Pairing Up - Pharmaceutical Executive

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Pairing Up
More companies are folding Competitive Intelligence departments into Market Research. Here's why that strategy makes sense—and some hints on making the new relationship work.


Pharmaceutical Executive


Impact Although competitive-intelligence teams are structured to support the marketing function and individual brands, in most companies, those that report independently to multiple functions often have the greatest impact. Take, for example, a competitive- intelligence team that reports up through the pharmaceutical company's business-intelligence function.

The business-development function receives the greatest benefits from strong competitive-intelligence activity. Competitive intelligence informs critical decisions and allows companies to stay keenly aware of competitor transactions that will alter the market landscape. Communicating business-development successes is the first step toward building strong support for competitive intelligence.

Furthermore, consistent competitive monitoring often yields strategies to thwart competitors' activities. For example, in 1994, American Home Products (AHP—now Wyeth) acquired American Cyanamid. AHP was motivated by discussions between American Cyanamid and Bristol-Myers Squibb (BMS) that hinted at an exchange of assets. When competitive-intelligence teams helped AHP's leaders project what the competitive landscape would look like after such an exchange, AHP altered its strategy and made a hostile bid for American Cyanamid—and beat BMS to the deal.

"By painting a competitive landscape for a product, we stumble on attractive licensing targets," says one competitive-intelligence professional. "At that point, we say, 'If we can't beat 'em, eat 'em.'"

This sort of collaboration between the business-development and competitive-intelligence teams is a model for how competitive intelligence should be strategically incorporated. Some pharmaceutical companies' competitive-intelligence groups consist of nothing more than a database housing competitors' press releases and articles. While knowledge management plays a vital role in organizing competitive information, it provides no road map to influence strategy. When other functions, such as sales and marketing or R&D, rely on competitive intelligence to shape strategy, the impact is widespread—affecting anything from brand planning and the portfolio-management process through clinical-trials design to annual planning for the whole company.

Building Competitive Intelligence

Patience is key with competitive-intelligence teams. Despite efforts at aligning structures, competitive intelligence's impact may not be felt for some time. Even companies that formerly separated competitive-intelligence teams from market research found that resources became scarce as competitive intelligence took longer and longer to prove its strategic value. Competitive-intelligence teams are routinely folded back into market research as resources dry up and companies begin relegating competitive-intelligence teams to building databases.

Disbanding competitive-intelligence teams is not an uncommon practice within the pharma industry. Cutting Edge Information's study noted that dedicated competitive-intelligence departments have an average life span of just three years. Of the 18 profiled pharma companies, 11 had established their competitive-intelligence teams within the last five years.

Nonetheless, market-research groups can still aid competitive-intelligence efforts by collecting additional data. Companies find extraordinary value in understanding competitors' product pipelines, or knowing how they are reorganizing. A simple review of a competitor's organizational chart can yield valuable insights on whether it plans to increase sales and marketing resources.

Market research can also be helpful in collecting information about competitors' changing product strategies. Information about competitors can often have a greater effect on internal product strategy than can typical market-research efforts. Market research's end-user techniques help companies to understand how customers react to changing product messages.

Market researchers need to communicate with competitive-intelligence teams and other parts of the organization if both groups are to be effective throughout the company. If market research and competitive intelligence cooperate, sales and marketing can also collect valuable business intelligence.

The first step in building a competitive-intelligence function is to gather as much internal knowledge as possible. Internal knowledge comes in the form of articles and databases housed on disparate systems, or even internal experts who understand certain aspects of the market and can serve as resources. Despite how much information is available inside company doors, pharma executives often don't know where to turn for answers.

Competitive-intelligence teams, especially those early in their existence, should serve as the liaison for internal information. Once the infrastructure is in place to house internal data and identify internal resources, competitive-intelligence teams are responsible for communicating to key stakeholders what the company already knows.


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