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Pharma can receive twice as much revenue from detailing than from DTC. For every dollar spent detailing, firms should expect about $10 in revenues. The return from DTC advertising is more in the range of $5 to $6.
Sridhar Narayanan, an assistant professor of marketing at the Stanford Graduate School of Business, recently completed a trio of studies about the function and usefulness of pharmaceutical advertising campaigns—particularly in the area of professional marketing.
The author used quantitative data from sources such as Verispan and IMS—including information on prescriptions written, therapeutic drug regimens, and different marketing activities—to create mathematical equations that determined the marketing category from which pharma companies receive the most value.
The results show the need for heavier professional marketing earlier in a drug's lifecycle. For example, in one study focused on marketing tactics used for three antihistamine drugs (Allegra, Claritin, and Zyrtec), Narayanan concluded that Allegra and Claritin could have increased revenues by four to 14 percent if they followed the same detailing pattern as Pfizer's Zyrtec, which involved heavier detailing at launch.
Pharm Exec talked to Narayanan to learn more about his research.
PHARM EXEC: Why did you choose pharmaceutical marketing as the focus of your studies?
NARAYANAN: I was struck by the absence of formal research reflecting the industry as it currently exists. Pharma has gone through some dramatic changes in the last 15 to 20 years, which haven't really been focused on research—for instance, all the direct-to-consumer changes that took place in the 1990s. The drug industry also has expanded tremendously in the last few years, and detailing has increased significantly.
Did you find any unexpected results in your research?
I didn't go in with very many expectations, simply because there's been a paucity of prior research, particularly in physician marketing. However, I discovered consistently that detailing had a much higher return-on-investment than direct-to-consumer advertising.
Pharma can receive up to twice as much revenue from detailing than from DTC. For every dollar spent detailing, firms should expect about $10 back in revenues. Direct-to-consumer advertising, on the other hand, is more in the range of a $5 or $6 return.
What is also interesting is that firms can benefit from putting dollars into detailing earlier in a drug's lifecycle. The first few months are very important to build up market share for a drug. And yet, if you look at actual allocations made by pharma, it's not clear that everybody's internalizing this fact. There are some firms that actually ramp up detailing well into the lifecycle of the drug.
I also found that physicians differ significantly in terms of how quickly they learn about new drugs. Physicians who are fast learners tend to be less affected by detailing later in a drug's lifecycle, but [they can be hugely influenced] early on. The opposite is true for slow learners.
In the antihistamines study, why was one marketing method better than the others?
We found that there were significant benefits to frontloading detailing in the early periods after launch. One benefit is that detailing influences physicians through the process of learning about that drug. They learn about that drug, they learn about its characteristics, how it treats the condition, and all the side effects. That strategy might make a physician prescribe a drug to his or her patients.
If you look at the detailing patterns, Pfizer's had a huge amount of detailing [during] the first 20 months after the launch of [Zyrtec]. And then they reduced it over time, whereas the other firms had different patterns. We found that Pfizer's strategy made the most sense.
Did it translate to more sales?
It translated to more revenues and presumably more profits early on. If patients are prescribed a drug, and if it works for them, they often don't want to switch. So getting your foot in the door early is very important, and I think that Pfizer's strategy worked.
What strategies can firms use to try to persuade high prescribers to switch drugs?
It is pretty difficult. Consistently, researchers have found that even if physicians are willing to switch, patients might not be. There has to be a multi-pronged approach. Pharma has to get physicians to convince patients that their drug is better, but they also have to convince patients that they have a reason to switch.
For instance, if you look at Cialis, the marketing material clearly talks about a consumer-relevant benefit that might motivate patients to go to a doctor and ask about this new drug. What is important is not just marketing to physicians alone or marketing to patients alone, but to use these different strategies in conjunction. Especially in these instances where there's already an established drug and you want to make both patients and physicians switch.
You mentioned detailing. What about other techniques such as meetings and lunches?
On average, a personal call to a physician or a face-to-face visit, however short it might be, has a higher bang for the buck than larger meetings in terms of additional revenue. However, marketers must keep in mind that different techniques work for different physicians. Some physicians might not be willing to see detailers, but may be willing to go to a meeting.
What can companies do to reach physicians better?
A lot of doctors have expressed concern that they keep seeing the same material over and over. Pharma companies must do a better job bringing in new material, and making the information more relevant to the physicians and prescribers.
Some doctors also said that today's detailers tend to be less trained than detailers of the past. Often, there's much more selling than actual information being transferred, and the reps can't answer specific questions that are more of a scientific nature. I think industry can benefit from increasing the number of specialized detailers in the field.
This is where the one-size-fits-all approach is not going to work. Many other industries have moved toward a mass-customization kind of strategy, with more targeted detailing that is tailored to individual physician needs.
Is pharma doing anything to cater to slower- or faster-learning doctors, or to segregate the two?
I spoke to some pharmaceutical companies and consulting firms, and it turns out that a majority of drug manufacturers use docile-based tools for marketing allocation. What that means is that they group physicians into 10 groups based on their total prescription volume in the category—people who are heavy prescribers versus light prescribers—and make their allocations based on that data.
I think the drug industry should internalize the differences between slow and fast learners and take that information into account when making their detailing allocations.
For example, specialists tend to be faster learners, but may not necessarily be heavy prescribers. So the docile-based tool would miss that. There are specialists in a Stanford hospital, for instance, who don't see that many patients—but they are extremely quick learners.
And you think that better physician segmentation is the answer?
I think pharmaceutical firms should look at segmenting prescribers on multiple dimensions and not just on sales. There's a lot more data about physicians that is available to firms besides just prescription volumes, including specialties, how much time they've been out of medical school, and the kind of practice that they are in. Are they in a big research hospital? Are they in a small clinic somewhere? Some firms are doing this, but there needs to be more, and it needs to be done in a more organized fashion. Pharma could get a huge benefit from segmentation.