Drugs and Olympic sport all-too-often share the same sentence for the wrong reasons. But if the run-up to the Rio Games was dominated by the stench of foul play, perhaps their aftermath can provide a more positive stimulant for the global drug industry. The most successful athletes at the Copacabana carnival reaped the rewards of four-year planning cycles that carried them towards their personal best. The pharmaceutical industry is similarly driven by long-term planning. But in a competitive field, many of its combatants fail to finish among the metaphorical medals. According to analysts, around two-thirds of new drugs fail to meet pre-launch sales expectations while half of all pharmaceutical product launches typically fall short of anticipated peak sales. If Strategic Planning was an Olympic event, the drug industry would need to find a performance-enhancing solution if it wanted a podium finish.
Perhaps that’s harsh. Strategic planning is notoriously difficult irrespective of sector. In 2014, the Forbes Leadership Forum cited a study that showed just 3% of companies believe they’re successful at executing their strategies. Even the most optimistic recent research finds that only around a third of businesses claim to be effective at implementing their strategic plans. That form won’t get many on the plane to Tokyo 2020. So how can pharma improve its performance? Let’s take a look at some of the basics.
From the top board
Strategic planning has a broad remit; it starts at the top of the shop with ‘corporate strategy’ and then cascades through an organisation, most obviously in the form of strategic brand plans. The former, of course, inform the latter. However, in the worst examples, the two remain as disconnected as Tom Daley’s mind and body in the semi-final of the men’s solo 10m platform at Rio 2016. Crucially, it’s the execution that will determine whether a strategy sinks or swims.
There needs to be a greater focus on emerging environments and better contingency planning
“Pharma companies are generally good at pulling together strategic plans – but there’s room for improvement in how they execute them,” says Joanne Henderson, executive director at Ernst & Young. “At the macro level, there’s a huge amount of change likely to happen over the next five years: regulatory pressures, increasing transparency and further changes in the market access environment. However, many plans don’t adequately account for emerging risks. Companies need mechanisms in place to monitor and respond to external drivers so they can align their strategic plans accordingly. They sometimes lack agility. There needs to be a greater focus on emerging environments and better contingency planning to ensure change is properly considered.”
Other aspects are firmly within companies’ control but are often handled suboptimally, revealing weaknesses in execution. “For example, many acquisitions fail to meet integration targets,” says Joanne. “This could be avoided through more considered strategic plans. Often, organisations focus on the top-line financial benefits of an acquisition without considering how it will be integrated into their front and back office operations. Companies can clearly articulate integration objectives, but their strategic plans need to detail how they’ll be met. Execution is often too far down the list.”
The successful organisations, says Joanne, will be those that understand macro trends and how they could impact their pipeline and portfolio. “It’s about asking the right strategic questions. For example, ‘Who is going to own ‘your’ patients in the future?’ (This may not be one of your traditional competitors). ‘What price will payers put on innovation in the future?’ With customers increasingly favouring real-world evidence over incremental innovation, understanding payers’ motivations in your therapeutic area will dictate your market access approach. Finally, ‘is your share of voice going to be in the right place at the right time?’. There is no longer a one-size-fits-all commercial model. These considerations, and knowing where you want to play in the continuum, will be crucial to ensuring your corporate strategy and brand plans are properly aligned.”
Track position
Understanding your market environment and how it might fluctuate is also a key constituent in an effective strategic brand plan. It’s the business equivalent of track cycling’s omnium – but with clearer rules – where knowing your track position is essential. Thankfully, in the digital age, pharma is blessed with good information. However, to be among the medals, companies could perhaps improve the way they use it. There is a huge opportunity to leverage so-called Big Data to inform agile strategic planning. But at present, the reality hasn’t yet caught up with the rhetoric.
“Pharma companies have rigorous methodologies for capturing commercial business intelligence – they’re exceptional at pulling in sales and marketing data, market research and competitor insight. However, the decision-making this intelligence triggers could arguably be improved,” says Fred Bassett, head of strategy, Blue Latitude Health. “Healthcare environments are fast-moving and complex. Yet pharma’s business intelligence operations, while sophisticated, are not sufficiently integrated into decision-making matrices, meaning that companies can be slow to act upon the intelligence they work hard to capture. There’s an overwhelming need to connect business intelligence and strategic planning functions much more effectively.”
There is also a growing need for companies to incorporate scenario planning into their strategic planning work. “Historically, pharma has done very little scenario planning. Typically, companies plan around a single scenario – a fixed direction of travel for a particular brand or market – and track progress against it. However, the single scenario approach no longer works. For example, when competitive data emerges that doesn’t align with that single view, it’s difficult to understand whether it’s a shift in strategy by your competitor or just a random datapoint. Proper scenario planning recognises that markets diverge rapidly and that, to respond appropriately, you need to be aware of – and prepared for – all the potential triggers and indicators that could arise. It’s an essential, but still underused, component of strategic planning.”
Fortunately, says Fred, there is now a growing appetite for scenario planning. This is coinciding with a growing recognition that old approaches to strategic planning need to be rethought. “Organisations are constrained by the notion of the annual plan – things are moving much quicker. There’s a real need for companies to conduct more regular reviews of their data and their assumptions about the way their market will develop. Organisations must take a more structured approach where they look for changes and exceptions – because more often than not, they will signify changes in competitor strategy that require a competitive response. At present, there’s a real risk that planning processes are neither agile nor refined enough to cope with the volume of data or the speed of change.”
Reaching new audiences
One scenario that is clearly panning out is the transformation of pharma’s customer-base. The range of stakeholders the industry must now engage is comparable with a modern pentathlon; the market is dominated by diverse disciplines each requiring a different approach. But while the emergence of payers and non-clinical decision-makers is yesterday’s news, the implications for pharma’s commercial strategies are here today and reshaping tomorrow. And they’re dictating new approaches to strategic planning.
The challenge is to … provide a business case that demonstrates the value of your medicine
“Market access is the new marketing,” says Tim Warren, managing director, Triducive. “However, current narrow definitions of market access are creating limitations as to where it fits in the strategic planning jigsaw. Market access is often seen by clients as Pricing & Reimbursement, or the process through which medicines achieve HTA approval as an extension to established regulatory hurdles. But market access – or patient access as it’s increasingly being called – is much more holistic than that. It touches all the domains of traditional marketing: What is the utility of the product? In which patients should it be used and which stakeholders influence its adoption? What price can it command? And how do all these variable combine to inform its promotion? These considerations are the essence of classic marketing (essentially the 4 Ps) and are at the very heart of access strategies. Pharma’s appreciation of market access therefore needs to transition from being a simple line under a strategic plan – to being accepted as a fundamental driver of the strategic plan itself.”
Strategic planning is ultimately about aligning operations and activities with the most appropriate audiences – and it’s here that brand plans feed back into the corporate strategies that set out where businesses choose to play. “Success is all about setting and meeting crystal clear objectives,” says Tim. “It’s about having clarity in what you want to achieve from the market and understanding the beliefs and behaviours you need to change to get there. A good strategic plan recognises that there’s a range of stakeholders that need to be influenced and supported: from HTA bodies, local implementers and non-clinical audiences to GPs, consultants, nurses and even patient groups. The challenge is to pull it all together into a cohesive plan that shows you understand the clinical rationale, the patient rationale and the health economic rationale – and can provide a business case that demonstrates the value of your medicine. That’s the underlying principle of an effective market access strategy – and the fundamental goal of every strategic plan.”
Performance-enhancing
The general principles of strategic planning essentially boil down to common sense. Yet, like every highly regulated industry, pharma can often be guilty of over-complicating the process. The coaching manual, however, is clear: the longer the plan, the more likely it is to fail. But with estimates suggesting it now costs almost $3bn to bring a drug to market, failure is not an option. Perhaps it’s time for pharma to draw inspiration from British Cycling and focus on delivering marginal gains in its strategic planning. After all, if we can get drugs and cycling into the same sentence without having to inform WADA, that really would be a gold medal performance.