April 2004
The Chronicle of Healthcare Marketing
April 30, 2004
Covering Canadian and Global Pharmaceutical Economics
www.pharmaweenie.com
Table of Contents
Bayer feels pain of restructuring
Park those Buicks: Physicians surveyed actually like e-detailing
Up Here: What's happening in drug marketing
Selling the other drug: caffeine
Which customers do your competitors target?
Out There: What’s happening in the world of drug marketing
You can’t shrink to grow: Making the budget process work
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Bayer feels pain of restructuring
One of the last combined chemical/pharma companies had big loss in last fiscal
By David Schepp
Special to THE CHRONICLE OF
HEALTHCARE MARKETING
A tranquil pond lies just outside Wolfgang Hartwig’s office window at Bayer Diagnostics’ Benedict Avenue campus in Tarrytown, NJ.
The peaceful view is just one of the perks that comes with being the president of a $2.3 billion division of a multinational corporation.
Such serenity, however, is hardly emblematic of the milieu that Germany-based Bayer AG, parent to Bayer Diagnostics, finds itself in.
Lawsuits, the US dollar’s fall against the euro on international currency markets, and Bayer’s move to realign its corporate structure all contributed to the company announcing a punishing fourth quarter and its first yearly loss since at least 1969.
For the three months ending Dec. 31, Bayer posted a record quarterly loss after the company took a charge to earnings amid a corporate restructuring. In the fourth quarter Bayer said it lost $2.4 billion, compared with a loss of $493 million during the comparable period last year (all figures in US dollars).
SIGNS OF RECOVERY
The fourth-quarter loss was largely the result of a $2.64 billion charge related to Bayer’s spinoff of its chemical business into another entity called Lanxess.
For all of 2003, Bayer recorded a loss of $1.63 billion vs. a profit in the previous year of $1.27 billion.
Nevertheless, the company’s chairman, Werner Wenning, professed optimism in announcing the earnings last month, saying that “the first two months of the year give us reason to be cautiously optimistic,” and adding that “there are signs of a gradual economic recovery.”
As Europe’s third-largest chemical manufacturer, Bayer is one of Europe’s last combined chemical-and-pharmaceutical giants.
Bayer traces its origin to 1863, when Friedrich Bayer and Johann Friedrich Weskott opened a modest dyeworks by the name of Friedr. Bayer & Co. in Wuppertal-Barmen. Research led to such breakthrough compounds as the synthetic pesticide Antionin in 1892, Aspirin in 1897, and synthetic rubber in 1915.
In 1925 Bayer, BASF, Hoechst, and other German chemical concerns merged to form the I.G. Farben Trust.
Following an Allied victory in World War II, “the 1945 Potsdam Agreement called for the breakup of I.G. Farben, and Bayer AG emerged in 1951 as an independent company with many of its original operations,” according to a company history prepared by research firm Hoover’s Inc.
Bayer’s ties to Westchester County date to 1988, when it acquired Technicon, a local manufacturer of medical diagnostic equipment. Bayer added some heft to its diagnostics business in 1998 after it acquired the diagnostics division of Emeryville, Calif.-based Chiron Corp. for $1.1 billion.
Then in November 1999, the company purchased the Cambridge, Mass.-based oncology diagnostics business of OSI Pharmaceuticals—an extension of Bayer AG’s then-strategy of diversifying via acquisitions and new product introductions.
BULLISH ABOUT DIAGNOSTICS
Largely known to the North American public for ASA (Aspirin), Bayer AG also markets other well-known analgesics, such as Aleve, heartburn treatment Alka-Seltzer, Flintstone’s children’s vitamins, and other products through its Bayer Health Care unit, which incorporates Bayer Diagnostics.
Among prescription drugs, Bayer has in its stable Levitra, an impotency drug that rivals Viagra, and Cipro, an antibiotic that became the focus of news reports in 2001 following the discovery of anthrax-tainted mail shortly after the attacks of Sept. 11.
But Bayer also counts among its businesses animal health, crop science, and biological products, which treat blood-clotting disorders, cancer, immune disorders such as HIV and others.
At its Tarrytown headquarters, which employs 800 workers, Bayer Diagnostics’ technicians conduct laboratory and molecular testing and develop tests and equipment to help with diagnosis of disease and other health issues.
“Our business is to produce automated laboratory instruments that will analyse blood or urine and measure biochemicals and other [components],” says David Okrongly, who heads up research and development at Bayer Diagnostics.
ONE NEW TEST MEASURES BNP
To that end, the company offers a line of institutional-testing products under the Advia brand name. One of them, called Centaur, a device about the size of a large photocopier or desk, can conduct about 60 different tests and allows a technician to run 200 tests an hour.
One such test that recently received US Food and Drug Administration approval measures the presence of B-type Naturietic Peptide, or BNP, a hormone produced by the heart when it comes under stress or high-blood pressure.
“When the heart tries to pump out the blood it meets resistance,” Okrongly says.
“It meets more resistance than it should, and it causes the heart muscles, the cells in the heart, to actually stretch.”
That stretching boosts the production of BNP that helps to relieve blood pressure in the body by opening up the blood vessels and by triggering the kidneys to pump out more water.
Both of those actions help to reduce blood pressure.
Bayer Diagnostics’ BNP test was granted FDA approval in June, the first one of its kind to be approved in the United States.
That approval has helped fuel demand for the Centaur, “sales of which rose by 24.4 percent in local currencies,” Bayer noted in its 2003 annual report.
BNP along with other tests are extremely important in diagnosis and treatment of patients with cardiac disease, says Dr. David Cziner, chief of cardiology at White Plains Hospital.
It is helpful in diagnosing congestive heart failure, a leading cause of death among Americans.
“A completely normal BNP can exclude congestive heart failure where you may be considering it as a possible diagnosis,” Cziner says.
A Bayer study is currently looking at whether combining BNP with other tests might help physicians make decisions more quickly when a patient might be having a heart attack.
Another test, called Troponin I, helps heart doctors determine the presence of small, almost microscopic degrees of cardiac damage.
“It allows us to identify patients who are at a greater risk of dying,” Cziner says. “Patients with chest pain who have elevated Troponin I are at higher risk of dying.”
It is these sorts of developments that have Bayer Diagnostics’ Hartwig upbeat about Bayer Diagnostics’ ability to compete in the $22 billion worldwide diagnostics marketplace.
Last year, “we were the fastest growing diagnostics company in the United States, and we were the fastest growing lab-testing company in the world,” he says.
“We want to repeat this and to really outgrow the market,” Hartwig says.
Asked if growth might lead to greater number of employees in the northern suburbs, he says that the unit can’t expect to grow significantly over the next five years with the same staff.
Having said that, however, Hartwig hastens to add that managers are always looking to do more with less. “You’re always looking for efficiency,” he says.
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Reproduced with permission. © 2004, The Record (Bergen County, NJ).
Park those Buicks: Physicians surveyed actually like e-detailing
But they aren’t as keen about eCME, US research indicates
By Ian J.S. Moore
for THE CHRONICLE OF
HEALTHCARE MARKETING
Canadians are reputed to be the most electronically wired people in the world, and, if that’s true, there’s a large group of physicians in the country who would be amenable to various forms of electronic marketing, including e-detailing and eCME using PDAs and handheld computers.
That could be considered a reasonable conclusion to extrapolate from the results of a recent survey in the US, presented to the Canadian Forum on Pharmaceutical Marketing in Toronto.
Mark Bard, prexy of Manhattan Research in New York, said the survey included 775 practising US physicians who wrote more than 50 prescriptions, saw more than 50 patients each week, and were online. They were representative of US physicians who were early adopters and likely intenders of electronic communications, using e-detailing or a PDA or devoting 15 per cent or more of their CME time to eCME.
THE NUMBERS DON’T LIE, HE SAYS
“If you’re an e-marketer, or you’re on the brand team looking at Internet opportunities, this is the population you care about,” Bard said regarding the potential of e-detailing. Detailing, in the US, is now still largely accomplished by 90,000 detail men and women driving their Buick Centuries from doctor’s office to doctor’s office.
“You may not get the interaction you want through a technology medium or through Medscape, but you can’t argue with the numbers. You can’t argue with getting 10,000 physicians in a month or a month and a half, at a fraction of the cost you would spend on an offline meeting.”
Although 89 per cent of these early e-adopter physicians can access the Internet at their offices, most (58 per cent) prefer to do so at home. “Doctors don’t sit behind computers when they practice medicine. They have a better PC at home than at work, and are much more likely to have a high-speed connection there as well,” Bard said.
More than two-thirds (68 per cent) of the e-physicians said they considered the Internet “a critical resource” for information about prescription medications. And almost one-third (30 per cent) reported they went online after viewing an advertisement for a prescription drug and one-third said they did after a visit by a detailer.
“Now you have the connection between the ads, between the rep and the online, a continuum from the physician’s point of view,” Bard commented regarding possible marketing and promotion synergies.
The respondents’ use of the Internet for eCME was not impressive, just 21 per cent. This number hasn’t changed considerably since eCME became available, primarily, it appears, because of the absence of the personal interaction characteristic of the traditional CME format.
“Convenience and timeliness were the key drivers for pulling an online CME as opposed to an offline,” Bard said. “A good example is SARS. Some companies try to take advantage of the timely opportunities and will rush some eCMEs to the front and put them out in two or three weeks. You can’t do that in the offline world, necessarily.”
Almost 70 per cent of the responding physicians said there was no difference between online and offline CME programs in terms of fairness, balanced presentations, or unbiased content.
Although more than three-quarters of the ePharma physicians evaluated in the survey reported participation in e-detailing within the previous 12 months, they also indicated they were choosy.
“They’re very selective in how they do e-detailing and the types of e-detailing they’ll do,” Bard said. “The average physician does it fewer than 10 times, or fewer than once a month from all companies. About one-third did it one to four times.
“E-detailing has to be very timely, very convenient, with the full 24/7 aspect and everything else, and [there has to be] a reason for the physician to go and get that information.”
By far the highest barrier to e-detailing was the expectation of payment (64 per cent), a practice recently dropped by US pharmas. Another, perhaps unexpected finding was satisfaction with the detail man or woman, an opinion expressed by 44 per cent of the responding e-physicians.
“If e-detailing ever replaces the physician-rep relationship, that’s a big problem,” Bard said. “We can get rid of a lot of reps—I don’t think anyone’s going to disagree with that statement—but the rep is going to be taking on a very different relationship with the physician, not just dropping off samples.”
More than half the respondents, he added, would forego any demands for reward-type systems in such situations as new product launches, new treatment indications, or new ad campaigns. “There is a viable population of what we call core e-detailers that will do this because they see the value in the timing of the information, as an adjunct to the rep.”
Bard said physicians will accept pharma e-mail messages, but will not respond, the same behavior they and others adopt when receiving e-mails regarding bank statements or reward program updates. “About 20 per cent of these early adopters/likely intenders will opt into e-mail programs,” he reported.
Physicians who have a PDA will use the device an average of 46 per cent of the time for professional purposes, and Bard considers this tool a potentially great medium for extending the reach of other e-applications and programs.
“Mobile health will be a phenomenal driver in the practice of medicine,” he said. “Physicians will go and buy a PDA just to get a drug reference data base.”
The physicians who responded to the survey cited several factors that inhibit their use of the PDA for professional purposes, including speed of wireless transmission, size of screen, battery life, and memory capacity.
For primary care physicians, the initial cost of a PDA was the main concern, Bard said.
Actor Randy Quaid makes like the Easter Bunny for Edgar Gonzalez, a cancer patient at the Los Angeles Children’s Hospital. Quaid, who was cast in the role of his lifetime as Larry Meadows in the film The Last Detail, seems to be subliminally reminding fans that he also appeared in the lamentable musical What’s Up, Doc?
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(Alberto Rodriguez/Berliner Studio/BEImages. PRNewsFoto)
Up Here: What's happening in drug marketing
FORBES MEDI-TECH, the Vancouver nutriceuticals outfit, inked a four-year deal with New York-based Marco Hi-Tech to distribute Forbes’ cholesterol-lowering agent Reducol to dietary supplement manufacturers, who, in turn, are expected to incorporate Reducol into products to be retailed in stateside health-food stores.
HEALTH CANADA accepted an advisory committee recommendation that SSRI and SNRI product monographs be revised to warn of suicide risk to pediatric patients and teenagers. A spokesman for the agency tells Canadian Press that Health Canada is likely to review the Rx class in May, but wants specific mention of suicide included in monographs immediately. The committee rejected a suggestion that GPs be prohibited from writing scrips in the category for pediatric patients.
SHIRE PHARMACEUTICALS announced it will invest cash, equipment, and intellectual property to ViroChem Pharma, a start-up Canadian-based R&D outfit. Other ViroChem investors include Picchio Pharma, controlled by BioChem founder Francesco Bellini, who also serves as board chair of Montreal Rx developer Neurochem. Shire, based in the UK, also announced it will sell its Laval, Que. HQ to ViroChem and Neurochem. Shire purchased BioChem in late 2000, and announced last year that it was planning to halt R&D programs at the former BioChem facility.
NOVOPHARM founder Leslie Dan is increasing his stake in Viventia Biotech, the Toronto Rx developer whose publicly traded shares have been a perennial underperformer. Dan, who sold his generics business to Teva, currently controls 56.2 per cent of Viv, but plans to bulk up to 58.4 per cent through purchasing a Cdn$2 million convertible debenture, it was revealed in a securities filing.
NOCs of Note: April 2004
Significant TPP approvals of Rxs for human use
Hormone replacement therapy03-30
Estradiol, norethindrone acetate (Activelle, Novo Nordisk Canada Inc.) Comments:TAB(1mg, 0.5mg)ORL
Androgen03-18
Testosterone undecanoate (Andriol, Organon Canada Ltd./Ltée) Comments: Change in formulation with improved stability at ambient conditions; CAP(40mg)ORL
Synthetic antithrombotic03-15
Fondaparinux sodium (Arixtra, Organon Sanofi-Synthelabo Canada) Comments: Update the action and clinical pharmacology section of the product monograph with regards to extended prophylaxis of the thromboembolic events in patients undergoing hip fracture surgery; LIQ(2.5mg/0.5ml)SC
Bone metabolism regulator03-23
Ibandronate sodium (Bonviva, Hoffmann-La Roche Limited) Comments: TAB(2.5mg)ORL
Relatively selective alpha2-adrenoceptor agonist, elevated intraocular pressure therapy 03-09
Brimonidine tartrate (Brimonidine, Pharmascience Inc.) Comments:SOL(0.2%)OPH
Antibacterial agent04-07
Ciprofloxacin supplied as ciprofloxacin hydrochloride (Cipro XL, Bayer Inc.) Comments: TAB(1000mg)ORL
Estrogen03-09
Estradiol-17ß (supplied as estradiol hemihydrate) (Climara, Berlex Canada Inc.) Comments: New strengths: 2mg/pad, 5.7mg/pad; new indication: for the prevention of postmenopausal osteoporosis, 3.8mg/pad, 5.7mg/pad, 7.6mg/pad; PAD(2mg, 5.7mg)TRD
Estrogen + progestin03-09
Estradiol-17ß and levonorgestrel (Climara Pro, Berlex Canada Inc.) Comments: PAD(4.4mg and 1.39mg)TRD
Estrogen03-01
Estradiol-17ß (Estrace, Shire BioChem Inc.) Comments: Product monograph update resulting from the Women's Health Initiative (WHI) study; TAB(0.5mg, 1mg, 2mg)ORL
5-HT1 receptor agonist, migraine therapy03-02
Sumatriptan as sumatriptan succinate (tablet/injection), sumatriptan as sumatriptan hemisulfate (nasal spray) (Imitrex, GlaxoSmithKline Inc.) Comments: Incorporate relevant clinical trial information into the product monograph; LIQ(6mg/0.5ml)SC, TAB(25mg, 50mg, 100mg)ORL, SPR(5mg/0.1ml, 20mg/0.1ml)NAS
5-HT1, receptor agonist, migraine therapy03-29
Sumatriptan succinate (Imitrex, GlaxoSmithKline Inc.) Comments: Reformulation of tablets; TAB(25mg, 50mg, 100mg)ORL
Human immunodeficiency virus (HIV) protease inhibitor03-26
Lopinavir, ritonavir (Kaletra, Abbott Laboratories Limited) Comments: To update the indications in the product monograph; CAP(133mg, 33.3mg)ORL, SOL(80mg/ml, 20mg/ml)ORL
Lipid metabolism regulator03-22
Fluvastatin supplied as fluvastatin sodium (Lescol XL, Novartis Pharmaceuticals Canada Inc.) Comments: New dosage form: 80mg extended release tablet; SRT(80mg)ORLAntibacterial agent 03-02
Levofloxacin (Levaquin, Janssen-Ortho Inc.) Comments: Revised dosage regimen: 750mg once daily for five days in the treatment of community acquired pneumonia (CAP); TAB(250mg, 500mg, 750mg)ORL, LIQ(25mg/ml, 5mg/ml)IV
Antibacterial agent03-02
Levofloxacin (Levaquin, Janssen-Ortho Inc.) Comments: New indication: for the treatment of chronic bacterial prostatitis; TAB(250mg, 500mg)ORL
Cyclic GMP specific phosphodiesterase type 5 inhibitor 03-17
Vardenafil as vardenafil hydrochloride (Levitra, Bayer Inc., Healthcare Division) Comments:TAB(5mg, 10mg, 20mg)ORL
Photodynamic therapy photosensitizer04-05
Aminolevulinic acid hydrochloride (Levulan Kerastick, DUSA Pharmaceuticals Inc.) Comments: Manufacturer name change; PWSO(20%)TOP
Lipid metabolism regulator03-26
Pravastatin sodium (Pravachol, Bristol-Myers Squibb Canada) Comments: Addition of a new 80 mg strength and revised dosage recommendations; TAB(80mg)ORL
Hormone replacement therapy03-15
17ß estradiol and 17ß estradiol/norgestimate (Prefesta, Janssen-Ortho Inc.) Comments:TAB(1mg and 1mg/90mcg)ORL
H+, K+-ATPase inhibitor04-01
Lansoprazole (Prevacid FasTab, TAP Pharmaceuticals, Inc.) Comments: New dosage form: orally disintegrating tablet; TAB(15mg, 30mg)ORL
Antiarrhythmic agent03-29
Propafenone hydrochloride (Rythmol SR, Abbott Laboratories, Limited) Comments: New formulation and indication: sustained-release capsules to prolong the time to recurrence of symptomatic atrial arrhythmias in patients without significant structural heart disease and with a history of symptomatic atrial fibrillation; CAP(225mg, 325mg, 425mg)ORL
cGMP-specific phosphodiesterase type 5 inhibitor03-08
Sildenafil as sildenafil citrate (Viagra, Pfizer Canada Inc.) Comments: Product monograph revisions regarding safety of sildenafil in subjects with treated hypertension, coronary artery disease and stable angina; TAB(25mg, 50mg, 100mg)ORL
Photosensitizing agent for age-related macular degeneration and pathologic myopia03-25
Verteporfin (Visudyne, QLT Inc.) Comments: New indication: presumed ocular histoplasmosis; PWSO(15mg/vial)IV
Glucosyceramide synthase inhibitor03-31
Miglustat (Zavesca, Actelion Pharmaceuticals Ltd.) Comments:CAP(100mg)ORL
Lipid metabolism regulator03-23
Simvastatin (Zocor, Merck Frosst Canada & Co. / Merck Frosst Canada & Cie.) Comments: New indication: in patients at high risk of coronary events regardless of lipid status; TAB(5mg, 10mg, 20mg, 40mg, 80mg)ORL
5-HT1 receptor agonist, migraine therapy03-02
Zolmitriptan (Zomig Nasal Spray, AstraZeneca Canada Inc.) Comments: New dosage form: nasal spray; SPR(2.5mg, 5mg)NAS
Hematopoietic agent03-12
Pegfilgrastim (Neulasta, Amgen Canada Inc.) Comments:SOL(10mg/ml)SC
Coagulation factor03-26
Antihemophilic factor, recombinant (Helixate FS, Bayer Corporation) Comments: Changes to manufacturing procedure; PWSO(250iu/vial, 500iu/vial, 1000iu/vial)IV
Pharma sales force management: Personal sales calls still powerful, but strategy needs to be examined
What makes a better sales rep—natural ability or good training? The thing is, maybe it doesn’t matter anymore
No one could dispute that sales are essential to the success of every business organization, no matter the field of endeavor. And in the hectic, competitive, and complex early years of the third millennium sales activities are becoming even more critical than previously to prosperity and success, especially in pharma.
What makes a good sales rep? Natural ability or good training? How do you recruit them and how do you measure their success or failure? Do you use census data or information gained from more sophisticated measurement techniques? What are the current trends and what new ones will affect sales management and reps in future?
There are many opinions, but all commentators agree on one fact: sales is the heart of every business organization.
Mark Beaudet, co-founder and vee-pee sales and marketing at Paladin Laboratories Inc. in Montreal, says successful pharma sales depend upon a number of factors, and although the personal sales call is one of the most powerful, the traditional sales model has to be changed.
“Strategy 1 is to become more focused and really much more pointed in terms of your return on investment on that kind of activity,” he says. “Strategy 2 is to look at other models that are more efficient to generate that ROI.”
Physicians today are too busy and don’t want to see reps, but the response from too many pharmas has been to increase the number of its reps calling on the same physician to increase its chances of making a personal call, as effective or ineffective as it may turn out to be.
“That’s [an approach], theoretically, that can work in the short term,” Beaudet says, “but in the longer term it can’t go on if everybody starts doing it. That’s what I mean by saying this sales model is ‘doomed.’”
The return on investment in this sales model is dubious, he adds. “If the industry were to start afresh, you would certainly be asking which customers should we be calling on and where do we get the greatest ROI for the sales rep calling on them.
“You focus your activities on [those customers] and on maintaining a long-term relationship with them.”
The trick for pharma companies, Beaudet submits, is to identify physicians with the largest ROI, and an economic model to support it.
“The opportunity is for the industry to become more financially disciplined,” he says. “Traditionally, it has been more of ‘Well, we need to cover doctors who account for 75 per cent of the market’ even if the bottom tier of that market is at a very low level that doesn’t justify the expense of calling on them.
“I don’t think this fact has really come to light, so much.”
But as the industry becomes more competitive, executives will have to begin to examine the model more closely, he says.
Strategically, Beaudet says, Big Pharma has to make a decision about where to allocate its sales promotion dollars—to the sales force or to another area? He believes Rx&D firms haven’t done anything to promote DTC advertising in Canada (and their counterparts in the US haven’t done enough there, either), pinning all their hopes on marketing to doctors at a time when more and more are saying they don’t have time to see bag carriers.
“There’s another audience of consumers out there, who are really interested and really motivated to learn about the different benefits in the new products that are coming out, even if they’re marginal,” Beaudet says.
NOT ENOUGH ATTENTION PAID TO ISSUES OF SALES MANAGERS
Consumers, he notes, are more receptive to new pharma products than physicians, and there’s plenty of evidence from the US that once a consumer is convinced of the therapeutic value of a new med, he or she will ask for it and have it prescribed 80 per cent of the time.
“But when you sit around with a group of marketing executives from Big Pharma in Canada, it’s a divided table,” he says. “Some people are for [DTCA], some people are against it and some are ambivalent.”
Steve Gregory agrees that the day of the sales person is not finished.
“There is great evidence to show that when sales people are effective you see penetration increase,” says the founder of Gregory Associates in Oakville, Ont., a consulting firm that specializes in sales organization development.
“But it’s becoming more and more difficult to develop the formula that ensures success.”
Gregory believes that if Big Pharma hopes to improve its business prospects nationally and globally it needs to do a lot more work supporting its sales managers. He thinks pharmas place too much emphasis on targeting customers to measure the effectiveness of their sales forces and not enough on supporting their sales managers, who have the heavy responsibility of integrating their operations with others in the company.
That support, Gregory says, would include better methods of recruitment and selection of sales reps, for sales management activities, for coaching reps and for getting other company departments such as marketing, human resources, and payroll involved.
If other departments are not involved, they won’t understand the needs of the sales force and mistakes will be made, including such costly mistakes as ineffective administration of bonuses.
Too often, he says, sales management isn’t given any macro orientation of its responsibilities. “The demands being placed on sales managers are huge, their jobs are becoming increasing complex. This is where sales organizations should be spending their money, but typically they don’t, spending it instead on training sales people.
“As sales forces shrink, the most successful organizations will be the ones who develop those precious sales management resources like sales managers.”
Pharma sales managers have traditionally relied on data for indications of sales made, but census data is not sufficient today, according to Tom Brogan, founder and head honcho of Brogan Inc. in Ottawa.
“Traditionally, companies have measured sales coming in the back door, which is fine, but you have seasonal patterns and buying patterns that have nothing to do with real business,” he says. “You’re not sure which store is actually selling the drug rather than which store is getting it.”
To provide a more accurate record of sales activity, Brogan developed Geographic Prescription Monitor, a sales territory measurement tool, which is based on pharmacy data, to measure what is being dispensed and to distinguish activity between the front door (for example, the patient walking out with a filled prescription), and the back door (bulk shipments to a pharmacy, a chain, or a buying group).
“It’s a better match with doctor data,” he claims, “because that’s what’s going out the front door.”
Brogan intends to use GPM as a launch pad for other products that will measure and record switching or upgrading to a new formulation or from one brand in a class to another brand in the same class.
“We have a suite of products based on ‘anonymized’ patient data,” he tells The Chronicle of Healthcare Marketing. “Our philosophy is tracking patient behavior and we’re working on products that will provide insight into activities at the patient level.
“We’re trying to relate doctor and patient, and it’s a real challenge.”
The computer may have been instrumental in speeding the harvesting and dissemination of data to sales managers and others, but unless they know what do to with all the information and to put it to good use, they run the risk of becoming “data stupid.”
Selling today is far more sophisticated than it was 10 or even five years ago, Brogan notes, and will become more so. “Selecting the right docs to see and measuring effectiveness is going to become more sophisticated and more critical.
“You’ve got to turn [data] into knowledge.”
Joe Knott, a partner at Pangea Consultants in Toronto, confirms that the territory sales analysis data base, which used to be almost 100 per cent accurate for reimbursement, is being abandoned because of regional pricing trends and Internet pharmacy activity.
“International pharmacy is an issue because there’s a whole bunch of stores buying for the United States of America, and with regional pricing we’re having people buy in other provinces and ship to other provinces.”
SETTING TARGETS KEY
“The key issue right now [in sales management] is how to set bonus targets and budget targets,” he says. “This is the last industry of one-to-one selling. Other than insurance, which is dying, I can’t think of another one.”
A growing trend in pharma sales and sales management, he says, is for one Big Pharma to recruit or “buy” one of another pharma company’s sales forces and to train it to sell its products.
“Why it’s so neat is that it’s a turnkey [operation],” he says. “The reps know the pharmaceutical industry, they’ve got a reputation with the doctors, all that good stuff.
“Company A gets cash for its sales force and Company B gets a noise level—reach/frequency—on a brand that they need.”
The key to this type of arrangement is the rep’s established relationship with the doctor, so it doesn’t matter what brand he or she is promoting.
The trend is increasing, Knott says, because approval delays at Health Canada’s Therapeutic Products Division leaves some pharmas not only with no new products, but also the expense of an idle sales force.
Companies involved in this type of arrangement include Ayerst with Organon, Boehringer Ingelheim with Abbott, and GSK with Bayer. Each of the companies has entered into a long-term contract, lasting a minimum of two to four years.
Knott says a pharma must achieve a certain reach and frequency if it is to influence prescribing habits, and agrees with Tom Brogan that the industry needs more accurate data.
“We do get ‘anonymized’ doctor level data,” Knott reports, “so we do get some collapsing, but if I’ve got four reps calling on the same doctor, how do I measure which one is effective?”
Selling the other drug: caffeine
Tell your story to (the) public—what you have and what you propose to sell.
Is hustling java in any way comparable to detailing prescription products to medical professionals? The differences are likely far greater than the similarities, but for a perspective on sales from outside the pharma industry, we looked to Bruce Andrew, vice-president of operations for coffee supplier Van Houtte Inc. of Montreal.
To Andrew, the ideal candidate sales rep is the individual who has the desire to help people and who will bring a disciplined approach to his or her work.
“That’s the type of person we look for and the ones we have the best success with,” he says. “Selling is not an art, but a science of discipline that builds trust. People buy from people they trust. It’s that simple.”
Van Houtte has 56 sales reps, 10 key account reps, and 100 customer service reps, who manage and sell continentally to grocery stores. It also operates its own coffee bistros (mainly in Quebec), and supplies coffees to business offices in 100 cities. It uses employment agencies and relies on employee word-of-mouth to recruit candidates.
The company uses a program developed by Andrew to train new hires itself. The program starts with 10 days of pre-training work which introduces them to staff and corporate “processes” and then five days of sales school taught by sales managers.
“That is all followed into the field by the sales managers, who work three days a week in the car making calls and working with the sales person,” says Andrew, who works from the company’s Mississauga, Ont. office.
“We want to reinforce what we’ve taught. The whole idea of training is changing behavior and we know when our people behave in the way they’ve been trained, they’re likely to get better results.”
Instead of analysing monthly sales figures—“They’re history, so you can’t change them”— Van Houtte monitors the sales reps’ daily and weekly activities, recording cold calls, follow-up telephone calls, proposal presentations, and other efforts to build and extend a “revenue pipeline.”
Andrew contends this kind of monitoring should apply to all sales efforts everywhere, including pharma. “Sales is where you put yourself everyday. If you’re not selling seeds everyday, if you’re not developing relationships and building trust with potential customers, you can’t reap the benefits of those relationships as a sale later.”
Medicus Canada prexy Peter Finlayson (right) receives the Corporate Leadership Award from Harry Snyder, CFO of the International Association of Physicians in AIDS Care (IAPAC) during the association’s annual gala in Chicago. Medicus was recognized for developing educational campaigns to increase the quality of care for people living with HIV/AIDS, including treatment guidelines, training modules, and patient support materials. Past honorees have included Archbishop Desmond Tutu, former US prexy Bill Clinton, and Pfizer.
Ortho Biotechhas made the largest single corporate donation to The Scarborough (Ont.) Hospital Foundation. The funds will be used to create the Ortho Biotech Isolation Unit with Canada’s first Sined Dialysis Data System. From left are: Chris Halyk, managing director of Ortho Biotech; Dr. Paul Tam, The Scarborough Hospital; Terry Brazill, chair, The Scarborough Hospital board of directors; and Amelia Canto Ellis, prexy, The Scarborough Hospital Foundation.
The first occupantof the Richard Hunt-AstraZeneca chair in gastroenterology at McMaster Univesity in Hamilton is Dr. Paul Moayyedi. Pictured from left to right are: Dr. John Kelton, Michael Cloutier, prexy of AstraZeneca, Dr. Peter George, Dr. Moayyedi, Dr. Richard Hunt, Dr. Stephen Collins, and Dr. Paul O’Byrne.
Which customers do your competitors target?
From a micro level of speakers and advisors to a macro level of specialty groups, you need to know where your competitor is. This information needs to be related to your understanding of the market and evaluated for opportunities. Ask a few questions about their selected targets to uncover new opportunities.
• Are they primarily a specialty-based company lacking the resources to reach GPs?
• Are they new to this therapeutic area and lacking the contacts, relationships, and resources to maximize their impact in a specialty group?
Are my competitors overlooking important customers?
Overlooked customers represent an opportunity for you. Your sales and marketing efforts will be unopposed, allowing for greater share gains in this customer group.
On a micro level, “important customer” may be key opinion leaders. On a macro level, the competition may have missed an opportunity with a specialty group, or have deliberately chosen not to target them. If targeting is predicated by a P1 brand, and your competitor occupies a P2 position, there may be a significant opportunity with underserved physician groups or specialties.
At one time Janssen-Ortho Inc. promoted birth control pills in their women’s health division. This division also promoted a drug for urinary incontinence, a condition frequently affecting women. Since the birth control pills are of greater value they occupied the P1 call position and targeting was driven by the value of doctors to this brand. There is little overlap between doctors of high value for birth control and high value doctors for incontinence. The age of the patient groups are quite disparate. Consequently, JOI was not targeting all the high value doctors for incontinence, leaving a significant opportunity for any competitor.
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ANDREW SENIOR, a marketing consultant specializing in pharmaceuticals, is author of “101 Questions: A Handbook for Opportunities in Pharmaceutical Marketing”, from which this feature has been excerpted. Chronicle subscribers may order the book at a $10 discount from the usual retail price. To purchase a copy, please send a cheque for $53.45 (GST inclusive) payable to “Target Pharma Marketing” to The Chronicle of Healthcare Marketing, 555 Burnhamthorpe Rd., Suite 602, Toronto, Ont. M9C 2Y3. Please allow up to three weeks for delivery.
Out There: What’s happening in the world of drug marketing
WYETH buddied up with Solvay on a deal to develop and commercialize four CNS Tx candidates, including bifeprunox, a late-stage compound in Phase III development for schizophrenia. Solvay’s US psychiatry field force will begin promoting venlafaxine (Effexor XR) stateside.
ABBOTT became the subject of a false advertising lawsuit by the largest stateside advocacy group for AIDS patients, which alleges Abbott made false claims concerning its Rx prices and policies. The suit by the AIDS Healthcare Foundation (AHF), which also operates pharmacies, claims Abbott fibbed in justifying its recent quadrupling of the retail price of antiviral Tx ritonavir (Norvir). According to the foundation: “Abbott's assertions that state Medicaid programs would be unaffected by the increase were fraudulent, false and/or misleading and constituted unfair business practices that induced consumers—including AHF—to continue buying its products, despite its contemptible conduct.” Abbott hiked the cost of Norvir in December, leading to government investigations in Illinois and New York, as well as a boycott of the company by some physician groups. A company spokesman called the suit part of “an ongoing misinformation campaign.”
BOEHRINGER INGELHEIM’s urinary stress incontinence Rx duloxetine (Yentreve, Ariclaim) got a green light from the clinical panel that advises the European Agency for the Evaluation of Medicinal Products. The regulators are not obligated to follow the panel’s recommendation, but usually do so within several months. The Rx, for female patients, will be co-marketed by Eli Lilly.
An advisory committee to the US FDA recommended approval of injectable poly-L-lactic acid (Sculptra, DERMIK) for HIV patients with facial lipoatrophy. The product is sold outside of North America as a cosmetic implant, under the brand name New-Fill. Predicted Dr. Neal Pennys, a committee member: “Twenty-four hours after this is available, it will be used off label.”
SHIRE PHARMACUETICALS re-acquired exclusive UK and Irish rights to dementia Tx galantamine (Reminyl), for an undisclosed upfront cash payment. Janssen retains the rights to the Rx, developed by Shire, elsewhere in the world. According to Shire, the new arrangement will enable the company “to deploy more resources in support of Reminyl in anticipation of the expected launch of new formulations and indications for the brand.”
Jack Layton's drug company
News Item: New Democratic Party leader Jack Layton, as part of his platform for the upcoming 2004 federal election, introduced the idea of creating a Crown corporation “dedicated to providing innovative drugs to Canadians and the world at cost, and by supporting promising young researchers in this area.”
April 4th, 2008. Winston Smith, a promising young researcher at the Bethune People’s Pharmaceutical Works Number 13, was waiting for his daily call from his cousin, the Prime Minister of Canada, the Rt. Hon. Jack Layton. It had been 43 months since the New Democratic Party, led by “J-Bro” (a nickname that originated in the Toronto Sun, before that newspaper ceased publication), had formed the government, having been narrowly elected on a platform of creating and providing free drugs to everyone in the world. The months following J-Bro’s rise to power proved to be a challenge for the pharma industry, Winston recalled as he listlessly continued his morning ritual of playing Windows Solitaire while waiting for the telescreen to buzz.
J-Bro’s hopes for the future were pinned on his grandest vision: that all the world’s people might live in prosperity and perfect health, as a result of the important new drug discoveries that would emerge from the state-owned non-profit company he created.
Of course, there were early disappointments. The foreign-owned pharmaceutical companies did not instantly embrace J-Bro’s vision, nor his edict that they provide compulsory licensing of all their products to the new, nationalized research company, known as VICTORYLabs.
Neither did they appreciate the new national taxation policy that required 100 per cent of the profits earned from commercial healthcare enterprises be returned to Revenue Canada, to fund the innovative research conducted by VICTORYLabs.
The multinational drugmakers expressed their lack of enthusiasm by abandoning their Canadian investments, leaving the test-tubes, factories, and workers all in the care of the new regime. The new Prime Minister regarded the development as regrettable, but arranged for an orderly takeover of the businesses by the government, and their continued operation was ensured by placing the facilities under the centralized control of the Ministry of Robust Health. The new health minister, whose job qualifications consisted of four sessions as a sociology lecturer at Trent University, quickly called on her counterparts in various Caribbean countries to send hundreds of “advisors” north, to assist in developing a new publicly owned pharmaceutical industry, modelled on those found in other nations where capitalism had cruelly turned its back.
The disappearance of Big Pharma was largely unreported and unnoticed in Ontario, since it coincided with the Leafs’ brave-but-doomed effort to get past the Sens in the second round of the playoffs. However, the threatened abdication caused great concern in Quebec, which had no desire to see significant numbers of drug companies leaving the province a second time.
For that reason, and others, Quebec split from confederation less than a year into J-Bro’s term—followed by, in order, Alberta, British Columbia, Saskatchewan, Manitoba, the Atlantic provinces, and each of the Northern jurisdictions, including Nunavit. Ontario was the only province to remain in Canada, although the city of Windsor voted to be annexed to Wayne County, Michigan, and several other communities seemed confused and uncertain why so many levels of government were still required, now that the country had shrunk so drastically.
Winston Smith’s job was simplified when two-thirds of the province’s doctors left the country, unhappy with the depleted resources and all the new regulations. In particular, many physicians objected to the presence everywhere of Informatics Adjuncts, as they were known, who were young workers assigned by the Ministry of Robust Health to hang around doctors’ offices and report any incidents of inefficiency or poor judgment they happened to witness. Three Adjuncts were assigned to each doctor. Of course, the cost of the new program accounted for a quarter of the national health budget, but the Adjuncts looked very smart indeed in their blue overalls, which came with badges bearing the three slogans of the Party:
• LEAVE YOUR CAR AT HOME; RIDE A BICYCLE, LIKE J-BRO
• SOME OF THOSE HERBAL REMEDIES WORK PRETTY GOOD
• INCLUSIVENESS: IT’S SO MUCH BETTER THAN THE OTHER THING
With few doctors available to treat patients, the ministry created its first Three-Year Plan, extending prescribing privileges to other government workers, including postal carriers, tax assessors, and liquor store clerks. Statistics Canada compiled data which indicated the new system was a great success, but you couldn’t help but notice that even though the majority of hospitals had been sold during the second Three-Year Plan and converted to Loblaws supermarkets and Chapters bookstores, there were more than the usual number of sick people around.
Abruptly, Winston’s telescreen glowed, filling with an image of the face of a man of about forty-five, with a heavy black moustache and ruggedly handsome features. The famously enthusiastic voice of J-Bro filled the room: “Win, hi, any new scientific breakthroughs for me yet today?”
Winston picked up his mug and drained it at a gulp. As always, the coffee, grown under a government program in hothouses surrounding Kenora, made him shudder and even retch slightly. The stuff was horrible. He said, “No, Prime Minister. I’m afraid there’s nothing today.”
“Disappointing, Winston, very disappointing,” J-Bro replied. “I’d hoped to have at least one new blockbuster developed by now. That’s what they’re called, yes? Blockbusters? All this time and effort and not even a piddling little breakthrough in HIV or cancer for me to give away to all the deserving peoples of the world. How will I be able to look my fellow world leaders in the eye at the next G-8 summit?”
Winston thought: O cruel, needless misunderstanding! Canada stopped getting invitations to the G-8 summit at least three years ago! But he said nothing. Eventually the telescreen would dim, and he would return to his game of Solitaire. Later, he would get up and pour himself another mug of wretched VICTORYCoffee in the Bethune cafeteria, and wait for the day when the innovations would arrive.
You can’t shrink to grow: Making the budget process work
But they aren’t as keen about eCME, US research indicates
By Larry Arshoff
Special to THE CHRONICLE OF
HEALTHCARE MARKETING
These challenging economic times mean that we’re continually working to improve financial ratios through budget cuts, increased sales targets, and managing to the bottom line. Between 1998 and 2001, pharmaceutical promotional spends increased 25 per cent, but sales only rose by 16 per cent, according to a 2002 Datamonitor report. In the boardroom, we’re used to hearing it expressed in different ways:
- Our objective is to grow the business by gaining profitable market share.
- Let’s improve our performance by raising sales and lowering expenses.
- Does sales growth justify the spend?
From my experience in the pharma/medical products industry, I’ve found that the traditional methods of cost control frequently affect marketing budgets due to a lack of a defined Return on Investment (ROI) component. Understanding the relationship between reducing expenses, growing sales, and improving profit helps to develop solutions that can address budget pressures. If you consider that a company can achieve similar profit improvements by either reducing expenses by a given amount or by increasing sales by a significantly larger amount, it is not surprising there is more pressure to reduce expenses, compared to the challenge of increasing sales.
CONSIDER THE BUDGET PROCESS
As a marketer and manager, how do you address these pressures and build support for initiatives designed to stimulate business growth?
The cost-cutting process intended to improve profitability can be painful and challenging for the marketer, especially considering that one of our key roles is to build demand and grow revenues.
We need to enhance our approach to assessing the value of promotional program investments, especially for high cost projects. Developing a strategy that grows both sales and ROI reinvigorates the budget processes, and in a mature market does more for growth than cost cutting and budget slashing. Marketing investments need to be linked to larger ROIs or, as finance says, get a ‘big bang for a buck’.
More than ever, marketing needs to understand: the total business, trends, and opportunities, as well as financial value and ROI language. From my experience, I have found that addressing ROI has the benefit of enabling business teams to more easily assess marketing expenses to ‘hold the best and trim the rest’ in the shift from traditional cost containment to ROI focused activities.
Above all, the ROI measure needs to be meaningful to senior management. It’s not enough anymore to say the ROI is either increased leads or awareness, or that the promotional factors that led to a successful close were impossible to track due to complex sales cycles. During budget reviews, I’ve found that showing the relationship between the real value of products, services, and programs and sales growth is crucial to make senior management smile, aids in earning CFO endorsement, and is an important factor in gaining budget approval.
DEVELOPING THE ROI MODEL
Start simple, work with the CFO, develop a straightforward model, select test cases (historical and planned) to track the selling process from lead to close, place a value/cost on each step/program by metric definition, and show the ROI on the programs over the long-term for the cases.
Since active participation is crucial to success, remember to ensure that team members appreciate the value of ROI analysis and establish an easy-to-implement process that aids in quick effective decision-making and does not lead to ‘paralysis by analysis’. I have found that determining measures of performance and success (including risks and probabilities) in advance fosters rapid uptake.
No system is perfect. The ROI method supports creative approaches to growing business by correlating promotional spends and sales results. In addition to providing a consistent framework for comparing diverse business opportunities, the process also enables the prioritization of budget allocation between acquisition strategies, customer retention programs, and cross-selling programs. Since expenses are tied to a ROI, budget cuts can also be related to a loss in profits.
A specific challenge with ROI analysis may be with programs designed to enhance image and build customer loyalty. If an objective ROI measure cannot be defined, these types of programs should be considered carefully to ensure there is real value for customers and the company (an advocacy program, for example).
Although we are more frequently being asked to reduce costs, in general… you cannot cut expenses and expect double-digit growth… or… you cannot shrink to grow… But a well thought out budgeting process with an ROI component earns you the support of finance and can help you get the tools you need to meet and exceed your sales and profitability targets.
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Larry Arshoff is prexy of Diagnosis, Solutions & Results Inc., a Toronto-based company