Choices of channels are often, but not always, driven by the disease areas a company focuses on. Most primary care physicians
treat a range of chronic, non-life threatening conditions, including hypertension, diabetes, bacterial infections, and ulcers.
Presence in any of these segments necessitates a large and expensive sales force. Patient or consumer-driven marketing is
most likely to occur in lifestyle conditions, like sexual health and skin care, but also in diseases like anemia, allergic
conditions, or diabetes, which require high patient involvement. Consumer-directed marketing almost always means expensive
print or television disease awareness or drug-specific advertising, often with spending exceeding $200 million in a single
year for the most heavily promoted drugs. Finally, specialists tend to work in high criticality conditions, such as cancer
and HIV, but they also serve less threatening diseases, like dermatology and ophthalmology. Marketing to the specialist channel
is perhaps the most efficient, due to the smaller number of doctors and more focused medical community that should be targeted
We examined how channel focus correlates with several performance metrics, including growth, profitability, and stock-price
performance. Once again, the analysis shows that focus confers significant benefit. Companies such as Ono, Solvay, and Akzo
Nobel play to multiple channels and may be paying multiple entry fees. As a group, they showed the slowest growth and lowest
profitability across the mid-cap cohort. In contrast, companies that have the greatest channel focus—Gilead, for example,
with virology specialists—show the most robust growth, as well as the highest overall margins. "What Gilead did well was focus
when we found something that worked," says Gilead's Rosen. "There had been much broader exploration into therapeutic areas,
such as oncology, cardiovascular disease, and anti-infectives. But when we got a hit—in anti-virals—we had the discipline
to focus, selling off oncology and other assets to provide the resources needed to bring our antiviral products to market.
Even Tamiflu, which fell within the antiviral focus, required commercial capabilities we didn't have at the time, so we out-licensed
While specialist focus correlated with the strongest performance, companies focused on consumers and PCPs also performed better
on average than those with mixed commitments. Channel focus increases promotional effectiveness. At launch, better relationships
with opinion leaders and doctors drive faster uptake. Further on, they increase the number and quality of sales calls. Channel
relationships can be leveraged both to understand marketplace needs and compete for partnering opportunities. Companies that
fail to develop this advantage are likely to lose ground over time to more focused competitors.
So how will industry have to change? The capabilities that develop, like their expectations for size, growth, and investment,
must reflect the disease areas they choose to work in. Parts of what was recently an emergent medicines industry are maturing
and the requirements for success are diversifying. New capabilities—technology integration, consumer marketing, and cost rationalization—play
growing roles in the capability mix. The integrated, doctor-focused, high-growth and high-profit model is still appropriate
for some companies, but only those that are diligently and successfully pursuing the areas of highest, most critical need.
The lessons for smaller companies seem obvious—choose a disease-area footprint carefully, make sure it aligns with financial
market expectations, and don't wander too broadly into adjacent or distant therapy areas or channels: Focus the business.
But for the largest players in our industry, focus won't be achieved so easily. Most companies of scale continue to pursue
medications across disparate disease areas—from the highly innovative to the highly mature. Few have the luxury of shedding
older segments of medicine, as the pressures for top-line growth remain intense.
For these larger companies, the lessons are more subtle: Different segments of their business may require fundamentally
different scientific capabilities, risk and investment intensity, and commercial orientations. One size no longer fits all,
and a single company might have to develop different models—in R&D, commercial structures, and governance processes—to succeed.
Focusing on marginal areas just to preserve growth options is bad medicine for large players, and for small. The number of
focus areas a company pursues should not be determined by what it needs to meet growth objectives, but by where the company
maintains leading capabilities to develop and market new medicines.