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Sink or swim

Excessive spending and borrowing has had an inescapable impact. How can pharma stay afloat in the new age of austerity?

A smiling piggy bank floating in waterThe UK coalition Government's emergency budget spells out how it plans to curb spending and start paying back the country's debts. This was to be expected, if not welcomed.

In light of these developments, there is now much talk about the 'age of austerity' we now find ourselves in, and the need to pare back to the essentials. We are being told to look afresh at how to achieve the results we need. This is a difficult lesson to learn — for individuals, but far more so for the State.

The field of pharma marketing needs to adapt to fit into this new environment.

The last time Britain was considered to be in an austere mode was in the post-war period (1945–1951) and we still hear about how bad things were back then. But we also know that there was a spirit of recovery, camaraderie and optimism about the future. At that time the NHS was shiny and new, and did not have to cope with the demands it does today. Today's period of austerity is likely to hit that much harder because it follows a period of apparent abundance. As the saying goes, you don't know what you've got until it's gone.

Adapting to austerity
Yes, everyone is going to have to tighten their belts for a while longer, and we are going to have to get used to hearing about how we must learn to make limited funds work harder.

For pharma marketers, this new climate presents an opportunity to reassess where budgets are being spent and allows them to realign their activities to get the most for their money. It is also a time for pharma to think more than ever about its biggest customer: the NHS. The NHS, in keeping with the rest of the public sector, is broke. Many of its employees are facing a two-year pay freeze, or worse, according to the Royal College of Nursing. Even with overall Department of Health spending escaping some of the worst cuts (so far), money is going to be tight for the foreseeable future.

While it may seem that the health service fared better than most in June's Budget, it must still make considerable savings and there may be even more bad news to come with the Government-wide spending review later this year.

In this environment, pharma is going to have to work closer than ever with the NHS, helping it out where possible, and supporting it through this time.

Back to basics
Austerity is a time for getting back to basics. Most in the developed world would agree that medical drugs are not luxury goods, but one of life's essentials, hence drugs sales do not suffer greatly during a recession. This level of protection from economic variance being the case, we should be asking whether glossy, expensive marketing campaigns for pharma products are still appropriate.

Now more than ever, pharma needs to listen and learn in order to understand its customers' situation before deciding how to position a product. This situation is, in fact, not restricted to pharma, but applies equally to other 'life necessities'. For example, Waitrose, a relatively luxury brand of supermarket, has realised this need and responded with the essential Waitrose range, the slogan of which is 'the quality you would expect at prices you wouldn't'.

Understanding your market does not necessarily mean conducting lots of expensive, bespoke market research. People — patients, healthcare professionals, carers and service providers, among others — are now talking online about what they want and the levels of service they expect. Simply listening to these conversations will tell you a lot and put you in a better position to respond to these needs. Additionally, this type of active listening can be implemented in a time- and cost-efficient manner.

Particularly in austere times, the art of conversation should not be underestimated; everyone likes to feel that they are being listened to. Many pharma companies are now (rightly) re-evaluating their strategies and putting people — as people, rather than 'patients' — back at the centre of their decision making. This is a step in the right direction, but the majority of people are not choosing or paying for a particular prescription drug. This means that conversations also need to take place with those who are.

Driving the conversation
Right from the earliest stages of the drug development process, pharma should be asking: "What can we do to help the NHS implement this new treatment or procedure? How does it fit into the way patients are cared for, and what additional benefit does it offer?" 

The current climate demands a greater emphasis on what specific problem your drug will solve and how you're going to help with any additional costs (in terms of either administration or support) associated with your product. You should be asking yourself what unmet need, beyond the actual treatment, you can help with, especially in light of consulting budgets being slashed. 

You must listen to and understand your market. Never forget that your market is composed of more than simply the physician, who is under more pressure than ever to think like a business owner, but also incorporates the media landscape, government pressures, patient organisations, NICE; in fact, anyone who uses the healthcare system. Considering the needs of this diverse range of 'customers' is essential before you can decide on the marketing needs of a product. The most important aspect, however, as with all businesses and individuals, is that pharma needs to spend its money wisely, now more than ever. 

Money well spent
From an early stage in a product's lifecycle, all key stakeholders need to be engaged with a compelling rationale for why the drug is needed and the value it brings to patients and the NHS.

In an ideal world, all drugs that meet a real unmet need would be adopted swiftly by those who hold the budget, thus removing a current barrier to prescribing. Increasingly however, it seems it is now not sufficient that the clinical effectiveness and safety of a treatment are proven, but it must also be cost effective. This has been seen with many of the new cancer drugs that have been precluded from taking up NHS budgets by NICE. It will be interesting to see what impact the latest NHS reforms, as laid out in the Liberating the NHS White Paper, will have if prescribers are to hold these budgets and make purchasing decisions themselves.

In post-war austerity Britain it was food that was rationed; now it seems it will be drugs, to a level that we have never witnessed before. Food rationing after the war resulted in a fairly healthy diet for most, and as a consequence, the general health of the population improved. The rationing of drugs, however, is likely to have the opposite effect.

Assuming your product meets a real need and you have listened to what people have to say, what is the next step? How can you make your money work harder?

It is interesting to look at the power of internet search and the impact this may have in austere-NHS Britain.

Google is a common starting point for payers, healthcare professionals, carers and people with medical conditions who are seeking out information about treatments. The first page of search results may inform an individual's subsequent attitudes about a pharmaceutical product. The content accessed via any search engine, which acts as a 'knowledge filter', will inevitably shape opinions about the value of any new treatment proposition. Understanding the aims and needs of the institutions that rank highly in healthcare searches and having something to say about your treatment is important in delivering effective, pared-back communications. 

If you Google any generic drug name, or any brand for that matter, what results come up on the first page? Apart from the US-branded website there will be: Consumer-generated content by way of blogs, Wikipedia entries and YouTube videos; traditional news coverage, usually from a well-used and regularly updated site such as the BBC (which often dominates a search result, as many internet sites link back to such content); probably patient group websites and medical journal references.

This is a good place to start when considering where you can have the most impact. By working with an agency that knows how to create online content, and has excellent relationships with journalists and patient groups, you should be able to have a voice on nearly every item on that first page of search results. Of course, excellent relationships with all stakeholders are paramount here, and must have been nurtured over a period of time; picking up the phone to a journalist who is a complete stranger will rarely land you coverage. The same goes when we consider other knowledge hubs — a last minute blitz to establish friends rarely works. Such relationships must be forged from trust and respect, which can only be fostered over time.

Austerity can bring benefits
Historically, periods of austerity haven't lasted long and can teach us good lessons for the future. It is no bad thing to get back to basics and spend money more wisely. Reducing waste in all aspects of life will continue to be important, if not just from a sustainability point of view. Who knows, it may even have a positive impact on healthcare delivery and communication. There is an opportunity for pharma to build sturdy bridges with healthcare providers during this time of austerity, emerging at the end of it as a valuable partner. This will put pharma in a much stronger position when the money eventually starts to flow again.

The Author
Claire Eldridge is co-founder and managing director of Aurora

To comment on this article, email

12th August 2010


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