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Peas in a pod

Therapy franchises are more than bundled products. A holistic approach demonstrates valued treatment expertise within a sector

Peas in a podThe whole is greater than the sum of the parts goes the popular saying and it rings true for pharma firms wishing to embark on successful therapy franchise management. In today's ever-changing market landscape, one constant remains: the need for companies to become truly customer-focused in every area, and it is often the marketing department which has to spearhead this drive and imbue a `marketing mindset' throughout other departments. Yet, putting the customer at the centre of the equation is no easy task.

In the past, companies relied traditionally, and successfully, on organisational structures that focused specifically on the product. Blockbuster drugs in large GP-oriented chronic disease areas paid huge dividends and gave companies leeway to delve deeper into their pockets to find the treatments of the future in their pipelines. However, these `mega-brands' often overshadowed the companies themselves and there was little cohesion in their attempts to manage product lines and earn a name for themselves across broader therapy areas.

Over the last decade there has been a shift in the way that big pharma views molecules: from discrete entities to a way of seeing how they can fit together in logical clusters around therapy areas. Companies have moved on and several have built up a presence in a specific therapy area that means a lot more to the customer than a simple line of four or five products, which may or may not overlap, in the same disease area. Pharma firms have built over-arching campaigns which help to position themselves more strongly within these, creating bespoke therapy franchises.

For the more successful multi-product examples among the big hitters, one has only to look at GlaxoSmithKline in asthma, Lilly in CNS and AstraZeneca in oncology, though much of the recent
M&A activity in the industry has been spurred by desires to get into therapy areas in which firms have no previous track record.

Overall effect
Therapy franchising has caught on, yet there is still no one hard and fast rulebook on how it can be achieved and demonstrated.

Indeed, structures range from company to company; those with a large division in one clinical area (such as Roche in oncology) may split it up into several sub-divisions, while companies that don't have a wide array of treatments in one area will inevitably not see the need to do so. However, more than simply displaying a huge range of products in one particular disease or therapy area, companies instead could aim to show that they are managing and positioning their product range effectively, however big or small, and crucially, sustaining the relationships they have built up with end users by establishing a recognised presence in their chosen areas of `therapy presence'.

Alasdair Mackintosh, vice president, life sciences at Cap Gemini, believes that from a marketing perspective, firms are distinguished by delivering outcomes that are greater than the sum of the parts.

Obviously, every company is promoting its products but where they have a strategy to develop a set of products and complementary services within the same therapy area, pharma firms can start to offer significant overriding benefits to the physician and also, therefore, to the end consumer, he says Therapy franchises allow you to market that bundle.

IBM Consulting's Michael Thomas, associate partner of the EMEA pharmaceuticals arm, says that therapy franchise management means two overlapping things - it's both the association of a company with a particular therapeutic, area as well as the structural and organisational device which evaluates how certain products can be managed and brought together.

Some products will be synergistic, will overlap and possibly be going out to the same targets, he adds. So it's about both a company's image and reputation as a provider in a particular therapeutic area with hospitals, prescribers and users, but also very much about how companies organise themselves internally when the sales, product marketing and medical functions overlap.

Independent healthcare consultant, Roger Watson, defines a therapy franchise as where a company achieves ownership of a therapy area by doing more than merely providing a range of pharmaceutical product brands.

An effective franchise is one where the company is either providing or supporting additional services that mesh with the product so that it becomes, in consultants' eyes, a true integrated product-service offering, rather than merely a product offering.

For example, it's much more rewarding for a company in cardiovascular to become known and respected for its overall heart disease management rather than as just the manufacturer
of an ACE inhibitor, he explains.

Of course, there is no quick and easy path to establishing recognised expertise that will stand up to the scrutiny of the medical community. GSK has, historically, possessed its asthma and respiratory franchise since the day it acquired the Allen & Hanburys legacy way back in 1958, although as industry consultant Deborah Mechaneck points out, one of the keys of therapy franchise management is continuing investment to provide added value.

It's in those instances where you see companies getting involved with policy- and decision-makers that they become viewed as real stakeholders in their therapy areas.

Companies have to display a depth of expertise around their therapy areas, such that the value they bring to the doctor is significantly higher than if they simply detail and push the benefits of a single product. By supplying doctors with advice on how best to treat different patients with different stages of onset of their condition or disease, they can lift the whole relationship from one of simply promoting medicines to one of being truly part of the system: a partner in healthcare, according to Mackintosh.

Small stable
But what of the smaller pharma companies and the biotechnology firms which may not have the
sheer numbers of products to run a therapy franchise in the same way that big pharma does? The message is that franchises don't necessarily depend on size; smaller companies, such as Novo Nordisk (diabetes) and Serono (fertility treatment), could also consider themselves to have dominant franchises in their respective areas.

Thomas argues that smaller companies have just as much potential to be considered masters of therapy franchises: While part of it is around portfolio management, much of the longevity and sustainability aspects are down to relationship management. I think biotechs have their own particular approach to franchises - they are essentially key opinion leader-led with a much more focused customer base and the commercial sales potential overlaps very clearly with the clinical trials.

It's a different type of franchise based around reputation and relationship from having worked with professionals in care delivery over a period of time. Some might call it `franchise with a small f'.

Mechaneck agrees that having fewer products is no barrier to developing a franchise: I was MD of a biotech medical devices company; we were market leaders in the aesthetics medical field with just one brand. Our training courses were considered gold standard, we were asked to speak at cutting-edge seminars and conferences, and we were definitely considered the experts in that particular area.

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It can be argued that therapy franchises can be a bit like the Roman Empire. They can take many years of dedicated patient planning and construction only to fall into irreversible decline. With the millstone of drug patent expiries hanging around your neck, is it simply worth the time and effort invested in therapy franchises, when it is inevitable that your leading product will one day fall foul of generic competition?

The answer is yes. While the issue of patent expiry is obviously one that the industry has to deal with, rather than making franchise management less relevant, most commentators argue it actually makes it more so. Watson is of the opinion that one of the key reasons for franchises in pharmaceutical marketing is in fact to ameliorate patent expiry.

Brands tend to have much longer ex-patent lives if they are part of an established franchise than if they are not. Successful franchises breed loyalty, he notes.

Indeed, product life cycle management is a skills set that pharma firms need to upgrade significantly at the moment - a survey by Cap Gemini at the tail end of last year found that more than 90 per cent of senior pharma executives believe that it is important for future prosperity, while 60 per cent said its importance will increase significantly in their organisations over the next five years.

If the ways in which you bring your indications and line extensions into the market are all about enriching what you bring to the therapy area, and at the same time you are developing products that will continue to be attractive in that therapy area after your core product has expired, the asset becomes not just the molecule but also the relationship you have with the physicians in
that sector, Mackintosh explains.

He cites AstraZeneca's well-publicised transition from Losec to Nexium, where the whole life cycle management strategy was aimed at maintaining a relationship within that therapy class, so the patent cycle becomes an important part of how the therapy area is actually managed.

Gaining recognition
Measuring the return on investment on therapy franchises can be problematic. While product sales are an obvious quantitative measure, it is often difficult to gauge the contribution of the non-product offering, especially when governments fail to take into account the high level of service that can accompany a product.

Gaining the broader, and right type of recognition for your efforts is really what therapy franchising aims to do, and this is why it features as a core category in this year's Pharmaceutical Marketing Effectiveness Awards. The judges are looking for companies to show that they are delivering more than the sum of the parts. In other words, that they are marketing at the `upper level' and providing complementary messages and support that help develop a strong franchise for the brand.

If companies can show that they are collectively investing in non-branded activities, which feasibly could be commercially viable for groups of products, then they are on the right track.

On top of effective portfolio management we're looking at the incremental value that the layer of franchise management is adding to the collective performance of products, says Thomas. That may come from good product positioning that aims to avoid cannibalisation, life cycle management or the rapidity with which products are adopted. After all, if you already have the relationships, your ability to introduce new products should be more effective.

Watson adds that franchises will be judged not just on their ability to boost sales and market share but also on customers' responses and whether health professionals have been impressed.

The Author
Gareth Carpenter is a freelance healthcare journalist

2nd September 2008

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