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What are the five forces that will influence our healthcare industry... and how will they impact on public relations?

A man staring into a crystal ballLet's look into our crystal ball. In the year 2012, the healthcare landscape that we know, that we feel so comfortable working in, will be gone or changed beyond recognition. It will be replaced by a world governed by forces that are only now taking shape and casting their influence on our clients, healthcare at large and global economies.

To be the highly valued communications partner to which we aspire, PR professionals need to both understand these change drivers and their impact on the world, and be able to adopt public communications strategies to help clients navigate through them.

"Seeing around the corners" will mean confronting issues far different from those now. That's going to be uncomfortable, but essential.

FIVE FORCES OF THE FUTURE
Let's look at some of the most important of these forces and their impact on our business:

1. Consolidation of industries
2. Shifting demographics and creation of new markets
3. Democratisation of information
4. Pharmacogenomics
5. The epidemic of epidemics.

A word about the cost of healthcare. It is the number one health issue in the developed world, and impacts everything from employment rates to elections but one can argue that it is the consequence of other factors, not the least of which are the ones cited here.


1. CONSOLIDATION OF INDUSTRIES
The consolidation of the healthcare industry over the last 10 years is a trend that will continue - and gain momentum. Look at the top 20 pharmaceutical companies. In five years 50 per cent of these companies will be gone, leaving seven or eight global behemoths at best. This contraction is not surprising; it occurred in the automobile, aerospace and entertainment industries.

Why? The clearest reason is that the cost of doing business has gone through the roof. Currently the cost of developing a new medication can top $800 million; there is no guarantee that an investigational product will work, and there is constant, worldwide pressure to stabilise prices.

Pharma companies can no longer afford to operate regionally. The old strategies of licensing brands to other companies more "in tune" with regional markets and of sequential marketing: ie, launching first in the US, then in France, the UK, etc, have given way to a new strategy of immediate product introduction by the sponsor in the US and the European Union, virtually simultaneously. This requires a huge infrastructure and vast amounts of capital. These are resources that are hard to come by for medium-sized companies.

"Survival of the fittest" is not unique to the pharmaceutical industry. The health services sector is contracting, with mega-giants such as Aetna and CIGNA swallowing regional competitors like light snacks.

Biotechnology is also undergoing mergers and acquisitions. Worldwide, there are around 600 public biotechnology firms. Our entire solar system cannot support that many companies. Three-quarters will disappear in the next 10 years.

What are the implications for us? With fewer clients, there will be a feeding frenzy among PR agencies - akin to what happens when a wildlife's habitat is reduced!

The winners will be agencies that have ties up and down the clients' hierarchy, that have proved their value and that have provided critical, unique insights for the client. Winners will be agencies that not only demonstrate value for the dollar spent, but who can prove they can work across borders and provide strong strategic advice, not only about product marketing but corporate issues, and mergers and acquisitions.

In this world of fewer clients there will be more pressure on pricing of services, but probably less concern about conflicts.

2. SHIFTING DEMOGRAPHICS AND NEW MARKETS
Everyone is aware of new demographics in the UK, such as the numbers of people from Eastern Europe and the ageing population. By 2010 in the US we will see something like a 50 per cent increase in the number of people aged 50-69. The implications are that we will see new priorities for spending on the diseases of ageing, such as arthritis, heart disease and Alzheimer's disease.

There will be a shift in the market however, that is even more profound than the ageing of the population. This is the emergence of new customer bases globally. What were once 'under-developed nations' are rapidly becoming economic lions.

Nowhere is this more evident than in Asia, where China's economy is growing at a sizzling 9 per cent a year. At this rate, it will double the economic growth of Germany by 2010 and will overtake Japan - now the world's second largest market - by 2020. India is not far behind, with a growth rate of 6 per cent.

Buried within this growth is the rise of true middle classes with disposable incomes and a thirst for health care products, from medical procedures to Viagra. India now has some 300,000,000 people in its 'middle class'. While these people aren't all driving Toyotas, this number is larger than the entire population of the United States.

Within the past three years, 10 new nations have joined the EU. The 100 million citizens of these countries will quickly expect the same health care benefits as those in the West. Both in Asia and in the new markets of the EU, hypertension, diabetes and heart disease are currently treated sub-optimally. Pharmaceutical marketers are looking at these emerging markets as the growth drivers of the next 10 years.

Developing nations will become real healthcare markets only when patent issues are resolved fairly and their communications infrastructures are refined.

But change is really only a question of time. And when it comes, vast new opportunities will open for the health care public relations industry. Will we be prepared to help translate global plans into local strategies? Will we be able to identify key audiences in these new markets and, most important, be able to guide clients in developing smart plans for selling? We'd better be.

WHAT WILL BE THE IMPACT ON OUR BUSINESS?

We are already seeing pressure on clients and governments to do more to contain the AIDS pandemic. With the emergence of new global infections, there will be greater needs for public education programmes and more effective strategies for communicating information about disease prevention to audiences with dramatically different levels of understanding of health. Health marketing or social marketing in developing countries may be the crucible in which the best public relations campaigns are made.

Each of the five drivers described here presents consequences and unique challenges; but they are challenges that, if we continue to apply public relations skills in a thoughtful manner, we will face and overcome.


3. DEMOCRATISATION OF INFORMATION
Ten or 15 years ago we began speaking about "patient empowerment", but we are only now seeing how this is being played out on the global stage.

The real influencer of healthcare customer behaviour is not the much-touted direct-to-consumer advertising movement that has created so much attention in Europe and the US. The real driver is a worldwide thirst among consumers to acquire more information about health; and based on this information, to take a more active role in their individual health decision-making. Knowledge about healthcare is no longer locked up in the doctor's office.

The controversy in Europe over whether to allow direct-to-consumer advertising is a red herring, as consumers in Europe can easily obtain product-specific information directly from websites in the US.

Europe will not, in the foreseeable future, permit product-specific advertising for drugs or devices. But that ban offers us a tremendous opportunity. European legal restrictions on brand name promotion and bans in other countries have, in effect, encouraged thoughtful, integrated marketing.

While American-style DTC focuses mainly on advertising to mass audiences to drive prescriptions, the European approach takes a more strategic approach, by targeting for education those patients who are likely to use the medication, working in direct co-
ordination with 'physician selling'.

Unlike American advertising, this approach is both more educational and designed to encourage patients to stay on therapy. The real winners in the future will be the agencies that are best prepared to show clients how to educate publics that are 'psyched' about healthcare, in coordination with selling to doctors.

4. PHARMACOGENOMICS
This is the direct application of our new understanding of the human genome to create drugs. Biotechnology, as such, is no longer the driver, any more than the fact that a company has access to electricity is the driver for business. We are just expected to have it.

The challenge for PR professionals will not simply be to explain this new science. Our challenge will also be to help clients develop and communicate reimbursement and payment policies that may seem harsh. For instance, insurance companies may enlist us to help communicate why they will not cover a 'miracle drug' for a certain patient, if we know that due to their genome, the medication would not help him or her.

5. THE EPIDEMIC OF EPIDEMIC
This final driver is the dark side of globalisation and the worldwide movement of people and goods. The best example is the AIDS pandemic; the virus has killed 20 million since it was first identified in 1980. The infection rates in developing countries are a genuine nightmare: in Botswana, for instance, 37 per cent of adults are infected.

Apart from the human tragedy of AIDS, there is the potential political calamity of the disease. Some of the fastest growing infection rates in the world are in Russia and other former Soviet republics.

Writing in The New England Journal of Medicine, Dr Mark Field of the Harvard School of Public Health noted that: "Unless the epidemic is stopped or controlled, it will result in a sizeable decrease in the gross domestic products of the former Soviet republics. It is estimated that the epidemic will cost these countries one per cent of their GDP in lost productivity annually and that healthcare of afflicted persons will cost between 1 and 3 per cent of their GDP - funds that are difficult to raise in impoverished countries."

Unfortunately, AIDS is not the only devil among us. More than one-third of the world's population is today infected with the tuberculosis bacterium. Other communicable diseases, including SARS have no respect for borders, and in fact thrive within an inter-connected global community.

2nd September 2008

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