Pharma Voice Niche Busters September 2010

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  • 1. BY ROBIN ROBINSONNICHEBUSTERS vs.BLOCKBUSTER$T Following the science instead ransformation in the industry is every- where, driven by healthcare reform, The Industrys Failed Responses of the money will warrant a increased regulatory scrutiny, patent to a Changing Market expiry cliffs, and thinning pipelines. IMS LISTS FIVE REACTIVE STRATEGIES radical shift in commercialThe old ways of doing anything drug PHARMA COMPANIES HAVE EMPLOYED TOdevelopment, drug research, sales, marketing, model strategies.launch activities, market research are noFIGHT THEIR DECLINING BOTTOM LINE,longer effective and need serious revamping. NONE OF WHICH, ACCORDING TO Enter the nichebuster model a businessparadigm that involves following the science ofANALYSTS, MEET WITH MUCH LONG-TERMa disease to determine where a drug can inter- SUCCESS, FURTHER PROOF THAT Avene along its pathway to create a positive treat- PARADIGM CHANGE IS NEEDED.ment outcome for a smaller population of I ACQUISITIONS: There is no evidence thatpatients. The model isnt new; companies have mergers add value in the long term. been looking to smaller targeted indica- tions, sometimes as added indications Although in the short term companiesDrug for their blockbuster drugs, for morebenefit from removing overlap, funda- companies arethan 10 years. What is new is themental issues remain post merger.recognizing that the industrys increased focus on rein- I REDUCING THE SALESFORCE: Althoughold model is changing and venting its commercial strategies, this was a reasonable method for improv-the change will be for theand the nichebuster model hasgood.moved front and center of this ing investment returns in the short term, focus.its been insufficient to change the unhap-BILL LITTLEDelta Marketing A recent IMS Health specialpy course of P&L trends. report, Understanding New Com-I INVESTING IN PHARMERGING MAR- Dynamicsmercial Models in the Pharmaceutical KETS: The worlds pharmerging markets Industry, shows that the industry has have decidedly strong growth prospects, been trying outmoded methods for buildingrevenue over the past few years with no dis- yet the numbers will not be large enough cernable positive outcome.in the next five years to fill the gap. According to Sydney Clark, VP, practice I RESTRUCTURING THE ORGANIZATION: leader for commercial effectiveness at IMSThis could be a good first move if the goal MarketingHealth, maximizing the efficiency of commer- is to operate against fundamentally differ-cial operations is standard fare for companies will be less aboutent metrics.operating in a difficult economy with bud-Product A vs. Product Bget constraints. Yet, because the biophar-I EMPLOYING A NEW MANAGEMENTand more about where ma world is being upended, creating TEAM: In actuality, what is needed is newdoes the product fit into thecommercial efficiencies is no longer sim- thinking, not necessarily new leadership.overall therapeutic course. ply about managing costs; its about DR. RICHARD VANDERVEERdevising a new commercial model thatSource: IMS Health report, Understanding NewGfK better leverages available or yet-to-be-dis- Commercial Models in the Pharmaceutical Industry.covered approaches to suit the new marketFor more information, visit imshealth.com. reality.32 September 2010 PharmaVOICE

2. PhysiciansNICHEBUSTERSare losing their power, and payers aregaining power, which isThe niche-creating a more competitive buster commerciallandscape with tightermodel will require both regulations and a tougher science and marketing tolaunch environment. align. SYDNEY CLARK GIL BASHE IMS Health Makovsky + Company There will need to be avery considered These attempts fail because they miss the covered a number of indica- approach to balancing the fundamental issue, Mr. Clark says.tions for the treatment of need for rigor vs. market The landscape has changed and the tried- other acute leukemias and research spend. and-true methods do not work, he says. Phar-other disorders there have JULIANA MASTROSERIO ma companies need to operate in a more inte-been four to five additionalJohnson & Johnson grated fashion with more internal coordinationindications outside of the oncolo- instead of looking at their commercial model in gy area and some of these turned isolation or making changes piecemeal. out to be bigger than people expected. Developing a new commercial model is oneThey are all considered niche indications but component of what should be a very broad andwere sequentially built out of that one pro- coordinated response that includes R&D port-gram. folio management, pharmerging market pres- ence, and overreaching business models. The Impact of the New Paradigm The shift will not be made quickly, howev- er, says Sushiel Keswani, executive director, on Commercial Activity advisory services, life sciences customer The industry is in the early stages of inves- domain, for Ernst & Young Advisory Services.tigating new commercial models to meet thecally change the playing field as the value Companies will have to maintain their cur- needs of the emerging nichebuster environ-proposition moves from developing drugs to rent course for a while, because niche marketsment. With new market realities coming into delivering healthy outcomes. require new capabilities and new services and,play, changes will have to be made, and somePayers, with respect to reimbursements, most importantly, new ways to secure reim-of them may be drastic, our experts say.will be in the driver seat, not physicians, says bursement, he says. A major shift requires aAccording to IMS Health, in less than fiveMr. Keswani. Reimbursement will become long-term strategy and those companies that years, companies in the mature markets will bethe key driver for success in the niche mar- have the coffers will invest first, and once they forced to evolve their commercial practices inket. realize the value, more will follow. But even fundamental ways. Our experts discuss how Companies that adopt a nichebuster model then, the shift will not be from one model to companies can be prepared for transformations will have to prepare for a major paradigm shift another, but more of a hybrid of the two.in marketing and sales, market research, andthat involves proving comparative effective- According to Trevor Mundel, global head ofthe need to develop relationships with payers.ness and healthy outcomes to payers and man- development at Novartis, the nichebusteraged care organizations that their drugs should model has emerged, in some ways, uninten- PAYERSbe the preferred therapies on formularies. Mr. tionally, stemming from researchers following The single biggest change facing the indus- Keswani says pharma companies will also need disease pathways of established indications and try is the shift of power to payers from physi- to build new capabilities and learn how to discovering smaller indications that fulfillcians. As payers become the gatekeepers for negotiate the reimbursement landscape. unmet needs of a smaller, targeted population.determining which drugs reach patients, com-Another challenge to this new model will He cites, for example, Novartis Gleevec, panies will need to target sales and marketingbe the need to prove the value of one drug over which started out as a niche drug and then with efforts accordingly.its competition. further testing, was found to treat other indica- According to the Ernst & Young report,Proving comparative effectiveness requires tions both in and out of the leukemia family of Progressions, Pharma 3.0, sales strategies will having mechanisms and capabilities in place to diseases. Gleevec was first approved in 2001 fortarget payers rather than prescribing doctors measure outcomes, and that is a major chal- adult and pediatric chronic myelogenous and pharma companies will focus on compara- lenge for pharma, Mr. Keswani says. leukemia (CML) and for the treatment of a raretive research to generate data specifically for As a result of comparative effectiveness, the form of cancer called gastrointestinal stromalthat purpose. In the report, Ernst & Youngniche model is going to require a focused effort tumor (GIST). refers to the emerging commercial model as thenot only on what population to target but what This was a niche population at the time,healthy outcomes model driven by healthcare population not to target. Mr. Mundel says. When we started that pro- reform, demographics, personalized medicine,Companies will need more data to prove gram for CML there were only about 30,000 health information technology, and the rise ofclinical and economic value of their drugs and patients; this is a very targeted group. We dis-the superconsumer. All these factors will radi- the decision-making becomes more complicat- PharmaVOICE September 201033 3. The industry is struggling with thehurdles of theharmonious marriage ofscience and money.The old model that TREVOR MUNDELserved the industry soNovartis well for 20 years isnt working today and new opportunities need to beevaluated. HARRIS KAPLANHealogix ed, Mr. Clark of IMS Health says. Pharma concepts, journal Marketers will have to identify where a companies need to make these decisions early onads, sales messaging, product fits in an overall treatment program in the process and they need to make sure theyand other traditional sales communicationand what to offer physicians to show which have the data to convince stakeholders that the methods will likely need to evolve to be a morepatients are best suited for the product and how drug will be differentiated in the marketplace.clinically oriented strategic partner.they will benefit. According to Bill Little, president of DeltaGil Bashe, executive VP at Makovsky +Make my product the No. 1 selection for Marketing Dynamics, federal and state legisla-Company, says such a model will require sci- hypertension is old speak, Dr. Vanderveer says. tors are going to shape what the industry isence and marketing to align. In the block- We are headed into an era of outcomes data able to do in terms of sales and marketing, sobuster model, science is very separate from thethat will identify the patients best suited for the as a result, companies will start moving toward marketing side of the business, however, treatment and how the treatment will make the a value-based comparative effectiveness model.nichebusters require a different set of skills overall therapy efficient and effective. Drug companies are recognizing that theand a different type of organization where sci- old model is changing and will change for ence, advocacy, policy, and reimbursement areSALES good, Mr. Little says. Companies will be mov- more important than the physical aspects ofAs the paradigm shift moves through the ing from a blockbuster model into a nichebuster traditional marketing, he says.different sectors, traditional sales models will model, because its better to own a space with aConsumers are very wired into patient and also be impacted. smaller population of patients than to add onephysician networks and have become veryIn my opinion, salesforces will likely con- more product to a large mature market withsavvy, so patient-access programs become tinue to be cut back, Ms. Mastroserio says. many other brands. much more important from the moment theThose sales reps who remain will need to product is launched, Mr. Bashe says.become more specialized as their customers MARKETING There will be a need for stronger market-change. Whether a product is adopted is more Marketing efforts will become more target-ing staff on the reimbursement end to deal likely to become the province of payers rather ed and the focus will shift from the product to with both private and government payers. than physicians. Physicians may be required to the overall health of the patient, our experts say. Advertising for these products may becomeseek product education through other means There is a move toward personalizedless important in the marketing mix over the rather than through a traditional sales rep. medicine, driven by payers unwillingness tolong term, but digital communications, edu-The cutbacks in salesforces over the past fund branded pharmaceuticals uniformly across cation, ongoing science, and scientificfew years are examples of the industry trying to all patients, says Harris Kaplan, president andexchange will become much more important.adjust to a new paradigm without making CEO of Healogix. As a result, product mar- Advocacy is also important and compa- fundamental changes, Dr. Vanderveer says. keters need to be prepared to narrow their focus, nies will have to make sure patients have a lis- The role of the sales rep needs a major rethink- which means the old marketing model thattening post, Mr. Bashe says.ing, not a modification. served the industry so well for 20 years wontOther changes in marketing strategy will Reducing salesforce numbers by 10% is work very well in the future, and new opportu-include a shift to providing services, such as tweaking the model, but that doesnt get to nities need to be evaluated in the context of a compliance programs, as part of a holistic the root issue, Dr. Vanderveer says. world where payers often hold the keys to the treatment program as opposed to just selling a Changing the role of pharma sales reps kingdom. bottle of pills, says Richard Vanderveer, Ph.D., would be what he calls disruptive change and Juliana Mastroserio, senior manager of mar- CEO of GfK Healthcare. most people are resistant to that much change. keting research at Johnson & Johnson, has onlyMarketing will be less about Product A vs.When we talk about changing to a com- worked on products intended for large patient Product B and become more about determin-pletely new paradigm, there is a tremendous markets and a broad physician base of support,ing where a product fits in the overall thera- temptation to cling to the here and now but she expects the industry to start movingpeutic course and what else should be done inbecause it is the known, Dr. Vanderveer says. toward niche marketing, as fewer drugs areterms of patient compliance programs and toHowever, disruptive change is what it will likely to achieve the billion-dollar plus status. support the product, Dr. Vanderveer says. take to revamp the sales role of the future. The Successful companies will learn how to There is a tremendous opportunity to expand industry has reduced the numbers, but the reps become more nimble, make decisions faster,beyond a bottle of pills into a complete treat-are still doing the same thing. We have not and adopt different marketing strategies andment program and by using in-depth spent any time thinking about what it is that tactics, Ms. Mastroserio says. Advertisingexploratory market research; the industry canthe rep of 2011 and beyond should be doing. agencies accustomed to producing ad/visual aidcreate a very different business model. Mr. Kaplan from Healogix agrees. The rea-34Se...