The pharmaceutical industry is facing rapid global transformation. The safety of marketed drugs has never been under more scrutiny, neither have operational and ethical practices, nor heightened R&D costs. What was once a stable, profitable industry predicated on ‘blockbuster’ drugs driven by a handful of global players is now morphing into a changing era increasingly known as the era of ‘personalised medicine’.
Payer pushback is rife in the pharmaceutical industry and consumers are becoming more medically literate and savvy about what’s on offer. The self-diagnosis era, thanks to social and digital media, is well and truly here. This coincides with an industry that is more ready than ever before to opt out of development routines, kill projects early in the development cycle and streamline business lines, often by reducing non-core activities.
Accordingly, the supply chain model of the future will look somewhat different. Greater flexibility, agility and responsiveness will be required, as will a move to an order-based model rather than a stock-based one.
Globally, healthcare systems are in crisis while corporate reputation and scrupulous, ethical business practices have never been more sought after. Patient safety and privacy have come much more to the forefront as part of regulatory frameworks. Governance and compliance practices at a global level are becoming the norm.
As a result, medication is undoubtedly becoming more expensive. Can patients fill the gap to some extent? Are they prepared to pay out of their own pockets?
A global healthcare study
To explore this question in more detail, Future Thinking, along with IRIS, the world’s largest network of independent research institutes, implemented a global healthcare study in 23 countries across five continents. We surveyed 21,300 research participants with a range of chronic diseases including but not limited to high blood pressure, high cholesterol, diabetes, asthma, heart conditions and cancer.
Our research uncovered many similarities and differences across countries. It also allowed us to develop a global segmentation identifying five key segments differentiated primarily in terms of their willingness to pay for medication and the extent to which they make decisions pertaining to the medication required.
46% of consumers worldwide are not ready to pay out of pocket for innovation
The Average Joe segment, the most mid-ranking in terms of willingness to pay for medication and willingness to pay for innovation in medical care, was a particularly useful benchmark. It contains more women on balance and its respondents feel relatively pessimistic about the healthcare systems in their respective countries. They are more likely to have a chronic medical condition (especially compared to those who are more thrifty and sceptical), while 84% will consult friends and family for healthcare advice.
Beyond this segment, we found:
- people who were ready to pay extra for innovative treatments
- those who will only pay if there is an imperative reason to do so
- pessimists who are reluctant to pay but willing to listen to their physician
- thrifty sceptics who are savvy about their health expenditure but not very willing to pay extra for innovation.
On a global level, healthcare is in a state of major flux. Systems are buckling at the same time as costs are rising. Increasingly the onus falls on consumers to make up the financing shortfall, but at the same time we have found that they are becoming better informed about their healthcare choices and options, and more ready than ever before to challenge expert medical opinion and push back if they are not happy with the choices or options put before them.
Today’s consumers are much more actively involved in decisions about their medication/prescriptions which means that, increasingly, pharmaceutical brands must leverage the opportunity to differentiate from their competitors wherever possible.
How to communicate, promote innovation and build trust
Pharmaceutical brands must master the ‘consumer internet’ as a channel of communication with potential users of their products. Regulatory and advertising legalities aside, they must find new ways of educating and sharing information and must show consumers that they are first and foremost patient-centric. A word of caution from our segmentation, however, shows that not all consumers are the same. It is crucial for pharmaceutical brands to understand their core markets, their core segments and the nuances within each, which includes a note of reference to the divergent opinions pertaining to willingness to pay.
Consumer willingness to pay is a key driver of healthcare innovation. When resources are tight and treatment is becoming increasingly expensive, the additional funds offered by patients seeking greater comfort or more sophisticated treatment are vital for the sustainability and continued development of the healthcare system. Yet our survey found that 46% of consumers worldwide are not yet ready to pay out of pocket for innovation and comfort in healthcare, with only 38% being prepared to pay. While in the US people were on average willing to pay €190 for innovative medicine, in the UK it was only €23 and in China it was below €10.
From our research, we can see that consumers are only prepared to pay for true innovation, whether it’s a medicine that tackles an ailment in a new and more effective way, or a medical device that makes life more comfortable. They will not pay for superficial innovation – or innovation for innovation’s sake. The value of using the product must be clear, demonstrable and sizable; otherwise, more sceptical patients will pass up on the opportunity. Communicating these benefits to patients needs to be a key priority going forward.
This is especially important as the relationship between physicians and their patients evolves, since new dynamics are increasingly coming into play as patients are diagnosed and choose their treatment plans.
Fortunately, confidence in physicians remains high. Two-thirds of our research participants said they have great confidence in their physicians when it comes to medication prescription.
Two thirds of our research participants said they have great confidence in their physicians when it comes to medication prescriptions
However, the combination of new technology and increased patient scepticism has led to more patients seeking information from people other than their physician. Over a third of us source healthcare information online and/or from friends and family. Friends, family and Dr Google, when used responsibly, can be useful supplements to the healthcare information provided by doctors. But it can also be a source of misdiagnosis, false information and deception. It is important to establish and emphasise the authority of medical experts and professionals, while educating patients about the problems that can be caused by other sources. And to do that, it is crucial that you maintain people’s trust by providing genuine value at all times.
Using different messages and different channels
Increasingly, pharmaceutical brands must become more patient-centric and differentiate from their competitors. They must deploy agile marketing strategies with communication always tailored to differing audience needs. Different messages and different channels need to be used on a case-by-case basis and tailored to therapeutic areas: for example we found, unsurprisingly, that in oncology the physician has more say and greater sway in consumer healthcare decision-making than in diabetology.
All in all, our research has made us and our pharmaceutical clients think in a much more strategic and non-linear fashion about the role of product development, innovation and communication within a fast-changing industry. The old rulebook no longer applies as audiences become global, competition becomes increasingly fierce and patients become ever more discerning. Those willing to be true game changers and do things differently will become the Ubers, Apples, Facebooks and Googles of the pharmaceutical industry.
