Intuition, experience and conventional marketing frameworks. MarketLive: Better Marketing Strategy Through Patient Journey Simulation

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1 SALES & MARKETING INSIGHTS MarketLive: Better Marketing Strategy Through Patient Journey Simulation Jean-Jacques Raoult, Amy Marta and Maneesh Gupta Intuition, experience and conventional marketing frameworks have served pharmaceutical marketers well the past few decades in building successful marketing strategies. Today, marketers are finding they can supplement these with a forward-looking framework called MarketLive. The framework brings the patient journey to life, helps teams better understand complex market dynamics and allows brand teams to test and refine strategies in a virtual future world before investing millions of dollars in the real one. As the pharmaceutical market becomes more competitive than ever, an approach that combines a realistic view of the therapy area with well-honed intuition and years of experience will enhance marketing teams decision making for the betterment of their brands success.

2 Table of Contents 3 Introduction 4 Current and Future Frameworks: Strengths and Weaknesses 6 The MarketLive Solution 8 MarketLive in Real Life 10 MarketLive Looks Forward 2 ZS Associates

3 Introduction The experience of marketing teams the past two decades has generally been positive through experience, hard work and their intuitive feel of the market, they have been able to successfully launch new pharmaceutical products and direct their companies marketing efforts. But despite their collective reservoir of experience and intuition, pharmaceutical marketers face radically different market conditions than 10 or even five years ago. We have found their approach often relies too heavily upon past experience and conventional wisdom, and marketing teams often do not use decision-support tools or processes that enable a truly forward-looking view of the market that anticipates the impact of their decisions. In addition, marketing team members may not integrate consistently a patient-centric view of the world the patient journey, or the behavior of individuals before treatment and onward into their decision making. Marketing teams that are able to embrace a forward-looking process, which entails predicting and influencing patient and physician behavior over the long term, can reap potentially enormous rewards. This is not to suggest pharmaceutical companies should scrap their current approaches, or that intuition and experience are not as valuable as ever. It is just that in 2009, a framework that combines intuition, experience and predictions of long-term patients treatment decisions over time can complement and enhance marketing teams current approaches. MarketLive is a forward-looking, problem-solving approach. As it incorporates a simulation platform, MarketLive can analyze different marketing scenarios (market conditions as well as internal strategies) and help answer What if? when presented with alternative situations. It can help marketing teams anticipate how investment decisions will play out over many years, allowing teams to experiment with and evaluate multiple strategic options. This approach focuses on the mostsensitive market dynamics while ensuring strategies are robust enough in different market contexts. 3 ZS Associates

4 For any given therapy area, MarketLive can simulate the entire market, bringing the patient journey to life. Though MarketLive cannot replace marketers intuition and experience, it can be a powerful addition to their decision-making abilities that helps plug gaps in their collective thinking and challenge it by confronting assumptions with reality. Current and Future Frameworks: Strengths and Weaknesses With well-honed intuition and years of experience, over the last couple of decades pharmaceutical marketers have been able to paint an inclusive, balanced picture that accurately reflects market conditions. In turn, they have been able to develop cohesive marketing strategies that propelled their products to record sales. However, this approach has its limits. From a marketing perspective, the pharmaceutical market has evolved into separate components managed care, multiple inline and pipeline products, regulatory and many other aspects that demand a specialist s full-time attention. Because decision making in pharmaceutical marketing is often divided into such groups, there is the risk that some members of the marketing team suffer gaps in their thinking; that is, they only see the world through the narrow prism of their own expertise. As a result, a conventional epidemiology-based approach may not incorporate every important piece of marketing information, such as data on physician and consumer behavior, competitive pressures, market access and treatment outcomes. In addition, not all marketing teams may integrate the effect of time into their overall market views. For example, few market development initiatives recognize that it may take years for patients to become potential consumers of a given product. Failing to integrate this fact can lead marketing teams to overestimate the impact of a promotional effort, or after implementation, to end the promotion believing it has failed. So if relying upon intuition and experience can mean gaps in a marketing team s thinking, what is the result? Often, it is an inaccurate assessment of the future, leading to suboptimal decision making and missed opportunities or overinvestment. 4 ZS Associates

5 The ultimate price for this can be huge. For instance, there is often a lag between a marketing investment and its impact. Marketing strategies need to be evaluated with this in mind; if a marketing team underestimates the lag, it could misjudge the potential effectiveness of a marketing investment. Yet marketing teams that suffer gaps in their collective thinking may not take this crucial detail into account. In addition, the patient journey differs for each person (see Figure 1). But often, marketing teams are forced to divide potential consumers into large, homogenous segments that do not accurately reflect market dynamics. Again, underestimating those differences between individuals or not taking them into account at all could lead to a suboptimal strategy, resulting in misdirected spending of precious marketing dollars. Figure 1. The journey is unique for each patient. Figure 1:. Incidence HCP Visit Off Therapy PATIENT A Male, 45 Moderate CV risk Painful Symptoms Diagnosis? Rx NSAIDs Fulfillment No Rx Cox-2 Fulfillment Selftreatment Selftreatment Time Incidence HCP Visit Death PATIENT B Male, 60 Severe GI risk Painful Symptoms Selftreatment Diagnosis Surgery Fulfillment Rx Opioids Fulfillment Selftreatment Rx Weak Non-narcotic Fulfillment Time PATIENT C Female, 30 Mild No Co-morb Incidence Patient Painful Symptoms HCP Visit Physical Therapy Physician Off Therapy Alternative (Chiropractor) No?? Diagnosis Fulfillment Rx Opioids Fulfillment Time As the complexity of pharmaceutical marketing has increased, advanced platforms and techniques are now able to help supplement marketing teams decision making. Marketers today can combine intuition, conventional frameworks, market simulation and data to their greatest advantage, helping put strategic marketing decisions on par with those made for clinical trial design and because these techniques are factbased, marketing executives have a solid basis to quantify and defend their marketing decisions to senior management. 5 ZS Associates

6 The MarketLive Solution Simply put, MarketLive helps pharmaceutical companies to make critical decisions on how, when and to whom they should market a pharmaceutical product. By simulating individual patient journeys, it helps develop and deepen their view and understanding of a given market. MarketLive follows individual patients journeys as they need treatment. Many events and personal interactions influence a patient s journey; the resulting treatment and therapies are a result of those interactions. These are not limited to doctor-patient interactions, but include payer decisions, treatment history and competitor behavior. MarketLive helps change how teams think about a pharmaceutical product and its competition, focusing on individual patients and their lives, making the market tangible in considering specific situations that patients and health-care professionals will face. In the end, MarketLive bridges the gaps between marketing team members thinking, enabling them to agree on perspective, helping them understand the patient journey. MarketLive does not replace intuition and experience but instead complements them. It adds simulation and data to current frameworks and marketers intuition, providing rigor and realism for marketing decisions. MarketLive works on the foundation of market simulation, which can show how daily events, personal interactions and decisions (with physicians, products and payers across patients lives) will affect product uptake (see Figure 2). Since it can simulate the actions of thousands of individuals, MarketLive can simulate the entire market. It integrates data, technology and decision making to provide both a framework to describe the patient journey, and a platform to simulate the patient journey. This virtual reality can help marketing teams better understand the dynamics of the marketplace in depth, allowing brand teams to test and refine strategies in a virtual world before investing millions of dollars in the real one. How does it work? Using knowledge of the therapy area, as well as primary research and secondary data, MarketLive constructs a virtual representation of the marketplace. MarketLive does not use all available prescription and patient-level data, but uses select data to devise parameters that describe data and a given situation over time. 6 ZS Associates

7 MarketLive generates scenarios that represent possible market situations to help answer clients business questions. By running scenarios based upon a marketing team s needs, MarketLive delivers answers to client questions regarding market behavior months and years in the future. In a way, MarketLive resembles a flight simulator used for pilot training. A flight simulator does not replace the experience of flying, but still manages to give novice and experienced pilots the opportunity to understand and train for the myriad situations they may face during flight. A typical MarketLive application involves a pharmaceutical company trying to prioritize marketing strategies for a product, and determine how various strategies will affect market share over the long term. The company could rely upon the marketing team s intuition, market knowledge and experience with previous products. However, each product and therapy area is different, and often intuition and experience predict only short-term outcomes. Figure 2. Events in individual patient lives finally lead to combined market outcomes. Figure 2: BIRTH Disease Occurrence INDIVIDUAL PATIENT JOURNEY Symptoms Physician Visit Fulfillment Diagnosis Severity Choice Brand Choice Flare Physician Visit COMBINED MARKET OUTCOMES Line 4 Therapy PATIENTS Line 3 Therapy Line 2 Therapy Line 1 Therapy ZS Associates

8 However, MarketLive can quantify the long-term impact of various marketing strategies over time through exploring alternatives for market expansion, product differentiation or influencing the length of therapy. MarketLive s quantitative output, which includes the number of prescriptions written, product revenues and market share over time, can be combined with qualitative metrics to prioritize marketing strategies. In addition, MarketLive can help ensure a marketing team s thinking is aligned. Intuition and experience are different in each individual, creating differences of opinion between individual marketing team members (or between marketing teams and management), and it can be difficult lining up team members behind a single strategy. But since it is objective, MarketLive has no stake in one position or another, and its predictive power can help convince reluctant team members of the benefits and shortcomings of a marketing strategy. Furthermore, with long-term, quantifiable financial estimates in hand, marketing teams can promote their marketing strategies with more confidence to skeptical corporate management. MarketLive is also transparent, and users can easily understand individual elements of the model. It is not an impenetrable black box into which no one can see. It is important to emphasize that MarketLive is not an end-all decisionmaking platform that replaces intuition and experience. Instead, MarketLive can reinforce the marketing team s intuition or challenge it. As it complements traditional frameworks to describe market dynamics, MarketLive has been able to uncover new perspectives and provide new insights to the team. MarketLive in Real Life Though we have outlined MarketLive s benefits and its basic working model, its attributes are best illuminated through two examples, which we have encountered in working with pharmaceutical company clients. Selecting Patient Segments A pharmaceutical company was planning to introduce a treatment for a chronic condition in a rapidly evolving and therapeutically complex 8 ZS Associates

9 market. Given its past experience with similar products and market situations, the marketing team for the new treatment decided to target the treatment-naive segment of the market. The team felt that treatment-naive patients represented the biggest opportunity, and intuition indicated that this marketing approach would be a success. The pharmaceutical company engaged MarketLive to investigate if targeting the treatment-naive market would be the best long-term strategy. Using scenarios built upon market research, MarketLive traced the patient journey for different market segments and came to a surprising result: The treatment-unresponsive market would outgrow the treatment-naive segment in five years, and would become three times as large in a decade (see Figure 3). Figure 3. Conventional treatmentunresponsive patients will become the biggest market segment over the next several years. Figure 3: PATIENTS Conventional Maintained EVOLUTION OF PATIENT SEGMENTS Conventional Unresponsive Naive As a result, the marketing team revised its product positioning and decided to target treatment-unresponsive patients. In doing so, the company tripled its potential market and tapped into millions of dollars in unseen revenue. Marketing team members united behind a single strategy, and had strong evidence to convince upper management of the plan s worthiness. Market Development Activity In another example, a pharmaceutical company s marketing team decided to concentrate investments for a new product on decreasing 9 ZS Associates

10 the time to treatment for recently diagnosed patients. Intuitively, the plan made sense: With a truncated time to treatment, the company could treat more patients and expand its customer base. Basing its strategy upon past experience with similar products, the company s marketing team hoped to increase sales 5% with this strategy, though it would cost millions of dollars to implement. But MarketLive simulations delivered a different answer. Once the team had a virtual view of how the therapy area would evolve and ran its marketing strategy scenarios, it found that reducing time to treatment would realistically result in only a 1% increase in the patient base and sales (see Figure 4), not enough to justify additional spending. MarketLive helped the marketing team rethink its proposed strategy; ultimately, the team decided not to pursue it. In doing so, the process helped save the company possibly tens of millions in marketing expenditures that would have been largely fruitless. Figure 4. The number of patients do not change significantly if the time to treatment is reduced. Figure 4: EXPECTED PATIENTS IN 2015 PATIENTS Base Case (150 Days) Faster (80 Days) * Time from diagnosis to treatment initiation MarketLive Looks Forward The complex pharmaceutical market shows no sign of untangling itself. For a marketing team trying to draw up a winning strategy, each component of the market clinical development, outcomes, physicianpatient behavior, or pricing and reimbursement is more difficult to assess than ever. And the complexity is only growing. 10 ZS Associates

11 It is also well-known that fewer compounds are reaching the market, and many therapy areas are crowded, if not saturated. For instance, once a handful of targeted oncology therapies dominated the market, but today, there are hundreds in development for most tumor types. Often-brutal competition has made it difficult for corporate management to deliver expected returns; in turn, corporate management is pressuring marketing teams to demonstrate quantitative performance measures before committing to a marketing strategy. In short, the competitive landscape will get tougher, putting more pressure on brand teams to fashion the right strategy before spending a dime on marketing. In our view, by continuing their current ways of doing business, marketing teams will have a tough time formulating marketing plans that maximize revenue and minimize waste. MarketLive cannot mitigate these trends, but it has the potential to mitigate their effects and improve performance. MarketLive cannot predict the future, but it can make the future easier to envision and anticipate how alternative strategies will play out. By using data and strategies consistently in a market simulation, not only can MarketLive fill gaps in a marketing team s thinking, it can help marketing teams work smarter for the long term. It expands the thought process, providing a way to make decisions more rigorous and effective. About the Authors Jean-Jacques (JJ) Raoult is a Principal with ZS Associates in New York. His experience is in marketing and sales issues in the United States and globally. He has integrated quantitative approaches to targeted client problems, and has helped develop and implement MarketLive with pharmaceutical marketing teams. JJ holds an undergraduate degree in geology and geophysics, a Ph.D. in computer sciences and an M.B.A. from INSEAD. Amy Marta is a Principal with ZS Associates in Evanston, Ill. She has worked with clients on a diverse array of marketing and sales issues, and helped develop and implement MarketLive with pharmaceutical 11 ZS Associates

12 marketers. Amy has a B.S. in chemical engineering from the University of Wisconsin and an M.B.A. from the University of Michigan. Maneesh Gupta is a Manager with ZS Associates in New York. He has helped clients design, develop and use MarketLive. He has also worked on marketing research, forecasting, market opportunity assessment, marketing mix optimization and product strategy. Maneesh has a bachelor s degree in chemical engineering from Jadavpur University at Kolkata, India, and an M.B.A. from the Kenan-Flagler Business School at the University of North Carolina. About ZS Associates ZS Associates is a global management consulting firm specializing in sales and marketing consulting, capability building and outsourcing. The firm has more than 1,000 professionals in 18 offices around the world, and has assisted more than 700 clients in 70 countries. ZS consultants combine deep expertise in sales and marketing with rigorous, fact-based analysis to help business leaders develop and implement effective sales and marketing strategies that measurably improve performance. As the largest global consulting firm focused on sales and marketing, ZS Associates has experience across a broad range of industries, including medical products and services, pharmaceuticals, biotechnology, high tech, telecommunications, transportation, consumer products and financial services. For more information on ZS Associates, call or visit ZS Associates inquiry@zsassociates.com ZS Associates, Inc All Rights Reserved All trademarks within this document are either the property of ZS Associates or their licensors.