The United States pharmaceuticals sector provides healthcare services to over 300 million people, and represented almost half of the global pharmaceutical market in 2006, with $289 billion in sales. With a return of 17 percent on revenue, the pharma sector topped the list of the nation's most-profitable industries, according to a survey of the Fortune 500, but today, U.S. pharmaceutical firms are facing tremendous pressure on their margins.
The following factors are primarily responsible for that new reality:
- the influence of generic medications;
- the dearth of new products in company pipelines; and
- government and regulatory pressures.
The effort to combat these three factors requires pharmaceutical firms to focus on three critical goals:
- reducing the historical cost-to-serve;
- redefining customer relations within the current compliance framework; and
- utilizing CRM to a greater degree to explore alternative channels within the current healthcare landscape.
Following the Tradition
During the early stages of healthcare marketing, the traditional strategy of deploying an army of sales representatives aimed for the highest reach and frequency among providers. As generics gained market share and competition between branded drugs increased, a paradigm shift occurred toward optimizing sales structures, designing robust compensation plans, and adopting data analytics on a large scale.
Furthermore, we have seen patients emerge as the decision makers in disease management, which has led to an increase in direct-to-consumer campaigns and patient-care programs.
A Look at the Alternatives
The current economic situation has driven companies to research, refine, and develop better communication channels that focus on building a strong brand image, reduce cost, and foster long-term relations with key physicians. The widespread use of technology has resulted in various new communications channels, such as:
- E-Prescribing: E-prescribing systems enable physicians to choose medications from a list of drugs approved for each patient's diagnosis. Physicians can then transmit any needed prescription to the patient's pharmacy.
- Online Care Management: Online care management encompasses a range of solutions -- such as disease-specific Web sites, which can include expert-opinion sections, discussion boards, and educational and marketing materials; advanced disease-management tools, which help patients manage their own conditions; and compliance tools, which leverage the Internet to monitor patients.
- Video Detailing: This is face-to-face, PC-based video conferencing between a physician and a pharmaceutical rep. Information about product indications, efficacy, dosage, side effects, and clinical data on new and existing products can also appear on the computer screen.
- Digital Signage: Well-integrated digital signs at the entrance of public places during wellness programs (such as free blood-pressure checks at shopping malls) help reinforce key messages. Such customizable displays allow marketers to reach target customers in nonthreatening ways.
As we enter the era of fewer blockbuster branded drugs and a rise in generics, we must change how we promote brands based upon their life cycles. Traditional methods may still hold strong as one-on-one relationships with sales representatives continue to guide physicians' prescription decisions -- especially when dealing with key opinion leaders. However, given the cost pressures on established brands, it will be essential to shift toward the latest CRM and related technologies, leverage alternative channels, and create a competitive advantage in this new landscape.
About the Author
Kunal Kaushal is a management consultant for the CRM practice at Accenture. He can be reached at email@example.com.
Please note that the Viewpoints listed in CRM magazine and appearing on destinationCRM.com represent the perspective of the authors, and not necessarily those of the magazine or its editors. You may leave a public comment regarding this article by clicking on "Comments" at the top.
To contact the editors, please email editor@destinationCRM.com.
To subscribe to CRM magazine, please visit http://www.destinationCRM.com/subscribe/.
If you would like to submit a Viewpoint for consideration on a topic related to customer relationship management, please email viewpoints@destinationCRM.com.
For the rest of the August 2009 issue of CRM magazine please click here.