Marketing and Sales Roles in the Pharmaceutical Industry

MARKETING

The Marketing Concept - Key Principles

It is easier to change the products and services of the individual manufacturer to fit the needs of the market than it is to convince the entire market to use the products and services as the individual manufacturer prefers them
You can have any color car you want as long as its black
Henry Ford

All the resources of the firm should be organized into a total system aimed at meeting the needs of the consumer The role of marketing is to influence or direct activities from the manufacturer to the patient:
The right products In the right quantity At the right place For the right price At the right time

Marketing as an Actualizing Process

Markets can be viewed as gaps that separate parties interested in an exchange Marketing removes the gaps between the parties through various actualization processes
PRODUCERS MARKET SEPARATORS EXCHANGE FLOWS
PRODUCT FLOW: toward the consumer TIME SPACE VALUE OWNERSHIP QUANTITY ASSORTMENT PAYMENT FLOW: toward the provider USE RIGHT: toward the consumer INFORMATION FLOW: both ways Advertising, personal selling, publicity, labeling, sales promotions, marketing research, consumer complaints, drug education programs Credit and cash payments

MARKETING ACTIVITIES
Assembly, transportation storage, packaging, grading

Purchasing and selling, pricing, post transactional rights

CONSUMERS
Source: McInnis; A Conceptual Approach to Marketing

ITs Role in the Actualizing Process

IT can assist marketing in closing the gaps that separate parties interested in an exchange IT can make some of the gaps irrelevant (e.g., space and time)

MARKET SEPARATORS Connectivity across geographically dispersed regions 24 x 7 Availability

TIME SPACE VALUE OWNERSHIP QUANTITY ASSORTMENT

IT

Enabling information access Enhancing personalization  Right use  Right amount  Right need Increasing the number of available options

Source: McInnis; A Conceptual Approach to Marketing

Unique Aspects of Pharmaceutical Marketing and Sales

Influence of non-purchasers on the purchasing habits of the consumer Veto/authorization power of physicians consumers need an authorized document to purchase a prescription drug Importance of the disease to identifying and classifying markets Professional licensing required to stock and sell pharmaceutical products Records of every transaction are kept that are specific to:
Patient Physician Product
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Definitions
Market Research:
Determination and assessment of qualitative and quantitative dimensions of a market

Marketing Research:
Analysis of the effects of various marketing activities of a company or its competitors

Market Research
Environmental scanning:
Physicians Pharmacists Pharmacies Hospitals

Data gathering and analysis Influence of unique aspects of the pharmaceutical market on market research:
Known list of entities Knowledge-based decisions Similarities in education and thinking (professionalization) Availability of records for transactional activity

Significant use of outside vendors for market research

Syndicated services Custom services
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Questions Answered by Market Research

Strategic Level:
What diseases or product areas should be considered for long-term investment? Short-term? Market size or potential? Availability and utilization of therapies? Next logical steps in therapy? Potential market segments to be exploited:
Disease conditions (e.g., migraine sufferers) Dosing preferences (inhalants vs. injections vs. patches)

Prevalence of disorder? Shared conditions? Potential development partners? Potential acquisitions?

Questions Answered by Market Research

Clinical trial Planning:
Seasonality Regionality Specialty

Premarketing Planning:
What physician specialties are important in a given therapy or diagnosis? What patient characteristics are important? Who are our competitors in this market? How do our competitors promote their product? Are there unsatisfied portions of the market? How do physicians perceive a proposed product?

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Questions Answered by Market Research

Post-marketing Monitoring:
Adverse events Product sales Patient information (medical history)

This can be critical in product defense situations! Example: Pfizer s defense of Viagra when suits were filed alleging an increased risk of stroke.
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Types of Market Research

Hospital Purchases Retail Pharmacy Purchases Warehouse Withdrawals

Promotional Media

Periodic Surveys

Retail Pharmacy Prescriptions

Retail Pharmacy Sales

Physician Panels

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Types of Market Research

Measures the inflow of products from the manufacturer to the pharmacy OTC Prescription drugs Indirect (through wholesalers) Direct purchases from manufacturers

Retail Pharmacy Purchases

Periodic Surveys

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Types of Market Research

Hospital Purchases

Periodic Surveys

Growth of pharmaceutical purchases by hospitals has greatly exceeded purchases from pharmacies on a proportional basis In many communities, the hospital has become more important in routine care

Measures the inflow of products from the manufacturer to the hospital OTC Prescription drugs Indirect (through wholesalers) Direct purchases from manufacturers

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Types of Market Research

Measures the outflow of products from the warehouse to all purchasers
OTC Prescription drugs)

Warehouse Withdrawals

Does not reflect direct purchases from manufacturers Provides ability to analyze small segments of the marketplace such as zip code or territories

Periodic Surveys

Can be valuable in dealing with questions of individual territory performance and potential or different selling techniques

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Types of Market Research

Measures the outflow of prescription drugs from the pharmacy to consumers Most sensitive indicator of prescription product performance (factual) Reflects mindset of prescribers and consumer demand Best indicator of marketing or promotional effort effectiveness Data available at national and sub-national levels

Periodic Surveys

Retail Pharmacy Prescriptions

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Types of Market Research

Specialized research services to identify patient product usage along specific variables:
Diagnosis Patient characteristics Location of visit Drugs used Action desired from drugs used

Periodic Surveys

Tracking of new prescriptions over time and monitors changes in doctor prescribing habits

Physician Panels

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Types of Market Research

Historically used for nonprescription pharmaceuticals Data typically collected for products of interest Collect unit and dollar information at the package size level Main use is to obtain prescription counts by product Used for pricing analysis and cross-tabulation analysis using data warehouses

Periodic Surveys

Retail Pharmacy Sales

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Types of Market Research

Promotional Media

Periodic Surveys

Monitoring of detailing visits to physicians by sales representatives Monitoring of journal advertising Monitoring of direct mail advertising Physician sampling

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Generic Stages of Market Research

Marketing Problem Marketing Objectives Reviewed Problems Defined Alternative Marketing Options Considered Exploratory research Formulation of data requirements, sources Research objectives defined Research Design

Written marketing brief

Costing
Was this what was requested? Research Proposal Select Sample Design Survey & Feedback Design coding, analysis instructions Interpret Present Findings Take Action and Monitor
Source: Smith, Pharmaceutical Marketing

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Market Research Organizations

IMS Health Datamonitor Healthcare Consulting Frost.com Reuters Also check out:
Eyeforpharma.com FDA.gov Journal of the American Hospital Association AMA Drug Evaluations

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Market Research Industry Associations

EphMRA European Pharmaceutical Research Association (www.ephmra.org) BHBIA British Healthcare Business Intelligence Association (www.bhbia.org.uk) PhRMA Pharmaceutical Research and Manufacturers Association (www.phrma.org)

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SALES

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Sales Roles
Detailing
Face-to-face visits to physicians or purchasing managers (e.g., hospitals, HMOs) to present new prescription drugs Influence prescribing habit Increase current prescription usage Deliver samples Build relationships with doctors Get drug into a formulary; pull through

Sample Management
Track delivery of prescription drug samples to physicians or other purchasers

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Effective Detailing
Influences on Physician Prescribing Habits Side Effects Drug delivery method Efficacy Potential drugdrug interactions Dosage Payor formulary status Patient request Brand

Cost of drug

Personal preference

Source: IBM Analysis

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Detailings Value to the Physician

Value of Relationship with PharmaCos to Physicians
Learn new drug information Get drug samples Connect with peers or physician thought leaders Receive the perks Establish personal contact with the drug company Provide stress release

Comments From Physician Interviews

I like the good, tangible information about a new drug The samples determine what I prescribe for the long term Samples are extremely valuable I value the relationships with them. Overall, I am satisfied with their service I rely on them to keep me aware of whats happening in the drug industry I like their presence to break up my stressed schedule Everybody likes perks

Source: IBM Analysis

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Detailing - Physician Concerns

What are your top complaints about detailers?

Physician Comments
I view them as the liaison but I dont take them at their word all the time I hate negative marketing. The lack of objectivity is a big turnoff for me If they keep coming back with the same information, its a waste of both parties time I appreciate the information, but the reps can be pushy The thing I dislike the most is when the rep doesnt appreciate that I am busy and still tries to pitch the drug to me I dont believe that someone with a bachelors degree knows more about how a drug works than I do 27

78%
Biased information

47%
Inconvenient timing

44%
Too many from the same company

40%
Take too much time

28%
Not enough medical expertise

20%
Not enough samples

Source: The Forrester Report: Pharmas Detailing Overhaul, February 2001 (IMS Health, Scott-Levin, Forrester Research, Inc); (Ziment/WebSurveyMD.com); IBM Analysis

Companies Are Experimenting with e-Detailing

There have been promises made about the benefits of e-Detailing
Benefits to PharmaCos
Cost-effective: an online sales session costs about $110 on average, compared with about $200 for a field reps office visit Cost effective: Increased contact time per visit allows for higher information content Better control of detailing content: as a result, e-Detailing can be used as an efficient way to train less-skilled sales reps Capture relevant physician practice data: with this information, Companies can identify potential high prescribers that sales reps can target later Counter detailing and off-the-label discussion: with e-Detailing, the companys medical experts can speak with physicians about competing drugs clinical trial flaws and offthe-label prescription, which is normally not allowed in a sales reps visit Increased sales of under-marketed drugs
Source: IMS Health, iPhysicianNet website, Aptilon.com website, IBM Analysis

Benefits to Physicians
Allows physicians to see sales reps, gather information they deem important, and to have the flexibility and control to do it in their own schedule Offers physicians a range of convenient interactive channels Provides timely updated drug information Provides simpler sample ordering and delivery Provides quality peer-to-peer discussions on a topic that interests a physician.

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Sample Management
The pharmaceutical industry in America distributed $6.7 billion worth of samples to physicians in 1999 * During a typical month, the average pharmaceutical sales representative will visit 150 physicians, distribute thousands of packages of drug samples, obtain FDA required signatures on 150 sample distribution forms and receive scores of new sample cartons to their home-based office, and expend as much as 25% of their time tediously managing a paper-based process

* Source: IMS Health

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Sample Management and Regulatory Requirements

PDMA (Prescription Drug Marketing Act)
Designed to minimize the threat to the public health posed by prescription drug diversion and counterfeiting Requires that samples distributed by pharmaceutical representatives be signed for and tracked to create audit trails Helps to ensure that the correct physician receives the correct samples. If a pharmaceutical company is found to be non-compliant, they could face significant penalties, fines, and possibly even prison terms

Source: FDA

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Typical Sample Distribution Process

The pharmaceutical sales representative (rep) arrives at a physicians office. The rep manually fills out a pre-printed sample distribution form including physician information, sample product information, and the proper quantity of all samples to be distributed. The representative conducts a 3-5 minute presentation with the doctor about the product he or she is promoting, encouraging the physician to write more scripts for the product. The rep ends the detail by giving the physician the intended samples, and asks the physician to manually sign for the samples on the distribution form. At the end of the day, the rep will review each distribution form to check for accuracy, and then manually type all of the data from every form into their laptop Sales Force Automation (SFA) system. The rep then removes a copy of the triplicate form for his or her own records which must be kept for seven years, and mails a copy to a central processing location. The data sent to the central processing location is then manually entered for a second time into a database by a team of data processors. Since this is a manual process, there is an increased chance for the data to be full of errors. Each discrepancy found must later be reconciled during an audit to meet PDMA standards. It can often take weeks before this information is matched to the sales representatives inventory, and even longer for the marketing manager to gain access to it. Finally, the representative will place a manual order, writing everything out on yet another pre-printed form, to replenish their own sample inventory 31

Source: Pharmiweb

OTHER MARKETING & SALES TECHNIQUES

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Key Opinion Leader Management

Expert physicians -- often called "opinion leaders" or "thought leaders" -- play critical roles in driving pharmaceutical sales
Participate in ongoing R&D Have privileged access to R&D information Company-sponsored featured speaking engagements at prestigious conferences

Exchange ideas with other physicians regarding new products or indications or adverse events Helps convince other doctors to prescribe new products and can make the difference between a successful product launch and a major disappointment Program is actively integrated with marketing program:
Physician recruitment (specialty, name recognition, etc.) Matching to appropriate R&D efforts Matching to appropriate marketing programs

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Medical Science Liaisons (MSLs)

Scientific professionals
Pharmaceutical PhDs Pharmacists Physicians Nurses

Generally have more scientific knowledge than sales representatives Roles:

Support and expand sales representatives marketing of a product Be able to speak to the purchaser on a more scientific (peer) level; not on a marketing level Will focus on clinical information

Focus on key opinion leaders

Typically will only see more knowledgeable sales reps Organize symposia, conferences, focus groups, etc. Training and continuing education programs

May be involved in setting up Phase IV trials (post launch)

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