The Learning Curve - Pharmaceutical Executive


The Learning Curve

Pharmaceutical Executive

Finally, health reform, not just in the United States but throughout the world, will have enormous impact on how the industry wins—and keeps—that customer. The new German reform legislation, AMNOG, has an important provision that effectively encourages drug firms to seek out ways to generate revenue with health services that "surround" the pill. Here in the United States, the March 2010 health overhaul raises a raft of strategic questions. What happens when the physician becomes just an employee of a networked accountable care organization? If sales reps have less chance now of seeing a physician, what will it be like when United Health Care completes its transition beyond third party insurer to full-service provider, and reaches the target of owning 1,000 group oncology practices that provide care directly to patients? Or when physicians in those practices don't set their own wages but have to bargain collectively for an annual cost of living increase?

We are not talking about bottled water here. But think about it. Someone has persuaded millions of Americans to fork over $2 on average for an unadorned bottle of water, yet millions more people will balk at taking the same $2 from their pocket for one of your research-intensive pills. Reputation—as exemplified by the treatment of customers—must have something to do with this. Former Lilly CEO Sidney Taurel once noted that "while investors and shareholders love us, there are two groups that don't—physicians and the patient. And the reason for that is they see us as nothing more than pill pushers." That perception has to change, if the industry is to justify its margins going forward.

Looney: For those of you on the business side of pharma, are there other issues that shape the way you approach your work?

Jim Robins, GlaxoSmithKline: A number of environmental factors and healthcare market drivers are converging to make this a dynamic—and challenging—time for the pharmaceutical industry. First, healthcare costs in the United States are already at an unsustainable level and are projected to continue rising. We will also experience a significant increase in the number of patients entering the healthcare system who previously did not have insurance coverage. Second, our R&D efforts have been increasingly challenged to discover new innovative medicines for unmet needs while a significant number of branded medicines continue to lose their patents. Lastly, we are seeing the majority of funding and purchasing power shift to the public sector. This is reflected by the US healthcare marketplace demanding a higher quality of care, lower costs, and improved health outcomes. This is having a major impact on how we approach providers, payers, and patients. It necessitates a holistic approach based on providing a range of services beyond the pill—one which depends on knowing our customer's needs much better than in the past and being able to deliver value based on those needs.

Charles Collins, Engaged Managed Markets: Another critical trend is the extreme price sensitivity of the drug market today. I disagree that the perception of the industry as a "pill pusher" is somehow our fault. Most customers just want us to drop prices or to give them more bundled options in limiting their pharmacotherapy cost exposures. Add-on services don't enter into the equation; there is little understanding that we might actually want patients to get well. To counter that impression, we have to do a better job at positioning around a business platform geared to prevention and evidence-based outcomes.

Tony Mack, ProSolus Pharmaceuticals: Size and scale remain important, but abandonment of the arms race has created more opportunity for the niche player unable to compete with the big companies and their enormous promotion budgets.

Lisa Flaiz, IMC2 Health and Wellness: One issue today's manager has to address is the impact of digital media on promotion. Brand equity in the digital world is an unending, 24/7 cycle, not the "put it up/take it down" mentality of print, where the battle for market exposure was conducted like a campaign, with a beginning and an end. Social media has also transformed messaging into conversation, not a diktat, and on that score it forces you to differentiate a brand against the competition on something larger than its safety and efficacy.


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