In today's payer climate, even innovative products face challenges securing reimbursement if they come with a premium price.
The growth of generic products is stunning, and the blockbuster era, with its broad indications, premium pricing, and big
marketing budgets, is a thing of the past.
Marketers need to rise to the challenge. The greatest value marketing leaders can provide is to harness the power of strategic
thinking. It starts with developing a compelling product positioning.
Positioning is the foundation
Positioning defines how a product competes—who it is for and how it is differentiated versus competitors. In consulting work
and teaching Kellogg MBA students, we see case study after case study detailing how companies have significantly steepened
their brand's growth curve by developing a compelling product positioning. There are three core elements in a positioning:
Target. Defining your target as simply "patients with X condition" or "primary care physicians" is not enough. The target definition
should be grounded in segmentation and customer insight.
Frame of reference. What comparison set do you wish to be a part of? For example, if your product is an asthma drug, are you better off competing
broadly against all other asthma drugs or, for example, competing for usage as a preventative therapy in this drug class?
Differentiating benefit and support. Your primary benefit must be narrowed to satisfy three criteria: it must be highly valued by customers, truly unique versus
competition, and credible based on the inherent strengths of your product or company. If your product is not seen as "best
in the world" at something, your benefit may not be focused enough.
The three elements can be summarized in a positioning statement. This is a fairly fundamental tool for marketing executives.
To (target), X is the brand of (frame of reference)that provides (differentiating benefit) because (support).
A common misconception is that a positioning statement is primarily to help create effective advertising or sales brochures.
It is much more important than that. Products with no advertising still need a positioning statement. It provides strategic
guidance for everything that happens downstream—development of the marketing plans, sales initiatives, legal/regulatory approach,
and financial plans.
Pharma's positioning challenge
It's difficult for pharmaceutical companies to develop strong positioning statements. The core problem is that pharma marketers
dislike niche strategies; when positioning products, most pharma marketing leaders push for breadth. That's understandable,
since the goal at launch is to capture as much revenue and profit as possible before the patent expires. Pfizer, for example,
reached a broad audience with Lipitor and that worked very well indeed.
Going after a small group of physicians and patients seems like a bad idea. Why think small? In some organizations, aggressively
championing a niche launch could well be a career limiting move.
Broad launches are appealing, but there's a simple problem: they don't often work in today's healthcare ecosystem. In a competitive
market, a broad launch often becomes a "me-too" strategy, raising the ire of regulators and payers.
Finding a niche is a far better approach. The key for any pharmaceutical product today is demonstrating a clear benefit, and
it's easier to demonstrate a benefit against a small target.
"Niche" doesn't necessarily mean small
A niche strategy doesn't mean sales will necessarily be small. Once a physician is comfortable with a product and appreciates
the benefits, she will likely use it with additional patients. It is easy to expand from the initial niche to the broader
population of patients that fall within the label. And once the product is in the market, companies can secure additional
indications to expand use further.
Eli Lilly's Cymbalta illustrates the power of a niche positioning. Cymbalta entered the intensely competitive anti-depressant
category in 2004. By focusing on depression sufferers who also experienced pain symptoms, Lilly could have embraced a broader
positioning, but this would have diluted its effort. Eli Lily had a lot riding on Cymbalta; Prozac lost patent protection
shortly before the launch, and Cymbalta needed to fill the gap. The depression category already had several blockbuster drugs,
and promotional spending was second only to the proton pump inhibitor class for heartburn.
Furthermore, existing SSRIs were all considered similar in efficacy, with no head-to-head clinical trials available for the
class. Lilly received a diabetic nerve pain indication on Cymbalta two months after receiving its depression indication in
2004. This niche gave Cymbalta a reason to exist in a very crowded and competitive marketplace. It has since received additional
pain indications for fibromyalgia and chronic pain. Prozac sales peaked in 2000 at $2.6 billion—a threshold Cymbalta blew
past in 2009.