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Pharma Marketing Survey

eyeforpharma on-line survey canvassing sales & marketing executives

from across the Pharma & Biotech market in Australia

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Introduction

eyeforpharma canvassed a broad cross section of senior executives from throughout the

Australian pharma and biotech industry to ask their opinions regarding several marketing

issues. The audiences responses were captured electronically and a detailed analysis of

these are presented in this report (by audience role where applicable). The analysis and

report have been undertaken by Vedere Group.

Questions Covered

Which marketing initiatives are receiving the highest priority of individuals’ time?

Which marketing initiatives are receiving the highest priority in terms of spend?

How sustainable is the current sales & marketing model in pharma?

Does the Code of Conduct impact marketing innovation for pharmaceutical companies?

How well do companies apply eMarketing and Social Media concepts in our industry?

Do sales and marketing need to communicate better with each other in order to become more customer centric?

Can pharma in Australia learn from case studies and experience from other industries?

How far have organisations gone in the implementation of Key Account Management (KAM)?

What benefits are seen from KAM initiatives?

Is our industry using social marketing tools?

Which areas of innovation and development are of most interest for pharma?

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Executive Summary

The survey was conducted by Vedere Group on behalf of Izzy Wakeling of eyeforpharma. Survey

participants were invited to complete the online questionnaire by eyeforpharma via email in

November 2009. 76 pharma and biotech respondents, representing 27 companies agreed to

participate and completed the survey. Respondents represented a broad range of functions and

companies, including sales and marketing line management, product management, commercial

effectiveness, business analytics, sales force effectiveness and training managers.

Several trends were identified in the analysis of results including:

1. While there is recognition the Pharma industry needs new sales and marketing models current spending patterns supports business as usual in the majority of companies surveyed

2. Social media, while dominating development of communication in consumer markets such as media, IT, FMCG is not yet a priority in Pharma

3. Personal social media habits in Pharma do not reflect general consumer norms

4. Key Account Management is not uniformly implemented, or utilised by pharma or biotech companies in Australia

5. Companies are balancing priority spend in key areas such as Medical Education and product

launch maximisation with business processes such as analysis and reporting.

6. Company management is allocating investment for potential solutions but there may be a disconnect between functions responsible for this expense (SFE, Business Analytics, Commercial Effectiveness) and Sales and Marketing Management

The results of this research have several important implications for pharma and biotech management and staff. First among these is the observation that a dichotomy may exist in pharma and biotech organizations, whereby the analysis and strategic development of new sales and marketing business models is not receiving an adequate level of internal attention and resources within companies. If this gap exists and goes unrecognized then it is the opinion of the study authors that significant inefficiencies will be created with organizations leading to a loss of competitive advantage and decreased profitability. The second important observation is that pharma and biotech companies are not prioritizing use or investment in social media tools. This demographic and business observation may point to a fundamental difference in the dynamics of healthcare sales and marketing, or is diagnostic of a failure by the industry to adequately invest and understand the new channel opportunities for consumers and medical professionals such as social media.

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Survey Results

Breakdown of respondents by Role

76 respondents were included in the survey analysis, representing 27 companies.

Respondents represented a broad cross section of roles as seen in the graph below.

The vast majority of respondents that were included in the analysis are Sales & Marketing Directors,

Business Unit Directors, Product Managers, Business Intelligence/ Commercial Effectiveness

Managers, Sales Directors, National Sales Managers, SFE Managers and Marketing Strategy Analysts.

Given the absolute number of respondents and the relevance of their roles to marketing and sales in

the pharmaceutical sector, this makes the results of this survey highly relevant.

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Respondent Environmental Overview

In which Environments do you sell and market your products?

Number of respondents by environment

Hospital

71

Payer/ Insurer

25

Primary Care

57

Pharmacy

58

% of respondents

93%

32%

75%

76%

The proposition posed to survey participants “The current sales & marketing model in pharma is

unsustainable and things need to change” received one of the clearest preferences in this research

with 72% of respondents either agreeing, or strongly agreeing with the statement.

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88% of respondents agreed or strongly agreed with the statement “In order to become more

customer-centric, sales and marketing need to communicate better with each other”

76% of respondents agreed or strongly agreed with the statement “The pharma industry in Australia

could learn a lot from case studies and experience from other industries such as the financial sector”

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The responses for “The Code of Conduct stifles marketing innovation for pharmaceutical companies”

follow a far from obvious distribution. With the exception of product managers, whom agreed or

strongly agreed with the proposition, the majority of respondents appear to have a more even

distribution across the categories. In the absence of more data it is difficult to speculate on the

drivers of this result and instead suggest that further dialogue and discussion may be warranted.

Priority areas for knowledge and information were Profiling & Segmentation, Customer Satisfaction,

Marketing Analytics and Key Account Management. Secondary areas were Social Marketing, Patient

Support Programmes, eMarketing and Marketing in Specialty Care with Medical Education, Code of

Conduct Compliance and Pharmacy Promotions the lowest priority for new information based on

responses.

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Respondents reported a preference for “Medical Education- Events”, “Maximising Product

Launches” and “Analysis and reporting of Rep performance & KPI Achievement” as the highest spend

areas. Conversely “Social Marketing”, “Minimising the impact from Generics” and “Pharmacy

Promotions” were the lowest spend categories reported by participants. Given the commercial

importance of social media in the general community and in a number of key industries, this result is

interesting and may warrant further research to determine if it is indicative of a natural

conservatism of industry managers, or is more reflective of a slower uptake of social trends by the

industry’s customers and consumers.

Budget Allocation by Category and Function

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Minimising the impact of generics was seen as the lowest spend category by almost all respondents,

with the possible exception of product managers. This may reflect the product life cycle of brands

managed by respondents, with product managers responsible for early stage brands traditionally

prioritizing spend in line with different requirements from product managers with more mature

brands.

Patient support programmes received one of the highest priorities for company spend by Sales and

Marketing directors, somewhat in contrast to other functional groups in the survey. Potentially this

may reflect a lack of visibility in costs associated with patient support programmes and/ or are an

indication that these programmes are not optimally leveraging internal functional resources.

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Overall measurement and understanding of channel effectiveness was not seen as priority expense

categories compared with our highest spend areas. This is a not unusual result for the pharma

industry; however it does, once again run against the norms for other industries. With the emerging

awareness of the need for new sales and marketing models, measurement of company channel

effectiveness may provide important insights around costs and performance opportunities for

pharma companies.

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Analysis and Reporting of Brand Performance & KPI achievement was the fourth highest category of

spend in this research, followed immediately by Analysis & Reporting of Rep Performance & KPI

achievement. Interestingly this result is not driven primarily by Sales and Marketing Directors or

Product managers, those roles charged with delivering brand performance. While the industry has

up resourced its brand analysis and reporting capabilities this does position a question that

companies may wish to consider. If analysis and reporting is now the third & fourth highest cost

category for sales and marketing in Pharma, are our sales and marketing managers utilising the tools

and resources at a comparable level?

In contrast to the analysis and reporting categories “Medical Education – Events” identification as

the highest cost activity on a weighted average score was driven by Sales and Marketing Directors,

Product Managers and National Sales Managers. This probably reflects the increasing importance of

medical education as a pharma activity, in an environment where options for promotional activities

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have become more limited under the MA Code of Conduct. It is also consistent with previous

industry research and publications which have identified medical education as a key cost and benefit

of industry activity in Australia.

eDetailing and eMarketing were not reported as high cost categories in this study.

Social Marketing was not reported as a high cost category in this study.

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48% of respondents agreed, or strongly agreed with the statement “My company does not

understand how to apply eMarketing and Social Media concepts in our business”. A further 20%

responded neutrally to this statement.

Pharmacy promotion was not reported as a high cost category in this study.

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Identifying and developing marketing talent was not reported as a high cost category in this study.

The need for more competitive and cost effective sales and marketing business models is a

recognised need in the industry. Once again we appear to see a discrepancy between where the

cost of the industry’s activities is being recognised and the line functions that would be expected to

be responsible for implementation. Refining sales and marketing business models was reported as

the 5th highest cost category, driven primarily by business intelligence managers, commercial

effectiveness and sales force effectiveness managers.

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Key Account Management tools & strategies was reported as the 7th highest spend category

Campaign management tools were reported as the 8th highest spend category, driven primarily by

product managers.

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While the 2nd highest spend category in this research was driven by responses across the majority of

roles, it was interesting to see that Sales & Marketing Directors saw this almost universally as the

highest spend area. With the number of new product launches at relatively low levels vs. 5 and 10

years ago this may indicate a highly polarised result, indicating not just the cost of new product

launches, but the high expectations across the industry for new product driven growth.

Key Account Management Questions

23% of respondents have KAM as a well established part of everything they do, with 57%

implementing for several years with some progress, or have started implementing it.

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86% of respondents believe “improved knowledge of Account based customers” to be a relevant or

highly relevant benefit of KAM.

69% of respondents believe “More effective selling to long complex buying processes” to be a

relevant or highly relevant benefit of KAM.

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Bundled cross-portfolio price/ volume negotiations were not seen as a clear benefit of KAM

56% of respondents believe “Better coordination of multiple roles with multiple customers” to be a

relevant or highly relevant benefit of KAM.

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75% of respondents believe “An improved value proposition that goes beyond product features and

benefits” to be a relevant or highly relevant benefit of KAM.

71% of respondents believe “A true partnership with key customers. Co-developed strategy” to be a

relevant or highly relevant benefit of KAM.

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Social Media Utilisation Questions

75% of respondents do not use BLOGS as a sales or marketing tool in their business

64% of respondents do not use medical professional Social Networks as a sales or marketing tool in

their business

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64% of respondents do not use patient Social Networks as a sales or marketing tool in their business

23% of respondents do not use Patient Websites as a sales or marketing tool in their business

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Does personal use reflect professional use of social media? While 40% of respondents occasionally

or actively use Facebook, the majority of respondents are passive or non-users of Facebook

Does personal use reflect professional use of social media? While 14% of respondents occasionally

or actively use Twitter, the majority of respondents are passive or non-users of Twitter.

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Does personal use reflect professional use of social media? While 14% of respondents occasionally

or actively use Youtube, the majority of respondents are passive or non-users

Does personal use reflect professional use of social media? While 9% of respondents occasionally or

actively use BLOGS, the majority of respondents are passive or non-users

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LinkedIn was the only social media site which respondents occasionally or actively use. Additional

data for this was not collected however future research on social media in pharma may wish to

explore this further.

The majority of respondents are passive or non-users of Wikis.

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The majority of respondents are passive or non-users of MySpace.

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Conclusions

New sales and marketing models Based on the study results it appears a dichotomy may exist in pharma and biotech organizations. The results of company spend analysis suggest that priority of spend on development of new sales and marketing business models is highest in non line sales and marketing management functions within companies. This is in contrast to the priority expenditure by Sales and Marketing Directors, Product Mangers and Sales management in the “business as usual” areas of Medical Education, Maximising Product Launch performance and Rep and Brand Performance. How significant a gap exists will undoubtedly vary across companies based, potentially, on a multitude of factors. If a gap does exist and is unrecognised then it is the opinion of the study authors that, based on historical analyses of poor internal alignment of priorities and communication, significant inefficiencies will be created with organisations leading to a loss of competitive advantage and decreased profitability.

Key Account Management Implementation There was significant variance in respondent selections in our Key Account Management analysis. While this variance could be due to varying degrees of product and sales model specialisation it came as somewhat of a surprise to the authors that only 23% of respondents believe KAM is “well established and part of everything we do”. This may, in part, be explained by the primary perceived benefit “improved knowledge of Account based customers”. While the authors do not question improved customer knowledge as a benefit, the lack of a directly measurable bottom or top line sales association for this type of perceived outcome may be leading companies to under prioritise KAM initiatives. The study authors would encourage the remaining 77% industry managers and leaders to review their current KAM business strategies, in particular how success is defined and measured.

Social Media That the disparity between personal respondent use of social media, and the general population data on utilisation, should be so great was potentially one of the most interesting findings of this study. If this is driving, or is driven by, the lack of pharma and biotech company investment in social media tools was not included in the scope of the research. Therefore whether this result points to a fundamental difference in the dynamics of healthcare sales and marketing, or is diagnostic of a failure by the industry to adequately invest and understand the new channel opportunities for consumers and medical professionals such as social media cannot be answered at this stage.

Given that, ultimately, all technology trends have significantly impacted the healthcare market it can

be assumed that consumer and professional use of social media will become a factor which will need

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to be understood by the healthcare market. What position should be taken in pharma and biotech

sales and marketing strategies may be unclear at this stage, however the current lack of utilisation

and investment prioritisation can probably be defined as a potential issue for marketers.

About the Authors

The authors of this study were Daniel Bacon and David Ledger of Vedere Group. Daniel and David

have had more than 40 years experience in sales and marketing in the pharmaceutical and biotech

industry, working both here in Australia as well as Europe and North America. They have specialised

in helping companies identify performance variance in sales and marketing and have been

responsible for multiple brand launches, defences and turn around business performances.

Daniel Bacon has worked for Janssen-Cilag, Novartis and Allergan in senior Australian,

Global and European Sales and Marketing roles before joining the Vedere Group in 2008

as a consultant. Daniel has been responsible for the development of Vedere Group’s

territory and sales management business planning processes and involved in the

ongoing development of Vedere Group’s industry leading reporting tools.

David Ledger is Managing Director and founder of Vedere Group. David has consulted

with a number of the top 10 global pharma companies in Australasia, Asia, Japan,

Europe and North America over the last 10 years. David’s background includes senior

sales and marketing roles within Pharma, including global head of sales & marketing

strategy for Boehringer Ingelheim, based in Germany.

If you would like to arrange a detailed presentation of the results of this survey, please contact

Vedere Group via freephone (1800 129 688) or email (contactus@vedere-group.com).

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Vedere Group help clients measure,

monitor and manage sales and marketing

performance to drive revenue and

profitability.

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To arrange a demonstration or further information about PREO™ Reporting Suite, Situation

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Freephone: 1800 129 688

Email: contactus@vedere-group.com

Or visit our website www.vedere-group.com

eyeforpharma provides analysis of cutting edge pharmaceutical business strategies via a free

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At eyeforpharma conferences, participants can meet face-to-face with senior level industry

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More information: www.eyeforpharma.com

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Upcoming eyeforpharma events in Australia

Marketing Excellence & Analytics Conference for Pharma

27-28th April, Sydney

www.eyeforpharma.com/au-marketing

Speakers include:

Ian Thompson, Managing Director, Amgen

Allan Dick, Business Unit Director, Sanofi-aventis

James Price, Marketing Director, Pfizer

Donna Edman, Executive Director, Public Affairs, Medicines Australia

….Plus many more

You can save $100 if you quote “Report” as your discount code.

Sales Excellence & Business Intelligence Conference for Pharma

First week of September 2010, Sydney

www.eyeforpharma.com/au

If you want any more information about eyeforpharma events, contact Izzy Wakeling on +61

(0) 3 9938 1202 or at iwakeling@eyeforpharma.com

More information: www.eyeforpharma.com