Digital Excellence In The Global Pharmaceutical Industry in 2014

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February 28, 2014 DIGITAL EXCELLENCE IN THE GLOBAL PHARMACEUTICAL INDUSTRY IN 2014 DT Associates Ranks the Top Global Pharmaceutical Firms on Their Digital Transformation Efforts by Tim van Tongeren

with Dennis van Rooij

EXECUTIVE SUMMARY To determine digital excellence maturity inside the world’s largest pharmaceutical companies, DT Associates surveyed digital leaders and used our Digital Excellence Maturity Model to rank these companies on thirty-two different criteria. The leaders, Johnson & Johnson’s Janssen and Merck, demonstrate the strong change management skills required to drive digital excellence. In contrast, the laggards, AZ and Roche, suffer from a lack of a sharp vision to guide and govern the various digital programs and capabilities. To accelerate their digital transformation, firms should adopt an approach that advances all of the different facets of digital excellence toward maturity at an equal pace.

Table of Contents

Are Global Pharmaceutical Firms Achieving Digital Excellence? J&J and Merck Top The Digital Excellence Maturity Rankings Companies Struggle With All Facets Of Digital Excellence Recommendations

2 3 6 7

Methodology Online survey with 32 digital leaders in global pharmaceutical companies Companies Surveyed For This Report AbbVie, Astellas Pharma, AstraZeneca, Bayer, Eli Lilly and Company, GlaxoSmithKline, Johnson & Johnson / Janssen, Merck & Co., Mylan, Novartis, Pfizer, Roche, Sanofi, Teva Related Case Studies and Endnotes

10 10 10


ARE GLOBAL PHARMACEUTICAL FIRMS ACHIEVING DIGITAL EXCELLENCE?

Superior digital prescriber, payer, and patient experiences don’t just happen—they’re consciously developed and supported by healthcare organizations that understand the opportunities of and details behind digital technologies. And while implementing new technologies is important, it’s vital to view digital transformation as a change management program that includes important factors such as people, processes, and a culture that supports digital excellence. To understand how close global pharmaceutical companies are coming to achieving digital excellence, we:

• Defined a model of digital excellence maturity. DT Associates’ Digital Excellence Maturity Model is a framework of twelve core competencies related to effectively embedding digital technologies at pharmaceutical firms (see Figure 1). We organize these competencies according to the four stages of organizational maturity—assess, plan, accelerate, and optimize—and evaluate two or three specific characteristics of each. For example, we have found that buy-in is important to the success of a significant digital project or program, so we look to see if at least one senior sponsor is championing the project (see Figure 2). In total, we used thirty-two criteria to determine a firm’s digital excellence maturity.

• Surveyed digital leaders about their organizations. We fielded an online survey to thirty-two digital leaders at global pharmaceutical companies and asked them to rate the state of their digital excellence as defined by our model.1 We found that these leaders typically head up teams with about eight members. These teams support a range of countries and brands—nine countries and thirteen brands on average—and are working with a budget of about €2.1 million in 2014, a rise of about sixteen percent compared with 2013 (see Figure 3).

• Ranked global pharmaceutical companies’ digital excellence maturity. For each of the thirty-two statements, respondents rated their firms on a scale of one (strong disagreement with the statement) to five (strong agreement). We converted these scores into percentages and averaged them to arrive at an overall score ranging from 0% (a complete lack of digital excellence) to 100% (full digital excellence maturity). Where we got more than one response from the same firm—due to factors like geographic coverage or organizational structure—we averaged those scores to determine the company’s overall score.

Figure 1: DT Associates’ Digital Excellence Maturity Model

Assess Launch Accelerate Optimize

Vision Strategic Plan Talent & Skills Benchmarking

Buy-In & Impact Road Map Capabilities ContinuousImprovement

AssessmentFramework Change Management Process & Governance Handover & Phase-Out

© 2014 DT Associates


Figure 2: Sample criteria in the Digital Excellence Maturity Model

J&J AND MERCK TOP THE DIGITAL EXCELLENCE MATURITY RANKINGS

Just two companies—J&J and Merck—received scores in the upper quartile, thus demonstrating proficiency in digital excellence. A dense pack of companies, led by Sanofi and Bayer, follows; the difference between the first and last firm in this cluster is just nine percentage points (see Figure 4). Overall, here is what we found among the eleven top global pharmaceutical firms:

• The most mature: J&J and Merck. J&J emerged as the clear leader with a score of eighty-eight percent—ten percentage points clear of its closest competitor. This high score is mainly due to J&J’s very strong Assess and Launch phase capabilities, including having a clear strategic plan and capability road map. J&J’s primary weakness is its lack of ability to benchmark its range of customer experiences; the firm also faces challenges in embedding digital capabilities into core company functions once those capabilities have been defined and built.

Merck’s strong points include setting a clear vision for digital, securing company-wide buy-in for the digital strategy, and aligning the organization to that strategy; the firm is clearly reaping benefits from the Univadis legacy. Merck can further accelerate its digital excellence by putting in place empowering governance frameworks for those brand teams that want to adopt digital channels such as social media and personalized email.

Assess Launch Accelerate Optimize

Vision Strategic Plan Talent & Skills Benchmarking

Our company has a clear,shared vision of whatdigital is trying to achieve;this vision is well under-stood throughout theorganization.

There is a clear planbehind the vision thatspecifies what thecompany wants toachieve with digital.

The digital team hasstrong business acumen,including projectmanagement skills.

Our company regularlycompares the digital andcustomer interactions weoffer via web, email, social,and other channels tothose offered by ourcompetitors.

Buy-In & Impact Road Map Capabilities ContinuousImprovement

The leadership teamfrequently endorses andcommits to the digitalteam’s role, vision, andresponsibilities.

Leaders in other parts ofthe organization, such asbrand, communications,and medical teams,actively support the digitalroad map and ensure thattheir teams adapt to itsrequirements.

It’s clear to everyone howto access and start usingdigital capabilities (web,email, social, CRM, etc.).

Key decisions are madeon the basis of a mix ofbusiness and customermetrics.

AssessmentFramework Change Management Process & Governance Handover & Phase-Out

Senior leadershipmeasures the digitalteam’s progress and holdsit accountable based oncompany-wide metrics.

The digital team has atleast one changechampion who knowswhere and how digitalchange affects thebusiness and has thetools to facilitate it.

The wider business,including medical, legal,and regulatory, hascollectively agreed on theappetite and tolerance forrisks related to digitalexcellence.

Once a digital capabilityis ready for implemen-tation, our companytransfers ownership to itslogical primary businessfunction (if applicable).



Figure 3: Our sample of thirty-two digital leaders in the global pharmaceutical industry


3.1 Digital teams come in all sizes

“How many people on your team (other than you)have digital responsibilities as part of their role?”

Base: 32 digital leaders

Zero

One

Two

Three

Four

Five(0%)

13%

16 ormore

11 to 15(0%)

Six to ten

9%

9%

3%

19%

25%

22%


3.2 Most digital teams support more than ten brands

“How many brands does your team support?”


One tothree

Four tosix

Sevento ten

9%

16 ormore

11 to 15

16%

22%

12%

41%


Figure 3: Our sample of thirty-two digital leaders in the global pharmaceutical industry (cont.)


“How many countries or affiliates does your team support?”


One

Six to tenTwo to five

(0%)

47%

16 ormore

11 to 153%

34%

16%

3.3 Digital teams either support one country or a ffiliate — or a lot of themaffiliate


16%19%

25%

3%6%

22%9%

6%3%

13%9%

3%9%

3%16%

22%

9%6%

20132014

3.4 Digital budgets are on the rise at global pharmaceutical companies

“What was the budget for digital in 2013? What will it be in 2014?”


More than €5 million

€2.5 million to €5 million

€1 million to €2.5 million

€500,000 to €1 million

€250,000 to €500,000

€100,000 to €250,000

Less than €100,000

Prefer not to answer

Don’t know


• The strong contenders: Sanofi and Bayer excel in specific areas. With overall digital maturity scores of sixty-six percent, Sanofi and Bayer tied for third place our 2014 benchmark study. Sanofi is strong in defining digital standards in cross-functional governance charters, but it will need an effective measurement framework to track the impact of digital initiatives on overall business outcomes. Without such a framework, pressure from the management team will eventually result in the firm diminishing its investments in digital.

Bayer received the same overall score as Sanofi; while Sanofi was stronger in the Accelerate phase, Bayer clearly did better in the Assess phase. Our data indicates that Bayer’s senior executives provide good support to the digital team; its challenge is finding the right people to staff the team with. Given the primary location of Bayer’s digital team, the company has had difficulty attracting the right skills to advance its digital transformation.

• The weakest: Roche and AZ. Roche reports that the senior management team has a solid commitment to the digital team’s role and vision. However, the vision that execs are endorsing is not well understood throughout the organization—to the point that leaders in other parts of the company don’t actively support the digital road map!

AZ’s digital road map is its biggest obstacle; its digital implementations suffer from weak project management skills and fail to meet the requirements of its internal target users. AZ’s strongest pillar of success? The digital training program that the firm makes available to the wider organization, supported by strong levels of digital expertise within its digital team.

Figure 4: Ranking of global pharmaceutical firms’ digital excellence

J&J 96% 100% 83% 75% 88%OverallAssess Launch Accelerate Optimize

Merck 81% 77% 70% 85% 78%

Sanofi 59% 63% 71% 70% 66%

Bayer 71% 66% 61% 66% 66%

Pfizer 68% 70% 63% 61% 65%

Lilly 51% 68% 65% 60% 61%

Novartis 56% 54% 61% 69% 60%

AbbVie 55% 53% 54% 67% 57%

GSK 58% 57% 49% 64% 57%

AZ 42% 49% 54% 55% 50%

Roche 35% 47% 60% 51% 49%



Companies Struggle With All Facets Of Digital Excellence

We drilled down into our data to examine and evaluate individual criteria, or competencies, of digital excellence from an industry-wide perspective (see Figure 5). We found that pharmaceutical firms:

• Are strongest at assembling a team with management skills and digital expertise. The success of a digital team depends on its ability to change the culture into one that wants to do promotional and product-related activities differently, including the use of digital channels and tactics. This requires team members to have a combination of change management skills and solid digital expertise. Our respondents rated this as their main competency: seventy-five percent say that their digital team has strong business acumen to drive change through the organization, and seventy-two percent believe that their team has strong expertise—gained from inside and outside the industry—to help their colleagues understand and apply digital marketing techniques.

• Are weakest at setting and cascading a vision for digital in the organization. A clear vision acts as a team’s North Star, providing direction and decision guidelines for digital programs and stimulating people to change and try something different. This is what the firms we surveyed struggle with most—just twenty-eight percent of the respondents agreed that their company has a clear, shared vision of what it’s trying to achieve with digital. Half of these companies are able to translate their vision for digital into one that aligns closely to the challenges and objectives of their primary internal “customer”: the therapy and brand teams.

• Face a major challenge to make their digital capabilities accessible. Building digital capabilities is a long, complex process that must carefully consider the requirements of different departments and affiliates and take into account legal and medical governance frameworks. Given the time and effort that companies invest in this, it’s disappointing that only one in four digital transformation programs takes the next step: making sure that everyone knows how to access and use digital capabilities. Company-wide training programs and rich intranet sites have proven successful for companies like GSK and AZ.

RECOMMENDATIONS

APPLY A SYSTEMATIC APPROACH TO DIGITAL EXCELLENCE AND FOCUS ON TURNING SKEPTICS INTO CHAMPIONS

Building digital excellence is a comprehensive change program whose success depends on many factors. Our study of global pharmaceutical firms shows that the weakest links in the digital excellence chain are not related to budget or the technology itself, but rather to a lack of buy-in—or even resistance—to the idea of doing things differently. Companies undergoing digital transformation need to continuously evaluate how they are doing in all twelve facets of digital excellence and identify where they’re lagging behind. But that’s just the baseline. Digital leaders who want to break free from the pack and use digital as a competitive differentiator for their company must do more:


Figure 5: The best and the worst on the path to digital excellence

• Avoid false starts by setting crystal-clear visions. A strong digital vision is not just a one-line statement of what the company wants to be, or achieve; it’s the guiding light that teams—including those that are skeptical about digital—can use to orient themselves. Everyone affected by a digital transformation needs to understand where he or she fits in. Strongly conceived visions do this, but individual contributors and teams often struggle to translate the vision into specifics—so managers need to spend the time to craft a message tailored to the specifics of the team and effectively communicate that message. Finally, when shaping your vision, enlist primary stakeholders in the effort to define the purpose of digital excellence and conduct a “five whys” exercise on general statements such as “Digital enables us to build a patient website.”2

• Demonstrate the value of digital to mobilize supporters. One of the most common change management challenges is deciding how to allocate your time and effort: do you spend it persuading the people who are resisting change, or supporting those that are embracing the new way of working to illustrate success? One of the best ways to ensure that your vision lasts and to inject more confidence into the change process is to measure the success of digital initiatives using a rigorous framework. Bonus points go to those managers who can relate digital success to key business outcomes, including NPS, cost, or even profitability.3 You can

The digital team has strong business acumen, including project managementskills.

The digital team has members with strong digital expertise gained from insideand outside the company.

5.1 Digital teams have the right skills and background to accelerate digital excellence...

5.2 ...but firms jeopardize digital investments by overcomplicating access to digital capabilities.

75%

72%

Competency

The company continuously keeps an eye out for emerging digital trends frominside and outside the industry.

The digital team has at least one change champion who knows where andhow digital change affects the business and has the tools to facilitate it.

72%

69%

Each significant digital project or initiative has at least one senior sponsor asits champion. 63%

Senior leadership measures the digital team ’s progress and holds itaccountable based on company-wide metrics.

The road map anticipates how core business processes such as brandmanagement, corporate communications, and medical a ffairs must change.

34%

31%

Competency

The digital capabilities that the company rolls out consistently meet therequirements of the internal users it ’s targeting.

The company has a clear, shared vision of what digital is trying to achieve,and this vision is well-understood throughout the organization.

31%

28%

Everyone is clear on how to access and use digital capabilities such asthe web, email, social media, and CRM. 25%



also demonstrate value by means other than company-wide KPIs. For example, a top-five pharmaceutical company boosted senior management involvement by determining the percentage of target customers that the firm’s field teams were unable to meet in person. This turned into a project, led by the management team, aimed at understanding how the company could use digital to deliver relevant information and services to these “unseen” customers.

• Build the capability that commercial teams need most—and can find. Running a social media account (with or without social listening capability) puts significant demands on a digital team. The team must allocate a lot of time and resources to coordination, alignment, risk management, and setting global policies. Social media is a hot topic and can give companies great insight into the benefits of interacting with the public, but companies shouldn’t forget to set up foundational digital services such as websites, email marketing, and electronic detailing; often, these should be built before launching social media capabilities. To understand which capabilities to prioritize, digital teams should work through their firm’s various brand plans and identify planned digital activities. Checking how the brand team’s intentions line up with current digital capabilities will give a clear picture of the required digital skills and technologies. This essential step can take some of the heat off of your already overloaded brand managers.


METHODOLOGY

DT Associates fielded its Q1 2014 Global Digital Excellence in the Pharmaceutical Industry survey to forty-nine digital professionals who demonstrated interest in and familiarity with digital marketing and strategy as part of their role in a pharmaceutical organization. The forty-nine professionals who completed the survey answered basic questions about their role, their team, and their budgets. Based on answers to these questions, we excluded seventeen of the respondents from our final sample, which included only those who have significant digital responsibility and budget (e.g. heads of digital, digital directors, and digital leads).

We fielded the survey from January 2014 to February 2014. Respondent incentives included a copy of a business eBook or a donation to a charity, as well as a copy of a report containing the collected survey data.

Our sample is not guaranteed to be representative of the population. Responses do not convert directly into precise maturity scores for respondents’ respective companies. Unless otherwise noted, data is intended for descriptive purposes.

COMPANIES SURVEYED FOR THIS REPORT

AbbVie Astellas Pharma AstraZeneca Bayer Eli Lilly and Company GlaxoSmithKline Johnson & Johnson / Janssen

Merck & Co. Mylan Novartis Pfizer Roche Sanofi Teva

RELATED CASE STUDIES

“The Changing Digital Landscape For Global Pharmaceuticals”, DT Associates case study, August 2013. “The Evolving Digital Conditions For A Commercial Organization”, DT Associates case study, August 2013. “Drive Digital Transformation Via A Digital Center Of Excellence”, DT Associates case study, March 2014. “Use Brand Reviews To Optimize Your Digital Investments”, DT Associates case study, October 2013. “Manage The Transition From Marketing Pilot To Global Rollouts”, DT Associates case study, February 2014.


TIM VAN TONGEREN

For more than ten years, Tim has specialized in helping commercial and marketing leaders navigate the strategy and operational transformations required to deal with technology change. In his current role as Managing Partner, Tim spends most of his time managing our international associate network alongside his work with leading global pharmaceutical companies to improve their digital excellence.

Tim’s primary achievements include developing digital capabilities for marketing managers, setting a long-term digital strategy, and adjusting the brand planning process for digital excellence, all for Tier 1 pharmaceutical companies. Most recently, he has guided business leaders in formulating and implementing their digital road maps, making sure that they don’t overlook the necessary change management elements of marketing organization digital transformation.

Tim has an extensive background in management consulting across a number of industries, which supports his digital excellence work for healthcare companies. As a senior strategy consultant at global marketing agency SapientNitro, he worked with clients across industries to develop and execute digital marketing strategies. Prior to that, Tim was an analyst at Forrester Research, where he produced thought-provoking research on technology innovation and customer experience management when it was still a relatively new discipline.

DENNIS VAN ROOIJ

Dennis is a recognized expert on how pharmaceutical executives can take full advantage of new digital technologies to bolster their commercial objectives. He brings a strategic yet pragmatic perspective on digital channels for the healthcare vertical in general and the pharmaceutical industry in particular to every engagement. In his current role as Managing Partner, Dennis is responsible for managing client relationships with a number of leading global pharmaceutical companies and spends a significant amount of his time working directly with clients.

Dennis was the Global Head of Digital Acceleration at Novartis pharmaceutical based in Switzerland. He also served as an interim advisor for an innovative pharmaceutical company, supporting its global digital capabilities and engagement team. Prior to that, Dennis led the digital marketing strategy for Asia Pacific, Japan, and emerging markets for GlaxoSmithKline, where he earned the prestigious President’s Award for innovative marketing in emerging markets. Dennis also has seven years of commercial and digital strategy experience outside the global pharmaceutical industry as a senior consultant at MetrixLab and Forrester Research, where he worked with many of the world’s top companies.

ABOUT DT ASSOCIATES

DT Associates is a specialist digital consultancy that enables healthcare companies to achieve digital excellence—an essential component of continued business success in an age of digital disruption. We help leading innovators in the healthcare and pharmaceutical industry successfully assess, launch, accelerate, and optimize digital excellence initiatives. DT Associates addresses firms’ digital business challenges in ways that no other consultancy can. Our clients face complex marketing and technology questions every day; we help them make the right decisions. DT Associates’ bespoke consulting services have a strong focus on digital marketing, strategy, and capabilities and our consultants bring deep digital and pharmaceutical knowledge and expertise to the table. Over the past ten years, we’ve helped dozens of executives and teams at leading healthcare firms achieve digital success. Discover on how we can partner with you to achieve digital excellence at www.dt-associates.com.


ENDNOTES

1 In total, forty-nine people completed our survey. Our final sample only included the thirty-two respondents who are part of a central digital team or who are a digital lead for a significant affiliate with its own budget. We fielded the survey globally in January and February 2014. See the Methodology section for more information. 2 The “five whys” technique was developed by Sakichi Toyoda as a critical component of problem-solving training for the Toyota Motor Company. 3 Net Promoter Score, a metric to measure customer loyalty by asking customers the question “How likely are you to recommend our company, product, or service to your friends and colleagues?”

Digital Excellence In The Global Pharmaceutical Industry in 2014

Healthcare

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