Competitive Success Factors

How should companies respond to this pharma-versus-pharma environment? Here are 10 Competitive Success Factors for surviving and thriving in the Competitive stage:

1. Competitive culture Companies in Competitive stage industries, such as consumer electronics and airlines must focus on competition and respond aggressively simply to survive. The vast majority of pharmaceutical companies have never experienced competition of this intensity, and need to instill a much more competitive mindset in all levels of the organization. Executives should formulate and execute revised strategies for this new environment as soon as possible.

3. Competitive planning Most pharmaceutical product teams create only portions of competitive plans, such as competitive product market research and competitive product profiles. Relatively few brand teams conduct integrated, comprehensive competitive plans that synthesize findings and identify specific action steps based on competitive company and product profiles; competitive intelligence and research; customer analyses; stakeholder analyses; market and environmental analyses; and corporate profile relative to competitors. It is not enough just to prepare these plans: They need to be implemented, reviewed, revised, and regularly revisited.

Pharma executives should also prepare corporate competitive plans to anticipate and prepare for changes in the broader environment. At minimum, executives should incorporate company competitive planning during annual strategic planning and budget review periods. Such plans help to identify potential competitive game-changers or wild cards, test market assumptions, and uncover potential blind spots.

4. Launch/counter-launch The paucity of new products creates even greater pressure for a successful launch. Conversely, because of stagnating markets, competitors cannot afford to have a powerful new player penetrate their limited market space. Consequently, competitors will increasingly use counter-launch plans to preempt new competitors—particularly during the pre-launch phase when the new product is most vulnerable. For instance, Amgen has, to date, protected its multibillion-dollar anemia franchise in the US by filing a patent infringement lawsuit to prevent Roche from introducing its new agent Cera. Similarly, Bristol-Myers Squibb, makers of the blockbuster anti-clotting agent Plavix, has aggressively tried to pre-position Lilly's new competitor Effient. "The way I see it, if and when it is approved, [Effient] will be a niche product," BMS CFO Lamberto Andriatti recently told analysts.

5. Competitive simulations Like sports teams, pharmaceutical companies should "scrimmage." Traditionally, pharma marketers have conducted business "war gaming" only when launching a product. In today's market, these exercises should be conducted at least annually. Companies should conduct a new version of war games called "competitive simulations." Competitive simulations are more realistic, engaging, and productive versions of war games that factor in not only physicians, payers, and consumers, but also other influential stakeholders.

Unlike traditional war games, which focus on physician promotions and detailing, competitive simulations are customized to test important strategic and tactical issues for a particular product and market. Simulations may be used to test the overall marketing plan or individual plan sections, such as payer strategies or communication plans. Most important, competitive simulations provide usable results, including specific action steps for going to market and winning.

6. Competitive differentiation In the Competitive stage, the sheer number, intensity, and diversity of competitors compels companies to create unique, sustainable product and corporate positioning along several dimensions. For example, to enhance its ability to negotiate with governments and other large payers, Novartis has repositioned itself as a full-line healthcare product company by offering branded and generic pharmaceuticals, vaccines, and consumer healthcare products.

Other companies will succeed in this competitive environment by focusing on a specific strategic market segment, geographic region, or disease state, and serving that target more effectively and efficiently than competitors. For example, Novo Nordisk achieves differentiation by focusing on all aspects of diabetes pharmacotherapy, including a diverse portfolio of diabetes products, numerous product formulations, novel delivery systems, extensive diabetes education programs, strong stakeholder relationships, and global diabetes philanthropic initiatives.

7. Cost competitiveness In the Competitive stage, it's particularly important to focus on payers, sophisticated repeat buyers who have the advantage of deciding among multiple competing brands. In today's market that means that competition shifts toward greater emphasis on cost and service.

Pharmaceutical companies must move aggressively to identify substantive ways to reduce costs. Companies have implemented techniques such as rationalizing R&D and product portfolios, revising processes, and raising employees' financial consciousness. Companies in other industries, such as Dell and Nike, have become "virtual companies," essentially outsourcing most functions. Over the past decade, pharma companies have increasingly moved in this direction by outsourcing manufacturing, distribution, clinical development, sales, marketing, IT, and even discovery. This approach not only makes companies more cost-efficient, but also more responsive to customers and competitors.

8. Technology competition In the Competitive stage, companies have a much more difficult time discovering new products. Consequently, competition shifts from internal discovery to external licensing and partnering. Over the past decade, pharmaceutical companies have been forced not only to find new compounds, but also to compete aggressively with their peers to gain access to those products. In a reversal from the Commercialization stage, pharmas in this stage are now actively marketing to biopharmaceutical companies, academic institutions, and other organizations, sometimes participating in product "bake-offs" or auctions for attractive, early-stage compounds. Companies are also competing for other types of technologies, such as genomics or nanotechnologies, to help expedite the discovery, development, or delivery of products.

9. Stakeholder competition Stakeholders other than physicians and patients—various healthcare professionals, regulators, consumers, the media, politicians, distributors, and patient advocacy groups—are increasingly influencing the adoption, utilization, pricing, and perception of drugs. What's more, companies are competing among themselves for the influence and support of these key constituents. Forward-thinking companies have developed strategic stakeholder leader plans, similar to those developed for key opinion leaders, to gain competitive advantage with these influencers.

10. Competition training Key staff members need to know how to analyze competitive products and companies, monitor competitive activities and signals, anticipate competitive moves, develop preemptive and defensive strategies, utilize best competitive practices, and take decisive action. Progressive companies have instituted competitive leadership forums, train-the-trainer programs, competitive case studies seminars, and a variety of other initiatives to provide professionals with the confidence and techniques to gain a competitive edge.