Sink or swim time for pharma (50.156Kb) - DOWNLOAD

The pharmaceutical industry has long been seen as a stable, highly profitable sector – a safe bet in uncertain financial markets. This reputation is partly due to the unflagging demand for effective interventions to treat disease and improve people’s health.

However, pharma is facing tough times. The high-rolling days of double-digit growth, created by billion dollar blockbuster drugs, are nearing an end and the pressure is on to bring in the returns that shareholders expect.

Healthcare systems across the globe are tightening their belts, striving to make the most of finite resources. The systems themselves are being reformed and restructured by politicians with the aims of raising quality standards and improving the health of their populations. New bodies are being set up every year to examine new and existing medicines, not just to achieve evidence-based medicine and better health but also to ensure countries receive value for money from their healthcare budgets. In the background, patients are moving from passive players to informed and empowered consumers of healthcare.

Amidst all these trends and changes, the pharmaceutical industry is finding it increasingly difficult to make a profit. However, it is a resilient and innovative business, ready to take on the many challenges thrown at it.

"There are a number of reasons why pharmaceutical companies are finding it much harder to find growth in the marketplace," says John MacCarthy, vice-president of new business ventures for IMS Health, Region Europe. "The low numbers of new chemical entities (NCEs) coming out of the pipeline is a factor. Last year, companies launched only 30 NCEs, the lowest number since 1994. So far, 14 have been launched this year. In addition, there are a whole host of significant hurdles that companies must pass to establish their products in the marketplace."

This article will examine many of these barriers, but one hurdle in particular is worthy of noting. Mike Sobanja, chief executive of the NHS Alliance, an organisation that represents primary care bodies in the UK, explains: "All healthcare systems, especially those in Europe, are constrained by limited resources.

Each is constrained in different ways and there is a lot of variation as to who picks up the tab for a nation’s healthcare, but all are trying to squeeze more out of the system as demand escalates. This pressure has produced a common European hurdle to the successful launch of a medicine onto the market - health technology assessment,"

“The patient is not yet king but he is more demanding, more thirsty for knowledge.”

Health technology assessment (HTA) is the systematic review of health technology, including clinical and frequent cost data. It is called the fourth hurdle as it represents a further requirement beyond the usual three regulatory requirements for a medical product of quality, safety and efficacy.

Sobanja says: "In the UK, we have the National Institute for Clinical Excellence (NICE), a government body that examines both the effectiveness and cost-effectiveness of medicines and issues guidelines to prescribers. There are more than 50 bodies like NICE in Europe alone – they even have an association (www.inahta.org). If companies want their products prescribed, they have to produce the evidence and build a strong argument."

A crucial question for pharma in this new era is: Who is the customer? In the past, the pharmaceutical industry has centred its promotional activities around the individual doctor armed with a prescription pad. However, the situation is changing, says Sobanja.

"In the UK specifically but also across Europe, prescription decision-making powers are becoming much more diffuse. Now, pharmaceutical companies have to influence people at three different levels," he says.

"The first is the national level. If a company wants its product included in national guidelines or the disease area raised to the status of a priority area, they will need a powerful machine in place to influence government and national healthcare bodies."

The second level is working with local influencers and prescribers. "Even though this is home territory for pharma, companies are going to have to develop their offering."  However, it is the third level that is potentially the most novel and exciting – working with patients, says Sobanja.

"Traditionally, the patient has been a passive recipient of healthcare, relying on the advice of the doctor. However, the patient is on the march. Empowered by the expansion of the internet, patients want information and involvement in their own healthcare and pharmaceutical companies need to be involved at this level. This is a tough proposition when companies are banned from promoting directly to patients. They need to refocus their attention away from their specific medicines and towards greater involvement in disease areas, to become part of the conduit of information to patients. The patient is not yet king but he is more demanding, more thirsty for knowledge and more willing to participate in his own healthcare and you can see this happening across Europe. "

According to Sobanja, the best opportunity for companies to interact with patients is to expand their existing activities with patient organisations.

"Patient organisations across Europe are becoming more important. For example, in the UK, Diabetes UK was heavily involved in the development of the National Service Framework on Diabetes that outlines best practice in managing the condition. In addition, the cancer charities were instrumental in changing the guidance from NICE by activating the appeals procedure."

Not only are they powerful organisations at national level, but they have direct contact with patients. "Many patient organisations give out information about medicines to their members, even guidance on what brand names to ask for. When you consider that half of patients who ask for a brand name drug are given it, patient organisations are not cuddly groups pharma can work with in the background, they are prescribing influencers," says Mike.

A big challenge for pharmaceutical companies in this changing healthcare environment is to review their own methods. Companies need to ask some hard questions – are we doing the right thing or should we use new, more innovative approaches? "Companies are looking at the productivity of their sales force and working on ways to get more return from their investment," says Richard Purchase, director of service development at contract sales organisation Innovex UK. "Even though rep numbers are high, access to the customer is down, so companies are starting to question whether they should focus their efforts on certain customers – for example, high prescribers or those doctors that are more receptive to their messages for whatever reason."

Now prescribing decisions are dominated by third parties and targets. If your product is not endorsed or on the formulary, then there is little point sending in reps. Smart companies are developing highly targeted strategies, focusing their  efforts on doctors’ practices where they have favourable positioning.  Some are even adopting micromarketing techniques to target their messages very specifically to a highly localised segment."  Indeed, the last five years have seen a wave of investment in sophisticated customer relationship management tools.

“Half of patients who ask for a brand name drug are given it.”

As access to customers decreases, pharmaceutical companies are looking at new methods of getting their message across. One such channel is provided by the internet and associated technologies.

"The e-channel is becoming an important promotional strand, although not yet a stand-alone channel in its own right," says Kerridge. "We have partnered with a well-known medical portal to access their large population of doctors. Knowing that you have to hit a doctor 6-8 times with a similar message to get some form of action, a combination of physical and e-reps can be a winning one."

Duncan Morris, managing director of contract sales company AmDel Services and an ex-Commercial Director of Danish company Lundbeck Pharmaceuticals, believes we can learn from the lessons of history.

"What is happening in Europe now happened in the US 10 years ago. The insurance companies decided to take control of healthcare and set up purchasing units and many pharmaceutical companies responded by doing away with their traditional jobbing reps, replacing them with super reps who could sell the drug onto formularies. "

"Many companies downsized their sales forces but it didn’t take them long to realise that once a drug is on formulary you need reps to make doctors prescribe the products. Super reps can create availability but you need the traditional sales reps to create pull through," he says.

The success of the pharmaceutical industry in the future will rest fully upon each company’s ability to adapt. Some companies will move fast and make radical changes, while the more conservative will rest on their tried-and-tested wait and see approach.

Pfizer and Takeda, for example, are two companies that fall firmly in the former camp. They have both restructured their sales forces to focus on the new prescribing bodies, identifying the decision-makers and their influencers. Takeda has gone the whole hog, ditching its reps team who sold into family doctors entirely in favour of 35 regional account directors who focus on the prescribing bodies and other influencers.

As healthcare systems continue to change, pulled one way by governmental tinkering and another by demands for cost-control, the customers of pharmaceutical products are changing. In this already remarkable industry, new scenarios are appearing that require innovative and adaptive thinking. It is sink or swim time for pharma.

Primary Care Organisation Survey
How well are the major pharmaceutical companies account managing PCOs in the UK? VIA is about to embark on its 4th annual survey based on indepth intervews with 100 senior managers in PCOs. The report allows pharma companies to get a good understanding of how their individual company is perceived by this important target group and how their account management team perform compared to competitors and near competitors. It also gives a unique insight into PCO managers wider concerns and interests.