Pharma: Staying Relevant and Profitable In Face of Market Change
It may not be your company’s first thought when considering the changes in healthcare brought by the Affordable Care Act (ACA). More likely, the boardroom buzz is focused on what changes will need to be made to your budget in order to take into account the additional taxes that the legislation will be bringing. Or maybe ACA is a small concern in light of the growing popular dissatisfaction with pharmaceutical companies and the industry in general.
Keeping one’s finger on the pulse of consumer wants and needs — and applying these insights to strategy — can keep a pharmaceuticals company ahead of these waves. For example, many consumers complain about the costs of medicines. Setting aside co-pays and formulary position for a minute, consider the following equation:
Value = Equity & Product Performance
Equity is what your product/service/company stands for in the minds of consumers – the image they have of your offering and how important it is to them. Companies whose products keep taking price increases (or face less expensive, equivalent generic competition) without offering meaningful improvements decrease in value to the consumer. Consumer-preferred innovation, whether in the form of product feature or the services wrapped around it, can maintain or improve the value equation and stay relevant.
Many old policies will no longer be enough to keep your company competitive within the new status quo.
Pharmaceutical companies can, however, answer the needs of the increasingly consumer-driven healthcare market. New, innovative healthcare strategies — strategies that take into account the needs and desires of the consumer — drive revenues while empowering consumers.
Finding the Right Priorities in a Consumer-driven Market
If you’re a pharmaceutical company relying on the industry standard heartwarming tales of biomedical innovation to manage corporate brand equity or market products, it might be time to re-assess your strategy.
No matter what kind of messaging your company has been using — heartwarming biomedical stories or something else altogether — your marketing strategy probably goes something like this:
- Create a campaign that promotes a particular pharmaceutical product/biomedical innovation while staying firmly within a self-defined brand image (i.e. your vision, mission, personality).
- Conduct market testing to gauge reactions.
- Apply consumer insights to tweak the campaign and make it incrementally more effective.
But a consumer-driven marketplace flips this paradigm on its head, and consumer insights become the starting point of marketing campaigns.
Reassess the Priority of Your Top Line.
Your top line growth priorities may look something like this:
- Increase sales of branded drugs to consumers, physicians and institutions (wholesalers, retailers, hospitals)
- Differentiate from competition (through incremental product features versus consumer-meaningful benefit) to prevent commoditization with other companies
- Compete against next-gen products
- Compete against generics
The primary focus is more about making your message heard through reach and frequency than it is about fulfilling a need for your customers.
You’re hunting down revenues.
With consumer insights in the driver’s seat, those priorities once again flip. The focus is on ensuring that your product and its supporting value-added activities fulfill a consumer need (and is branded in such a way). This fuels brand equity and differentiation through a consumer-relevant experience. Revenue growth is the natural outcome.
Looking at the Bottom Line
Only 10% of sales from reported products ($32 bn) came from drugs approved since 2007, and only 48% ($150 bn) from drugs approved during the last 12 years,” says Bernard Munos, Forbes’ top writer on pharmaceutical innovations. “The majority of sales from pharma’s biggest products ($159 bn) comes from drugs approved before 2001.”
Why are they so successful?
Much of it is owed to brand recognition, formulation variations and other life-cycle management tools. Enhancing brand recognition by associating with consumer-meaningful benefits through using consumer insights is key to success — especially in a healthcare system so directed toward cost reduction and driving the least expensive treatment options.
In order to stay competitive, and even improve their bottom line, pharmaceutical companies need to focus their attention on the consumer perspective.
And this perspective — perspectives really — can only be developed through market research that supplies data on the attitudes, behaviors and motivations of the individual health care consumer.
Image credit: wavebreakmediamicro / 123RF Stock Photo