Direct To Consumer Advertising

-Paul Herzich Kimberly Krynski Tim Tucker-

Current Topic In Biopharma Management, BUS590W

Wednesday, April 30, 2008

Richard E. Kouri, Ph.D. & Samuel Straight, MBA

Presentation Outline

●What is Direct To Consumer (DTC) Marketing

●PEST analysis of DTC

●Future Developments and Conclusion

What is Direct To Consumer (DTC) Advertising?●The collective marketing efforts of drug

manufacturers aimed at the patients who take their medicines –FDA.GOV

●Types of ads■Promotional■Reminder■Help seeking

Example # 1

●Do you know what Drug I represent?○ Lamisil

●Do you know what disease I fight?○ Fungus infections

●Do you know what Company I represent?○ Novartis Digger the Dermatophyte

Example # 2

●Do you know what Drug I represent?○ Nasonex

●Do you know what disease I fight?○ Seasonal Allergies

●Do you know what Company I represent?○ Schering-Plough The Nasonex Bee

Example #3

●Same Questions:○ Pfizer○ Erectile Dysfunction○ Viagra

Talk about promoting masculinity!

Political Analysis

●History of DTC●Only 1st world country with free-market

healthcare●Next president will push for price controls on

drugs●FDA regulations getting stricter

Economic Impact

●Pharmaceutical advertising-to-sales ratios are among the lowest for experience goods.

●Less is spent on advertising per unit

Demand drivers in Pharma ● Many demand forces exist:

○ Media thru Medical journals could publish some ground-breaking finding ➔ patient demands product

○ Physicians organization recommends for use of a “gold standard” therapy ➔ physicians increase “scripts”

○ Media reports negative side-effect of therapy ➔ patients stop buying the drug with possible litigation

○ DTCA ➔ patient inquires about specific product

○ Increased patient population ➔More people taking drugs

Q0

D

MC

MRATCQ

1

P0

P1

Profit-maximizing

Strategy

P2

Q2

Volume-maximizing

Strategy

Economic Model of Non-Competitive Goods● Typical of Monopolies (e.g. patent

protection)● Optimal Quantity is where:

Marginal Revenue = Marginal Cost, correlating to Demand

Making a model

Societal Impact

●Public perception●Physicians - pressure●Patients – product recall in the office●Managed care issues

Societal Impact

Technology Issues

● Internet○ Patient support sites○ Patient advocacy sites○ Physician trade groups○ Drug company sites○ Smart phone video and text messages

●Patient databases and data mining.

●Marketing feedback for "view time" or "clicks"

Good DTC strategy

●Follow the guidelines set up by the industry organization - PHRMA

●Work proactively with FDA● Increase education advertising components

○Doctor○Patient

Future Developments and Conclusions● Increase use of Internet for advertising●Federal regulations may force a change. ●Paradigm shift of industry to specialty drugs●Patient Assistance Programs ads will increase.

Questions

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