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Pharma Marketing: Emerging Scenario - Views on News from Equitymaster
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  • Sep 8, 2001

    Pharma Marketing: Emerging Scenario

    The dynamics of pharma marketing are changing by the day. In an arena of tough competition companies are coming out with innovate ways to market their products. Brand recall is becoming a key word for pharma marketers in today’s merciless world. New delivery systems are redefining the rules of the game.

    Bigwigs are joining hands…
    Recently, Ranbaxy tied up with its competitor, Cipla to market its Cipro-D drug in the domestic market. In a similar fashion Shantha Biotech tied up with Pfizer last year to market its Hepatitis B vaccine, the idea being, to leverage on the marketing expertise of Pfizer, which has amongst the best marketing teams in the country. The result: Hepashield B, (the brand name under which Pfizer is selling the vaccine) was ranked as the number one selling brand among all new products launched last year. This is for the first time ever that companies of proportionate size are coming together to cross sell products. Last year also saw a spate of brand acquisitions.

    While old marketing channels are time tested….
    The easiest way of creating brand awareness/loyalty among physicians is through medical representatives who persuade doctors on a regularly basis. Consider this. Overall the US pharmaceutical industry spends something around US $ 15.7 bn to promote its products through literature, journal advertising, sampling and DTC advertising i.e. around 14% of total revenues. Of the total expenditure around 50% of it was spent on promotional activities through medical representatives. This is the most traditional method of promoting drugs. In the US alone there is an army of 64,000 medical representatives (MR’s) to market drugs through this channel.

    Besides, visiting them, these MR’s are now pitching doctors over interactive websites and remote channels (PDA’s) specially designed for doctors. This new websites conveniently termed as D2D (Doctor-to-Doctor) portals aim to provide access to information at times convenient to the doctors.

    …. New delivery channels are emerging
    A global shift in consumer attitudes is taking place. The concept of “involvement marketing” is fast emerging where the patient is approached directly through education programmes, direct mailers etc. Empowered by better access to higher education, information sources like the Internet, and greater personal wealth, consumers want a much bigger say in their own medical treatment. Their expectations are rising, too. They increasingly regard healthcare as a right, not the privilege it was considered by former generations. And the way in which they define health is expanding to encompass quality of life, not just the absence of illness.

    DTC channel is gaining importance…
    The share of DTC (Direct to Consumer) marketing is on the rise. Direct-to-consumer (DTC) spending, which includes television, magazine, newspaper, radio and outdoors advertising, was estimated to be US $2.5 billion in 2000,up from roughly US $750 million in 1996. This now comprises roughly 15-16%of total promotional spending.

    While the medical industry has successfully used TV over the years, recent Federal Drug Administration (FDA) directives have dramatically widened the TV promotional opportunities for both Direct to Consumer (DTC) pharmaceuticals as well as OTC medications in the US.

    Results received by progressive medical marketers confirm Television’s effectiveness. According to a survey released on DTC advertising, TV ranked first in creating awareness of a new drug.

    DTC advertising is creating a perception that consumers decide for themselves which prescription drugs they should take. Indeed, 23% of consumers say the Internet is one of the primary sources of information on prescription drugs. Market research studies indicate that TV and Internet are set to become a growing part of the pharmaceutical/medical marketing mix and is currently growing at 50%.

    DTC advertising has implications not only for patient awareness but also on the cost to the company. DTC advertising, especially, the Internet is increasingly regarded as a cheaper cost option to tap patients. Interactive consultation and sale of pharma products over the web is expected to cut cost of healthcare by efficiently streamlining the supply chain and cutting operating costs.

    Back in India, except for OTC products pharma advertisements are not permitted. Though in the developed countries like the US, drugs are sold through various channels, where pharmacists have little influence over the volume of prescription-drug sales. Domestically, patients do rely on local pharmacists for medical advice. As a result, pharmacists are also lured with lot of freebies. It is estimated that there are an estimated 60,000 stockists and 5.5 lakh retailers in the country, which has grown almost 6 times in the last three decades. However, most of these retailers are concentrated in urban and semi-urban areas.

    Domestic companies are catching up on international trends
    Indian companies are also fast catching on to the trend in western countries in a lure to get closer to the consumer. DTC channel of marketing is expected to take off in a big way once certain legislations are put in place. Many companies are exploring the option of interactive websites. Take for example a relatively small company, Orchid Pharmaceuticals. The company has commissioned a special website www.healthorchid.com at a cost of Rs 10 m to offer a platform for communication between healthcare professionals, medical practitioners and patients. Ranbaxy’s, DTD portal www.ranbaxyfordoctors.com, offers online scientific chatting sessions amongst specialists.

    The marketing expenses of major pharma companies are on the rise as shown in the chart above. The delivery mechanism in drug marketing is expected to further go through a dramatic change with the entry of private health insurers. Surely, the trend in pharma marketing is going to be towards individualized health management where the consumer is going to be the king.



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    Aug 21, 2017 10:05 AM