to European healthcare professionals is also paying dividends in some markets but in others it seems to be falling out of favour.
The use of meetings/events outside the top five markets soared by nearly 35 per cent in the 12 months between 2006-2007. The longer-term view, from 2004 to 2007, shows that France experienced a rise of more than 39 per cent and the UK saw a remarkable 84 per cent increase in the use of meetings. In the UK, this is attributable in part to efforts by the Association of the British Pharmaceutical Industry to impose more stringent restrictions on traditional (rep-based) promotional activity, as governed by its code of practice.
Securing one-on-one access for sales reps to prescribers is becoming increasingly difficult (a good rep will typically average three calls per day, whereas in Germany and France it can be as many as 15), and, consequently, the medical meeting/forum format is proving to be an effective means of reaching and educating UK doctors.
On the other side of the coin, investment in meetings in Germany has not really changed since 2004, while in Spain it has dropped by more than 25 per cent - where the preference is for detailing, e-promotion and the use of samples. Italy has seen a fall of nearly 23 per cent in the support of meetings, as part of a more general wane of Italian marketing activities; in 2006, spending on meetings and e-promotion fell by 32 per cent and 34 per cent, respectively. During 2007 funds directed at post-marketing (phase IV) activity fell by more than 34 per cent, expenditure on print advertising and mail campaigns dropped by 29 per cent while product sample costs were cut back by nearly one-third.
Marketing activity in Italy tends to fluctuate more rapidly and to a greater degree than in other European markets, and a recent downturn in sales has been matched by a type of recoil by pharma. Promotional endeavours in Italy are known, traditionally, to have been effective and far reaching, though it is not uncommon for governments - new/reformed powers in particular, as followed Berlusconi's resignation in 2005 - to clamp down from time to time on pharmaceutical marketing, in an attempt to 'clean up' the image of the nation's industry.
Following such an incident, spending levels can plummet sharply in subsequent years, as is reflected by CSD's 2006-2007 data.
ALL IN THE DETAILING
For all that the pharma industry proffers, as the solution to a weak global pipeline, the model for small (yet potentially highly profitable) drugs - requiring efficient and streamlined marketing - detailing still remains the most highly prized of all marketing activities. In practically every European market, it is the one to which companies allocate the largest proportion of marketing budgets.
However, CSD reveals that by 2007 spend on detailing had risen little, if at all, in most European markets from that seen in 2004, except for Spain (up 35 per cent) and across the non-top five markets (up 28 per cent). More recently, and with these seemingly transient increases notwithstanding, each of the top five markets saw spending on detailing reduce as 2007 unfolded. This was also true for the rest of Europe as a whole.
Between Q1 and Q4 2007, investment in detailing in Italy fell by nearly one-third, in France by 30 per cent, in Spain by 28 per cent, in Germany by 13 per cent, in the UK by 12 per cent and in the rest of Europe by more than 11 per cent.
This does at least reflect companies' ambitions to reshape their marketing programmes, cutting back on expensive salesforces and developing a more targeted and efficient outreach. Human resource is still the most expensive element in healthcare marketing, with a good sales rep in some high value markets, such as the UK for example, earning between Ä106,000 and Ä130,000 per year.
PERCEPTION OF MARKETING
Even when these recent decreases in spending are taken into consideration the point of the PLoS study, as well as myriad press articles in Europe in recent years, was to spotlight these types of marketing investments in such a way as to question their magnitude; to prompt the question, 'how can pharma spend so much on promotion - even more than it does on R&D - when it complains simultaneously of the revenue-damaging effects of generics, parallel trade, slow healthcare technology appraisal processes and various other factors?'
Several European newspapers exhibit a sporadic, as well as cynical, interest in the level of healthcare marketing spend, in line with their agenda to foster in readers a general mistrust of large profitable industries. The journalists behind the scare stories seem to labour under the misapprehension that the public is served by their 'revelations' that pharma (like any other global industry) must spend significant sums on ensuring that markets are aware of its products; yet, in reality, these stories vainly elicit doubt where confidence could otherwise develop.
There should be no perception of secrecy over why European pharma companies invest heavily in marketing their products; without awareness programmes, patient support schemes and physician education initiatives the ability of European health systems to provide safe, effective medical care would be notably weakened. The gaps, flaws and iniquities seen in all national healthcare systems would be worsened, which, ultimately, would affect patient treatment and outcomes adversely. It is not wholly by design, but by necessity, that pharma extols the benefits of new and improved products the way that it does.
It is not wholly by design, but by necessity, that pharma extols the benefits of new and improved products the way that it does
One can only imagine how the course of action in marketing medicines might be turned on its head; if, rather than drug manufacturers striving to promote their products to physicians, the burden of finding the safest and most cost-effective drugs was laid upon the shoulders of the healthcare systems.
Prescribers would make appointments with pharma reps, in order to find out the latest clinical results and discuss the therapeutic and cost benefits of any products, or groups of products, developed by the company. Nurses would request training, in order to improve long-term and/or specialist patient management, and hospitals might readily showcase details of their performance figures and patient populations to demonstrate to drug makers the need of their wares, and hence seek to maximise patient care in a competitive setting.
Would newspapers and other observers then criticise Europe's government-run healthcare systems as brazenly spending money to develop business 'relations' in an attempt to lure drug makers into a deal? It seems more likely, most would agree, that acceptance of the need to keep up-to-date with the latest developments and changes in medicine provision - for the benefit of the patient - would prevail.
Without far-reaching (which, in any industry, can also mean expensive) marketing programmes and product support plans from pharma, Europe's healthcare systems would soon start failing patients. Yet, there remains a short-sighted view, or apparent limited understanding, of the need for this significant marketing spend to ensure the world's best medicines actually make a positive difference to 'everyday' patients.
Perhaps the key differentiator between healthcare systems and drug manufacturers is merely that one party represents ambitious organisations where cash flow is crucial and in which senior operators gain financial rewards, in one way or another, for hitting targets and ruthlessly maximising value; and the other is the European pharmaceutical industry.
Rob Skelding is a freelance healthcare and pharmaceutical journalist