For the past 20 years, the blockbuster model has dominated the pharmaceutical industry. It has generated tremendous value for companies and shareholders and will likely continue to do so well into the future. That business design matched Big Pharma's expansive product development and marketing investments with the ample supply of opportunities for benefiting large patient populations and allowed an unusually large number of players to succeed in the high-stakes game. Not all companies can continue to win that game, however, so new fields of competition will be needed.

This article describes four emerging arenas now challenging the broadbased success of the blockbuster model and approaches that some pharma companies are taking in response. (See "New Game, New Rules," page 90.)

Challenges to the BlockbusterLast year, 20 companies produced at least one product with global sales greater than $750 million, and eight companies had three or more such products. Bolstered by that level of sustained performance, investors have great expectations for the future, as reflected in current stock valuations that anticipate a continuing revenue and earnings increase of 15-20 percent a year.

During the next decade, pharma is likely to become more like other contemporary industries, which have fewer top players. Successful companies from those industries have business designs that deliver unique products and services, making them stand out in the eyes of customers, suppliers, and investors.

Consolidation raises the stakes for pharma companies that continue to use the blockbuster model. Some will surely continue to flourish, but by necessity or choice, others will change the way they do business and generate value. The leaders of those companies must master a new discipline-business design-and do it quickly. Following is a brief description of new competitive arenas that represent opportunities for revamping marketing approaches.

Share of MindTo win in this emerging playing field, companies must excel along three dimensions. First, they must target messages more closely to the needs of individual physicians. Second, they must understand the media that target different types of physicians most effectively and tailor their marketing efforts accordingly. And third, they must recognize the influence of the entire range of decision makers-providers, patients, pharmacists, nurse specialists, and third-party payers-and address the concerns of each.

All of those objectives demand a deep understanding of constituent needs. Many new tools are available for communicating with key groups, and the best companies will devise systems for trying new approaches, evaluating the effectiveness of each, and fine-tuning those that provide a significant economic return.

The ability to effectively communicate benefits to doctors and other decision makers is, of course, fundamental to the strategies of leading pharma companies. Doctors try to keep up with the panoply of emerging treatments, but industry marketing efforts strain the limits of their time and attention. In the second half of the 1990s, the number of pharma sales reps increased at an annual rate of nearly 20 percent, but the number of physicians remained relatively flat. (See "A Tougher Sell," page 92.) It's no surprise that doctors-directly and through the policies of practice groups, hospital committees, and HMOs-are less willing to spend time with reps. Competition for their attention will remain fierce as the number of products, sales reps, and patients expands.

In the future, companies will need to execute traditional practices flawlessly and adopt innovative approaches. They must augment leadership in sales-force effectiveness, physician targeting, and physician relationship management with a range of new tools that focus on the priorities and media preferences of therapy decision makers. Examples of new approaches include:

E-detailing. One form of e-detailing allows doctors to sign up for "e-visits" in lieu of face-to-face encounters. Companies, including Eli Lilly, AstraZeneca, GlaxoSmithKline, and Bristol-Myers Squibb, provide the necessary equipment, and doctors agree to receive a pre-set number of digital sales calls as well as access to medical information and patient education materials.

Addressing messages to other healthcare professionals. Limitations on the ability to communicate with physicians have led companies to reach out to other healthcare decision makers. Eli Lilly's launch of Humalog prefilled insulin pens included training not only for physicians but also for nurses and certified educators who treat large numbers of diabetics in doctors' offices.

Reaching patients and their caregivers. As DTC matures, many companies are addressing both patients and their primary caregivers, using everything from broadcast TV to targeted online channels. Pfizer and AstraZeneca have developed parent-oriented locations on their websites to address questions and concerns about important pediatric products such as Pfizer's antibiotic Zithromax (azithromycin) and AstraZeneca's asthma treatment Pulmicort Respules (budesonide).

Communications exchange. Given the difficulty and importance of communications, it has become common for top companies to trade on their capabilities by marketing other companies' products. Merck took that approach when, in the 1980s, it developed a relationship with the Swedish company Astra in which Merck agreed to lend its access and communication expertise to the US commercialization of Astra's products. The companies' joint venture, Astra-Merck, soon guided Prilosec (omeprazole) to the position of the world's best selling pharmaceutical.

Companies such as Pfizer and Bristol-Myers Squibb also plan to continue trading on their effectiveness as communicators. In recent years, Pfizer and BMS have received more than 30 percent of their revenues from products discovered by other companies. Because of the growing integration of professional and consumer communication networks, partnerships in the next decade will be driven more by global marketing effectiveness than by expertise in local markets.

Clinical ChallengesIn 2000, pharma companies enrolled more than 600,000 US patients in clinical trials. That number is likely to grow as the number of pharmaceuticals under development rises, requiring more resources to recruit both patients and investigators. Many companies already recognize some of the challenges posed by the growing number of treatments approaching trials and the rapidly rising number of participants, but they must also be aware of the effects that intensifying competition for patients and investigators will have on availability and cost. The challenges will be especially great in markets where several companies develop therapies, often derived using biotech methods, that target less prevalent diseases and conditions.

To date, companies have responded to such problems by spending more on advertising and stepping up investigator recruitment. Those traditional approaches, however, are becoming more costly and often yield unacceptable trial-recruitment time frames.

To win in this arena, companies must find new business designs--from inside or outside the industry. Many companies have begun to use customer relationship management programs to identify potential trial participants more quickly.

They are also conducting trials in more locations to expand the pool of potential patient participants. That global initiative was evident in Merck's Vioxx (rofecoxib) trials, for which it enrolled more than 8,000 patients in 40 countries. Merck now conducts approximately 35 percent of its clinical trials outside of the United States.

At the same time, many innovative startups are bringing Internet tools to bear on the problem. Whether the solutions come from incumbents or upstarts, it is clear that value will flow to the companies that develop the most effective recruitment programs, because faster, more efficient trials extend products' patent-protected time on the market. More important, companies that can effectively navigate that development challenge will become increasingly attractive partners for biotech and academic researchers who discover novel compounds.