How Pharma can enhance its impact
and reduce costs of marketing – a chalkboard sketch

Since 2005, we developed and implemented a strategy to create a new pharma market approach in the Netherlands. Since 2010 it proves to be effective to grow ROI. Here (1/2) we describe concisely the project.
In a few days, we will present a chalkboard sketch of the approach (2/2), based upon our review of the very project and our activities  to change the market approach and make it all effective.
It hasn’t been a very structured process, as experimentation and development often is not, but the innovation worked and we could collect its benefits to the ROI of our client, a local affiliate of a large global pharmaceutical company.
We are now using the decision and action tools that we developed in the course of the project, to create more adaptive pharma roles for other companies as well.

Changing market conditions in NL

In 2005, the Dutch government introduced several structural changes in the health care system in the Netherlands. See the article in Wikipedia here for a general introduction to the very change.

In that year, we sat with the board of the Dutch affiliate of a large global pharma company reflecting on these changes as for the implications to their market approach. As we were already setting up specific account teams to health care groups we became aware of the impact of the reform of the health system to the business of pharma. To give you some insight into this context to the market, we prepared this schematic overview of what happened in the course of the Dutch Health Care Reform in 2006

We also experienced in the Netherlands a number of declining market conditions that people familiar with these markets are well aware off:

  • Declining access to prescribers: it was an estimated drop of about 50% already;
  • Growing influence of new stakeholders in the market on prescribing behavior of physicians, from the health care insurance companies up to local protocol committees,
  • Growing pressure to prescribe generics,
  • More and more strict regulation of Pharma promotion, by the government,
  • A deteriorating image of the pharmaceutical industry in general,
  • A growing general awareness of the costs of health care on the national political agenda.

This has all led to a heavy erosion of pharmaceutical pricing,
as can be seen in the graph.¹

Pharma price erosion in the the Netherlands

 

The evolving strategy

To adopt an offensive, forwarding strategy to get out of the commodity trap² for drug prices, we decided to:

  • Focus on the developing context of influence on the physicians’ choices for Rx;
  • Develop care supporting services directly related to patient care; and
  • to be a consistent partner for sustainable innovation and health care development.

The first step to realize this strategy, was to make an extensive inventory of the networks around the individual prescribing doctors. When doing so, we quickly became aware of the evolving groups of cooperating doctors: a cooperation as a response to the growing influence of health care insurance companies on the selection process of medicines for therapy (see here).

A next step was to create a national foundation with a fund to stimulate new ways for the treatment of chronic care in which physicians themselves, both GP’s and medical specialists, could submit projects to develop innovation in care for chronic patients with the disease at hand. This foundation raised a lot of goodwill amongst the doctors and received awards as being one of the best initiatives for good care in health in NL. The board of the fund consisted solely of physicians.

Development of partnership

By the inventory of the networks, our client was first to the competition to know the relevant DMU (decision making units) of the different health care groups that began to develop themselves. By that, the organization could work along with the care providers in the group to develop and improve their care. The pharma company employed experienced nurses and physician assistants as health care consultants in sales forces to team up with account managers to help the physicians to help their patients better.
 By this, the pharma company had a head start to the market development from within. Promotion ruling was already such that deals of “Rx for support” were strictly forbidden. They were not made nor sought after by the company. Instead, by working with these  accounts we were able to partner the company with the intentions of the cooperating doctors and so were in the forefront of health care development. 
These partnerships led to a increased turnover from these groups, rather without heavy commercial activity from the part of the pharma company.
 By this we knew that the strategic principles of the approach were right and productive.
In the graph of the growing ROI presented here, we left out the details of volumes and name of our client. But it will give you an impression of the success of the strategy as from 2007/8 to 2011.

Market share in Month and MAT in €

Implementation

The strategy led to different and several developments in the organization, into growing cooperation between marketing and sales, the development of services to the therapy, the (re)staffing of district teams, the installment of new functions in the sales team, etc. etc. Never a dull moment.
We were also able to change sales targets like frequency of detail, with other custom tailored outcome targets. This began specifically with account managers. We could convince HQ that these new outcome targets would leverage the righteous actions from the persons involved, instead of bothering both account manager and clients with detailing that would oppose the development of partnership. We experienced that this change of focus led to highly cooperative work from the part of physicians with the professionals of the company. The doctors and their assistants were pleased with care supporting projects that helped them help their patients better. And, it helped the company with improved returns, due to the added support value of the drugs.

With this proof of concept of the new market approach, and with its gains in ROI to the affiliate, the local company became the lead company for this new approach to the European organization. We presented and discussed our case and approach to other affiliates, sometimes even accompanied by a physician from the health care groups we were working with. It was taken up in a HQ led European campaign to make “Customers first”.

References

¹ Stuchting Farmaceutische Kengetallen, Data en feiten 2009, Den Haag ThiemeMediaServices
² See for discussion of the “commodity trap” R.A. D’Aveni, Beating the commodity trap, How to maximize your competitive position and increase your pricing power. Harvard Business Press, 2009. You might also want to have a short introduction here

Read more in “Customer focus in pharma – chalkboard sketh of the new commcercial model to pharma 2/2″