The old model of health and pharmacy visitors does not work as well as it used to do. Also the sponsoring of scientific activities and congresses so successful in the past is nowadays so effective as it was. Recently a German representative of the fertility sectors told me: “Many drugs that sell now with good margin will become generic soon. Companies are very concerned and many are considering a cut of the sponsoring activities.”
The traditional model of medical visits and sponsoring is not working well
Until now the traditional and 2.0 marketing part have been working reasonably well. However, for various reasons, the pharmaceutical business models are becoming less effective. One of this reasons is well known: develop and market effective molecules takes many years, a lot of talent and a lot of money. Develop a drug takes about 12 years (including marketing) and costs about 800 million euros. Only one of every 9,000 molecules enters clinical research and of these, only 20% are sold. The useful life of a drug is 20 years in theory, but in practice competition, similar molecules and the fact that you can request a generic drug 8 years after registering a patent, greatly reduce the margin of a drug.
There are more reasons for the decline in profitability. The withdrawal of public sector from health for over 30 years is accelerating now with the crisis. Demographic aging plays in favor of the industry due to the increase of chronic diseases coupled to life expectancy, but this factor is weakened by the withdrawal of the state; public administration tends to cover less and chose generic medication. Also private insurance-more hurt by demographic change than they admit- tends to finance less treatments for the elderly with different strategies, if not openly forcing them out the insurance.
First, consumers are better informed and are not listening to any marketing message. Tehy compare drugs, their properties and prices.
Second, consumers are much more aware of the strategies of the laboratories and many are suspiciousof what their doctors prescribe them. Mothers attending pediatricians know and comment in forums that they are prescribed either medication or recommended milk or food types according to the physician’s commercial interests This is more serious than it looks for brands, as the doctor-patient relationship is based on trust; a relationship that is transferred to the pharmaceutical product and therefore to the company itself that becomes the “evil pharmaceutical company. ”
Finally, conversations 2.0 on social networks among patients reinforce and amplify any malpractice, the bad image described above is thus consolidated. There grows a feeling feeling of distance from companies preceived as far entities deaf to patient’s problems and pain and concerned about their interests.
One of the ways in which pharmaceutical companies have reduced development costs has been open innovation. Pharmaceutical industry was the first to use crowdsourcing platforms and online co-creation to reduce research costs and multiply talent. Procter & Gamble is considered to bes the first company to harness the power of internet through their Connect and Develop Platform . Pharmaceutical companies immediately saw the potential and asked “How many top scientists specilized on given molecule do we have? Regardless of how much talent we do have, there is much more outside. ”
Of course, nobody suspected that a strategy that began as a way to increase the productivity of R&D would eventually generate boost sales potential. According 3M co-created projects with customers are 8 times more profitable than normal projects and in this blog and have described numerous examples of sales increases in health but also in consumption and other industries. In fact, co-creation and crowdsourcing has become a multimillion dollar industry. A great blog about marketing and crowdsourcing for all interested is written by Yannig Roth.
Crowdsourcing strategies work, provided that they have created a real community of patients or users based on involvement and trust. Without that close and ethnographic work with patients, crowdsourcing will fall into the error of traditional marketing “everything for the consumer, but without listenting consumers.” Listen to consumer is not only making surveys: it means to work with the. Thus, Enterprising Solutions for Health (EH) achieved a high media impact pointing the situation of patients who need palliative care, associated with the Nycomed brand (now Takeda) co-creating among doctors, care professionals, scientific associations and patients themselves a visual guide for families of terminally ill patients. By making an executive summary and a separation into chapters, professionals could work with families of terminal patients and explain them different concepts.
The Guide was publicly supported by the Ministry of Health, the Spanish Autonomous Communities and the Director General of Pharmacy. The press impact was high both in print media and TV. There were numerous press releases and the news was hanged one fulll week at El País.
The guide was presented at the national conference of the Spanish Society for Palliative Care (SEPCAL) with tremendous applause. Health professionals supported it and thanked the lab for what happened. Theygreatly appreciated that their expertise was valued and tas well as the huge need for the product. The guide was placed on the web of SECPAL. Nycomed had an absolutely different treatment in respect to other laboratories in during the congress. Even today the guide is used to guide nursing schools in Spain and Latin America. All this at a cost less than minimal.
R&D with patients
Patient involvement is so important to Gruenenthal, the second European producer of analgesics and fifth worldwide, with an annual turnover of 947 million euros, that the entire company philosophy is patient centered, to the point that patients’ representatives sit on the board of supervision (Betriebsrat).
At Gruenenthal they ask always themselves:
– What factors are key to patients when choosing a treatment.
– Where is needed for help once a treatment starts
– What elements have impact on success chances
– How to minimize the risks of not meeting expectations
– Do we have constant dialogue with patient groups?
As a result,Gruenenthal does not only include patient needs from the very beginning of research -which ensures a much higher chance of acceptance by the demand … it means that half of the branding is done without having to spend so much on market research . Thus, the company has focused on rare diseases as niches. It has also overcome the opposition between selling more medication vs. patient satisfaction with medication. It has won the support of patients and families because it supports them.
Other elements of this strategy are early contact with the market, co-development with other companies, universities and biotech companies, as well as co-marketing (without U.S. distribution)
Patient experience and Novartis
Novartis has made a major commitment to develop from transactional health to services and business models that provide value to patients without increasing costs. How? In a future post