Building strength

The business environment in which we now operate has brought significant (and well documented) pressures for all pharmaceutical companies to reduce costs. R&D and marketing — areas of spend that were once "off limits" for cost reductions — are now a focus for most CFOs, and they are starting to feel the impact. This drive to reduce costs comes at a time when marketing directors are supporting an increasingly complex portfolio and operating under unprecedented scrutiny from a compliance point of view, but there are, nevertheless, strategies to optimise the marketing function that companies can undertake in response.

By examining techniques that companies in other sectors have implemented in response to similar challenges, pharmacos can learn valuable lessons.

The challenges
Historically, pharmaceutical marketing has been allowed to follow a "spend for growth" approach. Financial decisions for marketing funding were frequently based on RoI decisions, littered with assumptions that sounded good, but were just too difficult to prove or disprove. For example: "this event is worth funding as the external message recall will increase if we can have these opinion leaders at the symposium," or "This local subtle change in message will drive an increase in prescribing behaviour and hence the investment in new marketing collateral is justified."

This era has ended abruptly and marketing directors are now under pressure to demonstrate clearly the RoI of investments.

The drive for cost effectiveness has meant that marketing directors need much greater visibility of what is happening in and across the organisation: who is using what collateral? What is being spent on local message testing? And, if the local testing is largely repeating what has already been tested globally, what is the reason for this?

In the last 18 months there have been several high profile compliance fines, with pharmaceutical companies paying over a billion dollars for marketing compliance violations, including off-label usage, bringing even more scrutiny to bear on all marketing activity and marketing spend.

The marketing function is also becoming progressively more intricate. This is driven by:
• Increasingly complex product portfolios. As blockbusters are coming off-patent, they are being replaced by mid-market, generic and OTC drugs, which have lower margins.
• An increase in stakeholder complexity and a shift in powerbase, driving a need for greater insight into the patient, payer and prescriber community. Ultimately this will deliver individually tailored communications, requiring a greater level of marketing maturity.
• Increasingly sophisticated drug pricing: many governments now require outcome-based pricing, which is more complex to manage.
• The greater prevalence of co-marketing, which, by its nature, requires more management.

The maturity scale
Fortunately, several industries have demonstrated successfully the traits necessary to thrive in this environment, and life science marketers can learn from them. One strategy that other industries have used is exploitation of technology to drive automation, reduce transaction costs and better target spend, thereby freeing up resources to drive value-added services. Others have also conducted in-depth customer segmentation, which allows them to take more tailored approaches to their customers and increase the focus and effectiveness of their campaigns.

Technology companies, such as Dell, Apple and Panasonic, could superficially be perceived as product-focused companies, however, their approach is highly tailored to the customer need. Pharmaceutical companies could learn from the way these companies have taken cost out of their transactional channels to concentrate effort on building the brand. Crucially, they have all invested in understanding and segmenting their customers in a highly sophisticated way. The next lesson we can learn from this is that developing services around products adds high value for the customer, ensuring increased levels of repeat business or, in the case of pharmaceutical companies, repeat prescribing.

Fast-moving consumer goods (FMCG) companies, such as Unilever, P&G and Pepsico, have multiple stakeholders with multiple products in different categories. Like pharmaceutical companies they deal with customers, in the majority of cases via an intermediary (in this case the retailer). They also face a complex stakeholder structure and optimise use of marketing budgets through a relentless focus on marketing RoI. They have implemented centralised technologies to capture and analyse marketing spend, which allows them to take effective action to correct the impact of their decisions. The feedback loop for pharmaceutical companies, especially with ethicals, is longer, but it is no less important to understand and act on this feedback rapidly to address stakeholder needs.

These traits are indicative of mature marketing functions, which have made a shift from ad hoc activities focused on key events (in the case of life sciences, these are product launches and key campaigns) to customer-focused operations that seek out the needs of all customer groups for both products and services. There are four 'states' in this journey towards maturity:
• Ad hoc: predominantly collateral creation and support of key events.
• Product-focused: support of individual brands with traditional techniques such as collateral and advertising.
• Service-focused: segmentation into solution areas (such as therapeutic areas) with marketing providing product information and services to support the product. An example of this is diabetes management, which — in addition to drug prescribing and delivery systems — in many cases also includes blood testing meters, educational and nurse support.
• Customer-focused: seeking out the needs of all customer groups for products and services and using a multichannel approach to tailor messages to a suitable level.

The six pillars of marketing
There are six "pillars" of the marketing function that can support this transformation. These are:
• Marketing strategy — the corporate marketing strategy needs to accommodate subsidiary strategies relating to brands, therapeutic areas and stakeholder influence. It must address the growing complexities of the market with respect to channels, changing influencers and portfolio expansion. The increasing influence of non-healthcare professionals needs to be considered and addressed. The strategy must include measures better to exploit alternative channels to market (for example, internet or telesales). Equally, approaches such as key account management (KAM), supported by accurate segmentation models, should be considered to improve targeting of customers.
• Planning and performance management — "What gets measured gets done" is the mantra for performance management. The whole marketing function must be governed by a balanced and well-aligned set of metrics focused on customer satisfaction and RoI. The metrics must align to, and cascade from, the centre into each segment. This must be supported by clean and reliable data to remove the need for 'negotiating' the results on a regular basis.
• Marketing organisation — companies must consider the most effective and cost efficient delivery models for their services. The current model employed by the majority of life science companies tends to drive duplication at a local level. Having absolute clarity of the respective roles and responsibilities of global and local and following these strictly allows local affiliates to concentrate on driving localised campaigns which, by the very nature of the market, need to be more customer focused and complex.
• Marketing process — marketing processes should be efficient and focused on value added to the customer. Those processes identified as having low or lower value add can then be redesigned, centralised and/or automated as appropriate. For example, the direct sales channel: while this is not directly a marketing cost, supporting the sales channel constitutes a significant element of annual budgets.
• Skills and competencies — the changing needs of the marketing function have altered the profile of the ideal candidate. Staff now need to be able to work in small, focused teams supporting a wider product portfolio and stakeholder community in new ways.
• Information and technologies — technology support (such as workflow and campaign management, budget and spend visibility and so on) is essential to enable a shift from the provision of transactional services to support value-added and customer-focused outputs.

Conclusion
To translate the success stories of other industries into workable strategies, life sciences marketers must focus on these six pillars of marketing, which will allow them to achieve a customer-focused maturity embedded within their organisation. This will align the marketing strategy across therapy areas, between chronic and acute diseases and across key stakeholders, thereby ensuring a comprehensive and coherent approach tailored to the needs of the customer. In this way the pharmaceutical marketing function will reach maturity.

The Author
Adrian Howells is a managing consultant in Capgemini's life sciences team

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