Pharma Marketing Model Modernization, Marketing & Advertising News, ET BrandEquity
According to Milan Kundera, Czech author and playwright, business has only two functions: marketing and innovation. And nowhere is his saying more visible than in the pharmaceutical industry.
In most cases, marketing is the process by which goods and services move from manufacturer to end user or customer. For the pharmaceutical industry, however, it’s a bit more nuanced and complicated; it doesn’t fit in the same general box.
Instead, think of pharmaceutical marketing as a well-organized information system. For physicians, it is about access, availability, effectiveness and efficacy of specific drugs, whether old or new, patented or generic. For patients, the information system aims to provide an understanding of the benefits – and the risks or side effects – of drug consumption.
Which, of course, raises the issue of marketing budgets and numbers, a tricky and often polarizing topic when compared to other numbers. An analysis by American Health Insurance Plans (AHIP) found that in 2020, 7 of the top 10 global pharmaceutical companies spent more on sales and marketing than on research and development (R&D) of new drugs.
GSK ($15 billion in sales and marketing versus $7 billion in R&D), Abbvie ($11 and $8 billion), Johnson and Johnson ($22 and $12 billion) and Bayer ($18 and $8 billion) were among the biggest spenders, the other three being Pfizer ($12 and $9 billion), Sanofi ($11 and $6 billion) and Novartis $14v and $9 billion).
For these 10 companies, sales and marketing spending exceeded R&D spending by 37%, or $36 billion. Bristol Myers Squibb, Roche and Merck – the remaining three companies – spent more on R&D than marketing.
What about Indian pharmaceutical companies? Citizen Civic Action Group, a non-profit organization based in Chennai, conducted a similar analysis over 8 years (2008-2009 to 2016-17) comparing the marketing and R&D expenditure of the 7 largest Indian companies, found that in two cases – Sun Pharma and Cadila Santé – marketing expenditures exceeded R&D expenditures. Over the 8-year period, however, spending on R&D (INR 41,590.51 crore) exceeded marketing (INR 34,186.95 crore).
The comparison can, however, lead to a false dichotomy, depending on how it is used. Marketing is built around keeping products current; R&D is a strategic decision that aims to address future product development in the longer term. However, the common denominator across all pharmaceutical markets is that almost 90% of all marketing spend goes to the healthcare provider – the doctor – rather than to the patient, who is the end user.
Furthermore, scientific advancements – the decoding of the human genome – and the application of computer technologies – big data analytics and artificial intelligence – have radically changed the pharmaceutical marketing landscape. In India, the same goes for regulations, which have forever changed the doctor-doctor relationship.
On the one hand, marketing must move from the drug – the “product” – to the patient. Not just marketing, but the focus of the healthcare delivery system is now all about the patient. The diagram to the right represents the change in relationship, a change that also irrevocably changes the “purpose” of pharmaceutical marketing.
On the other hand, the democratization of health information – thanks to the Internet – helps patients and families to do their own research on their conditions and related drugs and therapies, especially with regard to non-communicable diseases. (NCD) – diabetes, cardiovascular disease, chronic obstructive pulmonary disease (CVD), cancer and chronic obstructive pulmonary disease (COPD) – which now account for more than 60% of all deaths in India.
Third, the 4Ps of traditional marketing need to be rewritten. ‘Place’ or ‘Promotion’ have no effect if a fifth P for ‘Patient’ is excluded. When you put the patient at the center – as the diagram referenced above does – the relative positions of other stakeholders in the health care delivery system must also adjust.
Health system players are increasingly talking about “patient centricity”. Which brings us to another highly contested “P” in the context of this particular industry: “Price”, which in India is subject to intense regulation. Given the socio-economic fabric of the country, affordability jostles with access to prioritize.
Let’s review for a moment the composition of marketing expenditure in the pharmaceutical industry. Data from previous studies indicates that 56% of companies’ marketing spend is on free samples, 25% on field staff or medical representatives;’ doctor visits and about 12.5% on direct-to-consumer advertising (but only in the United States and New Zealand). The rest includes “others” such as continuing medical education or CME.
What is missing or eludes mention?
Recalibrating marketing spend between direct-to-provider and direct-to-patient should include effective “patient communication” as an important element. This requires a multidisciplinary approach that integrates disease awareness, disease management, and integrated health management into most health care conversations, enabled by and with health care technology.
From now on, communications with patients will matter much more than conversations with providers; it transfers control of health management from the provider to the patient. Ultimately, that’s what it’s all about. Why should that matter?
Think of Maya Angelou, activist and poet: “I learned that people will forget what you said, they’ll forget what you did, but they’ll never forget how you made them feel.” After all, she knew why the caged bird sings.