Fair Isaac Experts Comment on Pharma

Vary the Dosage

THERE ARE MANY REASONS why growth in the pharmaceutical industry will slow to single digits for the first time in over a decade. The patents for numerous blockbuster drugs are set to expire; “me-too” products are on the rise; and the supply pipelines are thinning out. And that's not all.

Growing public scrutiny has resulted in fewer traditional marketing efforts due to guidelines set by the U.S. Department of Health and Human Services' Office of Inspector General, tighter controls on direct-to-consumer contact, and privacy regulations that limit the breadth of promotional activity. At the same time, physicians and consumers are turning to the Internet for educational and promotional information.

In the past, the answer to such challenges was saturation: Increase the sales force and fight for share of voice. However, investments in sales force visits have reached the point of diminishing returns.

Access to physicians has decreased — according to a recent article in The New York Times, nearly half of all pharmaceutical sales reps are turned away from doctors' offices on any given visit. When reps do actually get “face time,” management consulting firm Marakon Associates estimates that the average call lasts only 150 seconds, with much of that time focused on sample distribution.

The result: less effective sales calls with a far higher cost per call. So drug companies must rethink the way they market to doctors.

Pharma marketers must add new approaches to their arsenal to make their budgets go farther and improve customer targeting. By integrating DM tactics into the mix, expensive sales calls can be used to greatest advantage, while the less expensive channels can complement face-to-face contacts.

Creating relationships with physicians is nothing new. While drug companies have only recently attempted closer ties with consumers and patients, successful sales reps have always forged profitable bonds with the doctors in their territory.

The new model is an expansion of the old one. It involves better integration of personal and non-personal tactics across marketing channels with more effective means of capturing data at every opportunity. Salespeople will still be at the heart of the relationship. Their efforts will be enhanced through better coordination of strategies, a multichannel approach and value-added services that differentiate products and erect barriers to competitive threats from generics and me-too products.

As direct marketers in other industries already have discovered, empowering customers to access product information through their choice of media increases marketing effectiveness and return on investment. According to management consultancy McKinsey & Co., on average multichannel customers spend 20% to 30% more than single-channel clients. And by using a multichannel approach, companies can reduce the cost to serve customers by 10% to 15%.

In a channel mix study published last year by healthcare marketing information and services company Manhattan Research, physicians reported a preference for the Internet as their source for learning about new treatments and unfamiliar diseases, and to help patients understand and manage their conditions.

Even greater results can be achieved when the Web is coupled with a sales call and other channels are tried. This new way of disseminating product information to physicians, called electronic detailing or eDetailing, paved the way for additional interactions as many doctors who used it requested follow-up visits by reps.

For example, a study of physicians participating in the eDetailing program by technology research firm Forrester Research found that:


50% of doctors asked for samples.

33% downloaded sample vouchers.

61% requested more information.

Nearly half the physicians requested a rep visit.


Integrating channels and capturing data at each opportunity has two clear benefits for both parties involved: Doctors obtain access to information, events and programs, while pharmaceutical companies gain insight that can help them make more intelligent marketing investments.

But this is only part of the picture. Improved physician relationships and marketing ROI comes from using data and analytics to understand which channels and tactics (and combinations thereof) drive purchasing behavior at the lowest cost. Pharma marketers must capture data such as attitudes, preferences and demographics. Further, they must use physician data to develop customer insights, better measure their marketing efforts and refine strategies accordingly.

BEYOND PRESCRIPTIONS
When it comes to customer data, in many ways pharmaceutical marketers have it made.

Few industries have access to the detailed “purchase” behavior of their customers provided by sources like pharmaceutical market analysts IMS Health. With access to weekly prescription data detailing their products and those of competitors, the industry's database is quite rich and valuable when it comes to understanding doctors and their reactions to marketing programs.

However, while they can use that data to understand broadly what works and what doesn't, pharma marketers have not developed the capabilities to understand why a program worked or the ability to predict which doctors are most likely to respond to a future campaign.

Getting to this next level of insight requires profiling physicians in ways beyond how they prescribe. Successful DMers develop customer profiles that include data on all interactions — sales force visits, calls to customer service, Web site visits, event attendance and the like. This level of information allows marketers to build differentiated insight and to potentially predict physician behavior. With this data on hand, pharmaceutical firms can develop marketing programs that drive prescription writing behavior — and ultimately, sales.

The challenge lies in capturing data in a way that makes it usable and scalable. Today, much of the information that can help DMers truly understand medical professionals' motivators and attitudes is housed in the notebooks and day planners of sales reps. Sales force automation tools have granted companies some access to this information. However, full sharing of this data will necessitate rethinking program design and developing incentives to entice reps to funnel this information back to the organization. Feedback mechanisms must be built for every interaction, including those that are face-to-face with physicians.

Pharma marketers have paid lip service to the “customer-centric marketing” mantra, but few have really made the investment in time, energy and organizational shifts to transition from their brand focus. The basic sales force model allows for a customer focus in the field, but few doctors have relationships with the pharmaceutical enterprise. Businesses must look to other tactics and value-added services to build bonds that connect physicians to the companies as well as their sales representatives.

The implications are all too clear: Decile-based sales territories and calling plans aren't enough anymore. DMers need to understand the value of customers to the enterprise — including across various products — and must develop analytically rigorous relationship plans. These should take into account the physician's value and invest resources, such as calls, samples and events, to suit. Plans that integrate tactics, value-added services and channels to reach doctors with key product messages that target their needs will see the best ROI.

SHIFT TACTICS
All this requires organizational and cultural changes. At the heart of this shift is a new take on the relationship among the sales force, marketing and the physician.

When pharma marketers begin to understand doctors beyond sales calls and prescriptions written, they won't need to simply throw more reps at the top prescribers to increase the top line. The sales force will have to learn to understand the tactical marketing initiatives their physicians are engaged in to tailor sales calls properly. Resistance to this is understandable — reps undoubtedly will fear becoming obsolete. Online tactics in particular have met such cultural barriers to their implementation. The pharmaceutical industry can learn from other businesses, such as insurance, where customer relationship efforts included providing better selling tools to the brokers. This helped address the fear of a firm's losing control over such interactions.

Developing an expertise in direct marketing is key. Building calling plans that incorporate the tradeoffs between brands, and that account for local marketing environments (such as geography, managed care penetration and formulary status) is a complex and highly analytical process when done well.

Drug firms will need to remove the silos that impede communication and coordination across products, functions and channels. Planning, currently driven at the brand level, will need to more fully incorporate customers. Instead of looking at brands and determining the investment by product, companies will be forced to determine investments by customer (or customer segments), and then allocate those investments across brands.

Clearly, implementing physician relationship marketing requires significant investments in time, energy and resources. But there's no need to dive off the cliff without looking.

Companies vary in terms of their decision-making, but changes of this magnitude always require the support of senior management. A pilot involving a small number of territories and perhaps only one product is the best way to build a business case and increase organizational support for this new approach. Chances are, its value will quickly become apparent.



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KRISTIE SELLS (kristiesells@fairisaac.com) is the director of healthcare practice in Fair Isaac Corp.'s New York office. TONY KIEFFER (anthonykieffer@fairisaac.com) is vice president, healthcare practice, in the company's Boston office.