Under Pressure

May 01, 2008

The Big Ten
If you work in the pharmaceutical industry, you know what it's like to work under pressure. The industry's biggest blockbusters have lost patents or are facing patent protection, and new product approvals aren't able to replace the lost revenue. What's more, threats of external regulation and legislation are looming over both direct-to-consumer advertising and professional detailing. The pressure is building, and that's apparent in promotional spending, which dropped nearly 5 percent in 2007 after a 5 percent increase the previous year.

Play it Again: DTC Media Mix 2007
But the downturn in promotional spending isn't just a reflection of industry-wide belt tightening. The most recent available numbers reveal that companies aren't just spending less, but looking to spend a whole lot smarter.

Take samples. Last year, the industry distributed 4.1 billion doses—3 percent fewer samples than in 2006. At first glance, this dip looks like a simple case of trimming the fat. But a closer look shows that while some companies rolled back their sample spend, the 10 most sampled brands actually increased their sampling activity by 8 percent, according to IMS. This suggests that rather than cutting back, companies are reallocating resources where they've seen the greatest response.

"The whole combination of circumstances is making companies sit back and reflect on where they should put their sales and marketing resources," says David Gascoigne, vice president of global promotion management at IMS. "Companies are having to work much harder to get the bang for the buck that they had before."

The Spending Sag
When it comes to the sales force, 2007 will be remembered as a year of massive layoffs, particularly for primary care reps. Aside from a downturn in spending, one would think that marketing would be going through even more drastic changes, particularly with all the talk of e-health consumers and the efficiency of the Web. But in 2007, there were no sudden moves: Companies continued to rely mostly on traditional formats, albeit with a twist.

"There's been greater diligence by the pharma companies in terms of the different forms of consumer commercial activity," says Gascoigne. "We see branded advertising based on acquisition of new patients. We see more disease-awareness advertising, we see more advertising focused on compliance and persistency, and we also see the traditional DTC activities being integrated with CRM-based initiatives and Web-based initiatives."

It's hard to know if 2007 reflects a momentary pause in spending, or if it signals the beginning of the end to big-budget pharma marketing. What we do know is that execs need to rewrite the rules of promotion to withstand the changes in the healthcare landscape. Let's just hope they work well under pressure.

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