14 s healthcare...for the past few years, we’ve seen a well-documented “perfect storm” of...
TRANSCRIPT
Healthcare Marketers Trend Report 2014
A Medical Marketing & Media (MM&M) and Ogilvy CommonHealth Public Relations Study
Presented by:Kate CroninGlobal Managing Director Ogilvy CommonHealth PR
Emerging Markets
Patent Cliff
Sunshine Act
Regulations
Rising Clinical Development Costs
Sagging Economy
Consolidation
Affordable Care Act
Evaporating Pipelines
The End of Big Pharma
The BIG Shift – 2013
There’s no question that the healthcare sector is in transition. For the past few years, we’ve seen a well-documented “perfect storm” of converging pressures – patent cliff, increasing regulatory scrutiny, pipeline issues, healthcare reform, the economic recession, consolidation — all of which have pounded the industry with maximum force. And drug manufacturers are bearing the brunt. In 2013, Ogilvy CommonHealth Public Relations conducted an inaugural study among U.S. healthcare executives to define the changing paradigm of the healthcare industry and its related services. The study results provided important insights into what has driven change in the industry over the last few years, as well as challenges and opportunities in the years to come – including coverage on such topics as the regulatory environment, the Affordable Care Act, Big Data, pipelines, digital media, integration, consolidation and more.
Medical Marketing & Media Magazine June 2014 Feature
3
Small Healthcare Companies(Revenue <$500M)
Medium-to-Large Healthcare Companies
(Revenue $500M+)
Annual Revenue**
57%43%
26% 74%Non C-SuiteC-Suite
Title
This past June, we released the findings of the follow-up report, showcasing new insights on the challenges, opportunities and perspectives of an industry in transformation. The study was fielded among 202 U.S. healthcare company executives – director level and above from Pharma, Biotech, Devices, and Diagnostics manufacturers. The sample for the study was generated from the Pharmaceutical Marketers Directory (PMD) and included a cross-section of small (revenue <$500M) and medium-to-large (revenue $500M+) healthcare companies. Beyond tracking changes over the last year, this year’s study took a closer look at the impact of the Affordable Care Act (ACA), increased pressures to demonstrate value, and the trends and draft guidance on digital and social media.
4
The Turning Tides – 2014
FDA Guidelines
Medical-Legal Review
Pressure from Payers
Baby Boomer Health Burden
Innovation
Impact of ACA
Value Proposition
ROI
Big Data
Restrictions on Sales Reps
Not Patient-Centric
We found that while many healthcare marketers feel the industry is headed in the right direction overall, concerns have intensified around the ability to showcase effectiveness in an ever-changing business environment, with an increasing focus on integration and digital engagement. Some pressing concerns raised in 2013 such as the overall impact of ACA, were not as strong in 2014. The study highlights healthcare marketer perspectives on engaging, communicating and marketing in this evolving landscape. I’d like to highlight what, we believe, are some of the key outcomes in 2014.
Industry Outlook
6
57%Agree
The industry overall is heading in the right direction
Overall, industry executives believe that the healthcare industry as a whole is heading in the right direction, though some sectors are faring better than others.
7
88%Agree
The industry needs to evolve its business model to remain viable
But there’s no doubt among marketers that the industry needs to evolve its business model, and get better at demonstrating value and reconsider marketing opportunities to remain viable in the future. Most respondents (63%) believe that the healthcare industry is not doing enough to demonstrate the value proposition of new drugs, including cost, health benefit, and market need. This was more pronounced among mid-size to large-scale pharma companies as three-quartered said the industry is lagging behind.
In playing it safe, the industry is not fulfilling its innovation potential
65%Agree
Innovation remains a challenge area for the healthcare industry. Many believe that the industry is being too cautious, and that is hampering its ability to be innovative. FDA regulations and guidelines also are preventing healthcare companies from innovating (73%), as well as the historical organizational structure of the healthcare industry remains a major roadblock to innovation (63%). In addition, there are increasing concerns (80%) that restrictions on sales representative communication with healthcare providers will impact prescribing knowledge and patient outcomes in the future. But on the positive side, more than half believe that the shift of retail pharmacies to healthcare providers is opening new avenues for pharmaceutical marketing.
Compared to last year, concerns around the FDA and ACA were less pronounced in 2014, with MLR more prominent
9
Q: The industry has been, and will continue to be, subject to a number of trends, forces, events and pressures. Please score each of the following according to their degree of challenge to your organization currently. (Excludes “other”) (Top 2 box on a 5-point scale)
Top 5 industry challenges 2013 vs. 2014
Clinical development/time-to-market64%
Pressure from payers/managed care73%
FDA regulations/guidelines76%
The Affordable Care Act60%
The economy in general63%
2013
Clinical development/time-to-market66%
FDA regulations/guidelines66%
Pressure from payers/managed care74%
The economy in general54%
MLR/internal medical/legal approval55%
2014
1st
2nd
3rd
4th
5th
In terms of driving concerns in the industry, FDA regulation and guidance continues to be a leading challenge, though not as pronounced as last year. More interesting, is that while ACA was among the top 5 industry concerns in 2013, fears about how the changes might impact the overall industry do not seem to have materialized. When we probed deeper, we discovered that many marketers (41%) believe that while the Affordable Care Act has had the most positive impact on patients, it is having a substantially more negative impact on healthcare professionals (57%).
Constituent Engagement
11
8%
15%
21%
32%
43%
45%
46%
50%
51%
52%
55%
74%
0% 20% 40% 60% 80% 100%
Outdoors
Radio
TV
Mobile/tablet apps
Direct marketing/direct mail
Print ads
Digital ads
Advocacy education programs
Public relations (earned media)
Research/data/analytics
Social media
Websites (brand.com, disease.com)
Total Respondents
Digital channels, research and PR will lead consumer-focused marketing initiatives in 2014
Q: And which do you plan to use for the current fiscal year (2014)? (Excludes “other”)
Marketing channels planned for consumers in 2014
Compared to last year, marketers see greater opportunity in customer behavioral change and social media
12
Q: Now please score each of the following according to their potential opportunity to your organization in the future. (Excludes “other”) (Top 2 box on a 5-point scale)
Top 5 industry opportunities 2013 vs. 2014
Clinical development/time-to-market50%
Pipelines58%
Emerging markets58%
Customer behavioral change 48%
Mobile/tablets49%
2013
Emerging markets58%
Customer behavioral change 59%
Pipelines60%
Social media 54%
Clinical development/time-to-market57%
2014
1st
2nd
3rd
4th
5th
When engaging with their key stakeholders, industry executives are seeing greater value in customer behavioral changes and in social media than they did last year.
13
While many healthcare companies claim to be patient-centric, few operate in this way
78%Agree
But many marketers question the authenticity of the industry being patient-centric and do not believe it has planned for the coming generational health burden. 69% also believe the healthcare industry is not prepared for the significant health burden of the baby boomer generation.
While a large portion of 2013 spend was dedicated to meetings and sales support, projected increases in 2014 were focused on digital channels
18%
18%
18%
19%
21%
22%
26%
28%
30%
33%
34%
36%
64%
68%
69%
70%
68%
53%
65%
59%
63%
62%
61%
54%
18%
14%
13%
11%
11%
25%
9%
13%
7%
5%
5%
10%
0% 20% 40% 60% 80% 100%
Sales materials
Paid traditional advertising (print, TV, radio)
Sales representatives
Public relations (earned media)
Advocacy relations
Professional meetings/conferences
Direct marketing
Content/materials development
Paid digital advertising
Social media
Search engine optimization/marketing
Websites/micro-sites
Increase
Stay the Same
Decrease
Q: And how do you anticipate your marketing budget changing, if at all, for this current fiscal year (2014)–increase, stay the same or decrease for each channel? (Excludes “other”)
Marketing budget expectations for 2014
Ranked on Increase.*Indicates that the audience is significantly higher than its corresponding audience.
Sm21%
Md/Lg38%*
Increase
Sm11%
Md/Lg23%*
Increase
14
15
86%Agree
Digital media has forever changed the way the healthcare industry needs to communicate and engage with its constituents
Most marketers agree that digital media has changed the way in which the industry needs to operate, and indeed, marketers are increasing their spend in digital.
16
72% AgreeThe industry significantly lags behind
patients in engaging digitally on health information
42% AgreeHealthcare companies are ready to embrace social media engagement
But few believe the industry has kept pace with the digital revolution. While many believe digital media has forever changed the way the healthcare industry needs to communicate and engage with its constituents, most also believe that the industry is severely lagging behind their constituents and are not quite ready to embrace social media engagement. The promise of electronic health records (EHRs) in evolving patient care also has fallen short of expectations (70% agree).
In 2014, marketing dollars increased for patients/consumers as well as physicians, with the greatest decreases noted for advocacy audiences
17
Q: For each of the following audiences, did your marketing budget increase, stay the same, or decrease for the current fiscal year (2014) compared to the last fiscal year (2013)? (Excludes “other”)
17%
22%
24%
35%
40%
42%
65%
61%
56%
53%
43%
43%
18%
17%
20%
12%
17%
15%
0% 20% 40% 60% 80% 100%
Pharmacists
Nurse practitioners/physician assistants
NGOs/advocacy groups
Payers/managed care
Physicians/specialists
Patients/consumers
Increase
Stay the Same
Decrease
Marketing budgets shifts from 2013 to 2014
Ranked on Increase.
In 2014, marketing dollars increased for patients/consumers as well as physicians, with the greatest decreases noted for advocacy audiences. Compared to last year, many marketers increased their branded communications budgets, while unbranded budgets remained flat. And in 2014, digital channels, research and PR will lead consumer-focused marketing initiatives. Regardless of marketing spend, physicians are seen as the most important audience to healthcare companies, followed by payers and patients. When targeting HCPs in 2014, the primary marketing channels will focus on meetings, websites, as well as sales materials and representatives.
Regardless of marketing spend, physicians are seen as the most important audience to healthcare companies, followed by payers and patients
18
5%
6%
15%
19%
38%
39%
79%
0% 20% 40% 60% 80% 100%
NGOs/advocacy groups
Pharmacists
Shareholders/investors
Nurse practitioners/physician assistants
Patients/consumers
Payers/managed care
Physicians/specialists
Total Respondents
Q: Regardless of your actual marketing spend, please rank the following audiences according to how important you think they are to your organization and your brands.
Important audiences for marketing (ranked 1st-2nd)
A focus on professional meetings and sales remained the cornerstone of healthcare marketing spend in 2013
19
4%
4%
4%
5%
5%
8%
8%
9%
10%
12%
14%
16%
0% 20% 40% 60%
Search engine optimization/marketing
Social media
Paid digital advertising
Advocacy relations
Public relations (earned media)
Direct marketing
Paid traditional advertising (print, TV, radio)
Websites/micro-sites
Content/materials development
Sales materials
Sales representatives
Professional meetings/conferences
Total Respondents
Q: Overall, what percent of your marketing budget did you spend on the following marketing channels during the last fiscal year (2013)? (Excludes “other”)
Percent of marketing channel spend in 2013
Performance Optimization
21
The pressure to demonstrate ROI is a substantial hurdle to implementing marketing initiatives
75%Agree
Total 2013: $12.9M
Total 2014: $13.5M
57%22%
21%
Increase
Stay the same
Decrease
Year-over-Year
https://www.youtube.com/watch?v=vmoVsbaFrHc Pharma budgets averaged 19.4mm and devices were at 4.2mm – and their budgets remained flat. BIOTECH budgets shot up 28% to 14.7mm Small companies reported an increase in mean total budget to 2.6mm Small companies and non-pharma fared better than medium and big pharma companies (could be patent cliff issues)
22
Marketing spend increases are of note, but come with greater scrutiny
Annual Marketing Spend (mean)**
Total 2013: $12.9M
Total 2014: $13.5M
**Marketing budget only provided by 138 of 202 respondents.
Q: To what extent do you agree or disagree with each of the following statements? (Agree represents strongly/somewhat agree–Top 2 box of 5 pt. scale) / What was the size of your total annual marketing budget for the last fiscal year (2013)? / And what is the size of your total annual marketing budget for the current fiscal year (2014)? / Year-over-year change (increase, decrease, stay the same) calculated
Medium-to-Large Companies
(Revenue $500M+):
$22.2M
Pharmaceutical: $19.4M
Biotech: $14.7M
Devices: $4.2M
Diagnostics: $747K
57%22%
21%
Increase
Stay the same
Decrease
Year-over-Year Organization Type (2014) Organization Size (2014)
The pressure to demonstrate ROI is a substantial hurdle to implementing marketing initiatives
75%Agree
Small Companies
(Revenue <$500M):
$2.9M
23
Compared to last year, many marketers increased their branded communications budgets, while unbranded budgets remained flat
Q: For each of the following, did your marketing budget increase, stay the same, or decrease for the current fiscal year (2014) compared to the last fiscal year (2013)? / How many brands does your marketing budget cover?
BRANDED COMMUNICATIONS UNBRANDED COMMUNICATIONS
Marketing budget shifts from 2013 to 2014
51%36%
13% Increase
Stay the same
Decrease
33%
47%
20% Increase
Stay the same
Decrease
Average number of brands covered under marketing budget (2014)
3.6Mean
24
90%Agree
Much like trends in the utilization of CROs, healthcare companies will continue to look for ways to optimize resources and profitability
Nearly all marketers report that healthcare companies are looking for ways to optimize resources, expecting greater collaboration and integration from agencies. Healthcare companies are looking for greater consultation and collaboration across the marketing service spectrum from its agencies. And 81% feel that marketing service companies must integrate their offerings and become more dynamic to serve the changing needs of the healthcare industry. This is a significant jump from 69% in 2013.
25
57%Agree
65% among mid- to
large-scale companies
Expect their company to consolidate its marketing services (Advertising, Public Relations, Media, etc.) under fewer agencies in the future
45% among small-
cap companies
Much like last year, the majority of marketers expect their companies to consolidate their marketing services, with larger healthcare companies significantly more likely to note this.
26
36%
61%
49%
63%
19%
35%
78%
59%
71%
46%
56%
26%
0%
20%
40%
60%
80%
100%
My company’s preferred partner lists
Recommendations fromothers
Inviting existing partnersto pitch for new work
Industry relationships My company’s procurement services
Consulting reference sources (such as The
PMD and MM&M’s The Agency Issue)
Small Healthcare Companies
Medium-to-Large Healthcare Companies
Identifying Agency Partners
Many marketers leverage existing relationships when searching for agency partners, underscoring the importance of maintaining service satisfaction. Future partner search strategies vary by firm size, with small companies more often leveraging industry relationships, while medium-to-large companies lean more on partner lists and procurement.
27
Industry Outlook
Integration of marketing services will continue to increase
Continuation of trend toward digital marketing and away from traditional
Increasing collaboration across companies in the healthcare industry
Emphasis on value will continue to increase
More than 8 in 10 marketers agree that market service companies must integrate their offerings and become more dynamic to serve the changing healthcare needs of the hc industry – an increase from 69 percent last year.
Healthcare Trend Report Can Be Accessed at:
http://www.ogilvypr.com/en/turning-tides
THANK YOU
212-880-5360