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Pharmaceutical companies and their marketing partners face a common dilemma: how to translate scientific progress into market success. Despite huge investments, R&D never seems to produce an adequate number of products with blockbuster potential.
Pharmaceutical companies and their marketing partners face a common dilemma: how to translate scientific progress into market success. Despite huge investments, R&D never seems to produce an adequate number of products with blockbuster potential.
Sometimes the science falls short of marketing's promise; other times, marketing overlooks key advantages in the science. Blame often goes to defects in strategy, conflicts in culture, or flaws in corporate structure. Solutions tend to follow the same tracks, yet all tend to aim at ways to integrate marketing with R&D and vice versa.
Pharmaceutical Executive's Marketing Mix Roundtable, which took place this past June in New York City, explored those solutions and others, including the radical proposal that integration is a dead-end street. As a catalyst for industry change, the gathering of agency and company executives encouraged discussion of how companies and their partners can increase the success rate of science and marketing in producing the next generation of powerful brands. (See "Present & Accountable.")
Present and Accountable
This presentation of the meeting reveals participants' new ideas for strategies, models, skill sets, services, partnerships, audiences, and media aimed at a more dynamic R&D/marketing relationship. Following are a few of the questions that served as a discussion guide, indicating the main areas the meeting addressed:
Twenty-five executives from pharma companies and healthcare agencies come together for breakfast and a chat. Their easy informality belies the high stakes behind the discussion-including agencies' future as leaders or followers in the pharma marketing team. It seems the blending of science and marketing has become the chief skill in question, and it may weigh heavily in the outcome for industry's "marketing partners."
Seated (l to r): Stan Bernard, Wayne Koberstein, Patricia Pesanello, Henry Solomon, Sarah Harrison, Rita Sweeney, Sharyn Arnold. Standing (l to r): Robert Krell, Richard Daly, Larry Star, Tom Spann, Paul McDade, Laura Schoen, Donna Michalizysen, John Racik, Patricia Malone, Kashif Chaudhry, David Winigrad. On stairs (l to r): Mark Kershisnik, Vince Parry, Karsten Risch, Anne Cunney, John Starzweski, Joel Bradus, Nancy Turett, Cavan Redmond.
PE: These are probably the most interesting times that we could wish for. The next generation of blockbusters is diminishing. Patent expirations are looming. But even if that were not true, we would still be wondering where the next wave of blockbusters is and how to make the most of the products that do come out of the pipeline.
Certainly, the science has never been more interesting-in discovery and in development-with advances that promise treatments and cures that we've only dreamed of so far. There are all kinds of issues, including political ones, that either speed or impede that progress. Yet, one of the most daunting problems the industry faces is not so much external but internal: getting two cultures, two silos, two giant areas of thought-R&D and marketing-to interact effectively. What cases can you cite of companies successfully integrating R&D and marketing for a given product or pipeline?
Henry Solomon: CellCept, a transplantation product from Roche. When it entered the market, the approval and clinical guidelines were that you had to have proof of long-term graft survival to ensure long-term patient survival. There was no short-term surrogate. The science around CellCept indicated that you could demonstrate in a much shorter time frame that acute graft projection was prevented.
That meant getting regulatory officials, opinion leaders, and clinicians to buy in. Roche did that successfully by communicating the science through R&D and marketing. Now, seven out of every ten renal transplant patients go on CellCept as soon as the transplant occurs.
But there are failures, too. One company, which has been in business 13 years, had great science and developed unique, innovative products. It was so fascinated by the science, in fact-seduced by the pharmacology- that it never developed a business or figured out what kind of medical need it could meet. So it never brought a product to market. Investors have pulled out of that company, and it's dwindling away.
Robert Krell: It's helpful to start by defining integration success as the degree to which R&D and marketing mutually collect and share information within cross- functional teams and use that information cooperatively to steer the development process for a successful new brand.
There is literature that mentions Pfizer employing cross-functional teams during its development of Trovan, the antibiotic. The marketing team asked for larger-scale clinical trials than were initially planned. As a result, Trovan was launched with approval for 14 different types of infections rather than the one indication that the scientists sought. One Pfizer executive said in Forbes that he attributed Trovan's success to cross-functional teams that fostered marketing's integration with R&D.
Building Brands Through R&D and Commercial Collaboration
That statement shows a complete turn- around in the company's attitude toward integration. Thirty years ago, Pfizer deliberately moved its researchers to Groton, Connecticut, because they did not want any of their researchers influenced by the marketing people in New York. To Pfizer's credit, it has turned things around and pulled off some major successes.
Sarah Harrison: At AstraZeneca, we built our operating model on complete integration. It's not a matter of coming together for a specific new project. It's a matter of living together all the time. Because we do that, we have an impact on the different cultures-the way we think, the level of trust, the objectives for the business.
R&D people start to embrace more of the entrepreneurial mindset and understand customer needs better. The other important thing is working as a global team. First, we have a true matrix. In a therapeutic business area all the directors are on the same team. So the target product profile is agreed upon, which makes it much easier to take emotion out of the decision process.
We decide what we want as target claims, how we will market them, what is necessary for commercialization. It's so much easier for R&D to work with the overall goals and objectives of the business rather than feeling they are forced to do what marketing or the commercial people want them to do.
PE: Richard, how does the model Sarah describes compare with Takeda's approach to R&D/marketing integration? And how does it compare to other successful models?
Richard Daly: At Takeda, we had a unique opportunity in the United States. We spent a lot of time thinking about the structure and what we wanted from it. We believe that the opportunity is integrating early and through target product development profiles, making sure that everyone is going in the same direction.
The Trovan example, in which teams working together can think more broadly, is excellent. And you get diversity of thought, diversity across commercial and scientific cultures. So, like Sarah, I believe that's the hallmark of success.
Agencies and Research-A Marketing Mix-Up?
One other thing. I'm inside one company, so I can't see what success looks like from the outside. But just because a company is successful doesn't mean it did it right. So I'd be interested in the thoughts of the agency people who see across companies.
Harrison: I'm also interested in what the agencies have to say, because I'm comparing it to our former process. And I know what we did and what we didn't do, and how difficult it was to try to integrate R&D. Even though we felt that our information was going in, we never knew what was done with it because we weren't sitting at the table throughout the entire process.
Nancy Turett: I'm sure that many of us agency folk are really anxious now to respond to that. [Laughter.] Richard's point is important, because our business is not just about the top line. It's about the bottom line. And the inefficiencies that can happen-not just financial but also human and temporal-are quite significant.
That's why it would be interesting to learn more about the AstraZeneca model, where R&D and marketing people work on the same team. Because what we see often on the agency side is a structure in which the folks in marketing and the folks in R&D are in very different parts of the organization. Often something will have developed pretty far along on one end until somebody appears and says, "That doesn't make sense for this side," or vice versa. And there are significant inefficiencies. In companies where the model has become flatter, we've actually seen things happen-not only right, but sooner.
John Racik: Sarah, what kind of processes are in place to deal with the bad habits that human nature, all people, bring into an organization? And how often in the matrix is the team driven by R&D versus the marketing or the operations side? Is it still the marketing side that, more often than not, drives that team, because they have to produce the bottom line?
Harrison: Certainly, there will be some of that. We probably struggled with that initially. But it eased once the R&D folks truly understood what we were all working toward, which is value enhancement. We are all trying to figure out how to have an impact on the bottom line.
R&D people felt less marketing-driven once they understood the business implications of improving efficiency-shortening the development cycle, having a clearer understanding of what customers want, having a better understanding of how market research translates that into dollars and return on investment. So we all became accountable for the end result. And once you become accountable for something, it changes your mindset.
Also, we did more than just involve the research people in decisions about a new project. They are involved in marketing activities. So they feel immersed in the team. They are involved in both the financial and supply chain discussions.
Rita Sweeney: I had the opportunity to work in an integrated environment as a consultant, where all the agencies and other consultants were brought into the loop. We often worked as a team with other agencies, all the way through. That experience also allows you to replicate the effort. It's not just a one-time occurrence. You're building a culture.
Joel Bradus: I was at AstraZeneca in the early nineties. One thing I would add to the discussion about the R&D/marketing interface: It was not emotionally driven. It was fact-based. That is, AZ had a lot of data from market research supporting both camps. So it made the interchange much more profit- and team-oriented. I see Sarah nodding.
With human nature already identified as an obstacle to integration, the panel moves on to analyzing more systemic impediments and how to overcome them.
PE: What are the chief reasons that integration of R&D and marketing break down, and what can you do to prevent it?
John Starzewski: Perhaps it would be useful to discuss why R&D and marketing are more often split than integrated. One characteristic of this industry is that it is highly regulated, and there are hurdles. Overcoming those hurdles are short-term goals, and people get paid to achieve goals. One problem is that we are very good at compartmentalizing, because that's the way we're rewarded.
After a regulatory approval, everybody goes home from R&D and says, "We've done our job." How do we transition from "I've got my regulatory approval. Now I've got to make sure the marketing guys understand this?" I think we shouldn't beat ourselves up too much, because we've been very successful so far. What we worry about now is the next step and bringing the whole thing together. But if we know what is driving the splits, maybe we can talk about how to fix that.
Paul McDade: I handled the integration communications for Pfizer and Warner-Lambert on the research side, and there was a tremendous emphasis put on two issues: globalization and cross-functional integration. With research and marketing sites around the world, how do you bring everyone together? And what makes the most sense-cross-functional teams or functional expertise? How can marketing and basic research cross-pollinate one another?
Cavan Redmond: Every major pharmaceutical company has an example of a product for which they've been successful in integrating commercial and R&D. We can't have a blockbuster product without it. But to be successful, companies must develop systems and be able to identify the core competencies, expertise, and processes to sustain it time and time again.
At Wyeth, we reorganized the way we work with our global marketing group and our R&D organization. All of our teams-regulatory, statisticians, writers, clinicians, marketing, marketing research-are co-located at our new facility.
We also restructured the processes-portfolio review, commercial review, and some of the infrastructure-to be common across the organization. It's taken a series of changes and an enormous amount of work to develop a sustainable system.
We involve the discovery teams when they're forming development tracking, and we provide commercial input. We're not sitting there at the bench trying to design the experiments and identify the targets. But we are sitting there talking about the unmet medical need and where healthcare systems are headed.
Starzewski: We're talking about an organization as though it were an entity. In fact, an organization is a dynamic collection of people that come and go. So one thing we probably recognize is that the pendulum swings between R&D and marketing depending on who's in the situation at the time.
I've seen this in large companies where at one point you have medical marketing driven by R&D and then by marketing. The issue is, though, how to capture what really works, institutionalize that, and make it work for you.There is success all around us. But the issue is the rate of improvement. Maybe we should start attending to the organizational dynamics as much as the specifics of the R&D process.
Patricia Pesanello: Many companies have put processes in place but cannot execute them. Either people are confused or they lack clarity about their roles. A development person says, "Now I have to think customer focus. What does that mean?"
Success comes to companies that can compress that change into a small window of time. Some companies have deliberately driven it by virtue of who they hire and how they organize. But an ad hoc approach-having a team success here, maybe shared over there-will not ensure survival in the future.
Vince Parry: In my experience, there are three things that companies with the greatest success do right. The first is the way they're organized. The second is having protocols for people to work together. Many companies organize themselves very well, but they don't know how to behave in a group. That's a role that agencies can help play-teaching people of different disciplines how to work with each other.
The third key is that the companies that do it right don't talk about R&D and marketing. If you can get the key people to all be brand managers-to look for brands rather than just compounds-that's a common denominator.
Branding is about the ownership of ideas. The Cox-2 inhibitors are the most recent examples of owning the science from day one. That's a marketing idea, to go out and say, "Whether or not we get an independent class from the FDA, we're going to create a class."
Laura Schoen: I have seen a major difference between biotech companies and Big Pharma. Biotech has been a much better example of integration. But a lot of those companies are not yet success stories. So one has to ask, in this case, is the integration a plus? But on the Big Pharma side, my clients are now trying to have integrated teams, but I still see a language gap between R&D and marketing. They have to make sure that they understand each other and their marketing goals.
Panelists continue to paint in the details of how R&D/marketing integration can transform company operating models.
PE: What tools, skills, and resources do marketers and their scientist collaborators need to realize the full scientific potential of developing new brands?
Daly: For Takeda, the language and the culture are about lifecycle management, not about R&D. It's not about medical affairs, marketing, or sales. It's about lifecycle management and taking advantage of the cultural differences between R&D and marketing. There is an interplay there.
In our integrated model, we use marketing people as the judges. We're the ones who have to bridge the short and the long term. The definition of product management is you have all the responsibility and none of the control. It's easy when you're small. It gets much more difficult as you grow, but the processes are the things that will save you. If you build them, the cultures are forced to talk to each other.
I joined the Drug Information Association because I got tired of wanting regulatory and R&D people to come to the marketing conferences. They won't! So we're going to create a marketing section within DIA, so marketers can go to the mountain.
Stan Bernard: The single biggest challenge we face in entering and closing this argument on the interface is to overcome a long-held myth in the industry, which is that the R&D process and the commercial process are sequential, independent events.
Researchers tend to believe they own the product until it gets to approval. And then they hand it off to the marketing people, who then own the product. But the R&D and commercial processes are actually simultaneous and interdependent. In the most successful companies, the business and marketing people will often lead the R&D people into analyzing the opportunity and the portfolio.
PE: Have the mega-companies exhausted the integration model? Are they coming up against impossible hurdles of size, complexity, or something else? What other models are possible?
Racik: It makes sense that smaller companies could potentially be better at integrating. But we have some pretty big pharma companies here as well as a mid-size company. Is there a certain threshold or critical mass where the matrix organization can succeed? Can the start-up companies meet that threshold if they commercialize their own products?
From an agency standpoint, we have to be invited in. Your culture has to allow us to be strategic partners at the earliest stage-not Phase III or IV. We do tend to come in earlier with smaller companies, because we have come from the client side. We add value, and there are a lot of financial reasons to do that. But in some of the larger companies, we get in after the consultants have helped you develop your strategy, and now you want us to move it forward.
Mark Kershisnik: Being one of the companies that hasn't merged or changed in that way, we've been working with a team-based structure for more than ten years. But we found that, after four or five years, the system broke down. There was nobody looking after functional expertise. As a result, we saw erosion both on the research and marketing sides of that expertise.
So, we had to change the model and hybridize it so that we have both strong functions and strong teams. And we have teams of varying sizes, depending on the size of the product and the size of the opportunity. That was a real enlightenment for us.
In 1998, our marketers went through a total of about 900 days of training; by 2000, we took our marketers through more than 12,000 days of training. We have done the same thing with the research side.
It's been an interesting journey, developing a cross-functional, integrated methodology, where the team has all the necessary power and resources. Marketing and research have equal responsibility within those teams. It's not just havingeverybody co-located and all those things. It is looking out for functional excellence, plus being able to control decision making centralized in a dedicated and focused team, by therapeutic area or major product.
We don't use just one model any more. Cancer is organized differently than CNS, which is organized differently than diabetes, which is organized differently than bone-and for good reason: They are different markets. That reflects the needs of customers, scientists, researchers, and marketers. So that's where we are after ten years of team-based experience.
Kashif Chaudhry: Integration has two components. One is structural. We've talked about how companies like AstraZeneca or Wyeth have organized their therapeutic area teams to get the different groups to start working together. At Bayer, pre-launch marketing reports to R&D-not to marketing as in every other pharma company.
The second component is cultural integration. How can we train the new leaders and team members? Before we even start training, there is a significant amount of just getting people to talk with each other. And that has a global dimension.
If senior management isn't behind integration, it doesn't have a good chance of succeeding. There are cultural differences between scientists and marketers. Scientists tend to be more quantitative and have a longer time horizon for making an impact in the market. Marketers need to balance science and art in their work, and they have a shorter time span in which to affect the business.
Krell: So, it's necessary to deal with the basic psychologies of the two types of people and make sure there is leadership that joins the two. An important tool is internal training to bring people together so they understand the cultural differences. There is also a lack of mutual rewards for product success.
Having issued a report questioning the value of attempting to integrate marketing and R&D, Accenture's Tom Spann explains why structural changes sometimes fall short of expectations.
Tom Spann: I grew up around some of the operating model successes, like AstraZeneca and Takeda, and there are many others where it works well for the product in the therapeutic area. But many clients are in situations with revenue shortfalls and patent expirations because five years ago they had "not invented here" issues in their R&D and commercial integration. They did not allow their commercial organizations the latitude to in-license, to divert attention from products developed in-house.
We conducted a survey that showed 80 percent of commercial executives think it really doesn't matter where products come from, that in-licensed products are potentially just as good. Almost 50 percent of them believe that their internal R&D organizations will not come up with sufficient product flow to grow the business the way it used to grow.
There's a need for those companies to have the latitude to in-license, yet often that doesn't happen because of the cultural barriers within the R&D organization. And the opposite happens as well. Some R&D organizations have great technology expertise, turning out some interesting compounds, but they don't fit the commercial portfolio. Yet there is even unwillingness to out-license those products.
For any product at the therapeutic level, it is important to drive great integration. But at the portfolio level, you may be sub-optimizing both your R&D and commercial assets.
Larry Star: I don't believe you can institutionalize innovation. Organizational changes have led to an institutionalization of efficiency, which can lead to incremental advances. But there is a risk of developing consensus-driven cultures, which are a threat to individual genius, the ultimate source of breakthrough ideas. GE is a much more efficient organization than it was when Thomas Edison was running it. But it sure as hell is not the same kind of innovation source.
PE: You two are talking about similar things. It is a common criticism of the team approach that we've all been taught by our various organizations. Perhaps we need a greater maturity in looking at our teams, because-I've heard it over and over again-teams become so equal that no decisions ever get made.
Redmond: The point you all make is important, because it's actually the hardest thing for the large pharma companies to do. It's also why smaller companies can at least appear successful, as they move through to approval and launch. It's a question of leadership and the types of leadership you need on the teams.
Larry Star was talking about consensus building and the challenge of preventing mediocrity in decision making. That's where the pharma industry is changing; it's identifying the leaders of those teams. The functional leadership and the team leaders are being redefined as we speak. It boils down to the quality of leaders and the cultural relationships they create. There are companies where it is very difficult to get innovation going, because the leadership style isn't one of taking risks.
But there are ways to build systems, at the team level and at the organizational level, that encourage the risk of innovation and of moving projects forward. And that's probably the most difficult thing facing large pharma companies today-how to build risk in so that today's leaders can drive through and deliver innovation.
Solomon: At Roche, we now have a system that's built around business development, but it probably will soon be applicable to our own internal portfolio. It's a team concept, but it's kind of simple. We have a business development director at the central core, along with basic research, business/marketing, and development on my team. They all happen to be in Basel, which makes my life difficult. That's a global company's problem. We use video constantly and we travel a lot.
But everyone on the team agrees that, suddenly, we are moving forward. We talk to each other all the time about things that research never thought about before. We make each other think. I have to think about the basic science targets; they have to think about the business case.
It's beginning to work. Instead of development only wanting a product that will eventually be approved, marketing is saying, "You've got to have a product that I can sell." That's a very different focus.
PE: Even in major companies, whether you're licensing in or getting products from your own internal research, you still have to integrate that functional expertise in house.
Solomon: We do incredible business case analyses of in-licensing opportunities. We don't do that as closely with our own internal portfolio.
Daly: Somebody said, "Let's get rid of the emotion." Exactly. At Takeda, we push every single product through the same process, because a dollar of NPV [net present value] is a dollar of NPV. We don't care where it comes from. So, I agree. It absolutely has to be that way.
Harrison: If you start with a business strategy, you get everybody on board in agreeing on the overall business goals and objectives. So it's not about a product; it's about the total business. One therapeutic area may have to release resources to another totally different therapeutic area, because it's the best for business across the company. You have to identify what you need and where your gaps are.
Bernard: I had the good fortune to work both as a clinical research director and as a product manager, so I have a unique perspective. When I was on the product manager side, talking with clinical researchers, I understood where they were coming from.
More and more we're seeing that the marketing/R&D interface boils down to a marketer and a researcher interface. Ultimately it's about two individuals communicating and interacting with each other. Cross-functional training-having people with clinical backgrounds move into marketing or people in marketing work in clinical research areas-breaks down enormous barriers and greatly enhances the likelihood of success in those interactions.
A question about customers ignites a simmering issue: Internal success often fails to raise external applause.
PE: How can R&D/marketing collaboration enhance a company's understanding of, and communication with, key audiences such as medical opinion leaders, payers, and consumers?
Turett: It strikes me as fascinating that 90 percent of our conversation is about how to run a big business and how to deal with a technology-driven industry. This could be a conversation in the information technology or aerospace industry. We aren't talking about medicine, healthcare, saving lives, or any of the other things that we're being accused of doing or not doing.
The pharmaceutical industry is now the most resented industry. And that probably is because we're having something of an identity crisis ourselves. What are we really about? Is it about making money? Is it about saving lives? Obviously the answer is yes and yes. However, I don't think that will take hold until we address the fact that the business we're in isn't the same as aerospace and technology.
People don't really want to have to use our products, because if they're using our products, chances are it's because there's something wrong with them and it reminds them of their mortality and suffering and unhappiness.
PE: Nancy has brought up an interesting point. In the public's mind, it might not be a positive thing to make those two interact. But it's very important that they do and that the industry be more in touch with the things Nancy is talking about.
David Winigrad: At the end of the day, this is about patients, who are our ultimate customers. In my observation, the industry people who really have a dream and a passion about patients tend to be gravitating from Big Pharma into biotech and small start-up companies.
The problem is, although small biotech is better integrated, there are many situations where there is almost nothing to integrate. You talk about a nascent marketing function. In biotechs, that is often nonexistent; the companies are run by scientists and the CEOs are doctors.
But those companies are the incubators of future blockbusters. So how do we help them bring their products along and make the right decisions overall? Because the companies stumble left and right, and they make mistakes. They are so lacking in marketing expertise; there's often nobody there that speaks the language at all.
PE: But, Tom, isn't that what the Accenture report recommended, to separate those folks and leave them on their own?
Spann: No, it really is about optimizing both parts of the business, not that they don't need to work together. Many of the most effective, successful products have been products of collaborations of different R&D organizations becoming commercial organizations.
Bernard: Increasingly, we are going to see patients getting involved earlier in clinical trials as advisors. Already we've seen patients working to help a variety of organizations revise protocols in patient clinical trial recruitment and other aspects of trials. That brings in the marketing people, because the customer is coming into the game. And, if they're involved as advisors in Phase II or III trials, then marketing gets involved.
More and more, marketing is backward integrating into the clinical trial process, because the customer is becoming part of it. The other trend is the forward integration of researchers into new technologies on the marketing side.
An example of that is pharmacogenomics. R&D people have a lot of expertise in how to use pharmacogenomics to differentiate products, to help in labeling, and so on. Those trends are pulling the two groups closer together into a customer focus.
Bradus: I agree with that, and I think it's important to get all the stakeholders involved. But if they're not involved by the time you're in Phase III, it's too late. Because by then you have already directed the clinicals. The good news is that, with some of the marketing research techniques becoming available through the internet, it's easier to get broad-base samples among all the stakeholders-payers, patients, and physicians-and get them early on, so geography is no longer an issue.
McDade: We have a cross-functional team that looks at sociology issues-what's happening with society and how does that affect your industry? How is a patient different from a consumer? You become a very different person when you're a patient with a disease than you are when you only think you may be at risk. So, accelerating communications to patients, not necessarily to consumers, makes sense.
As an industry, we think we're proactive if we're in it five years, because we're comparing ourselves to ourselves. But maybe IBM and Motorola have something in communicating much further in advance to some key audiences.
Sharyn Arnold: The discussion about connecting with stakeholders is critical. Because, once you get to know who the senior thought leaders are, that helps the company to further its goals and objectives. In my former life at Smith-Kline, before GlaxoSmithKline, we did a terrible job of connecting with the constituency groups. We usually waited until late Phase III or Phase IV, and then it was too late.
We need to bring those groups into R&D so that everyone hears and understands the customer's perspective. Marketers hear it all the time, but it's good to expose the R&D groups to that as well.
Winigrad: Someone talked about the importance of effective leaders for these teams. That's critical. One of the most important tools I see leaders use-and it works-is getting everybody, regardless of their discipline, focused on patients. They remind everybody that they're in the healthcare business, and they ask, "What are we going to do to create value for patients?"
One reason that companies may need to reach beyond the sales force is to hear the patient's voice. Pharma companies have a lot of value to add by understanding not just a product's mechanism of action but also how patients feel about the disease. The quality of life issues are critical. That is an important mechanism for bringing R&D together with the commercial function in working on the product.
Although the discussion of patients hints at altruism, panelists soon make clear that a patient-centered focus promises ample rewards for the industry.
PE: In what other ways can companies and agencies tell whether the R&D/marketing integration is successful?
Schoen: If we are going to measure the success of the new model based on the number of successful products that we bring to market, I want to remind everybody that we have been integrating better, yet the last two years have been the worst in 30 years in terms of the number of new drugs brought to market. Does that mean integration is failing?
Turett: It's not the number of products that defines success or failure; it's the size of the profits. It only takes one Claritin to drive more revenue than you get for 15 orphan drugs. That's why it's important for us to be really clear about our goals and then work toward them. That's why I was getting at that issue of the industry's identity. I'm not talking about public relations; I'm talking about the public. The public resents the concept of us being only money-driven. They want needed products, not just giant products.
Harrison: But, adding to success from the company's point of view, how big could Claritin have been if the development cycle had been shortened by two months? Three months? Four months? How much faster or how much steeper would the curve have been at launch?
Anne Cunney: Recognizing that integration will not have an effect until some years from now, many companies are seeing the value of acquisition and licensing-especially with the small biotech firms coming up with novel approaches. That can be the basis of fueling the franchise approach for a long-term commitment in a given category or disease area, enabling companies to reap the value of early market research for an in-depth understanding of the customer voice.
But we're looking at a long-term commitment. Every opportunity for acquisition and licensing to fill those gaps is not a failure of the R&D or marketing groups to bring a molecule to market. It's part of the whole process.
Solomon: Who is our customer? Is it the physician, the patient, the family that influences the patient's decision? Or is it the spouse?
I focus on what triggers the physician's treatment decision. What drives a physician to treat the patient with coronary risk? It's right after that patient has had acute failure, and everybody is terrified. That's a key moment. It's key for medicine and it's key for marketing.
Only now are statin makers beginning to say, "You know what? With a MIRACL [myocardial ischemia reduction with aggressive cholesterol-lowering] trial, maybe we can use a chronic statin in an acute setting. Years ago, scientists knew that it couldn't just be lowering cholesterol. There had to be something else. But it wasn't until recently that people said, "What else are these drugs doing? We know they improve the endothelial function and there is the blood vessel..."
If that marketing insight had been recognized and incorporated into trial design early, I can only imagine what statins would have been today. You think they're a big market? They would have been double. The blockbuster model, trust me, is not dead.
Patricia Malone: It's important to know the nuances of the marketplace so you can discover niches. If we align our stakeholders around the total value, we will have a blockbuster. Not as we currently define it-mass produced and mass promoted- but as a sum of many different markets.
PE: What, after all, is a blockbuster? Is it just some compound that bowls everybody over with a new indication and takes the world by storm? Or is it something that can be created from other parameters, including patient behavior, compliance, delivery, and other benefits that improve healthcare? Maybe that is the chief value of the R&D/marketing interface-to enhance pharma's performance beyond what it's traditionally been able to achieve.
Parry: We tend to think that integration is just about the drug. And it isn't. Part of what is being integrated is the patient.
When you enroll a particular kind of individual in a clinical trial, you're already beginning to formulate the idea about what a blockbuster could be. A drug is nothing unless it has a useful purpose. And the size of the drug's potential in the marketplace depends on the number of people who need it.
Now, how many people knew ten years ago that there would be such a term as erectile dysfunction? That's brilliant branding. And it's not just about branding the drug; it's branding the condition and, by inference, a branding of the patient.
What makes a blockbuster has been evolving into not just branding the class or the science but branding the patient. What kind of patient does a blockbuster create? We're creating patient populations just as we're creating medicines, to make sure that products become blockbusters.
Krell: One of consumers' complaints about the pharma industry is that it's so focused on blockbuster drugs it seems only after the money. There are many diseases out there that require medications. And there are many newer, smaller companies coming up that are looking for small-cap products of $50–$60 million. And that's good for the people who need it and good for those companies.
There might be a danger in Big Pharma focusing almost exclusively on mega- brands because, if any of those brands fail, it puts that company in a bad light financially. As a business person, I would rather have ten clients who pay me $1 million a year than one client who pays me $10 million a year. It's much safer.
Arnold: Just another point about blockbusters. It's unfortunate that companies have allowed themselves to use that term on a routine basis. Companies are communicating the wrong message to the media.
Cunney: We do need to communicate that there is a constant development cycle, always percolating up molecules with some chance of treating disease, whether it's a huge category like inflammation and pain or some sort of niche category. We have done ourselves a disservice using blockbuster nomenclature and not promoting our investment in niche areas more.
Daly: The best way to improve the communication is to have people go live in those environments. If you want to learn Japanese, the best way to do it is to go to Japan. At Takeda, for example, I hired a woman about two and a half years ago as director of new product planning. Now she is vice-president of clinical research. She moved over. Now you should hear the discussions we have about who's directing the ship and where we are going. She understands. She came from that environment. She built the system. And now she supports the system from the R&D side.
We want to have a free flow within our company, a free flow of people all across the board-finance people coming to marketing, marketing people going to live in the clinical world, and the clinical people coming back. That's what it's going to take to solve the problem.
From customer relations and product innovation, the panel shifts at last to the relationship of companies and agencies moving along the path toward science-based branding. Who's leading whom?
PE: How does the quest for R&D/marketing collaboration affect relationships between pharma companies and their marketing partners? Does it drive agencies to become larger organizations that encompass the entire product life cycle, or does it create more opportunity for smaller, flexible organizations that fill specific company needs?
Karsten Risch: Communications agencies can obviously help clients identify stakeholders' specific needs early on, and that could be somewhat integrated in development plans. But maybe there is an even larger task; our stakeholders do not understand one another. We can help our clients integrate the markets or stakeholders by communicating to doctors what patients need-because they believe they know, but they don't. As communicators, we should mirror the integration effort in our communications. If we integrate, we also need to know what others believe.
Krell: Ad agencies can do a lot for the smaller companies that don't have huge resources. By sitting down and saying, "Okay. You need marketing people involved. What do we want to say in our patient insert? What is going to persuade the audience and help out the audience? Then they take that PI into market research focus groups and talk to doctors, patients, and payers.
It's very important for biotech companies to get their products on formulary, because some of their products are extremely expensive-$60,000 to $80,000 per year. And if they can't do that, it could be the end of the company. They need to talk to marketers and do pre-market research and bring a PI with them so that they have some goal for all of the clinical trials.
Schoen: How will we manage the results? Will our results be measured or based on the number of successful products that we bring to the marketplace? If that's the case, there is a disconnect between the way companies measure R&D and the way marketing managers work. Marketers have very short time horizons versus researchers who work maybe ten years down the line. How will we consolidate that?
Harrison: Is the goal to figure out how to integrate marketing and R&D within a company? Or should we have a broader goal of trying to figure out how to reintegrate those skill sets and thinking, regardless of whether it's within the organization or bringing others in from outside? Seventy-five percent of the people in this room are marketing partners. How do I integrate you before I get my internal people integrated?
We will integrate marketing and R&D in the United States and, after that, integrate marketing and R&D globally. Then we want to integrate the external marketing partners. So you need to bring a lot to the table: great insights about the customer that can be integrated back in the discovery chain. You're not inside. So, how do you help us be even better in what we're trying to do?
There are a couple of challenges. We're trying to integrate with the US market and its needs, which are very different from the rest of the world. Yet the rest of the world has its own needs, and they see the United States as arrogant and wanting everything. Is there a role for external organizations, consultants as well as marketing partners, to help everyone see the value of the key markets and how each need is necessary?
If all of you, key thought leaders, and advocacy groups would bring answers to the table-I don't see as much of that happening as can or should happen.
Racik: Sarah, you took the first step, because the lexicon has to change in this environment, and the word you didn't use is "vendor." You used the word "marketing partner." The more our clients perceive us as marketing partners, the more we can play on the same field with you from an intellectual property standpoint.
I have no idea why we sign one-year contracts with pharma clients. At Becton Dickinson, I dealt with GPOs doing three- and five-year contracts. I know everybody's getting squeezed, that's fine. If you want that $125-God forbid-magic number, we can attain that over a 5-, 10-, or 17-year contract with you. But if we're up front and you're going need more intellectual capital on a global basis, that is not going to happen. Because, like you, we have to report back to our shareholders.
Harrison: But the creative part of what you just said is that trust is important, because then people like me stop calling you vendors, right? The other thing, though, is that we are creating ways for you to put a dollar value on your ad account. We may say, "We're going to pay you X to do that," but you could take accountability like everybody else and say, "Okay, but if I help you deliver Y, I want some more."
As the clock ticks down to the session's end, many voices speak at once, then quiet down to hear more challenging words from the client side.
Redmond: At Wyeth, we use vendors very differently. We use consultants. And we use partners. A vendor is somebody who comes in and does a job for us. It could be a print shop. It could be an ad campaign. It could be something quickly budgeted out.
Consultants have partnered with us to develop systems and to bring us expertise. But they've also had a lot of stake in the game going forward. And those have been our most successful collaborations. My biggest challenge is the marketing partners. The products and services that most of them offer for R&D commercial interaction are the same products and services that they offer for inline branded products.
It is very difficult to get the wealth of potential marketing partners out there to understand that they are not offering the products and the services that match where the industry has gone. They are still talking about turnover of product managers. But for the more successful product development and brand teams, and the interactions within the R&D commercialization, turnover is much lower than it was five years ago. Not only that, the level of professionalism in a number of companies-AstraZeneca, Wyeth, Lilly, and others-has gone up.
Those companies have programs to integrate and move people around. That's created a different space in terms of competence. I would argue that the marketing-support companies haven't caught up. Ironically, consulting companies have, because that's the nature of a consulting company. But they're not offering the marketing services.
If, as marketers, you ask me if I am I getting the services I need to be effective with R&D projects, to partner with R&D, to deliver value from the discovery track through to registration and launch, my answer is: They offer incredible value from Phase III through to launch. But I haven't seen innovation on the external partners' side in products and services that match where the industry has gone. I think they're trying to catch up with the companies.
Star: You are right on. Part of the problem is the actual business model of the agency, which is designed to deliver products and services within a window of 8–12 months prior to launch and then continuing. Our clients' marketing budgets have been linked to those time periods. If we want to provide consulting services-and there is a rich opportunity there-we need to figure out how to make that investment pay off prior to that traditional window.
Daly: I agree. The marketing approach to research means spending more earlier in Phase I than you've ever done before. So, if someone comes up with products and services that help us make better decisions, do better product positioning, and bring better value to the healthcare system, I believe pharma companies would accept that very readily. Because we already do.
I predict that five years from now we will be talking about a revolution that the industry went through when the supplier side provided a whole new set of services that accelerated our ability to deliver.
Harrison: Let me ask a question. How many of the marketing partners here are involved in communication and publication strategies that start much earlier than 18 months before launch? (A few hands go up.)
Schoen: The industry is also changing the model. For example, we employ about six key agencies who have experience on the research side of the business, because we need to contribute. We're not trying to be a medical education agency. But products are becoming more and more complex, with new mechanisms of action.
We should not forget that the research is the excitement of this business, at least it has always been for me. I love it when I'm exposed to the science, when I have a chance to talk to the people who actually develop the drugs. That's always at the core of my campaigns.
Bernard: What we're seeing is the emergence of the "virtual pharmaceutical company." It's really a company without walls in a sense that companies now have to outsource more and more things. We outsource virtually everything today. Discovery is being outsourced more and more to biotechs and other technical companies. Development, marketing, sales-all are being outsourced in a virtual way.
That requires pharmaceutical executives to learn a new model. How do you manage the virtual organization and your internal people, and also manage across borders, functions, and even companies?
Kershisnik: If we take a look at the pharma industry, its lifecycle is accelerating tremendously. The pharma product is becoming more like an airline sink, hooked to a small tank. Once it's empty, that's lost revenue; that's value that can never be delivered.
In this context, when a pharma company discovers an opportunity for value and doesn't have the capability inside to leverage it, it can look outside. One small company I know has a transplantation product with a dermatological indication. So they're looking to gain therapeutic area expertise quickly in the dermatology clinic.
If agencies can bring new competencies in therapeutic areas, then a pharma company may have an additional avenue. As pharma companies integrate marketing earlier into R&D, the agencies need to be prepared to help them.
Parry: Integration should be a product we're delivering. It's not just about integrating us into the mix. I spend a bulk of my time brokering an understanding between product development and marketing groups. It's not just about marketing. And it's not just about science. It's about communication.
Through our skill in communication, we can foster integration on your end that companies, no matter how well organized they are, often can't do themselves. That's also true on the agency side. Some agencies offer a vast number of services, and they try to integrate them to reflect the clients. Agencies often don't do a very good job of that for the same reasons that pharma companies have trouble integrating. They have separate P&Ls. They often have different goals. Their leaders have different incentives. But it is incumbent upon agencies to break down the barriers that prevent their services from being organized and deployed against the challenges of integration. It should be something your marketing partner delivers to you.
Harrison: Within agencies, just as within our companies, we have a tendency to work in silos. So shared learning never happens. I have hired an agency or consultant to work on the development side, only to find, two years later, different people at the same place trying to help us to launch the product.
I would recommend that larger agencies integrate themselves to better understand the full lifecycle product management that your clients are trying to bring to the market. The new team may know nothing about the communication strategy that occurred 36 months before launch. But if they talk to the people who worked on that, maybe they can learn more about it.