September 12, 2008
Change is good, so goes the old adage. But is it always good? Some of the new realities that are taking place in the biopharmaceutical world for example, have forced many organizations to radically rethink their business models.
According to a Roland Berger study, Pharma at the Crossroads, the major sticking points in the US market include: patent expirations of major blockbusters, pricing pressures, declining R&D productivity, regulatory issues, product withdrawals, tarnished reputations and an obsolescent sales & marketing model that is under close scrutiny.
The traditional approach of creating demand for a medication via healthcare providers has been challenged. A study by SK&A Information Services reported that nearly 20% of US-based healthcare providers are saying “no” to sales rep visits. The new focus, according to PricewaterhouseCoopers' Pharma 2020: The Vision: Which Path Will You Take?, is on who can add the most value versus who can move the most pills. The report says that the success with which pharma can make “big ticket” sales will depend on their ability to differentiate their brands from those of rivals, demonstrate value for the money and contribute to the overall improvement of health.
The other key drivers of demand creation are patients and caregivers—the major targets DTC or one-to-many communications. Although still at a high of approximately $5 billion annually, industry study data reveal that traditional DTC spend is declining while at the same time undergoing scrutiny from the government. DTC is experiencing new growing pains and challenges as it strives to remain a viable marketing approach. The most pressing challenge facing DTC continues to be persuading consumers to take action after watching a 30- to 60-second TV commercial that includes information regarding potential risk factors. For this reason a prominent display of an 800-number and a website address is critical to writing-off the cost of DTC spots, as it encourages interested parties to request more detailed information about the brand or disease being advertised.
The rise of digital marketing also offers a key opportunity and represents an ideal complement to the marketing mix, as multichannel marketing is still the most effective way to achieve desired results. According to a study by Forrester Research, one in five consumers are using social computing (such as Facebook) as the sole means of gaining knowledge about their health conditions.
The FDA and National Council on Patient Information and Education report that 14% to 21% of US patients never fill their original prescriptions; 60% cannot identify their own medications; and 12% to 20% use other people's medicines.
Non-compliance represents a huge opportunity to maximize the value of prescription brands and industry experts point out that better compliance could generate more than $30 billion in incremental sales each year. Some industry insiders contend that with better communications, monitoring and mnemonic devices, manufacturers can reduce attrition rates by 33% a year while continuing to generate an extra $1 billion a year from new sales.
Effective, data-driven, direct-to-patient (DTP) marketing strategy can go a long way in maximizing the lifetime value of a brand. Success of patient-targeted communications is realized when potential patients are identified and motivated to call or visit their healthcare providers to inquire about the appropriateness of specific brands.
Shire has myriad competitive and regulatory challenges when marketing its ADHD product Adderall XR to potential patients, in particular, children. When the patent expired on the company's successful flagship ADHD drug formulation, Adderall, it developed a long-acting, once-a-day version that offered convenience and qualified for a patent extension.
Among the challenges that Shire identified:
- How to spur usage among patients who had taken Adderall;
- How to market within official parameters. (Adderall, because of its stimulant properties, is tightly regulated by the DEA and the FDA. Samples cannot be distributed or marketed directly to children and broadcast advertising is not an option); and
- How to capitalize on the aged files of 140,000 Adderall patients.
Public perceptions regarding ADHD also presented challenges. For instance, some parents believe that ADHD is a “lifestyle disease” nothing more than bad behavior. The web is also chock-full of sites that tout “alternative” non-pharmacologic remedies for ADHD.
At the time, Shire was generating more than $1.5 billion in annual sales with $600 million of that from ADHD brands, and faced significant competition. Its number-one objective was to grow market share for its new ADHD formula by 2% and, in addition to making sales calls to healthcare providers more productive, it needed to develop an effective DTP channel.
In response, Shire and its partner developed a multifaceted, integrated plan with three consumer segments. Specialists built two databases—the first to track patients and their parents, replacing the company's flat files. The other helped the company to monitor the effectiveness of multiple promotional and educational channels.
Adhering to industry regulations, Shire's DTP marketing was permission-based, which in this case meant parents had to opt in to receive information. On the front end, Shire re-qualified everyone in its files and applied list and data resources to find additional ADHD patients and parents. On the back end, analytics specialists designed studies to measure how targeted consumers respond to marketing versus a control group that did not receive communications.
Next, blending research and insight, the marketing team created the strategic and tactical blueprint by which the company's revamped ADHD formulation was to be promoted to patients/parents. A sampling of the tactical DTP executions included:
- Print ads placed in consumer magazines serving to enrich the patient/parent database with responses via business reply cards and toll-free inbound phone calls.
- A back-to-school mail kit that included a six-page newsletter, brochure to help children with their peers, a pharmacy discount coupon and a non-branded lunch bag.
The idea behind this approach is that parents often stop children's ADHD medication in summer, and then consider renewing during back-to-school physicals. Other key “events” in the lives of children with ADHD were identified as appropriate times to market, such as mid-school year (to assess progress) and winter/holidays (to ensure social success during time with family and friends).
The original campaign sought to acquire and convert patients . Once a child was successfully taking the medication, the parents were sent communications based on the key events identified above. The program was constantly refined to concentrate on the persistency issues related to Adderall XR, with the message of direct mail efforts even more focused on efficacy. Messages were also geared to managing expectations and addressing potential side effects.
The DTP program and its initial execution rolled out four weeks prior to launch, resulting in a 43% expansion of Shire's target patient/caregiver universe. Response to personalized direct mail was as strong as 13.5%, and prescriptions increased. In fact, Shire captured 23% of the US market, leading its two larger competitors, and generated a return in sales of more than $29 for every marketing dollar spent.
Julian M. Parreño is SVP, pharmaceutical markets for Harte-Hanks