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H E A L T H C A R E
Pharmaceutical Branding StrategiesThought leader perspectives on brand building, effective
communication and future brand models
By Steven Seget
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Steven Seget
Steven Seget is Principal at Delphi Pharma, and provides independent strategic
consulting services to the pharmaceutical and biotechnology industries. Steven
previously managed the strategic healthcare consulting function at Datamonitor and has
an MBA from the London Business School. sseget@delphipharma.com
Delphi Pharma provides strategic, financial and marketbased solutions to clients,
focusing primarily on the portfolio management, business development and licensing
functions. Delphi Pharma combines an extensive research network, applied analyticalexpertise and an established track record to deliver high value results and measurable
impact to its clients. www.delphipharma.com
Copyright 2006 Business Insights LtdThis Management Report is published by Business Insights Ltd. All rights reserved.Reproduction or redistribution of this Management Report in any form for anypurpose is expressly prohibited without the prior consent of Business Insights Ltd.
The views expressed in this Management Report are those of the publisher, not ofBusiness Insights. Business Insights Ltd accepts no liability for the accuracy orcompleteness of the information, advice or comment contained in this ManagementReport nor for any actions taken in reliance thereon.
While information, advice or comment is believed to be correct at the time ofpublication, no responsibility can be accepted by Business Insights Ltd for itscompleteness or accuracy.
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Table of Contents
Pharmaceutical branding strategies
Executive Summary 10
Introducing pharmaceutical branding strategies 10
Building pharmaceutical brands 11
Communicating pharmaceutical brands 12
Alternative brand models 13
The future of pharmaceutical branding 14
Chapter 1 Introducing pharmaceuticalbranding strategies 16
Summary 16
Introduction 17
Report outline 18Introducing pharmaceutical branding strategies 18Building pharmaceutical brands 19Communicating pharmaceutical brands 19Alternative brand models 19The future of pharmaceutical branding 19
Profiles of contributors 20Joe Carofano, General Manager, CCA Advertising 20Jeff Daniels, Strategic Branding Consultant 21
Karen Friedman, Karen Friedman Enterprises 22David Griffith, President, Sparkiting Solutions LLC 23Max Jackson, President, Publicis Healthcare Group International Division 24E.M. Kolassa, Managing Partner, Medical Marketing Economics LLC 25Rebecca Robins, Global Marketing Director, Interbrand Wood Healthcare 26David L. Stern, Executive Vice President, Metabolic Endocrinology, SeronoInc 26David Wood, CEO, Interbrand Wood Healthcare 27Lydia Worthington, Vice President, Managing Director of Healthcare,BuzzMetrics 28
Pharmaceutical brands: state of the pharmaceutical brandscape 29The importance of pharmaceutical brands 29
Brand versus message 31
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Global versus local 31Current trends in pharmaceutical branding 32Direct-to-consumer advertising 33The future of pharmaceutical brands 33
Successful pharmaceutical branding 34
Chapter 2 Building pharmaceutical brands 36
Summary 36
Introduction 37
Understanding the nature of pharmaceutical markets: building brands
through evidence-based marketing 38Why pharmaceutical markets are different 38Response to medical need 39Learned intermediary 40Guidelines and protocols 42Experience goods 42
Negative goods 43Fixed product features 44Restricted pharmaceutical marketing 45Evidence-based marketing 46Conclusion 49
Building global brands: a new challenge for the pharmaceutical industry 50The importance of global branding 50
The value of global brands to key stakeholders 51Pharmaceutical global branding to date 51Key challenges of global branding 52Delivering global brands 54Corporate branding 55Launch phase coordination 56Communicating to different audiences 56Current best practices 57A cautionary tale 58The future of global brands 59
Brand matters: the lingua franca of pharmaceutical brand names 60Introduction 60The value of a good name 62An art and a science 64A global currency: namer beware! 70Summary 73
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Chapter 3 Communicating pharmaceuticalbrands 78
Summary 78
Introduction 79
Pharmaceutical public relations: the impact of corporate
communications on brands 80The importance of effective PR 80Impact of media communications on pharma brands 81Best practice communication 82Media messages 84
Maintaining credibility in a crisis 85Crisis management 85Improving PR efforts 90
Word of mouth: the new frontier for patient insights and communication 91Word of mouth: an influential force in patients lives 91The internet becomes a major catalyst of patient word of mouth 92Pharma companies tap into online word of mouth 92Word of mouth strategy: five guiding principles for pharma marketers 93Into the future: word of mouth an untapped opportunity 96Crisis buzz: tracking reactions to drug trials gone bad 97
Chapter 4 Alternative brand models 100
Summary 100
Introduction 101
Promise-centric versus product-centric branding: creating a meaningful
pharmaceutical brand 102The state of pharmaceutical branding 102A promise is central to successful brands 103Integrating communication around the promise 103
Identifying the product-centric approach 108A review of pharmaceutical products 109Promise-centric branding and relational buyer behavior 114Planning brand communication with the relational buyer behavior model 116Brand communication pitfalls 118Focusing the brand for success 118
Brand dynamics: coordinating brand efforts across different touch-
points, geographies and lifecycle stages 119Managing brand dynamics 119Defining Core Brand Dynamics 121Combining a brands core function and core user need to define its CoreUtility 122
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The Core Evaluative dynamic 123Determination of the Core Brand Value 124Facilitating common understanding across brand marketing teams 136A coordinated brand model 136
Final point: lifecycle branding 137Corporate branding: building franchises of product brands 140Destroying product brands 140Corporate branding 142Corporate brands 143Franchise brands 144Line extensions 145Corporate versus product branding 146The future of branding 147
Chapter 5 The future of pharmaceuticalbranding 150
Summary 150
Introduction 151
A shift in the branding model: building sustainable brand equity in a
commoditized market 152Brand evolution 152Brand revolution 152A new model of information sharing 154An image crisis 154Brand conversion 155Creating a sustainable halo effect 155Intellectual meets emotional 157Brand values 158The future of branding: the new healthcare model 159
Critical success factors: building and communicating winning brands 160Building pharmaceutical brands 160Communicating pharmaceutical brands 161Alternative brand models 162
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List of FiguresFigure 2.1: Examples of Viagras blue pill branding (left) and the use of the color purple by
Prilosec and Nexium (right) 58Figure 2.2: The AA encoding in the angiotension antagonist brands Hyzaar and Cozaar 67Figure 2.3: Zavesca combining brand name, supporting nomenclature, messaging and brand
graphics 69Figure 3.4: Examples of GSKs corporate campaign in UK, centered around science with a
conscience 83Figure 3.5: Zocor sentiment before and during test result announcement 98Figure 4.6: Promise-centric versus product-centric branding 107Figure 4.7: Promise-centric and relational buyer behavior 115Figure 4.8: Brand Utility (conjoined expression of Function and Need) is determined by the actual
Core Function of the brand and the Core User Need it satisfies 122Figure 4.9: Rational brand dynamic (Core Function), emotional brand dynamic (Core User Need)
and evaluative brand dynamic (Core Evaluator) combine to define the EvaluatedUtility (or Core Brand Value) 124
Figure 4.10: Brand Analysis model facilitates the audit of all rational and emotional dynamics ofa given brand, and distillation of these to extract a meaningful and enduring
promotional platform 126Figure 4.11: The highly complex, time consuming and costly stages between the initial idea for a
new product and it actually being available in the pharmacy 138Figure 4.12: Examples of brand switching strategies: Prilosec to Nexium (2000-05) and Prozac to
Cymbalta (2003-05) 141
Figure 4.13: Example of franchise branding: Novartis BP Success Zone website 145Figure 5.14: Examples of BMS campaign with Lance Armstrong (left) and GSKs commitment tocorporate responsibility and access to essential medicines (right) 156
Figure 5.15: Examples of Amgens commitment to human science (left) and J&Js legacy as atrusted consumer brand (right) 158
List of TablesTable 2.1: Pharmaceutical brand names beginning with Z, October 2005 65Table 3.2: Percentage of messages mentioning statin brands 98Table 4.3: Review of pharmaceutical brand promises (1) 110Table 4.4: Review of pharmaceutical brand promises (2) 111Table 4.5: Review of pharmaceutical brand promises (3) 112Table 4.6: Review of pharmaceutical brand promises (4) 113
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Executive Summary
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Executive Summary
Introducing pharmaceutical branding strategies
Pharmaceutical branding describes the process whereby companies attempt to
transform an active chemical compound into a recognizable package of associated
brand values. These values, such as effectiveness, safety, trust and other more
emotional associations, have become increasingly important levers through which
pharmaceutical marketers can look to achieve greater market share and loyalty in
an evermore competitive market space. Pharmaceutical branding efforts impact on
a range of related strategies, including brand name development, Rx-to-OTC
switching, DTC marketing, PR and corporate communications.
Rather than present a generalized summary of current perspectives in
pharmaceutical branding strategies, this report brings together the different views
found from across the industry, presented directly from the experiences of leading
experts in the field. The report contains the views of ten experts drawn from across
different sectors of the branding arena, including industry product and marketing
managers, advertising agency executives and management consultants. In an
attempt to shed light on the future direction of this dynamic topic, Pharmaceutical
Branding Strategies provides a unique window into the perspectives and
experiences of those leaders at the forefront of shaping that future.
There are a number of reasons why pharmaceutical brands have become more
important. First of all you have got to create more value from your molecule above
and beyond the obvious benefit. Secondly you want to create an entity that is
differentiable from your competitors. In addition to that, you have the potential to
create a sustainable entity through which to leverage the value of your brand.
Pharmaceutical companies need to clearly define the value that their brands have in
the marketplace above-and-beyond that of the competition. Only by clearly
defining and managing that value can they begin to build and leverage brand equity
moving forward.
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Building pharmaceutical brands
Pharmaceutical markets are different than more typical consumer markets, and as a
result the marketing of pharmaceutical brands cannot follow the established rules of
consumer brands. However, by examining what has actually occurred in
pharmaceutical markets and evaluating the relevant forces and relationships,
pharmaceutical product managers can become more effective, efficient marketers.
In the future, as this marketplace becomes tougher, evidence-based marketing will
become a requirement for success.
The key challenges of global branding go in line with the key critical success
factors. The critical success factors in terms of global branding really come down to
one thing you have to have a position that is single minded, that resonates well in
the key markets, and that is applied consistently at local level.
Effective global brand teams will have to balance an inclusive branding process
creating buy-in across the organization with strong corporate leadership
limiting the rework of the global brand at the local level. The resulting brands,
which have been developed from an early stage of the product lifecycle, willdeliver a clear and consistent brand promise to their target audiences and a
premium price and sustained market position for their marketers.
In an industry where patent life is limited and the domain of market exclusivity is
being toppled harder and faster by the onslaught of generics, a brand name needs to
work that much harder throughout its on-patent life, while having the potential to
live long beyond it. As companies are increasingly looking to lengthen the
productive and profitable life of their brands, established equity in a brand name
can provide a powerful platform for future wealth creation. Its about a name that
will resonate with prescribers and consumers alike, and, ultimately, that will be
relevant for the lifetime earnings potential of a brand.
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Communicating pharmaceutical brands
The public does not care about pharmaceutical brands. They do not care whether
you make money, or whether you stay in business or fold tomorrow. They care
about the benefits and what your brand means to them. How would it help me?
How would it ease the horrific pain that my grandmother suffers from rheumatoid
arthritis? How would it make my cancer treatments more bearable?You have to
think about what the brand really means for someone.
When dealing with the media in a crisis every situation is different and there is no
such thing as a one size fits all solution. If the public believes you did the right
thing, you can work with them. However, if the media even hints that you might be
hiding something, that you are not approaching it in the right way, that you did not
do something that could have benefited the public, you are dead. That is how the
media works.
The pharmaceutical industry has always been subject to heavy government
regulation, especially when it comes to collecting information on patient
consumers. Consequently, pharma marketers face complex challenges in theirattempts to responsibly promote products, solicit patient feedback, manage
relationships and ultimately close that entire marketing and information loop.
However, these challenges have prompted pharma to become one of the most
advanced industries in leveraging an ancient phenomenon we call word of mouth.
Numerous pharma brand managers and researchers should be commended for their
leadership in applying word-of-mouth research and insights to strategic decisions
surrounding drug launches, black-box warnings, patient feedback and product
development and positioning. Looking to the future, the word-of-mouth channel
will be evermore important amidst our fragmenting media landscape. Before long,
all healthcare companies may have no choice but to more actively engage in
conversational marketing. Therefore, its probably a wise decision to start
incorporating these strategies now.
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Alternative brand models
The brand promise is the basis for integrated communication across all audiences:
physicians, patients, payers, and others in the pharmaceutical industry. The purpose
of specific communication often varies to address the specific audience, yet a brand
promise should remain consistent across all audiences. A consistent brand promise,
at its very essence, should match across audiences in order to more effectively
establish brand expectations that will be fulfilled in the brand experience.
Clarity in brand communication must be achieved and maintained for brands to be
successful. Promise-centric branding is a simple concept, yet often difficult to
execute. The brand promise decision must be well conceived with a comprehensive
marketing analysis that selects an appropriate expectation that will be fulfilled in
the brand experience. Once a compelling brand promise is defined, all brand
communication must embrace the essence of the brand promise in a campaign that
is consistent over time.
A correctly observed brand analysis process involves a lot of hard work and can be
heavy going. However, the entire process is normally redeemed by the satisfactionexperienced as each phase is completed and the functional and emotional territory
truly occupied by the brand is revealed. The need to generate the deepest possible
understanding of, and attitudes towards, the brand is overriding. All existing results
of quantitative and qualitative research will need to be taken into account and
become part of any new promotional campaign. This campaign must express a
clear, motivating, selling idea in a form that customers will notice, talk about and
act upon.
The pharmaceutical industry must begin to look at channeling their promotional
investments in particular therapeutic areas. However, a move to franchise brands
will require a deliberate corporate strategy within different therapeutic areas, with
companies establishing a beachhead in an area, and developing follow-up products
into those therapy areas.
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The future of pharmaceutical branding
There is currently little to no corporate brand equity in the pharmaceutical industry.
This is unlike most other industries that have communicated their value and
educated the world about their contributions. While the commercial objectives of
an organization cannot be compromised, they must be synergistic with corporate
visibility goals. There needs to be an evolution to brand conversion looking to
build corporate image, therapeutic and disease awareness, and the product brand
simultaneously. Fusion will become the new brand model.
Rather than starting with the solution the lone marketed product of the old model
marketers need to focus on a therapeutic/corporate model and build relationships
with patients and caregivers at this deeper level. This must be the new priority.
Reallocating resources across different mediums will help educate todays curious
and thoughtful consumers, and invite patients, caregivers, and physicians in to
direct the dialogue.
Building successful pharmaceutical brands requires an understanding that
pharmaceutical markets are different to other consumer markets, that brandingefforts should be global, that brand teams must be inclusive and that brand names
are important for building brand equity.
The effective communication of pharmaceutical brands requires an understanding
that patients require a personal touch, that the media reflects the public perception
and that word of mouth communications must be tracked and managed.
Winning brand models must include an understanding that the brand promise needs
to be clear and consistent, that brand analysis must consider both functional and
emotional aspects and that franchise brands help to deliver long-lasting
relationships.
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CHAPTER 1
Introducing pharmaceuticalbranding strategies
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Chapter 1 Introducing pharmaceuticalbranding strategies
Summary
Pharmaceutical branding describes the process whereby companies attempt to
transform an active chemical compound into a recognisable package of associated
brand values. These values, such as effectiveness, safety, trust and other more
emotional associations, have become increasingly important levers through which
pharmaceutical marketers can look to achieve greater market share and loyalty in
an evermore competitive market space. Pharmaceutical branding efforts impact
on a range of related strategies, including brand name development, Rx-to-OTC
switching, DTC marketing, PR and corporate communications.
Rather than present a generalised summary of current perspectives in
pharmaceutical branding strategies, this report brings together the different views
found from across the industry, presented directly from the experiences of leading
experts in the field. The report contains the views of ten experts drawn from
across different sectors of the branding arena, including industry product and
marketing managers, advertising agency executives and management consultants.
In an attempt to shed light on the future direction of this dynamic topic,
Pharmaceutical Branding Strategies provides a unique window into the
perspectives and experiences of those leaders at the forefront of shaping that
future.
There are a number of reasons why pharmaceutical brands have become more
important. First of all you have got to create more value from your molecule
above and beyond the obvious benefit. Secondly you want to create an entity that
is differentiable from your competitors. In addition to that, you have the potential
to create a sustainable entity through which to leverage the value of your brand.
Pharmaceutical companies need to clearly define the value that their brands have
in the marketplace above-and-beyond that of the competition. Only by clearly
defining and managing that value can they begin to build and leverage brand
equity moving forward.
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Introduction
The Introducing pharmaceutical branding strategies chapter sets out the important
issues impacting on pharmaceutical branding, as well as introducing the reports
structure and approach. The reports outline has been divided into three core elements,
namely the building of brands, the communicating of brands and the alternative brand
models employed in the pharmaceutical industry. The report is concluded with a look
at the future of pharmaceutical branding and the critical factors associated with
success.
Pharmaceutical Branding Strategiescompiles the independent views of ten different
pharmaceutical branding experts. Along with the summary and conclusion sections
written by the reports editor, the ten articles written by industry experts reflect their
personal perspectives on the leading issues surrounding pharmaceutical branding
strategies, both now and in the future. Full profiles of the writers contributing to this
report have been detailed, along with contact details where available.
The first perspective included in the report introduces the topic of pharmaceutical
branding and gives a review of the current state of the industrys efforts in this area.
David Wood, CEO at Interbrand Wood Healthcare, presents his thoughts and
experiences in Pharmaceutical brands: state of the pharmaceutical brandscape. This
article sets out the importance of pharmaceutical brands, current industry trends and
where the industry is heading in the future.
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Report outline
Pharmaceutical branding describes the process whereby companies attempt to
transform an active chemical compound into a recognizable package of associated
brand values. These values, such as effectiveness, safety, trust and other more
emotional associations, have become increasingly important levers through which
pharmaceutical marketers can look to achieve greater market share and loyalty in an
evermore competitive market space. Pharmaceutical branding efforts impact on a range
of related strategies, including brand name development, Rx-to-OTC (prescription toover the counter) switching, DTC (direct to consumer) marketing, PR (public relations)
and corporate communications.
Branding is a central issue in the pharmaceutical industry. However, while the
packaged consumer goods industry has highly sophisticated branding models, the
pharmaceutical industry has been slower to develop and leverage its brands. Product
managers are evolving into brand managers and are beginning to understand thedynamics of brand equity that lie at the heart of product development and marketing.
Introducing pharmaceutical branding strategies
In the reports first chapter, the structure and approach will be outlined. It will explain
how the report will tackle the key issues associated with pharmaceutical branding and
how these will be compiled into coherent sections. It will include an introductory
article reviewing the importance of pharmaceutical branding and setting out theindustrys experiences to date.
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Building pharmaceutical brands
In the reports second chapter, the importance of building effective pharmaceutical
brands will be explained. It will present why pharmaceutical brand markets are
different, how difficult it is to develop global brands and the importance of a strong
brand name.
Communicating pharmaceutical brands
In the reports third chapter, the value of communicating brands effectively will be
outlined. It will look specifically at two hot topics: the use of effective PR and the
word of mouth communication between patients.
Alternative brand models
In the reports fourth chapter, alternative brand models will be presented and discussed
in detail. It will include reviews of the promise-centric approach, a combination of
rational and emotional dynamics and the development of franchise brands.
The future of pharmaceutical branding
In the reports final chapter, the future of branding in the pharmaceutical industry will
be presented. It will include recommendations as to the critical success factors in
building and communicating winning brands.
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Profiles of contributors
Rather than present a generalized summary of current perspectives in pharmaceutical
branding strategies, this report brings together the different views found from across
the industry, presented directly from the experiences of leading experts in the field. The
report contains the views of ten experts drawn from across different sectors of the
branding arena, including industry product and marketing managers, advertising
agency executives and management consultants. In an attempt to shed light on the
future direction of this dynamic topic, Pharmaceutical Branding Strategiesprovides aunique window into the perspectives and experiences of those leaders at the forefront
of shaping that future.
The reports editor would like to take this opportunity to thank those listed below for
the high quality of their contributions. A short biography of the contributing writers
and their companies follows:
Joe Carofano, General Manager, CCA Advertising
Joe Carofano has spent the last 21 years in the pharmaceutical and healthcare arena. He
spent 18 years on the client side working for Bayer Healthcare, Pharmaceutical
Division. Joe held numerous positions of responsibility at Bayer including Senior
Product Manager, Cardiovasculars; Director of Business Operations; Vice President of
Sales; and Vice President of Global Strategic Marketing, Cipro. Joe joined the
Chandler Chicco Companies in 2002 as the Head of Advertising. He has helped leadCCA Advertising into a growing and reputable agency partner. He has also helped
launch `nition, a multi-media and design studio. His clients include a diverse mix of
healthcare companies.
Joe has a rich history in marketing communications, product launch and lifecycle
management. While his therapeutic expertise is diverse, his area of strength is in the
field of anti-infectives and cardiovasculars.
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Joe has been involved with the launch of Cipro (PO and IV), Adalat CC, Avelox,
Baycol and Cipro XR.
Joe can be contacted at:
Joe Carofano
General Manager
CCA Advertising
450 W 15th St
6th floor
New York, NY 10011
212-845-5651
Jeff Daniels, Strategic Branding Consultant
Jeff Daniels is Executive Vice President and Chief Creative Officer for Europe at Grey
Healthcare Group, the healthcare division of Grey Global Group. After graduating as a
designer in 1981 Jeff worked for a number of leading London-based design
consultancies and communications agencies. He now specializes in the strategic
branding of healthcare products and services, and most of the worlds largest
corporations are long-term clients of his. Widely published and winner of over 40
creative/design awards, he is regularly invited to give talks and hold strategic branding
workshops with major international corporations, and also to judge at international
design/creative awards festivals. In addition to his professional obligations, he is
currently involved in postgraduate doctoral research into strategic brand positioning.
Jeff can be reached at jeff@brandlab.freeserve.co.uk
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Karen Friedman, Karen Friedman Enterprises
Karen Friedman is known as one of the leading communication coaches in todays
business world. An award-winning television news anchor and reporter who has
interviewed thousands of people, she now teaches others how to make the most out of
every interview, appearance and presentation.
Friedman made award winning stops at television stations in Philadelphia, Milwaukee
and Huntsville, Alabama, where her breaking coverage of local and national events
aired on ABC, CBS, NBC, CNN, the Today Show, Good Morning America and
Nightline. Her expertise was recognized when a U.S. delegation led by former First
Lady Hillary Rodham Clinton tapped Karen to provide media and political training for
women in South and Central America. She continues to counsel people across the
globe, recently returned from Asia where she helped a worldwide health organization
roll out a crisis communication training program.
For the past decade, spokespeople have been relying on Karens know-how to
communicate during nationwide educational campaigns, manufacturing shutdowns,
Justice Department inquiries; product launches and recalls, employee issues, chemical
spills, and during presentations to seek approval for new drugs being presented before
the FDA Advisory Committee. She taught journalism at the University of Wisconsin
conducts seminars at the University of Pennsylvania and once ran for a hotly contested
seat in the Pennsylvania State House.
A dynamic keynote speaker, Karen is a proud member of the National Speakers
Association, who is often quoted by national publications such as Selling Power, PR
Tactics, Presentations, and the Wall Street Journal On Line. She has published a series
of Communication Survival Guides, recently released a multi-media Communication
Survival kit and has authored hundreds of articles.
Karen can be reached at Karen@KarenFriedman.com
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David Griffith, President, Sparkiting Solutions LLC
David Griffith provides consulting and training for sales and marketing in his role as
the President of Sparkiting Solutions, LLC. David has worked with entry-level
management through to senior executives from over twenty-five countries on a variety
of subjects that often cover important concepts involving leadership, communication,
branding, marketing, and sales. David developed the Sparkiting model that is
designed to energize entire organizations with a customer-focused approach. His
specific area of focus involves healthcare related industries for either products or
services.
David uses his extensive experience in healthcare related industries to generate insight
that is used to create interaction during training forums involving managers to senior
executives. David has provided consulting and training throughout the Americas, along
with international countries such as Germany, Japan, Spain, Australia, and China,
giving him a truly international flavor to his training. In the pharmaceutical industry,
David communicates elements of the sales and marketing process needed for growth at
any point along the molecule to medicine cabinet spectrum. David has both created
course content and been utilized to facilitate senior executive learning / discussion on
the internal processes for large organizations.
David also teaches a Masters level marketing course at the University of Texas. The
course is offered through the College of Pharmacy, one of the nations leading centers
of pharmacy education that often ranks in the top two by US News and World Report.
David also serves on the Editorial Advisory Board ofProduct Management TodayandNutraceuticals World.
David earned a BS in Pharmacy from the University of Texas and an MBA from St.
Marys University. David lives with his wife and four children in San Antonio, Texas.
David can be contacted via email: mail@davidgriffith.net
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Max Jackson, President, Publicis Healthcare Group International Division
Originally from New Zealand, Max studied Marine Biology at university where he
gained a Master of Science at the University of Auckland, and initially followed a
career as a Navigating Officer in the Royal New Zealand Navy, before joining the
pharmaceutical industry. Within the pharmaceutical industry he gained extensive
strategic and operational sales and marketing experience, and joined the Medicus
Group in 1992, moving to FSP International in 1996 initially as Client Service Team
Leader, then Director, Strategic and Client Services, before becoming Managing
Director of FSP in January 1999.
In November 2001, Max was appointed Regional President, The Medicus Group, with
responsibilities for all European and international operations within the group.
Following the merger of BCOM3 and the Publicis Groupe in September 2002, Max
took over responsibility for the European and International operations of Publicis
Healthcare group. Publicis Healthcare Group, the largest healthcare communications
group in the world, is composed of the Publicis Vital, Publicis Wellcare agencies, the
Medicus Network and the Saatchi & Saatchi Healthcare network. With offices in all
major European and ROW countries, Publicis Healthcare Group has the strongest
Global presence of any healthcare agency group.
Max has combined his skills from industry together with involvement in over 40
product launches to contribute to the development of unique strategic processes for the
Publicis Healthcare Group. Max continues to provide strategic input and direction for
major client accounts, including facilitation of both internal and external meetings, and
has published a number of articles on the strategic marketing of early development
products.
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E.M. Kolassa, Managing Partner, Medical Marketing Economics LLC
Dr. Kolassa is the Managing Partner of Medical Marketing Economics LLC (MME), a
consulting firm specializing on marketing and pricing strategies for firms in the field of
health care. He is also Adjunct Professor of Pharmacy Administration at the University
of the Sciences in Philadelphia and Adjunct Associate Professor of Pharmacy
Administration at the School of Pharmacy of the University of Mississippi.
Prior to forming MME, Dr. Kolassa was Associate Professor of Pharmacy
Administration and Associate Professor of Marketing, and Coordinator of the
Pharmaceutical Marketing and Management Research Program at the University of
Mississippi. He has held several positions in the fields of marketing, pricing, and
economic policy, serving as Vice President with the Strategic Pricing Group, Director
of Pricing and Economic Policy with Sandoz Pharmaceuticals, Pricing Specialist with
the Upjohn Company, as well as holding positions in the banking industry. His
academic research has focused on the value of pharmaceuticals in health care systems,
the application of marketing activities in pharmaceutical markets, the effect of cost
control mechanisms on patients and systems, and the process of treatment selection by
clinicians. He received his doctorate from the University of Mississippi and MBA from
Eastern Washington University.
Dr. Kolassa has written and lectured extensively on the topics of health care policy and
pharmaceutical markets and marketing activities. He is the author of several papers
published in both business and pharmacy journals and is the Editor of the Journal of
Pharmaceutical Marketing and Management and former Co-Editor of the Journal ofPharmacoepidemiology and Associate Editor of the Journal of Research in
Pharmaceutical Economics. His first book, Elements of Pharmaceutical Pricing, was
published by Haworth Press in 1997. His latest book, co-authored with Mickey Smith,
Greg Perkins, and Bruce Siecker, is Pharmaceutical Marketing: Principles,
Environment, and Practice. It was published in 2002, also by Haworth Press.
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Rebecca Robins, Global Marketing Director, Interbrand Wood Healthcare
Rebecca Robins is Global Marketing Director of Interbrand Wood Healthcare. She is
based in London, having previously been based in the New York office of Interbrand
Wood. She is responsible for global marketing, client services and heads up the London
office. Among a diverse range of clients across a number of industries, Rebecca has
extensive experience within the pharmaceutical and biotech industries, working with
companies such as AstraZeneca, GSK, Merck, Novartis, Roche and Schering AG. She
also brings to the pharmaceutical industry an understanding of branding at product,
service and corporate levels, having worked with such clients as British Airways, Lego
and Reuters.
Rebecca is co-author of Brand Medicine: The role of branding in the pharmaceutical
industry, a practical examination of the changing dynamics in the industry and of the
increasing importance of strong branding. She is a regular conference speaker, keen
writer and contributor of articles to pharmaceutical and marketing publications.
Having graduated from Cambridge University with a First Class degree in French and
German and an M Phil in European Literature, Rebecca has a passion for languages.
Rebecca can be contacted at rrobins@interbrandwood.com
Interbrand Wood Healthcare is the worlds leading branding consultancy in the
pharmaceutical industry, providing services in brand strategy, brand name
development, visual identity, package design and market research.
David L. Stern, Executive Vice President, Metabolic Endocrinology,Serono Inc
David L. Stern is the Executive Vice President for Metabolic Endocrinology at Serono
Inc. He is responsible for commercial operations of this therapeutic area in the US.
Serono, Inc., located in Rockland, MA, and is the US affiliate of Serono, a global
biotechnology leader. David can be reached at david.stern@serono.com
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David Wood, CEO, Interbrand Wood Healthcare
David Wood, CEO of Interbrand Wood Healthcare, is the renowned developer of many
of the world's leading healthcare brands.
Interbrand Wood Healthcare was born of David's desire to find better ways to address
the branding process, and is a direct expression of his commitment to excellence in
business and in life. His innovative approaches have been setting new global branding
standards for the past twenty years for some of the best-known healthcare companies in
the world.
Born in England, David received his B.A. in Marketing from Strathclyde University in
1966. He opened the first North American office for Grand Metropolitan (now
Diageo), then an emerging British hotel and consumer products company. He served as
President of Grand Metropolitan in North America, and as President of Air France's
Meridien Group for North and South America. His global experience and
understanding of complex international markets continues to keep Interbrand Wood a
step ahead.
David can be contacted at: dwood@interbrandwood.com
Interbrand Wood Healthcare is the worlds leading branding consultancy in the
pharmaceutical industry, providing services in brand strategy, brand name
development, visual identity, package design and market research.
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Lydia Worthington, Vice President, Managing Director of Healthcare,BuzzMetrics
Lydia Worthington leads the BuzzMetrics word of mouth research team with
responsibility for maintaining research modes and methodologies as well as overall
quality assurance. Since joining BuzzMetrics, Lydia has spearheaded research projects
for over twenty Fortune 500 clients, including analysis of more than two dozen
healthcare therapeutic markets.
Prior to coming to BuzzMetrics, Lydia served in the Financial Services and
Telecommunications divisions of Booz Allen Hamilton, a leading management
consulting company. While there, through a program of nationwide in-person
interviews she helped streamline the operations and processes for a major health
diagnostics facilities provider. Previously, Lydia worked as an Analyst at the Royal
Bank of Canada, focusing on the implementation of new software technology for the
retail brokerage group.
Lydia received an MBA from the Columbia University School of Business in New
York City, where she focused on Management, Entrepreneurship and Marketing. She
earned a BS in Microbiology & Immunology from the University of Western Ontario.
Lydia can be reached at lydia.worthington@buzzmetrics.com
BuzzMetrics, the global standard in online word-of-mouth measurement and analysis,
helps more than 75 Fortune 1000 companies strategically leverage the buzz
surrounding their brands. BuzzMetrics client list includes global leaders in virtuallyevery industry companies like Comcast, Hewlett-Packard, General Motors and
Mazda. Its partners include the worlds largest marketing-services firms, and
distinguished think tanks such as the Pew Research Center. The company is
headquartered in the U.S. and operates an advanced technology research-and-
development lab in Israel. BuzzMetrics receives strategic backing from VNU, owner of
such renowned research brands as ACNielsen and Nielsen Media Research. For more
information, visit www.buzzmetrics.com.
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Pharmaceutical brands: state of the pharmaceuticalbrandscape
By David Wood, CEO, Interbrand Wood Healthcare
The importance of pharmaceutical brands
If you look at why people create brands, there are a number of reasons. Fundamentally,
they include being able to sell a product at a higher price and being able to create a
sustainable entity through which to differentiate it from the competition and to leverage
the brand going forward. If you look at the traditional pharmaceutical model, the modelwas to invest a lot of money to develop an innovative product for which you get a
patent life and when that patent is over you launch a new product. Once a molecule was
approved you could more-or-less charge anything you like, and so pricing was never
really an issue. The life of the brand was seen to last only as long as the life of the
patent, and so it was not really possible to create a sustainable entity. Therefore,
traditionally, pharmaceutical brands were created to build awareness. When
pharmaceutical marketers talked about branding what they really meant was brand
awareness and whether or not a physician recognizes your product.
If you look at what has happened in pharmaceutical marketing over more recent years,
a number of key factors can be extrapolated that have impacted on the way in which
brands are now viewed and developed. First there are considerable price pressures
going on. The differences in prices between Europe and the US are huge, with
European markets much more restricted in what they are willing to pay for
pharmaceutical products. Pharmaceutical pricing has become increasingly important,
where if I am going to pay that much money for something it had better be worth it.
This trend is now evident in the US with the recent Medicare/Medicaid reforms
meaning that individual states will have a significant drug bill, beginning to put the
same sort of pressure on US prices that European governments currently exert on
European prices.
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Secondly, typically what used to happen in the pharmaceutical industry was that
companies would develop and launch a new molecule that was many times better than
the last one. It was probably more effective, it was probably much safer and worked
faster, lasted longer and had all sorts of tangible benefits. If you go back to the 1980s
and 1990s, you would also have the market to yourself for maybe 4 or 5 years after
launch. However, now the whole model has changed. Innovations are smaller and
smaller it is getting harder and harder to produce significant improvements. New
drugs may work in different ways, but they rarely work much better than the previous
drugs on the market. As a result, distinguishing your drug has become very important
and the chance of you having the market to yourself for any significant period of time
has become pretty slim.
Finally, there is such pressure now, particularly with the big pharma companies, to be
able to deliver a double digit growth every year that they are required to bill several
billion dollars in drug sales each year. As a result the time to launching new drugs and
marketing them into blockbusters has been squeezed into a much shorter timeframe.
Thus, the traditional models that were set up to monitor adverse side effects by the
Food and Drug Administration (FDA) and others, setting limits to the total number of
adverse effects within a short period after launch, are no longer appropriate. For
example, setting a limit of 100 adverse effects in the first three months on the market,
but then having an accelerated launch, means you are likely to see many more adverse
effects than expected. The problem is are there really more adverse side effects than
expected or is it just a function of an accelerated launch?
So there are a number of reasons why pharmaceutical brands have become more
important. First of all you have got to create more value from your molecule above and
beyond the obvious benefit. Secondly you want to create an entity that is differentiable
from your competitors. In addition to that, you have the potential to create a sustainable
entity through which to leverage the value of your brand. For example, if you take
Prilosec and Nexium, they have been able to try and leverage the values they had in
their brand using the color purple and the vehicle of the purple pill. The brand
elements that were associated with Prilosec, that were built well in advance of its
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decline following patent expiry, were leveraged into the Nexium brand. Another
example of brand leverage is Claritin and Clarinex. Claritin never really had any
discernable value other than it was a non-drowsy antihistamine, but Schering-Plough
has leveraged that nicely into Clarinex.
So pharmaceutical branding initially was just about brand awareness and being able to
make sure that you maximize awareness. Now it is much more about the value that my
brand has over-and-above competitors in the marketplace. Pharmaceutical branding
today is about expressing brand value about expressing something else about the
product that is valuable to either the patient, physician, or any relevant audience.
Brand versus message
The same brand can be expressed in different ways to different audiences. If, for
example, your brand is all about being trusted, then that may be expressed in one way
to a physician, another way to a payer and another way to the patient. However, the
brand is still about being trusted what it stands for is consistent but its messages can
change.
Global versus local
When you build a global brand you build a positioning and a brand essence. While you
might be able to position your product slightly differently in different markets the
brand essence needs to be consistent. For example, if we look at Volvo cars, the
original brand essence is all about safety. However, in the UK you might have the S60
positioned as the young persons car, whereas in the US the same car might bepositioned as a reliable car for the older person, but the brand essence of safety remains
constant.
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Current trends in pharmaceutical branding
The traditional pharmaceutical branding model was developed around product features
and related directly to the products positioning rather than any consistent brand
essence. You might position a new product because it has a fast mode of action. You
would build your whole identity around being fast, and would probably have the
market to yourself for quite a while, and you would own that space for being fast. If we
looked at your logo, the typeface, everything would be about being fast. However, the
problem is that markets are now becoming so competitive that you may have to change
your positioning. The traditional model worked very well and was very functional and
focused on what the drug did. However, things have now changed, and if you just load
your whole brand on a single positioning that is not based on a consistent brand
essence, then you risk severing your relationship with your audience.
So as the market is changing, we are in that flux period where some people are starting
to look at what brands are really about and build brands from a different perspective
than from the traditional, simple perspective. They are looking more into how super-
brands are built, with a big idea as well as a positioning. However, progress tends to be
limited to where you have big global launches with big global teams that spend a lot of
time developing a significant opportunity. Smaller, more local, launches continue to
develop brands in the more traditional way.
As part of this change we are beginning to see new people enter the pharmaceutical
industry people with different backgrounds, people with MBAs, people who have
spent a lot of time in marketing and come from consumer brand backgrounds. So wenow have a different type of marketing person in the industry much more savvy,
much more aware and those people are starting to build the pharma brands of
tomorrow.
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Direct-to-consumer advertising
Direct-to-consumer (DTC) advertising can be a very effective medium. However, it
often fails to get across what the brand is about. The problem with DTC, in terms of the
information we must give legally, is that the information is usually conditional
information and is given in such a context that people do not really understand it fully.
It therefore becomes very difficult to get a balanced communication, and this limitation
impacts on brand.
One of the main issues for DTC is the use of television. Television by definition is a
single-minded media, it is all about putting one view across. However, in a 30/60
second commercial it is very difficult to get across a number of different concepts.
While really what you want to say is this works faster, a whole host of additional
qualifying information is included to maintain fair balance and the key message that
you are trying to put across gets lost. It is important to have a very simple message in
DTC campaigns, otherwise they are confusing and not a cost-effective means of
communication.
The future of pharmaceutical brands
As the pharmaceutical industry moves towards bigger and bigger brands, companies
will have to look more closely at the equity they have created in those brands and how
they can leverage it. For example, Lipitor is a $10 billion brand, and out of that there
must be some significant brand equity. So even if a blockbuster drug goes off patent
and loses 90% of its sales, it is still a $1 billion brand. This is enough money to force
companies to ask themselves the serious questions: what is the brand equity and how
can you leverage it?
On a smaller scale, pharmaceutical companies can leverage franchise brands. Key
product brands can be leveraged into a therapeutic franchise area and other brands from
the same therapy area. By building a portfolio of products, companies can invest in the
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franchise, spreading costs across a number of different products, rather than having to
invest in each individual brand.
In the future, pharmaceutical companies will develop corporate brands, but not
necessarily to support their products but rather to support their business. Traditionally,
the industry has not focused on their corporate branding, but companies are more
interested in it now because of the negative perception of the pharmaceutical industry
right now.
The extent of lifecycle branding opportunities, with more and more drugs coming off
patent in the future, is really down to how much brand equity a product has and how
easy it is to leverage that brand equity. Obviously, the bigger a drug is when it is
coming off patent, the more interesting the brand leveraging opportunities. However,
the size of the brand equity will depend somewhat on whether companies have
effectively built a brand in the first place. The big problem is that many of the
pharmaceutical products on the market today are not real brands of additional value,
they are simply brands that have a lot of awareness.
Successful pharmaceutical branding
Pharmaceutical companies need to clearly define the value that their brands have in the
marketplace above-and-beyond that of the competition. Only by clearly defining and
managing that value can they begin to build and leverage brand equity moving forward.
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CHAPTER 2
Building pharmaceutical brands
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Chapter 2 Building pharmaceuticalbrands
Summary
Pharmaceutical markets are different than more typical consumer markets, and as
a result the marketing of pharmaceutical brands cannot follow the established
rules of consumer brands. However, by examining what has actually occurred in
pharmaceutical markets and evaluating the relevant forces and relationships,
pharmaceutical product managers can become more effective, efficient marketers.
In the future, as this marketplace becomes tougher, evidence-based marketing
will become a requirement for success.
The key challenges of global branding go in line with the key critical success
factors. The critical success factors in terms of global branding really come down
to one thing you have to have a position that is single minded, that resonates
well in the key markets, and that is applied consistently at local level.
Effective global brand teams will have to balance an inclusive branding process creating buy-in across the organisation with strong corporate leadership
limiting the rework of the global brand at the local level. The resulting brands,
which have been developed from an early stage of the product lifecycle, will
deliver a clear and consistent brand promise to their target audiences and a
premium price and sustained market position for their marketers.
In an industry where patent life is limited and the domain of market exclusivity is
being toppled harder and faster by the onslaught of generics, a brand name needs
to work that much harder throughout its on-patent life, while having the potentialto live long beyond it. As companies are increasingly looking to lengthen the
productive and profitable life of their brands, established equity in a brand name
can provide a powerful platform for future wealth creation. Its about a name that
will resonate with prescribers and consumers alike, and, ultimately, that will be
relevant for the lifetime earnings potential of a brand.
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Introduction
The Building pharmaceutical brands chapter introduces answers to the important
questions of why and how pharmaceutical companies build brands. E.M. Kolassa,
Managing Partner at Medical Marketing Economics, sets out his experiences and
insights in Understanding the nature of pharmaceutical markets: building brands
through evidence-based marketing. This article outlines the key ways in which
pharmaceutical markets differ from other consumer markets, and how this makes
traditional brand marketing more difficult. It also presents several rules of thumbcurrently employed in pharmaceutical branding that should be replaced by evidence-
based marketing.
Max Jackson, President of Publicis Healthcare Groups International Division, outlines
the challenge of global branding in Building global brands: a new challenge for the
pharmaceutical industry. The article outlines the importance and value of global
branding in the pharmaceutical industry before setting out the key challenges andsuccess factors. It finally presents current best practices in global branding and
forecasts future changes in global branding.
Rebecca Robins, Global Marketing Director at Interbrand Wood Healthcare, sheds
light on the important topic of brand names in Brand matters: the lingua franca of
pharmaceutical brand names. The article presents the value of a pharmaceutical brand
name and the difficulty in securing global names. It also outlines the steps that need to
be taken in building an effective brand name.
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Understanding the nature of pharmaceutical markets:
building brands through evidence-based marketing
By E.M. Kolassa, Managing Partner, Medical Marketing Economics LLC
Why pharmaceutical markets are different
The market for prescription pharmaceutical products differs substantially from other
markets in a number of important ways. Typically, most markets operate in response to
consumer demand, which often can be affected by marketing activities undertaken by
manufacturers and others. Customers, either businesses or consumers, often desire
products for a number of different reasons, not always reasons that might be considered
rational. In such industries, marketing activities can make products appear more
desirable or important and actually create demand by convincing a number of
consumers that a product is desirable. Pharmaceutical markets, on the other hand, exist
only in response to the initial medical need for the actions provided by the product. The
availability or promotion of a new pharmaceutical product cannot directly create
demand for it; the underlying medical condition must be there first. Although few
people actually need a Coke or a new shade of lip gloss, the patient with high blood
pressure requires a medicine to control the disease. Medicines are prescribed by an
individual not involved in the financial transaction of its actual sale, and consumed by
another individual who, all things considered, would rather not need the product in the
first place and may have no idea why they have been instructed to take it. The patient
may or may not have a direct role in the actual purchase of the product. This dynamic
is in stark contrast to most markets, and the components of the dynamic are described
in more detail below.
The market for prescription pharmaceutical products differs from the market for most
normal goods in several key ways:
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Prescription drugs are subject to derived demand products are demanded, and
sold, in response to medical need;
The key decision maker for prescription drugs is a learned intermediary, the
physician;
Prescription drug use is affected greatly by treatment protocols, guidelines, and
recognized standards of care;
Prescription drugs are experience goods, which means that their actual utility
cannot be determined until they have been used, and their continued use depends on
satisfactory experience;
Prescription drugs are negative goods, in that those who purchase or consume
them would prefer not to;
The product features for prescription drugs are fixed, and cannot be changed to
meet consumer needs or preferences without significant investment in clinical
development and achieving regulatory approval for the changes;
Prescription drug markets are highly regulated, and all communications must be
within a narrow set of parameters established by the FDA and other agencies.
Response to medical need
Prescription drugs are used in response to a medical need. Unlike consumer goods,
where demand can be created through creative advertising and other promotional
methods, a pharmaceutical company cannot create a need that is not there. The demandfor antibiotics is determined by the spread of infectious disease, and the demand for
other categories is driven by similar epidemiology. The primary demand, which is the
demand for a specific product category, is determined solely by medical necessity. The
product specific demand is then determined by the prescriber, who evaluates the
options that are known to be available at the time.
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Pharmaceutical marketing activities simply cannot create medical demand for the
treatment of a disorder that health care professionals do not recognize and believe
needs treatment. However, when a pharmaceutical product helps to fill an unmet
medical need, marketing activities, particularly sales calls, will act to increase sales by
making more potential prescribers aware of the product, and to provide them with the
information needed to reach a treatment decision. Pharmaceutical marketing, in this
regard, is principally communication and education, informing potential prescribers
about a treatment option, not creating a need for it.
Learned intermediary
Although marketing activities undertaken in support of pharmaceutical products can
help to increase prescribers awareness of a new agent, or new uses for an older agent,
those marketing activities cannot affect the underlying epidemiological structure of the
market or the physicians ongoing opinion of and faith in a product. Because the initial
decision-maker for a prescription is the physician (or similarly authorized individual),
the task for the pharmaceutical marketer is far different from that of a consumer
marketer. The physician is a highly educated decision maker who is not only sceptical
by training but conservative by nature.1For a physician, especially those who practice
in a primary care setting, adopting a new product is not something that is generally
done on a whim.
When deciding to try a new medicine, the clinician weighs the risks and benefits of the
new product, and compares them with those currently used. If the new product has
greater potency or effectiveness, with no increase in side effects or other untoward
consequences, the product is likely to be used. Similarly, if the new product offers
improvements in side effects and other negative aspects of their current products,
1 Fennell ML, Warnecke RB, The Diffusion of Medical Innovation: An Applied Network Analysis,
Plenum Press, New York, 1988.
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without a substantial decrease in effectiveness, the new product is likely to be tried. A
basic tenet of medical practice is to first do no harm. Products that provide
improvements in safety, or improvements in efficacy without sacrificing safety, will be
readily adopted by many practitioners, who recognize the added value brought by the
new product. I have discussed this concept at length in my book, Elements of
Pharmaceutical Pricing.2 The presence of the learned intermediary who follows this
tenet in pharmaceutical markets places a constraint within the market that limits the
ability of pharmaceutical marketing to create artificial demand or to drive use that is
not medically warranted.
The nature of medical practice also constrains pharmaceutical marketing. The average
sales call lasts less than 5 minutes, during which a sales representative is expected to
discuss three or more products. Because physicians have only a limited amount of time
to spend with sales representatives, given their duties of patient care and practice
administration, those minutes made available to a sales representative are precious.
Physicians are unlikely to dedicate the time and attention to a sales message that does
not meet with an immediate need.
Because practitioners, in general, do not readily seek out new therapies, and no
mechanism exists to require them to accumulate new and developing information on
pharmaceuticals,3 the marketing activities of pharmaceutical firms is the most readily
available mechanism whereby the diffusion of new information concerning drug
therapies can be assured. The complexities of medical practice combined with the
inherent conservative nature of the practitioner and the lack of requirements to acquire
2 Kolassa EM, Elements of Pharmaceutical Pricing, (New York, Hayworth Press, 1997) pp 95-98
3 Avorn J, Harvey K, Soumerai SB, Herxheimer A, Plumridge R, Bardelay G, Information and
Education as Determinants of Antibiotic Use: Report of Task Force 5. Research in Infectious Disease,
1987;9(3): S286-96
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new knowledge without some other stimulus would lead most physicians and other
providers to focus on their immediate needs, seeking new information only when faced
with intractable problems and ignoring most products that provide lesser
improvements. Pharmaceutical marketing helps to provide healthcare professionals
with the most current information on new medicines, new uses for older medicines, and
newly discovered problems with or cautions concerning medicines. This is the basic
purpose, and effect, of pharmaceutical marketing: to communicate information on
medicines and advance that knowledge.
Guidelines and protocols
Medical care, although typically customized to meet the needs of an individual patient,
is influenced and guided by clinical guidelines, treatment protocols, and standards of
practice, which are developed and promoted by medical societies and governmental
agencies, not by pharmaceutical companies. Clinical practices that do not reflect
generally accepted standards of practice expose physicians to high risks of treatment
failure and medical/legal liability. Because of the typical physicians concerns about
these issues, it is uncommon for clinicians to stray too far from these standards except
in extreme cases.
Pharmaceutical marketing programmes and activities that are not consistent with
standard practices and currently accepted guidelines are very unlikely to be successful
because of the inherent risk-averse nature of physicians, and because such programmes
would, in all likelihood, be in violation of the products official labelling, which
establishes the parameters under which the product can be marketed.
Experience goods
An experience good is distinguished by the fact that its quality, and therefore its value
or usefulness to a customer, cannot be precisely determined at or before the time of
purchase. Examples of experience goods include used cars, food and wine, expert
advice, and prescription drugs. Unlike the case of known product quality, with
experience goods a customer cannot know until after its use whether he or she will
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have positive outcomes. This problem is due to the nature of the product; regardless of
the search for information undertaken before the purchase, the customer cannot know
whether the desired outcome will be achieved until he or she has had experience with
the product. They can solicit advice and opinions from colleagues or friends who have
experience with the product, but cannot know before hand if the product will work
for them. If the desired outcome is not achieved, customers will either seek refunds or
discontinue the use of the product.
The marketing in support of experience goods may move customers to try a product,
but their continued use of the product requires that it performs satisfactorily.
Prescription drugs, to gain a physicians or patients loyalty, must deliver the outcomes
promised or expected. Failure to deliver would result in a new search for a better
alternative. In healthcare, no amount of marketing efforts, whether they are advertising
or personal selling, will convince a physician or patient to continue to use a product
that does not perform as expected. Even in the case of satisfactory performance, should
a new pharmaceutical agent enter the market with enhanced features and outcomes,
prescribers will move to that agent upon learning of it.
Negative goods
Unlike many types of products with which we are familiar, pharmaceuticals are what
are termed negative goods, that is, a product that people would rather not buy. A
specific definition of negative goods is products or services seen by customers as an
unpleasant necessity bought to avoid some disutility. A simple way to consider
negative goods is that their primary benefit is the negative reinforcement the removal
of an unpleasant condition.4 Because of the negative nature of pharmaceuticals,
marketing appeals aimed at generating greater use of the product are generally doomed
4 Dawkins I, Best RJ, Coney KA, Consumer Behavior: Implications for marketing strategy, Richard
Irwin, 1995, pp 454
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to fail. The motives for a customer to purchase (or prescribe) a negative good is to
overcome or reduce the underlying problem, not to add pleasure or enhance their
personal image. The difference in the reasons for the continued purchase of positive
and negative goods can be summed up as follow: [p]ositive reinforcement occurs
when the subjects positive utility increases. For example, the purchase behaviour of
ice cream is reinforced by pleasant consumption. On the other hand, negative
reinforcement causes an increased probability of behaviour through disutility
reduction. The subject is under some pain or discomfort, and the action that reduces
that discomfort is reinforced.5
Besides pharmaceutical products, other negative goods include pest control services,
automobile insurance or repair, and airline tickets, all of which, like pharmaceuticals,
are products that customers would rather not need to purchase.
Fixed product features
One of the main reasons new and improved pharmaceutical agents can quickly
overtake already established agents is that the newer agents often provide better value
by offering better performance, in terms of efficacy, safety, dosing convenience, or new
uses. The maker of the older product cannot make immediate changes to their product
to meet the new competitive challenge. The features of a specific pharmaceutical agent
are fixed not subject to immediate change by the manufacturer and the
communication of those features to customers is restricted, in that a marketer cannot
make claims of the product that are not consistent with official labelling. To make
changes to the features of a product requires significant investments of time and
money. Firstly in the laboratory, to bring about the physical changes to the molecule or
delivery system, which seldom result in the desired results. Secondly in the clinical
5Widrick S, Fram E, Identifying Negative Products: Do Customers Like to Purchase Your Products?
The Journal of Product and Brand Management, Volume 1, No 1, Winter, 1992
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setting, to test and demonstrate whether the changes bring about the desired effects.
Finally, investments are made in negotiating through the regulatory maze to gain
approval of the new form and obtain permission to communicate those changes to
customers. If a superior agent is launched into the market, the makers of the older
product cannot simply change it to compete, they must undertake the efforts just
mentioned, and those efforts must bear fruit.
Attempting to match or exceed new competitive offerings is far more difficult for
pharmaceutical manufacturers than for many other types of business. This investment
and risk stands in stark contrast to the makers of cars, soft drinks, beauty aids, or
computer software and hardware, where manufacturers wanting to match or beat a new
competitive feature can often make the changes and market them to customers quickly
and at a relatively lower cost.
Restricted pharmaceutical marketing
Within the context and limitations just discussed, pharmaceutical marketing
programmes and activities can do little more than inform a potential customer about the
benefits of the product, communicate those benefits of the product over other choices,
and take steps to make the prescribing and dispensing of the product easier, such as
assuring the availability of samples and, in some cases, reimbursement and
affordability. That is the extent of pharmaceutical marketings effect and ability. What
differentiates a good pharmaceutical marketing programme from a bad programme is
the efficiency and effectiveness in the way these tasks are carried out. By identifying
and targeting the customers that will be most likely to try the product, and delivering
the required information in an appropriate manner, a firm can make its marketing
programme more effective, in that more potential customers will evaluate the product.
The continued use of the product is based solely on the customers satisfaction with the
performance of the product. No amount or quality of marketing effort can sustain an
inferior pharmaceutical product.
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Evidence-based marketing
Much of the intellectual focus in pharmaceutical marketing today is on understanding
best practices in the industry companies want to understand what the leading firms
do. That is all well and good, but what successful firms do better is that they tend to be
associated with better medicines. However, that does not mean small firms cannot
come up with good products; it means that when small firms do come up with winners,
they become bigger, and they themselves then become successful. Size, as well as
success, tends to be the result of good products, not their cause. What does this have to
do with best practices in marketing? Absolutely nothing! It is easy to have an award-
winning marketing programme when the product is in some way clearly superior to the
competition. It is more difficult to differentiate the marketing programmes of the so-
so products that do not grab anyones attention.
Most in the industry tend to associate great marketing with successful products.
Therefore the industry has failed, in many ways, to look at the evidence that is
available about marketing and what marketing can and cannot do. Hundreds of
pharmaceutical marketing rules of thumb have been advocated over the years, most of
which, upon investigation, have been very wrong. These rules involve:
Order of entry;
First-year sales and marketing;
New product launches and key opinion leader support;
New competitors and market growth;
Brand equity.
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Order of entry
Most people working in pharmaceutical marketing believe in the power of order of
entry and first-mover advantage in their markets, but any rules here must be based on
two assumptions: (1) that every product is exactly the same as its predecessor (e.g.
absolutely no differences) and (2) that every product receives the same amount of
marketing support.
When one views product performance in the marketplace through the lens of order of
entry, it appears that better products always beat out the competition as long as
better is defined as improvements in efficacy or safety that are needed and
recognised by customers. A me-too product that offers no advantages over the
competition will not create much excitement, no matter how hard one tries to sell it.
That been said, physicians are still more likely to try a product that is marketed than
one that is not. Marketing efforts do generally result in increases in sales, and the best
general predictor of the initial sales for a product is the number of sales representatives
supporting it. The best predictor of ongoing sales is the value the product delivers.
First-year sales and marketing
I have often been asked if there are any rules for how much one should spend on the
launch of a new drug. Several studies have shown that the median first-year sales for a
new drug are usually equal to the median first-year spend. Exceptions appear to be very
high-priced drugs (with higher sales than spend) and low-priced drugs launched into
competitive markets, such as antibiotics (with lower sales than spends). I have not been
able to find any products that generated substantial early sales without marketing, and
that makes sense. How are doctors supposed to learn about a new drug if the company
does not tell them about it?
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New product launches and key opinion leader support
Many in the industry believe that securing the support of key opinion leaders (KOLs),
also known as thought leaders, is essential for new product success, but this support is
not always necessary when launching a new product. They are, without doubt, essential
when bringing a new therapeutic category to the market. However, if a product offers
no new advantages, product managers should not waste their time trying to recruit
KOLs, because those who respond are not leaders. By the time there are several
products within a therapeutic category, the market is sufficiently familiar with the
concept that primary care physicians have often come to trust and understand them.
When a market is truly mature, a product manager will often have trouble finding true
thought leaders in the category, because clinical pioneers have already moved on to
new areas.
New competitors and market growth
The rule that new competitors expand the market is true for developing markets. New
competitors in an immature market will raise overall awareness and interest in a
therapeutic category, prompting more prescribers to try the new products or to try them
on different patient types. However, by the time the category is mature the launch of a
new agent does not prompt new use. The appeal of a specific new product might cause
prescribers to try it on patients for whom they would have prescribed a different
product in the category but generally will not result in new prescribers trying the
category for the first time.
Brand equity
Brand equity is the Holy Grail of pharmaceutical marketing, the topic of several books
and conferences, and the factor everybody is trying to measure. The problem is that
pharmaceuticals are not like other brands. Most people will never identify with their
proton-pump inhibitor (PPI). These are not fashion items; they are medicines people
are told they must take to feel better. The greatest measure of brand equity for any
product is the amount of business it maintains once close competitors enter the market.
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It is well known in many markets that a pharmaceutical brand that receives generic
competition can be expected to lose half of its sales in the first month and 90% by the
end of six months. So much for brand equity!
Molecules and treatments can have equity in that physicians will come to prefer them
over others and continue to use them, but in the current healthcare system, the brand is
virtually irrelevant after patent loss, which is the time when brand equity would be
most useful. Various branding initiatives have served some products quite well, the
most notable example being AstraZenecas Purple Pill campaign for Nexium
(esomeprazole) in the US. People can identify the product, and even prefer it over other
PPIs, so there is some element of brand equity at work here, but the pedigree and
labelling support the product and the Purple Pill campaign very well. Without
esomeprazole, the brand Nexium would have no equity. When the time comes, generics
will do to Nexium what they have already done to Prilosec and other brands. The
current equity generated for the Purple Pill is really only valuable now if patients
would be willing to pay a third- or fourth-tier copay for it over a different PPI that
would cost them less, or if the brand will be switched to OTC status, where its identity
and the trust it engenders with consumers can carry over.
Conclusion
Pharmaceutical markets are different than more typical consumer markets, and as a
result the marketing of pharmaceutical brands c