Dan Mathews, managing partner of Accenture's UK Life Sciences Practice and chair of judges for the Pharmaceutical Market Excellence Awards (PMEA) speaks to Linda Banks on the current trends shaping pharmaceutical marketing strategies.
“We are facing three true inflection points that are causing fundamental changes in pharmaceutical marketing and customer engagement," says Mathews. "Changing pharmaceutical portfolios; a shift in geographic drug adoption towards emerging economies; and the empowered consumer are all forcing a rethink in how life science companies go to market.
"Firstly the large, blockbuster-driven players are facing an unprecedented change in their portfolios – due to threat from patent expiry and years of R&D under-productivity. Globally we will see a third of pharmaceutical sales at threat due to patent expiry – worth tens of billions in revenues. Many of the previously dominating industry players are working out how to make up that shortfall, whilst facing the prospect of going to market with a more specialty, niche portfolio. Sales and marketing costs in pharmaceuticals are on average 25 per cent of revenues (compared to 17 per cent for R&D); this is simply not sustainable in the new world and forces a rethink in the sales and marketing business model.
"Secondly, power and growth is shifting away from the European market towards emerging markets. Austerity in Europe is driving down prices in an environment of increasing regulatory complexity. Meanwhile consumers in Asia and Latin America are a growing, empowered demographic which offer large opportunities for growth for the companies that are ready to exploit them. We see pharma companies in Europe responding by building expertise that really demonstrates value to the payer and patient population, becoming more nimble in their operations and increasingly working in niche and rare disease product areas.
"At the same time, today's consumer is empowered by information availability. Pharma companies have bought into the idea of using digital channels to service the growing market in information, but consumers no longer look for the product alone – and are demanding a 'full service' around the product.
"A patient with diabetes needs their medication, but also wants support on monitoring and managing blood sugars, reminders of when to take the dose, and connections to the diabetic community and medical practitioners for advice and support. Pharma companies can differentiate and demonstrate better patient outcomes by providing these services, but need to become more connected, able to execute campaigns at greater speed, and face the reality of investing in, sustaining and selling a service as well as a product.”
To drive value in healthcare I believe we need to bring a number of different players in the market who can combine their expertise to drive value in the industry revolution
PMEA refined for 2012
As chair of the annual PMEA, Mathews has refined the name of the awards and the entry categories to reflect this changing industry environment. The themes he has outlined are reflected in the updated PMEA categories for 2012, including the new services agenda, and recognising the increasing convergence and connectedness in the industry:
“I am quite passionate about the term 'marketing' but this year the change from the 'Pharmaceutical Marketing Excellence Awards' to the 'Pharmaceutical Market Excellence Awards' reflects the current ecosystem where life sciences professionals are required to bring value all the way across the chain, as opposed to just talking about selling the products.
“New channels and the digital channel are given a more prominent role in the awards, as this is an area where we see a lot of investment as brand teams strive for differentiation.
“There is also a big focus on partnership this year. To drive value in healthcare I believe we need to bring a number of different players in the market who can combine their expertise to drive value in the industry revolution,” he explains.
Reflecting this, as well as changing the award categories, the PMEA programme strives to have the best people connected to the industry as judges. As such, this year Steve Arlington from PwC has joined the panel. According to Mathews, such additions bring “a different flavour to the space”.
“We are combining academia with people in industry and people providing services so that we can get the best understanding of really good pharmaceutical markets. Steve brings a different perspective with his experience in R&D commercial strategy.”
New challenges, new marketing strategies
Mathews goes on to outline the key challenges for pharmaceutical companies in operating in the new ecosystem.
“The science of marketing continues to evolve with greater use of analytics, a more diverse channel mix, increasing globalisation and a greater range of stakeholders.
“For the first time people are able to scale marketing beyond the limits of sales force capacity. A key challenge is deciding which channels to utilise and when. When should you use the sales force? What role should digital play? When is a call centre most effective? The next generation of marketing strategy will pick which channels work best based on robust channel impact data.
“A greater use of analytics supports this, but also enables marketing teams to understand customer segments and how to tailor your campaign to each. There will be more deployment of closed loop marketing, very successfully enabling marketers to see what's happening with customers at a much faster frequency. The challenge lies in moving from data-overload to getting good insights and using them to adapt the marketing approach at speed.
“Plus, there is the next evolution of proper global operating models for the first time. Many companies now have an individual strategy for a region, as opposed to just a country; and are learning new ways to operate as they expand into emerging markets. The challenge is how to reap the benefits and efficiencies of executing a shared strategy at scale, whilst addressing the unique environments of the individual marketplace. Today's marketers are in effect being asked to 'do more with less'.
“Now more than ever, marketing strategy must consider how to create value for the various players in the ecosystem; this isn't just about services. What you're really trying to do is work out not just how to send your drug in a pen or a syringe, but how you can provide consistently for the different stakeholders, how you can make sure that you understand the true lifetime value of the customer and put the appropriate services in place.”
“It's probably the most challenging time for a marketer, which means that it's the greatest opportunity too. The real expert marketers will be able to differentiate themselves versus their peer group to a much greater degree by getting their messages across in a difficult environment with a range of channels against a backdrop of politically-driven developments in healthcare.”
He concludes enthusiastically: “It's a more exciting career path for marketers now than ever before – there's a real opportunity to shape the future of the industry.”