With the necessity of cutting billions from budgets next year, big pharmas are finally grasping the fundamental principle
that "you are in business not to own assets but to use assets," says Bill Trombetta, a professor of pharmaceutical marketing
at St. Joseph's University. He sees a growing trend to outsource more and more—whether manufacturing in Ireland or Singapore,
conducting clinical trails in South Asia or Eastern Europe, or even moving R&D to India or China.
Peter Young, president of Young & Partners, agrees—up to a point. "There will be more outsourcing but not to the extent that
it was predicted. No drug company will be crazy enough to move its important R&D out of house."
But such old-school notions may obscure the path to new business models, according to Accenture's Arjun Bedi. Now that the
fat times are gone, even—especially?—the big pharmas are forced to "focus on their core competencies and do as many other
functions as feasible out of house," he says. That may mean skewering some sacred cows. "R&D practice has traditionally been
viewed as an art form, but the truth is, 80 percent can be systematized—and outsourced—leaving that 20 percent that is creative
genius at home to run wild," Bedi says.
WORKS IN PROGRESS
This year, innovation begins at the end of a knife, whether stabbing sacred cows or slashing sales forces. The sad sight of
thousands of bright young things getting their pink slips will be a constant as drug companies follow Pfizer's lead in cutting
their sales forces. Nor will R&D be spared the blade. Of course, with some 100,000 US reps and only 300,000 docs to call on,
the situation had long ago taken on a certain "Stop the Madness!" aspect.
"If we yelled, 'Freeze!' on a Tuesday morning, there would be a rep in every office waiting room and a couple outside a group
practice," Mason Tenaglia says. "Every CEO knows something has to give but no one wants to unilaterally disarm. With the Pfizer
announcement, this might have finally changed. But they still have no idea how much bang they're getting for their buck."
He expects 2007 to be a year of reckoning—and the beginning of the end of the one-size-fits-all national sales force. Companies
will have to do some fancy formulary footwork, getting up to speed on which of their brands are in which plans and which states,
in order to deploy downsized sales forces in more flexible, efficient ways.
Jerome Kassirer, MD, a professor at Tufts University School of Medicine and the former editor of The New England Journal of Medicine, sees "a trend toward using doctors to promote drugs—in the development of education materials, in medical meetings, and doctor
lectures. And with doctors' incomes suffering, pharma will find a willing group of potential employees."
Many small but significant changes are also in the works, from marketing to information technology to study designs. Pharma
is showing an uncharacteristically bold penchant for experimenting with both new media and new messages, according to Jane
Sarasohn-Kahn. "There's finally a move toward the Internet—not just as an advertising channel but direct-to-patient education
and interactive marketing," she says, pointing to a Vodaphone instant-message program that proved very successful in helping
diabetic teens improve their med compliance.
Offering consumers support, information, and even incentives for daily med adherence for chronic conditions seems a no-brainer—and
a valuable way to deepen brand loyalty in the age of generics.