Not very surprisingly, the results indicate that in companies in which executives report robust marketing processes and the corresponding functional capabilities, performance is just around the corner. But… the majority of responders did report that in the majority of cases, there’s room for very substantial improvement. And the areas of improvement span the entire marketing cycle, from the assessment of opportunities (especially in terms of generating relevant insights), to strategy design and to subsequent implementation. The article isn’t mentioning much regarding the measurement of performance… But one has to assume that should the opportunity analysis be in need to be perfected, the executives who report that state of affairs would also admit that their tracking of performance is suboptimal.
It is very striking – and most certainly very frustrating for people whose job is to embody the “science of the market” – to read that most companies underspend on generating insights, whether though market research all the way to web analytics, and mining the company’s CRM system, and in recruiting or developing the right talent.
That should lead any senior leader to as a crucial question:
“Has marketing demonstrated its value? Is there a need for a marketing value proposition in these companies?”
I’d posit that the answer is positive, and I’ll be demonstrating how, in the specific case of life science companies.
“Also, the McKinsey report indicates that marketing is only haphazardly connected with the other functions, with unclear plans and responsibilities for the delivery of marketing initiatives…”
That simple insight should lead to question the contribution of a number of other internal stakeholders, from senior management to human resources. Without delving too much into technical details, let me use a simple medical analogy to illustrate the point.
“Would you survive for long if your ears and eyes were only informally and intermittently connected with your brain? And if your brain was not sending clear instructions to your limbs and wasn’t receiving consistent and reliable signals about their movements and interactions with the outside world?””
In a protected environment such as a dedicated medical facility, you would stand decent odds of surviving. But what if you were in a wilder, generally hostile environment, fighting for your survival? Well, that’s precisely the kind of environment that the companies live into. It’s called competition!
How about marketing in the life science industry?
Some external observers would argue that most marketers in the pharma world live a cozy, pampered life… And in some respects, that perception can be explained by the fact that marketing of life science products is extremely peculiar as I’ll be describing in the following lines.
When it comes to analyzing opportunities, the life science world is one of the richest in terms of data. There’s generally an abundance of published information about medical needs and current consumption, existing products, as well as about compounds under development. Life science companies need a robust news flow underscoring the value of their assets and publish clinical results as they become available. As a consequence, any incumbent is seeing its future challengers coming from a long distance, and well ahead of actual launch.
In addition, several companies provide all sorts of data to analyze physician populations and behavior, patient attitudes, payers expectations, promotional investment…All of these are supplemented by a host of ad hoc market research to fine-tune the analysis and get more precise insights.
Overall, should there be an issue with the analysis of the opportunities for life science companies, it is not due to a dearth of data; therefore, one should look at the next building blocks of the marketing cycle, namely strategy design, and execution.
For life science companies, the design of the strategy is largely funnelled by the scientific and medical reality which crystallizes as the pre-clinical and clinical data become available, defining the actual product and its fit with the medical need, its role in care procurement and the amount of disruption that it will induce from the medical, economic and social perspectives.
In other words – and contrary to a number of other industries in which the market can be expanded – for the most part the life science products have a well delineated market opportunity and in the absence of additional indications (opening the access to new patient groups), the strategy rests on two main pillars: maximizing the value of the product in its eligible market, and minimizing usage in other segments in which the product has not been thoroughly tested and approved, so as to limit the risks linked to unexpected adverse events.
The strategy is designed so as to maximize patient centricity (remember, a well-defined patient, as much as possible), to focus on delivering the health outcomes negotiated with and agreed upon by the authorities and to partnering with the various stakeholders to deliver those outcomes. Customer centricity up to the active engagement of the patient has a varying degree of importance depending on the disease type and the approach to care. For instance, it is much more critical in the management of breast cancer, diabetes or depression, than in renal dialysis (due to the weight of the strict protocols in the management of the patient) or Alzheimer (for obvious reasons…).
The purists will excuse this deliberately concise section on strategy. It is true that identifying the levers and the supportive initiatives to these two pillars requires a lot of strategic thinking and is no easy task. Yet the purpose of the present paper is to focus on the execution component.
Life Science Marketing Execution: a limited and constrained tool kit.
When it comes to executing marketing strategy, most cynical observers would be better advised to take a step back and to take their hat off to pharma marketers, since their scope of intervention is much narrower than that of their counterparts in the other industries. Thus, they have to generate value with less levers, which they therefore have to use more effectively.
In reality, most pharma marketers cannot grow a practical knowledge of many marketing variables from their professional experience, but rather from studying the text books. Picture this, along the lines of the famous 4P’s described by Kotler a while ago (and still revered by marketers of all stripes)…
Product: in life sciences, it changes rarely, if at all… On average, companies that have a productive R&D launch a new product every year or two, based on a clinical dossier that took many years to build (and during this time, many a drug candidate fails and ends up in the cemetery of R&D). Any new indication (remember my earlier point? This is the key to expand the market size) requires some additional clinical development, and even a new presentation requires some data bridging the original dossier to be registered by the authorities. Arguably, the medical device and diagnostics industry is facing less regulatory hurdles to launch a new product, yet product innovation is not coming out at the pace experienced by the consumer goods industry.
“Because products are so rare, they are treasured and jealously guarded… There’s no tampering with the jewels. Let’s imagine that De Beers was unearthing only one or two Kho-Hi-Noor per year, and none of the smaller diamonds. The annual finds would be escorted by entire armies!”
Place: the distribution of life science products is almost entirely controlled by professional wholesalers, who master all the technical, regulatory and logistical capabilities to handle all sorts of pharmaceutical products, irrespective of their storage requirements. And the dispensing is taking place in duly licensed pharmacies, or in hospitals having all the relevant control mechanisms in place. Not much of a playground for marketers, except in very rare and specific cases, such as hospital products on the one end of the spectrum, and OTC products at the other… Besides, distribution represents a minuscule percentage of the P&L of life science products; therefore it isn’t a variable of the mix offering lots of potential leverage.
“As an exception to the above, the European Union represents an opportunity for marketers to show their prowess when it comes to managing parallel trade in the case of products with high prices and wide price differences between member states.”
Price: on that dimension, marketers can start to flex their muscles since all markets are not even. In the US, a company can set the price of its product freely, and a combination of the output of the health economic model, the laws of competition and the negotiations with health plans result in the final “average” selling price and in pull-though. The limits to this free pricing approach are currently being tested, as indicated by the uproar in late 2012 over the price of some oncology products, and more recently in 2014 with that of a novel treatment against hepatitis C. The US payers are increasingly reluctant to pay steep prices for innovative products and they demand a more realistic balance between cost and effectiveness, which is pretty much what the system has been organized to deliver for many years in the Old Continent…
As a matter of fact, most European countries have a centralized, government-controlled pricing authority (since the largest payer in these countries is precisely the state) or at least a Health Technology Assessment (HTA) body which issues recommendations that often have an impact well beyond the national borders as it is taken as a reference by other countries (see for instance the NICE in the UK). As a consequence, price is, well, not really a marketing variable! That state of affairs has spawned the emergence of dedicated staff to take care of these questions of market access, based on outcomes research and economic modelling to support the negotiations with the payers. And these can be very complex and vary a great deal between countries, depending on the relative role of public provision and public insurance versus that of market mechanisms, as well as the existence of gate-keeping mechanisms, of limitations in the choice of providers, and in the procurement of basic coverage by public versus private insurance.
That leaves the pharma marketing team with only one variable to play with… Promotion!
But this is an incredibly rich and evolving variable of the mix, since the patient flow is increasingly fragmented and we’re witnessing the emergence of stakeholders playing a role in disease prevention and diagnosis, as well as treatment prescription and patient adherence. In a market which is evolving towards patient centricity and where authorities and payers are demanding specific health outcomes, customer experience – and that includes the patient, but also all the relevant stakeholders along the care procurement chain which supports the patient journey – listening and co-creating have become an integral part of the marketing armamentarium, as well as innovative partnerships.
As the patient flow is getting more complex, it is worth noting that it’s evolving from a discrete series of encounters with the traditional places of care procurement (doctors’ practices, hospitals) to a seamless world that has invaded the private spaces of the patients, evidently their homes and their families, but also their social networks. This trend has been accompanied by the rise of the patient as a “responsible partner” of its own health, making it the central piece of the marketing promotion chess board.
That same trend is both enhanced and compounded by the explosion of media solutions, from the traditional to the digital – and more or less personalized – ones, offering uniquely complex opportunities for emitting tailored messaging and for capturing meaningful and actionable insights.
The life science marketers have therefore had to develop a unique set of skills to provide innovative services around well-defined products along the fragmented patient flows, to master the flow of quality information from multiple sources and across a wide array of media, to partner with stakeholders towards managing patient population to deliver expected outcomes, to navigate the complex steeple-chase of healthcare arbitrage and trade-offs and to build lasting trust and rapport with their ecosystem.
I do not know how many life science marketers responded to the Mc Kinsey survey. A subgroup analysis is warranted, as there are likely differences across industries, explained by their idiosyncrasies, resulting in differences in the robustness of the marketing processes as well as in the skills profile of the marketers.