Marketing Communications in the Pharmaceutical Industry

Peter Holden

• Publisher: CRC Press
• Year: 2018
• ISBN:
  9781315343976
• Edition: 1
• Topic: Medicine
• Subtopic: Public Health, Administration & Care

Specialists drawn from industry, agency and academia explain the role of the various elements in the marketing communications process, and show how a reassessment of the marketing mix can result in a positive response to challenges imposed by a changing commercial environment. The pharmaceutical industry is often used as the model to illustrate proven techniques and creative innovation in marketing; although primarily intended for all those involved in the pharmaceutical, healthcare and allied industries, the book should be of interest to a much wider readership.

1

Pharmaceuticals – the Ultimate Gamble?

Peter Holden

Britain’s pharmaceutical industry is one of the great success stories. Whilst industry in general is in the doldrums of recession, the pharmaceutical industry moves ever onwards. In 1990 it earned a record trade surplus of £1 billion, a 15% increase over the previous year, and there is no reason to believe that this trend will not continue into the next century. 13 of the 50 most widely prescribed drugs in the world were developed in Britain; three of the six best selling drugs in the world were developed by British companies; and four of Britain’s biggest companies by market value are involved in pharmaceuticals manufacturing. A great success story, but despite its successes the pharmaceutical industry faces increasing difficulties. As we approach the twenty-first century these are twofold: on one side there is pressure on prices from the National Health Service (NHS) management changes; on the other, drugs are becoming more expensive to research and develop.

Current estimates are that for every 10,000 compounds investigated by the industry for possible development into a new drug, only one emerges through all the trials and reaches the marketplace. With such odds stacked against it, the pharmaceutical industry is involved in a constant gamble. The stakes are indeed very high and so are the rewards if the gamble pays off. It takes an average 12 years and £120 million to bring a new drug to the market. This leaves only eight years of patent protection to recoup the cost and make a return on the investment. After this time the patent expires and any one of the generic manufacturers may copy the original compound; and having not had to bear the research and development costs they can sell the generic drug much more cheaply.

The nature of the gamble in pharmaceuticals is serious. Only eight years to recoup the cost and maximize the return with a healthy profit means incredible pressure on the business end of the company in order to get the marketing absolutely right. Many very good new drugs have failed to meet their full potential because of poor marketing, missed opportunities or changes in the market environment which were not forecast.

If a company fails to produce enough big new drugs it will not be able to grow in real terms. Such a company will stagnate and be a target for takeover or merger. As new chemical entities become more scarce and take longer to develop, more and more strategic alliances are taking place. Co-promotion and co-marketing deals are becoming frequent, allowing companies to carry extra weight and make more noise in the marketplace.

Selling to a single customer

A unique factor influencing the pharmaceutical industry in Britain is that it has in the main only one customer, the National Health Service. In 1990 the total expenditure on healthcare services was estimated to be about £32 billion; in 1995 this is estimated to be in excess of £40 billion. The NHS accounts for 90% of healthcare expenditure, the balance being in the private medicine sector.

Expenditure on healthcare has increased significantly in recent years: there was a near eightfold increase in per capita health spending in the last 15 years. A major factor contributing to this dramatic rise in healthcare expenditure is the increase in size of the ageing population, which places a more frequent and greater demand on services. Additionally, the cost of manpower services within the NHS is significant: more than half of the total NHS costs are accounted for by the wage bill.

The Government has responded to the twin threats of escalating costs and growing demands on services, and major reforms have been introduced. In January 1989 the White Paper Working for Patients was published, which signalled the Conservative Government’s intention to instigate wide-ranging reforms in the NHS. Working for Patients came into operation in April 1991.

The government reforms have been founded upon the tenet of market forces. In effect, an internal market has been created which is intended to shorten the lines of communication between doctor, patient and the Government. Competition is the main ethos, with the appointment of business managers to implement the competitive process. The principal targets for the NHS reforms are the control of the rising costs in the hospital sector, and the increasing costs of drugs.

Pharmaceuticals represent a relatively soft target for the Government compared with other forms of expenditure. The pharmaceutical industry is policed by its own organization, the Association of the British Pharmaceutical Industry (ABPI). To date the ABPI has been none too successful in pleading its members’ case to Government and it is doubtful if it will ever be more than the reactive moribund body into which it has developed.

The NHS reforms, prescription analysis and cost data (PACT), indicative drug budgets, practice budgets and formularies will all place a downward pressure on drug expenditure.

Impact on industry

There will be many and various effects of the NHS reforms on the pharmaceutical industry. Companies have already begun to realize that, whereas they had previously sold their products to doctors, now a whole new customer audience needs to be addressed. This new audience will comprise not only the medical profession, ie prescribers, but also key decision-makers in the new NHS. Family Health Services Authority (FHSA) managers and medical advisers are of fundamental importance to companies, as are regional pharmaceutical officers and members of formulary committees.

Already companies are realizing that communications to the new audience cannot be facilitated merely by increasing the size of their sales force. Communications have to be specifically targeted and focused on the key decision-makers and skilled negotiators are needed. Business managers focused on NHS managers are now becoming commonplace in those companies who are ‘ahead of the game’ in their response and reaction to the changing environment. It is becoming apparent that specific ‘high-cost’ areas are being targeted by the new breed of NHS managers. Non-steroidal, anti-inflammatory drugs (NSAIDs), antibiotics, cardiovascular and anti-ulcer therapies have been identified as areas where doctors believe that treatment is unjustifiably ‘high-cost’.

Those companies involved in the above therapeutic areas will need to respond to the downward pressure by skilfully using cost benefit data, quality of life studies and educational initiatives in order to make their position viable and continue to thrive in a hostile environment.There can be little doubt that in the current ‘anti-pharmaceutical company’ environment the speed of new product uptake will slow, and there will be an increased move to generic prescribing.

Response to change

Change is a stimulant or a narcotic. Depending on your response or viewpoint you can either be a rat or a squirrel. When changes in the weather become apparent the squirrel heads for its hole and hibernates for the winter; the rat meanwhile goes about its business and produces more rats with no regard at all for the weather. It has been said that a squirrel is only a rat with good PR!

Pharmaceutical companies will need to respond to the changing environment by a proactive response and a shift in emphasis of their promotional machines, and the need to respond to the downward pressure of indicative budgets and formularies will lead ‘thinking companies’ to question and reconsider their marketing mix. Advertising and sales as direct promotional activities will be there but they will not be so much in the forefront. ‘Below-the-line’ communications activities involving a whole panoply of activity will begin to predominate. Educational initiatives, media relations, third party endorsement, marketing communications through symposia, seminars and publications, will become a more significant force.

Marketing communications in the pharmaceutical industry will be the main pieces which make up the jigsaw which gives the big promotional picture.

2

Internal Communications

Val Seddon

The importance of the internal market

Issues surrounding the pharmaceutical industry

From animal experimentation and profits to side effects and ‘wonder drugs’ there is much about the pharmaceutical industry to stimulate comment, if not actual motion. The media’s love-hate relationship with the industry is a passionate one and acres of tabloid coverage are readily devoted to perceived successes and failures, particularly the latter.

People working within such an industry, which provokes very strong views – both positive and negative – among the general public, can often feel challenged. In addition to reacting to the views expressed by family and friends, employees also have their own prejudices and preconceptions. They need information in order to respond positively, and it is only by being well informed about their employer’s business and the issues surrounding it that they can defend and even champion themselves, their employer and ultimately the industry.

A heritage of secrecy

For many years the industry’s response, both corporately and in terms of individual companies, was to stay as far below the parapet as possible. In external relations, tactics have been changing for some time: this is reflected in the increasing importance attached to public relations teams and the developing sophistication of the external advisers available to them. Like all good salespeople, pharmaceutical companies have begun to address objections directly. Nevertheless, while marketing and communications professionals have pushed forward the boundaries of external relations, the heritage of secrecy is still strong and internal relations may be its last bastion.

It is still possible to find otherwise well-produced house journals, the content of which bears little relation to the business of the company which produced them, and in which working life is depicted as a jolly round of parties, presentations and carefully back-lit managing directors. The pharmaceutical industry is by no means alone in contributing to that bland and sanitized view of internal communications, but it is a regular offender. Even when international corporate policy advocates openness and debate, local management may take the view that the less said the better.

Every employee a PRO

The mythical target of ‘every employee a PRO’ is just that. Even pharmaceutical companies are not stuffed from delivery bay to boardroom with skilled presenters, each with a broad grasp of the company’s position on a range of complex issues. Yet it is not unreasonable to suggest that the warehouse foreman should know the main disease areas in which the company specializes, that the sales secretary should understand the timescales involved in clinical trials, and that the representative in Caithness should be aware of business initiatives in Cairo.

If internal communications helps employees to do their jobs better, and to feel better about the jobs that they do, then its costs are justified. In any industry a well informed workforce is conducive to better business performance.

The internal communications process should make every employee feel that he wants to speak positively about the company.

Defining ownership

Own the system or use it?

If internal communications is about helping people – and hence companies – to understand and achieve targets, we might make the assumption that responsibility for internal communications automatically falls within the marketing function. This is not necessarily the case. From personnel to finance, from local site manager to the corporate parent hovering in the background, there are many who have an interest in and seek influence over the internal communications function. Internal communications involves access to and control over information and in any company this equates automatically to power.

The first question which any marketeer considering internal communications must answer is whether he wishes to own the system or simply use it

Contenders for ownership

A well-structured and professionally managed communications programme should meet the needs of all senior managers since, ideally, both system and managers are geared to the common goal of meeting the company’s objectives.

The realities are often rather different: responsibilities for communicating with staff can be fragmented and parent companies, individual sites, training departments and personnel departments all muddy the waters. In addition, the presence of so many European and American companies within the industry means that there is often a strong flavour of other cultures in corporate communications which then sit uneasily alongside the local product.

The marketing manager with a message to deliver to the internal market will review the media currently available within the company, and his access to them. If the vehicles available do not suit his purpose, he must seek to introduce tactics which are as measurably effective as the rest of the marketing programme. The politics of such a manoeuvre will vary greatly according to the size and culture of the company, but the mechanics are logical, quantifiable and can be practically applied.

Establishing and agreeing objectives

Communications planning is as precise as any other aspect of the marketing ...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright Page
• Dedication
• Contents
• Foreword
• List of Authors
• 1 Pharmaceuticals – the Ultimate Gamble?
• 2 Internal Communications
• 3 The Role of the Medical Department
• 4 The Sales Force
• 5 Meetings, Symposia and Conferences
• 6 The Role of Advertising in Communications
• 7 The PR Consultancy
• 8 Opinion Leaders
• 9 The NHS and its Managers
• 10 Marketing Communications – the Future
• Abbreviations
• Index