Post on 07-Jul-2018
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Pharmaceutical Marketing in Turbulent Times -
Developing innovative approachesto face new challenges
Vienna, 7 November, 2011
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Current context and challenges
Demand for healthcare is rising
Aging population, increase of chronic diseases
New diseases and growth of existing diseases
Increased expenditure on healthcare
Demands for increased level of care at a lower cost
Increased regulatory control and price pressure
Decreasing R&D productivity
Continued penetration of generics
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Trends
Shift in decision-making power and influence
transfer of decision-making authority from doctors to policy-makers andpayers
Shift in healthcare roles
primary care, secondary care and patient self-care and this will lead to ashift in needs
Shift in public healthcare focus
from palliative care to preventative care and compliance (vaccines,health management)
Shift in geographic focus
developing markets will be the growth drivers in the coming years
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Trends
Shift in the Sales and Marketing model
the traditional model is becoming obsolete
Shift in portfolio focus
from blockbusters to specialised medicine
Shift in the pricing model
value-based pricing/performance-based pricing using outcomes data
Shift in the way Pharma engages with the customer
from one-way “push” communication with a narrow customer focus to atwo-way “dialogue” with a wide range of stakeholders
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What must the Pharma industry do?
Innovate in everything we do!
What will this require? A radical change in mindset
How we define the market boundaries
How we define who our customers are
How we define our value-chain
How we organise ourselves
How we work
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Value Innovation
What is it?
What does it mean?
Why has it not been a focal point for pharma in the past?
Industry too rich
Narrow mind-set
Why is it relevant now?
Revenue streams are shrinking Increased competition
Past business models and commercial practices are no longer relevant
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What do these companies from different sectors
have in common?
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http://e/http://www.starbucks.co.jp/index.htm
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8What are Value Innovators doing?
1. They reconstruct market boundaries Especially barriers in mindset
2. They expand beyond existing demand A superior understanding of customers, dissatisfied customers ,
and non-customers
3. They break the Value-Cost trade-off Creating superior value at a lower price
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Breaking the Value-Cost Trade-off
Source: ‘Blue Ocean Strategy’, Chan Kim, Renee Mauborgne; Harvard Business School Press, 2005
Careful...decreasing Costsdoes not mean decreasingPrice!
Decrease
Unnecessary
Costs
IncreaseBuyer
Value
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1
0
The mindset challenge is to learn and unlearn
Innovation is not only about finding the new idea
It is about getting rid of the old idea
Which one is more difficult?
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Blue Ocean Strategy
Based on the book “Blue Ocean Strategy” by ChanKim and Renée Mauborgne, INSEAD Professors
Published in 2005 by HBS Press
#1 worldwide business book bestseller
Over 30 local translations
Based on a study of 100+ companies over a 10 yearperiod
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Why seek Blue Oceans?
Launches within Red Oceans(line extensions, etc)
Launches Creating Blue Oceans
Total Launches 86% 14%
Revenue Impact 62% 38%
Profit Impact 39% 61%
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Business launches of 108 companies
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Red Ocean Strategy
Compete in existing market space
Benchmark and beat the competition
Exploit existing demand
Make the value-cost trade-off
Choose differentiation OR low cost
Blue Ocean: a new approach to innovation
Source: Kim and Mauborgne, “Value Innovation”, Harvard Business Review, 1997
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Blue Ocean Strategy
Create new market space
Make the competition irrelevant
Create and capture new demand
Break the value-cost trade-off
Choose differentiation AND low cost
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Applying Blue Ocean Strategy to Pharma: CSFs
The BOS methodology is very flexible and can be applied to almostany aspect of business activities
But, to be successful, there are two main requirements Aradical change in mind-set
Change in vision of healthcare structure, stakeholders, competitors and theinternal organisation
A company-wide commitment to innovation
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Pharma Innovation examples
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Innovation example 1:
Implementing a patient-focused culture
Innovation example 2: Digital Technologies and the Use of Social Media Networks –
revolutionising pharma communications
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Implementing a patient-focused culture
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Orphan drug company founded in 1992, headquarted in Cheshire, CT One drug on the market: Soliris (Eculizumab) with several indications:
Initial indication: PNH (rare hematologic disorder), launched in 2007
New indication: Hemolitic-uremic syndrome, launched in 2011
Several additional indications currently being investigated Seen as one of the most striking biotech success stories in recent years by many
industry analysts
The company decided to develop its own full-fledge pharma operation (vs
partnering with established companies) in order to fully control the quality ofthe product, process & relationship
The company’s focus, as driven by the Founder /CEO Lenny Bell, is on each
single patient
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The recipe for success?
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The company has been tremendously successful: formal launch in 2007 (FDA approval in March and EMA approval in June), Alexion
revenues reached $541mn in 2010, with $97mn in net income, and 800 employees
The company’s stock (ALXN) listed on the NASDAQ has skyrocketed.
The company’s market cap is currently in excess of $12bn,
Alexion's 2011 full year revenue guidance has been revised upwardbased on Q3 2011 results, to the range of $770 to $775mn:40% growth over 2010
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In order to mobilize the entire organization, you
have to realize first the Value of each Patient
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What is the Value of a Patient to the company?
In the example of Alexion, parameters of the equation may include The price of Soliris: around 400.000 $ / patient / year*
If for example, the average duration of the relationship with each patient = 10
years (fictitious estimate), even with discounted cash flows and the projectedincidence of price renegotiations in several countries, it clearly appears that theValue of a Patient to the company amounts to several million dollars
If you fully realise this fact, you will then be able to ensure a “VIP”
service level for the Patients and quality in everything your teamdoes
*source: Forbes magazine, 2010
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Single-patient focused culture: what does it mean
in practice?
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The company has to develop targeting at patient level. The commercialprocess is centred around the patient: Patient identification is key: you must ensure that each potential patient is
validated, correctly diagnosed at the right centre, and that the treatment is fundedand initiated without delay
The local teams ensure that funding-related administrative paperwork is handledefficiently in each country, or in each region and hospital in countries with adecentralised healthcare system
Once the treatment has been initiated, the effort focuses on improving complianceand the services to the patient
Pharmaco-vigilance is of utmost importance and everyone in the teammust be trained on how to handle PV issues and patient requests. Allassociates at all levels must be trained on Disease and Drugunderstanding!
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Potential implications for the Pharma industry?
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The change of focus of many pharma companies from Mass Marketto Specialty might go even further in the direction of Niche diseaseareas including Orphan / Ultra-Orphan E.g., the recent acquisition of Genzyme by Sanofi-Aventis and the fast growth of
Alexion
Is it interesting and possible to initiate this type of patient-focusedmindset and single-patient driven commercial model in your
organisation?
If so, how can you make it happen?
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Pharma Innovation examples
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Innovation example 1:
Implementing a patient-focused culture
Innovation example 2: Digital Technologies and the Use of Social Media Networks –
revolutionising pharma communications
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Digital: A new way to engage the consumer
New access devices… …and new channels
Internet: 1.8 Bn users
Mobilecommunication
PC: 1.7 Bn devices
Tablets / readingdevices:66 Mn devices
Phones andSmartPhones:4.9 Bn devices
SOURCE: Pyramid Research Q4 2010; Yankee Global Connected View
http://i.bnet.com/blogs/verizon-prepping-the-ipad.jpghttp://kara.allthingsd.com/files/2011/01/groupon-logo.jpeghttp://findicons.com/files/icons/1788/large_icons_social/512/blog.pnghttp://cordobo.com/wp-content/uploads/ie-pure-css-logo/
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Building a Digital Strategy
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Digital has become truly global…
71% of Internet users are outside ofNorth America / Western Europe
Asia accounts for almost half of worldmobiles
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15
14
MEA (16)
Asia(24)
45
Eastern Europe(19)
8
Latin America(23)
10
Western Europe(7)
North America
(4)
1410
6
11
11Latin America(15)
Western Europe(3)
North America
(5.5)
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Asia(19)
Eastern Europe(9)
MEA (25)
Internet users by region, Percent, 2006-10 CAGR, % Mobile devices by region, Percent, 2006-10 CAGR, %
100%= 4.9 billion100%= 1.8 billion
SOURCE: Pyramid Research Q4 2010; Yankee Global Connected View
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… But mix varies across regions
1017
51
28
8797
5364
9389
000022
MEA1 N. America AsiaLat. America E. Europe2W. Europe
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126 TabletsMobiles
PCDigital device penetration by regionPercent of population
MobileDominant
2CAGR, %
2011-15E 8.310 10.511.94.62 43 60-153 88110 997251
PCDominant
SOURCE: Pyramid Research Q4 2010; World Bank1 Middle East & Africa 2 Includes Russia and Turkey
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Digital is changing how consumers engage with
brands
Community: Consumers share their product experience throughblogs, on-line communities and social networks
Information: Consumers use internet to evaluate an increasinglylarge pool of brands
Interactivity: Consumers expect two-way relationships betweenconsumers and brands
Personalization: Consumers expect manufacturers to learn aboutthem and provide personalized solutions
Convenience: Consumers shop for brands and look for bargains fromthe convenience of their home or on-the-go
SOURCE: Press searches
http://www.sxc.hu/browse.phtml?f=download&id=995748
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Research shows that key stakeholders are
increasingly engaged in digital
SOURCE: emarketer.com, Pew Research Center, press searches
Consumers
Internet is the first source patients and families go toresearch a health-related question
HCPsPhysicians and other health care providers (HCPs)are using the internet to help inform their clinicalpractice
In OTC, retailers are aggressively investing in onlinespace and look to partner with CPGs to drive in-storetraffic
Retailers
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How companies are making headway in the digital
space
Some examples: Customized HCP advice through iPhone application to build direct
relationships with HCPs and gather insights
Branded educational content and advice for consumers
e.g. brand/company-sponsored websites providing disease information,Facebook apps, advice and brand education, assistance programmes
Sponsored on-line communities e.g., Facebook groups for mothers of ADHD children, diabetesdaily.com
cancerforums.net, cnsforum.com
Links to on-line and off-line retailers
Multi-category digital newsletters e.g., Harvard Health Publications
http://www.pepto-bismol.com/http://www.pepto-bismol.com/
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Some key questions regarding social media
How critical is social media to the future of Pharma marketing?
What role should social media play in overall strategy?
What are the key opportunities of social media?
How, as a highly regulated industry, can we participate in socialmedia while mitigating compliance risk?
What ROI can be expected from investment in social media?
What are best practices for our industry?
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Conclusions
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There is good reason to be excited for the future in pharma! In large companies, the main struggle will be to overcome inertia and
organisational hurdles that smaller companies don’t have
But if we have the courage to think differently, promote creativity and
avoid over-processing/over-controlling, we can succeed and createsignificant value for ALL stakeholders
In spite of all the change we’re seeing, one thing remains true:
Never lose sight of the need to develop a clear and effective marketingstrategy which leads to a clear and relevant communications strategy
To do this, as always, we need to understand our customers and engagewith them in meaningful ways
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THANK YOU
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Consulting and Training consultants An international team, with headquarters in Paris, France
Certified trainer and practitioner in innovative “Blue Ocean Strategy”methodology by the Blue Ocean Centre at INSEAD, Fontainebleau,
France R&D team in London focused on computer simulation
development
Experience across a wide number of business cases and therapeutic
areas in both classical pharmaceuticals and biotech:
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