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Thriving Amid Uncertainty


Pharmaceutical Executive

Pharmaceutical ExecutivePharmaceutical Executive-09-02-2002

As healthcare struggles to reinvent itself, a confluence of major societal forces has irrevocably changed both the business world and the healthcare landscape.

As healthcare struggles to reinvent itself, a confluence of major societal forces has irrevocably changed both the business world and the healthcare landscape.

Those forces include globalization; market deregulation and privatization of businesses; new conduits of information such as the internet, telecommunications, and media; increasingly complex and technologically sophisticated products; and an unprecedented erosion of trust in corporations and institutions. The changes have also had direct and profound impact on the pharma industry and on the vigor of larger healthcare business, resulting in new communications opportunities and challenges.

This article describes communications techniques that address healthcare market trends and needs. It discusses how those techniques are essential and interrelated because of the many stakeholders that pharma companies must reach and relate to, not just once or twice, but in a continuing, mutually beneficial way.

Relationship Imperative

The growing importance of building relationships among influencers results from several significant trends:

  • Changed stakeholder dynamics that have created a three-dimensional sphere of influencers in constant interaction so that public relations professionals can no longer distribute information merely through linear lines of communication. (See "The Relationship Network," page 20.)

  • New standards and expectations for healthcare companies and their brands so they deliver a more rigorous, honest, and socially responsible product.

  • New channels and expectations for information that guides patient loyalty and decisions through access to, and dialogue with, stakeholders. The internet chat room may now pull as much weight with consumers as a product insert-and possibly more.

Above all, an aura of uncertainty hangs over the US economy, and the pharma industry in particular. As soon as the public spotlight falls on a certain area-accounting, management investment practices, the role of directors, or product safety-that area changes not only for the company under scrutiny but often for all companies perceived to share similar attributes. A negative regulatory ruling can, and often does, bring down the entire public pharma sector, not just the stock of the company in-volved. There's no better example of the powerful effect uncertainty can exert over established practices than the new PhRMA Code on Interactions with Healthcare Professionals, which went into effect on July 1, 2002. It affects the way pharma companies handle entertainment, consultants, healthcare practices, and medical education. As a result, companies must find new ways of communicating within the code's ethical boundaries. That will take some trial and error because the rules are still being rewritten.

Companies and brand owners find it increasingly difficult to control the market. Branding has been reborn as a business unto itself and not just a promise made to consumers in the marketing of products. The communication must be reinforced over time through consistent messages. Branding requires that actions and messages directed at stakeholders be uniquely relevant to each subset of each target group, as well as integrated and aligned.

Brand and company success re-quire building and maintaining trust through open, interactive exchange of information. Consumer activism, the increasing focus on social responsibility, a stronger link between brand identification and corporate reputation, and brands that deliver "experiences"-such as allergy medication taken at a baseball game, not just products, are all solid reasons for investing in relationship building among stakeholders.

In the world of pharmaceuticals and healthcare, there are four dominant constituents with which PR personnel must build and maintain relationships.

Prescribers. This group includes doctors, nurse practitioners, and in some parts of the world, pharmacists. Also included in the category are medical trade reporters and editors. In the past, prescribers had the first and last word about a treatment regimen. They were the source of all information and, with few exceptions their wisdom went unquestioned. Today, open communications channels, a more informed and cynical public, and the do-it-yourself nature of information retrieval have toppled that group from its pedestal.

Investors. Individual and institutional investors, analysts and portfolio managers, financial and business trade journalists, business partners, and current and potential employees all require attention from PR professionals. Who'd have guessed that Wall Street analysts' persistent questions about pipeline products' viability might change how a large pharma company prioritizes its research? Or that companies only be judged not only on the basis of their science but also for their ability to maintain a strong balance sheet and make their quarterly numbers-and defend their patents in the courtroom?

Consumers. Patients, their caregivers, and immediate acquaintances such as neighbors and relatives as well as personal health reporters make up the third category. This group is unlimited-virtually every human has played one of those roles at some point in life.

The relationship network

Overseers. This category consists of regulators, thought leaders, formulary directors, and anyone else who has an impact on pricing, market accessibility, and exerting external controls.

The information and communication needs of each group are distinct. PR exists to create and facilitate lines of communication to build relationships among them. Although there have been profound changes in the ways that media spread that communication through talk programming and pop culture, media is not the be-all and end-all of public relations.

PR is not short for press release. Rather it is about creating trust, understanding, and awareness. It's about facilitating communications among internal and external stakeholders and coordinating numerous functions, including corporate communications, finance, science, knowledge, and marketing.

Following are some burgeoning areas of current PR practices:

Corporate governance. This subset of investor and financial communications was at the forefront of company attention in the late 1980s, along with issues such as social responsibility and executive compensation. It faded into the background for a while, to resurface again as a result of the recent accounting scandals.

Public affairs. Transformed during the last decade, public affairs is now another PR function, largely because healthcare-with the government as a payer and protector of the citizenry, has become a political issue. The entire industry-its pharma and managed care subsets-has come under scrutiny. Both policy makers and shareholders continually question and challenge its business models. In the healthcare arena, issues management has become an integral part of success: If a company can't or won't manage the issues, the issues will manage the company. The benefits-such as fewer hospital stays for patients who comply with their medication program-of every new product, service, or technology must be rationalized and leveraged to gain policy makers' approval.

Coverage and reimbursement. Obtaining appropriate coverage and reimbursement for a product is essential today; it is a function of issues management. How the attributes of the product are positioned to persuade payers to provide appropriate coverage and reimbursement is as fundamental to any product's success as regulatory approval. There's no guarantee of coverage for any approved product and no guarantee that, even if covered, the level of reimbursement will approach the actual price of the product. Thus, it is incumbent on the company to develop open lines of communications to convey the message that reimbursement be adequate. PR professionals, who have established lines of communication, can advocate for beneficial policy changes.

Need for capital. Health-related companies share a common attribute: they are all, without exception, capital-hungry. Financial and investor public relations come into play as critical components of capital formation for the company. A stable, supportive shareholder base can do more to keep the cost of capital low and help raise critical funds than all the media blitzes in the world. On the accounting side, a key new activity is communicating the value of intangibles-such as corporate social responsibility, trustworthiness, and being a high-quality employer-and what they add to the pharma and biotech businesses.

Corporate governance is again coming to the forefront. Companies need to assess and benchmark themselves against peers' corporate governance practices in a whole range of areas. Credibility is essential. Thus, the task at hand for PR professionals is to communicate management competence and compliance, both consistently and credibly.

Reputation management. This evolving discipline has become particularly important in the last six months, as basic trust in senior management has eroded. Ten years ago, healthcare providers were near the top of the public's most-trusted list. That trust has withered away. Former partners are now enemies. Motivations are suspect. The internet and the changing model of how information flows and is managed has short-circuited the relationship between corporate spokespersons and the public, making that arena more complex to manage. Even beyond the high-profile cases, trust in the leadership of US companies has eroded. Corporate reputations must be managed and integrated with social responsibility, especially in the pharma and managed care industries, which have been under everyone's microscope, not just the government's. Companies need to study models of good citizenry and determine how they, too, can achieve that stature.

Consumer marketing. The direct-to-consumer (DTC) trend has refocused the attention of PR professionals as well as advertisers in an effort to grab a share of the public's attention. Sponsorships of entertainment events and product endorsements by sports and media personalities are just one new twist. It is critical to understand the importance of public relations in the media mix: DTC does not begin and end with advertising alone.

Advocacy. Third-party messages are an essential means of communication for validating scientific credibility, for legitimizing products, for building brand and disease awareness, and for building defenses against crises. As advocates develop louder voices, pharma companies must forge alliances and win allies. Those partnerships can be complex to manage, take a long time to develop, and require a strong foundation of trust. The golden rules of advocacy relations are to start early to build relationships among key stakeholders such as third-party professional groups, consumers, authors, and healthcare providers, and to find the quid pro quo with advocates.

The internet. According to Pew Internet and American Life research, six million individuals go online to research health-related topics every day. It's not just the internet, but also the interactive nature of today's society that drives companies' healthcare relationship management opportunities. The internet is a digital marketing tool that can help create and enhance relationships among stakeholders.

So what does PR stand for? It stands for powerful relationships. The heart of PR is third-party credibility. It may not be able to eliminate the uncertainty that permeates today's environment, but it can be used as a means to master it, through building the relationships and offering responsible, credible, and substantive information and content through multiple communications channels.

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