The First P: ProductStrategy for Old and New Drugs

What is a Product?

A good, service or idea consisting of a bundle of tangible and intangible attributes that satisfies consumers and is received in exchange for money or some other unit of value.

Tangibility----------------Intangibility a capsule of Xanax MTM

Product variation in pharmaceuticals

Product item - single like Tylenol

Product line – closely related - OTC pain killers -

Tylenol, Tylenol PM, Tylenol Flu

Product mix – all product lines offered Antibiotics, analgesics, beta blockers, etc.

Types of Medications Sold

Differ in terms of: Effort used to purchase - doctor visit?, OTC Attributes used to purchase Frequency of purchase

4 types:

PRODUCT TYPE DECISION TYPE Convenience goods Routinized - aspirin Covered Formulary/Generic Non-formulary brand Complex

The Product Life Cycle

Stages a product goes through from its inception to its disappearance from the market:

Introduction: Gain awarenessGrowth: Stress DifferentiationMaturity: Maintain Brand LoyaltyDecline: Harvesting, Deletion

The PLC

IntroductoryStage

GrowthStage

MaturityStage

Decline Stage

TotalMarketSales

Time

Product Life Cycle

Length: varies

Shape High learning – long intro

Low learning – quick intro

Fashion – quick, recurring

Fad – very short

Market size

Rate of Adoption

LaggardsLate

MajorityEarly

MajorityEarly AdoptersInnovators

"The Chasm"

Technology Adoption Process

Strategies for the PLC

Lengthen life by:Modifying productModifying market

Finding new users Increasing use Creating new use situations Repositioning the product Reacting to competitor’s position Reaching a new market Catching a rising trend Changing the value offered

Introductory Stage Strategy

Sales Low salesCosts High cost per customerProfits NegativeCustomers InnovatorsCompetition Few if any

Introductory Stage Strategy

Strategies Create awareness and trialProduct BasicPrice Charge cost plusDistribution Build select dist.Advertising Awareness among early adopters,

dealersSales Promotion Heavy to entire trial of FPCGs

Growth Stage Strategy

Sales Rapidly rising salesCosts Avg. cost/customerProfits Beginning and risingCustomers Early adoptersCompetition Growing numbers

Growth Stage Strategy

Strategies Maximize mkt. shareProduct Revise, extend, add services,

warrantiesPrice Price to penetrate mkt.Distribution Intensive distributionAdvertising Mass mkt. Awareness, interests Sales Promotion reduce

Maturity Stage Strategy

Sales Peak SalesCosts Low costs/ customerProfits High profitsCustomers Middle majorityCompetition Stable- beginning to decline

Maturity Stage Strategy

Strategies Maximize profit and defend market share

Product Diversify brands, itemsPrice Match best competitorsDistribution IntensiveAdvertising Stress brand differencesSales Promotion Increass to encorage brand

switching

Decline Stage Strategy

Sales Declining salesCosts Low cost/ customerProfits DecliningCustomers LaggardsCompetition Declining number

Decline Stage Strategy

Strategies Reduce expenses, milk Product Phase out weak models Price Cut/ raise price Distribution Go selective; phase out outlets

that are not profitableAdvertising Reduce to level to maintain loyal

customersSales Promotion Minimal

Branding strategies

Manufacturer brands Multi-product branding

Multi-branding

Private branding Single

Multiple

Generic

Brand Equity Drivers

Patents

Initial choices for brand elements: names, URLs, logos, symbols, characters, spokespeople, slogans, jingles, packaging and signage.

Product + services + all marketing activities and supporting programs

Other associations transferred indirectly by liking to other persons, places or things

Direct to Consumer Advertising

Legal in only 2 countries

USA

New Zealand

Controversial !!!!!!

Other forms of promoting drugs

Advertising in medical journals

Placement and promotion of favorable studies in medical

journals

Visits of sales representatives to doctors

Provision of free samples of drugs for doctors to give to

their patients

Gifts for doctors and subsidized 'educational' events and

conferences.

DTC Facts

Encourages consumer to see doctor to take care of conditions early, avoiding later hospitalization

One study of 64 drugs found a median increase in sales of $2.20 for every $1 spent on DTC advertising

In 2005, the top 20 DTC advertised drugs accounted for more than 50 percent of all spending on DTC advertising. Not many drugs are advertised.

Most drug ads aimed at chronic conditions like high blood pressure, high cholesterol, allergies and asthma

How much is spent on DTC?

A November 2006 report by the U.S. Government Accountability Office report stated that drug companies spent $4.2 billion in 2005 on DTCA.

In comparison the drug industry spent $7.2 billion in 2005 promoting drugs to physicians and $31.4 billion on research and development.

However, the GAO found that the amount spent on DTCA "increased twice as fast from 1997 through 2005 as spending on promotion to physicians or on research and development." [1]

It estimated that spending on DTCA was growing at approximately 20% per year.

FDA Requirements for DTC

To be accurate and not misleading;

To make claims only when supported by substantial evidence;

To reflect balance between risks and benefit

To be consistent with the FDA-approved labeling.

PHRMA’s Assertions about DTC

Increases awareness about diseases

Educates patients about treatment options

Motivates patients to contact their physicians and engage in a dialogue about health concerns

Increases the likelihood that patients will receive appropriate care for conditions that are frequently under-diagnosed and under-treated

Encourages compliance with prescription drug treatment regimens.

What do you think?

How should doctors be informed about new drugs?

Does the consumer have a right to know what the potential treatments for their condition(s) are - without waiting for a doctor to tell them/

What is the pharmacist’s obligation to the patient regarding treatment - knowing the condition a patient has, should the PharmD talk to the doctor, the patient or both?

What is the FDA’s responsibility?

Class Exercise: Groups

1. Drug company2. Patients3. Physicians4. Pharmacists5. FDA