- Experienced marketing line manager, management consultant with four decades experience esp. new product & market development.
- McKinsey senior advisor and partner, serving clients in retailing, consumer goods manufacturing, financial services.
- Business development and worldwide marketing for PricewaterhouseCoopers, Merck, PepsiCo.
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Facing the New Realities in Pharma and Biotech Marketing
- The changing mix of products – with fewer products that have home-run potential – poses marketing challenges.
As the blockbuster-drug mindset enters a period of, at best, hibernation, pharma will be forced to adapt to the new reality of portfolios made up of products bearing more modest prospects. Having grown accustomed to the near certainty that diligence and patience would eventually open the floodgates for cash, the average company is now looking at a scenario where more small victories may have to take the place of a single big winner.
That fundamental change will have an impact on companies from top to bottom, but marketing will be one of the most affected areas. Specifically, marketing will have to become a much more adaptive business activity for many companies. A pursuit that may have been a sidelight in an era when supply virtually ensured demand, marketing to build demand and a climate for sales is set to take on a more vital role. Intelligently pursued, it stands to become the linchpin in translating all elements of a prospective new product’s potential into tangible results.
- Proportionate costs of launching products will grow.
As pharma slowly transitions to a business model that emphasizes generating a higher volume of smaller margin opportunities, development costs are bound to receive more scrutiny.
When blockbuster drugs ruled the day, the costs of bringing products to market, though astronomical, were bearable because of the anticipated returns. As a percentage of expected profits, those costs could be easily amortized over the product’s life.
Now, with the focus on developing products that individually may yield only a fraction of the revenue of blockbusters, costs will have to be watched more closely. The hard truth, though, is they’re not likely to shrink, either absolutely or proportionately. In fact, they may only grow as the price of accessing new science, staging trials and securing approvals in a crowded market, increases. Throw in marketing, an element that will have to be seriously ramped up to find and exploit new opportunities, and it’s plain that cost control will take on a new importance.
- Pricing pressure will squeeze margins.
In the face of more competition, greater scrutiny of efficacy and costs, and a more regulated marketplace, pharma will see its bottom line come under more pressure.
The pressure to cut prices on products that require massive investments will be felt most acutely in markets that are relatively easy to enter, but hard to get traction in. Undifferentiated markets, in which many companies are competing for the favor of payers and buyers with “me-too” products, stand to be the source of some of the greatest pricing squeezes.
Add in escalating costs to commercialize products, and the new obstacles facing an industry that grew accustomed to writing its own ticket appear formidable.
- Small biotechs are emerging as essential partners.
The quest for new drugs is taking pharma in new directions that represent a major departure from old methods of drug discovery. While in-house efforts still dominate, companies are increasingly looking to leverage the partnership model as a method for streamlining discovery, spreading risk, controlling costs and tapping ground-breaking new technology.
Biotechnology companies, many small and highly speculative but possessing the seeds of new discoveries, are emerging as a big players in the development scene. That’s setting up a challenging new transactional dynamic in which large drug marketers eager to secure the technology platform for new products are meeting small biotech companies across the table.
Both parties will be challenged to master the nuances of this new “partnership of unequals” model, one that’s likely to become pivotal in taking drug development down an entirely new and essential path to the promising frontier of “personalized,” genetics-centric medicine.
- Consumer power will test readiness to engage.
From curiously being a middleman of sorts between prescribers and drug marketers, the consumer/patient is moving into a rightful position of power. As consumers are handed more discretion and say in managing their medical affairs, pharma will be challenged to speak more directly – and clearly – to patients, careful to walk the fine line between marketing and selling and offering responsible medical advice in the process.
The effort to engage the end consumer isn’t new, but it is beginning to take on more urgency and will require more creativity and clear thinking about messaging strategies. With the rise of social media and new avenues for reaching consumers, pharma will have to be more precise in when, how and where it connects.
The rise of the patient as a decision maker and prescriber-influencer will test pharma’s readiness and ability to speak effectively to what amounts to a new stakeholder. The industry will be forced to ramp up and refine all of its direct-to-consumer efforts, at considerable cost, and find reliable methods of measuring the return-on-investment in the context of market share and influence on prescribers.