Pharmaceutical Marketing in Turbulent Times - Developing innovative approaches to face new challenges

Transcription

1 Pharmaceutical Marketing in Turbulent Times - Developing innovative approaches to face new challenges Vienna, 7 November, 2011

2 Current context and challenges Demand for healthcare is rising Aging population, increase of chronic diseases New diseases and growth of existing diseases Increased expenditure on healthcare Demands for increased level of care at a lower cost Increased regulatory control and price pressure Decreasing R&D productivity Continued penetration of generics

3 Trends Shift in decision-making power and influence transfer of decision-making authority from doctors to policy-makers and payers Shift in healthcare roles primary care, secondary care and patient self-care and this will lead to a shift in needs Shift in public healthcare focus from palliative care to preventative care and compliance (vaccines, health management) Shift in geographic focus developing markets will be the growth drivers in the coming years 3

4 Trends Shift in the Sales and Marketing model the traditional model is becoming obsolete Shift in portfolio focus from blockbusters to specialised medicine Shift in the pricing model value-based pricing/performance-based pricing using outcomes data Shift in the way Pharma engages with the customer from one-way push communication with a narrow customer focus to a two-way dialogue with a wide range of stakeholders 4

5 What must the Pharma industry do? Innovate in everything we do! What will this require? A radical change in mindset How we define the market boundaries How we define who our customers are How we define our value-chain How we organise ourselves How we work 5

6 Value Innovation What is it? What does it mean? Why has it not been a focal point for pharma in the past? Industry too rich Narrow mind-set Why is it relevant now? Revenue streams are shrinking Increased competition Past business models and commercial practices are no longer relevant 6

7 What do these companies from different sectors have in common? 7 7

8 What are Value Innovators doing? They reconstruct market boundaries Especially barriers in mindset 2. They expand beyond existing demand A superior understanding of customers, dissatisfied customers, and non-customers 3. They break the Value-Cost trade-off Creating superior value at a lower price

9 Breaking the Value-Cost Trade-off 9 Decrease Unnecessary Costs Careful...decreasing Costs does not mean decreasing Price! Increase Buyer Value Source: Blue Ocean Strategy, Chan Kim, Renee Mauborgne; Harvard Business School Press, 2005

10 The mindset challenge is to learn and unlearn Innovation is not only about finding the new idea It is about getting rid of the old idea Which one is more difficult?

11 Blue Ocean Strategy Based on the book Blue Ocean Strategy by Chan Kim and Renée Mauborgne, INSEAD Professors Published in 2005 by HBS Press #1 worldwide business book bestseller Over 30 local translations Based on a study of 100+ companies over a 10 year period 11

12 Why seek Blue Oceans? 12 Business launches of 108 companies Total Launches 86% 14% Revenue Impact 62% 38% Profit Impact 39% 61% Launches within Red Oceans (line extensions, etc) Launches Creating Blue Oceans

13 Blue Ocean: a new approach to innovation 13 Red Ocean Strategy Compete in existing market space Benchmark and beat the competition Exploit existing demand Make the value-cost trade-off Choose differentiation OR low cost Blue Ocean Strategy Create new market space Make the competition irrelevant Create and capture new demand Break the value-cost trade-off Choose differentiation AND low cost Source: Kim and Mauborgne, Value Innovation, Harvard Business Review, 1997

14 Applying Blue Ocean Strategy to Pharma: CSFs The BOS methodology is very flexible and can be applied to almost any aspect of business activities But, to be successful, there are two main requirements A radical change in mind-set Change in vision of healthcare structure, stakeholders, competitors and the internal organisation A company-wide commitment to innovation 14

15 Pharma Innovation examples Innovation example 1: Implementing a patient-focused culture Innovation example 2: Digital Technologies and the Use of Social Media Networks revolutionising pharma communications 15

16 Implementing a patient-focused culture Orphan drug company founded in 1992, headquarted in Cheshire, CT One drug on the market: Soliris (Eculizumab) with several indications: Initial indication: PNH (rare hematologic disorder), launched in 2007 New indication: Hemolitic-uremic syndrome, launched in 2011 Several additional indications currently being investigated Seen as one of the most striking biotech success stories in recent years by many industry analysts The company decided to develop its own full-fledge pharma operation (vs partnering with established companies) in order to fully control the quality of the product, process & relationship The company s focus, as driven by the Founder /CEO Lenny Bell, is on each single patient 16

17 The recipe for success? The company has been tremendously successful: formal launch in 2007 (FDA approval in March and EMA approval in June), Alexion revenues reached $541mn in 2010, with $97mn in net income, and 800 employees The company s stock (ALXN) listed on the NASDAQ has skyrocketed. The company s market cap is currently in excess of $12bn, Alexion's 2011 full year revenue guidance has been revised upward based on Q results, to the range of $770 to $775mn: 40% growth over

18 In order to mobilize the entire organization, you have to realize first the Value of each Patient What is the Value of a Patient to the company? In the example of Alexion, parameters of the equation may include The price of Soliris: around $ / patient / year* If for example, the average duration of the relationship with each patient = 10 years (fictitious estimate), even with discounted cash flows and the projected incidence of price renegotiations in several countries, it clearly appears that the Value of a Patient to the company amounts to several million dollars If you fully realise this fact, you will then be able to ensure a VIP service level for the Patients and quality in everything your team does *source: Forbes magazine,

19 Single-patient focused culture: what does it mean in practice? The company has to develop targeting at patient level. The commercial process is centred around the patient: Patient identification is key: you must ensure that each potential patient is validated, correctly diagnosed at the right centre, and that the treatment is funded and initiated without delay The local teams ensure that funding-related administrative paperwork is handled efficiently in each country, or in each region and hospital in countries with a decentralised healthcare system Once the treatment has been initiated, the effort focuses on improving compliance and the services to the patient Pharmaco-vigilance is of utmost importance and everyone in the team must be trained on how to handle PV issues and patient requests. All associates at all levels must be trained on Disease and Drug understanding! 19

20 Potential implications for the Pharma industry? The change of focus of many pharma companies from Mass Market to Specialty might go even further in the direction of Niche disease areas including Orphan / Ultra-Orphan E.g., the recent acquisition of Genzyme by Sanofi-Aventis and the fast growth of Alexion Is it interesting and possible to initiate this type of patient-focused mindset and single-patient driven commercial model in your organisation? If so, how can you make it happen? 20

21 Pharma Innovation examples Innovation example 1: Implementing a patient-focused culture Innovation example 2: Digital Technologies and the Use of Social Media Networks revolutionising pharma communications 21

22 Digital: A new way to engage the consumer New access devices PC: 1.7 Bn devices and new channels Internet: 1.8 Bn users Tablets / reading devices: 66 Mn devices Phones and SmartPhones: 4.9 Bn devices Mobile communication SOURCE: Pyramid Research Q4 2010; Yankee Global Connected View

23 Building a Digital Strategy

24 Digital has become truly global 71% of Internet users are outside of North America / Western Europe Asia accounts for almost half of world mobiles Internet users by region, Percent, CAGR, % Mobile devices by region, Percent, CAGR, % 100%= 1.8 billion 100%= 4.9 billion MEA (16) 8 North America (4) 14 Western Europe (7) 15 MEA (25) 14 North America (5.5) Western Europe 6 (3) Latin America (15) Asia (24) Eastern Europe (19) Latin America (23) Asia (19) Eastern Europe (9) SOURCE: Pyramid Research Q4 2010; Yankee Global Connected View

25 But mix varies across regions Digital device penetration by region Percent of population PC Mobiles 126 Tablets CAGR, % E 2 N. America W. Europe Lat. America E. Europe 2 Asia MEA PC Dominant Mobile Dominant 1 Middle East & Africa 2 Includes Russia and Turkey SOURCE: Pyramid Research Q4 2010; World Bank

26 Digital is changing how consumers engage with brands Information: Consumers use internet to evaluate an increasingly large pool of brands Convenience: Consumers shop for brands and look for bargains from the convenience of their home or on-the-go Community: Consumers share their product experience through blogs, on-line communities and social networks Personalization: Consumers expect manufacturers to learn about them and provide personalized solutions Interactivity: Consumers expect two-way relationships between consumers and brands SOURCE: Press searches

27 Research shows that key stakeholders are increasingly engaged in digital Consumers Internet is the first source patients and families go to research a health-related question HCPs Physicians and other health care providers (HCPs) are using the internet to help inform their clinical practice Retailers In OTC, retailers are aggressively investing in online space and look to partner with CPGs to drive in-store traffic SOURCE: emarketer.com, Pew Research Center, press searches

28 How companies are making headway in the digital space Some examples: Customized HCP advice through iphone application to build direct relationships with HCPs and gather insights Branded educational content and advice for consumers e.g. brand/company-sponsored websites providing disease information, Facebook apps, advice and brand education, assistance programmes Sponsored on-line communities e.g., Facebook groups for mothers of ADHD children, diabetesdaily.com cancerforums.net, cnsforum.com Links to on-line and off-line retailers Multi-category digital newsletters e.g., Harvard Health Publications

29 Some key questions regarding social media How critical is social media to the future of Pharma marketing? What role should social media play in overall strategy? What are the key opportunities of social media? How, as a highly regulated industry, can we participate in social media while mitigating compliance risk? What ROI can be expected from investment in social media? What are best practices for our industry? 29

30 Conclusions There is good reason to be excited for the future in pharma! In large companies, the main struggle will be to overcome inertia and organisational hurdles that smaller companies don t have But if we have the courage to think differently, promote creativity and avoid over-processing/over-controlling, we can succeed and create significant value for ALL stakeholders In spite of all the change we re seeing, one thing remains true: Never lose sight of the need to develop a clear and effective marketing strategy which leads to a clear and relevant communications strategy To do this, as always, we need to understand our customers and engage with them in meaningful ways 30

31 THANK YOU

32 Consulting and Training consultants An international team, with headquarters in Paris, France Certified trainer and practitioner in innovative Blue Ocean Strategy methodology by the Blue Ocean Centre at INSEAD, Fontainebleau, France R&D team in London focused on computer simulation development Experience across a wide number of business cases and therapeutic areas in both classical pharmaceuticals and biotech: 32