Pharmaceutical companies are prolonging the good health of their customers--and the CRM industry. Largely influenced by retiring Baby Boomers, lack of FDA-approved drugs in the pipeline, and direct selling campaigns, the industry is becoming more customer-focused. CRM spending in the pharmaceutical/biotechnology industry climbed 19 percent, from $220 million in 2000 to $262 million in 2001, according to AMR Research. And if current forces persist, that number will likely sustain itself.
Although pharmaceutical spending is expected to increase, the cash will go to fewer companies, as the FDA is approving fewer drugs. "Last year saw the lowest number of FDA approved drugs in the past seven to ten years. So there is anxiety over what's available in the sales pipeline," says Tom Murtagh, vice president of healthcare solutions at Braun Consulting, a consulting group.
Another phenomenon contributing to the increase in CRM activity is the pharmaceutical companies' ability to sell directly to customers (see "Support Gets A Face-Lift," page 51).
Direct-to-consumer selling has gone into the stratosphere, Murtagh says. As a result, pharmaceutical sales reps are spending less time calling on physicians and focusing more of their efforts on diligent fact-finding on consumers. This limits physicians' exposure to pharmaceutical sales reps, and therefore limits their access to a main source of industry knowledge, Murtagh adds. But CRM solutions can help bridge the gap between pharmaceutical companies and doctors and patients, he says.
For starters, CRM can increase pharmaceutical companies' ability to execute evidence-based selling and marketing, enabling them to determine what drives a physician's decision-making process, Murtagh says. Also, CRM can enable companies to market to physicians by niche groups, such as by specialty or by insurance plans. Finally, Murtagh says, as consumers continue to educate themselves and make informed decisions with less influence from physicians, there is an increasing threat that patients will switch to competing products. Therefore, pharmaceutical companies need to shift the industry focus from patient acquisition to patient retention.
"Over the next 20 years our patient population will be larger than we've ever seen it," Murtagh says. "It will provide a catalyst for the industry overall. Also, Baby Boomers tend to be very active and informed about their healthcare. The combination of those has been a factor in determining a robust future for the industry."