Getting Your Skates On
In a price-challenged environment, the successful companies are the ones that embrace change and new marketing strategies. But without leadership on board, efforts will be in vain.
I’ve spent most of my career in marketing and commercial strategy – most recently at AstraZeneca (AZ) where, as Vice President of International Projects, I was involved in helping the company divest older brands to focus on more specialty care brands in three core therapy areas. Before that, I spent time in China as the VP of Commercial Strategy & Excellence, where I developed a real passion for new business models and finding ways to make pharma move more quickly. China is a very competitive market – if you stand still someone else will quickly knock you aside, so you need to “scale fast and partner to win”.
I’d been thinking about starting my own strategic consultancy for a number of years. And recently I did just that, with SPiCE Healthcare. I’m passionate about helping companies transition to new business models that create more value for our customers and the company; in particular, relying less on the traditional sales rep model by introducing new ways of working with online telecommunications, new service channels and the integration of digital technologies to create a better customer and patient experience. This is something I discussed recently in Barcelona at eyeforpharma 2017. New digital channel approaches are already being used extensively in other industries, but there is a long way to go in pharma.
Specialties, skills and strategies
Introducing new, innovative thinking in the traditionally conservative and slow-moving pharma industry can be difficult – especially given issues around pricing. As the industry comes under increasing pressure to reduce drug prices, resource allocation problems are bound to grow, which will encourage (or force) the adoption and integration of new technologies – or new ways of selling and marketing. I often see companies that want to maintain all their old brands, while also needing significant budget to launch new ones. There’s a clear challenge here, and it’s one that is compounded by the fact that the industry is undergoing a significant shift; more and more new drug releases are niche, specialty pharmaceuticals that cater to a small subset of the population. The launch of such drugs requires a different set of capabilities, including new medical and marketing skills.
Year-on-year, the FDA approves a higher proportion of specialty drugs, with a large amount of sales coming from the US. However, it’s well accepted that the healthcare population is shifting towards emerging markets – these nations have many more unmet needs and will not be able to afford to pay for specialty drugs (see box, “The Challenge of Healing the World”). Brian Smith, a professor and expert on the evolution of the life sciences industry, has just launched a new book about how the industry is going to diversify over the next ten years. He expects to see many niche biotechs, as well as mass-market players, seeking a broader market, such as big generic houses. It’s actually already happening – some companies, such as AZ, are trying to become more specialty driven and are divesting older drugs, whereas others are still investing to reach mass market as well as specialty populations – Pfizer springs to mind here.
Overall, it’s about adapting to change. The large companies still create value by reaching a broad set of patients around the world, which is really important for these populations, but we will also see more and more niche companies focusing on rarer diseases. It’s amazing to see how Gilead has grown into a large company so quickly – with their amazing drugs coming through. The company is doing well with approximately 8000 employees. Smaller companies can be nimble – and many have not started to move into the emerging markets yet but, when they do, the results will be interesting to see, as their small set-up may allow them to move and partner more quickly than larger players.
Embracing change
Going forward, I believe that pharma companies should seek to embrace an omni-channel approach, which involves identifying the different motivations, goals and pain points of the customer/patient at different stages of the customer journey – and then applying appropriate channel and content strategies to improve engagement. In particular, it’s time for companies to look at the potential of new channel approaches that can enable a digital experience. One excellent example of an omni-channel digital approach is the online GP service, founded by Ali Parsa, called Babylon. You can book a face-to-face virtual consultation with a GP via the smartphone app, and the consultation is recorded to watch later. They can also refer you onto a specialist or a nearby pharmacy. It’s a fantastic example of how you can make use of mobile technology to make it easier for the patient and improve their experience. In healthcare, there are many ways in which pharma can better engage with its customers.
However, when introducing a new channel, it’s important to think about the whys and hows – why are you introducing the new channel? And will you integrate it with your current field force channels, as well as the customer journey? People often say, “It’s all about digital today,” but you have to integrate digital with your other channels, such as sales representatives, key account managers and medical science liaisons. If you can make it work, you’ll be moving in the direction of focusing on true customer engagement, both in terms of patients and healthcare professionals, which in time will come with other rewards.
The Challenge of Healing the World
Gilead is an interesting example of a relatively small, nimble company. When mentioning Gilead, however, it is difficult to overlook the price of some of their medicines. In particular, many people were unhappy with the price of Solvadi, which was priced at around $84,000 for a three-week course (though it should also be said that the drug did demonstrate remarkable efficacy). Gilead is not the only company to put a high price on medicines – and the increasingly high costs of many new drugs is feeding the industry’s growing image problem. I have friends who work in the tobacco industry – and I sometimes think that tobacco does a better job of managing public perception than pharma. Why? At times, it feels as if the pharma industry is just looking after a very narrow group of patients with very expensive drugs.
I have spent a lot of time in Africa and there are millions of people who just need drugs of slightly better quality than those of 20 or 30 years ago. Those patients are being forgotten. China has a slightly different problem; patients used to go to Hong Kong to buy drugs (for example, lung cancer treatments) because they were cheaper and more widely available. Today? Generics from India and Bangladesh are flowing in and being sold on the black market (which brings with it additional problems in terms of quality and counterfeiting). The government makes no effort to try and stop the drugs leaking in because they can’t afford the manpower – and the consequences could be a huge spike in patient deaths. Unless patient access programs are put in place, such problems will continue. And issues around patient access aren’t limited to the developing nations. AZ recently launched a lung cancer specialty drug in the UK, but the UK’s National Health Service limited the drug to only a handful of patients.
Striking the balance between getting a return on investment and reaching enough patients is a huge challenge for the industry.
For big pharma companies, it can be beneficial to partner with a service company who is a specialist in a new channel. Sometimes, building a new capability in-house isn’t the right approach, or takes too long – especially if you don’t have the right expertise to begin with. A recent example was a client who was trying to coach internal sales representatives to sell over the phone – the problem being that the client didn’t have anyone in-house who actually had experience to make this channel work successfully. But companies – specifically senior leaders and management – need to really understand these new approaches to support their teams through the change process to be successful – otherwise you can end up with internal challenges, whilst also confusing customers rather than improving customer engagement!
Leading the way
I’ve seen firsthand how a company can be ahead of the curve when it comes to focusing on new channel capabilities that are required to engage customers in new ways and create value for the company. I’ve also seen a company move backwards after a shift in a senior leadership team – changing leadership is a constant with implementing new initiatives to drive sustainable impact with appropriate resources and time. If the leadership team withdraws visible support, then the new channel approach will make way for the old,
traditional habits.
I would say that there is a great deal that Western pharma companies could learn from emerging markets – particularly China – with regards to moving quickly and embracing change. In the digital arena, China has gone from a standing start – and being 5–10 years behind the US and Europe – to the point where they are probably going into a leading position.
Phil Matton is the Managing Director of SPiCE Healthcare.
Phil Matton is the Managing Director of SPiCE Healthcare.
