The incredible thinking industry
The pharmaceutical business is shrinking, too, at least in the US. But fear not. Despite our playful cover metaphor, no one is predicting a downsizing as dramatic as the one experienced by our beleaguered hero.
According to our annual “Pharma Report” (p. 39-46), the total sales for prescription drugs in the US increased by just 2.3% in 2010, sales of branded drugs declined 0.7% to $229 billion (IMS Health data). While, on the face of it, this could hardly be described as a collapse, the alarm bells are sounding for the short-term patent expiration schedule, featuring numerous brands whose revenue is significant enough to deem them irreplaceable.
That schedule of horrors sees the likes of Lipitor, Advair Diskus, Zyprexa, Levaquin and Xalatan lose patent by the end of this year, with Plavix, Seroquel, Singulair, Actos, Lexapro and Diovan following suit in 2012. OxyContin, Nexium, Cymbalta, Celebrex and Abilify will be among the casualties by 2015. The revenue accounted for by these incredible shrinking categories gets a little scary: $25.4 billion this year, $26.1 billion next year and, following a mini-respite in 2013, a further $36 billion across 2014-2015.
As if anyone was ever in any doubt, pharma is an industry in transition.
“The new norm means constant change,” declared Wisconsin Govenor and former Health & Human Services Secretary Tommy Thompson last month. “Companies must reinvent themselves to survive.”
Thompson was addressing delegates at the DTC National in Boston, an event whose focus extended this year way beyond the realms of consumer advertising. Senior speakers from the pharma side attempted to shed light on what it is that companies should be doing to “reinvent themselves.”
Having spent less than three years in pharma, but with a consumer marketing resume that includes 14 years at P&G, Gary Walker, senior director, customer innovation at Eli Lilly, is in a good position to judge. And, unsurprisingly, he thinks pharma has a little catching up to do. “Our customers are ahead of us. They are building an expectation of us and it's driving us to new places.”
Walker stresses the need for pharma to understand what its customers need, when they need it, and then adapt to that. “We spend about 95% of our marketing budget on finding that nRx—the next patient—and then probably less than 5% after we've found them. Where I come from, that balance is very different. We have a lot to do.”
John McCarthy, VP, commercial strategy and operations, at AstraZeneca, agrees. “Educating consumers about a drug after they are taking it is so important.” He believes that in the next five years the industry will be having consistent, ongoing conversation with its customers. “We'll be able to be better partners with both patients and providers,” he predicts. “We haven't been good at that. Our best marketers are going to be those who can execute plans across all customers and all channels.”
These topics, along with other future strategies for the industry, will be covered at the MM&M Virtual Summit on May 24. For more details, visit mmm-online.com. Get ready for the ride.