PM360 DECEMBER 2010

LIFECYCLE MANAGEMENT

COST-EFFECTIVE PROMOTIONAL STRATEGIES EXTEND BRAND CONTRIBUTION

Mature brand warhorses can still provide significant revenue—with new field representative types, deployment models, and alternative channel promotion.

By Rich Micali

We've all read the headlines. We're all experiencing to some degree the financial, organizational, and psychological ramifications of an industry responding to vanishing blockbusters; and more change is still to come. Of the major brands serving the top 16 therapeutic categories, 43 will face generic competition by 2012. This translates to reduced consumer spending of $80 billion to $100 billion by 2014, according to an IMS forecast, on brands currently representing global sales of $142 billion. IMS predicts the impact to be strongest in the U.S. market, where two-thirds of these patent expirations will occur; 2011 and 2012 will be particularly difficult as expirations peak and 6 of the 10 greatest revenue-producing brands will go off patent. Such prescription brands can lose up to 90% of their sales per IMS when confronted by less costly generic competition.

In the face of such potentially staggering revenue losses, the industry has put many reengineering activities in place to ensure that the revenue stream needed to successfully fund the research addressing disease treatment and cures continues. Perhaps nowhere are these efforts more important than in the management of mature brands of all sizes, particularly in light of fewer new molecular entities in the pipeline and increased regulations slowing the development process. These mature brand warhorses have helped drive revenues for many years and still can provide significant contribution, if managed properly. However, traditional marketing practices for mature brands, particularly coverage from field sales representatives, must be modified to effectively balance promotional spend versus effort in order to optimize ROI.

LIFECYCLE MANAGEMENT

Managing mature brands is not a new concept. A recent report, published by consulting and benchmarking firm Best Practices and based on a survey of 11 of the leading pharmaceutical companies, has shown the potential to gain as much as 10 years of additional product life using tactics such as new formulations, new and pediatric indications, dosing and delivery methods, line extensions, publication strategy, thought leaders, clinical practice guidelines, brand repositioning, and add-on services. The dollar rewards were significant according to Best Practices. One company reported incremental sales of $2.25 billion by introducing pediatric indications. Another showed an uptick of $1 billion for a new formulation; yet another gained incremental revenues of $500 million for new indications. With product development and introduction costs already covered, much of this incremental revenue has the potential to drop right to the bottom line. Yet those with the most success in this study found they had to overcome significant hurdles in terms of implementation cost, the length of the process required, and the acquisition cost of specialty expertise.

NEW REPS FOR MATURE BRANDS

These experiences, along with the need to find promotional strategies that produce better top- and bottom-line results, have led the industry away from its sales strategy of using highly trained, highly paid representatives throughout the brand’s lifecycle and across the entire country. Although experienced, dedicated primary-care representatives may still be needed for more complex brands or major- impact brands just entering maturity, a one-size-fits-all strategy is no longer viewed as viable for many mature brands requiring less complex or intense promotion to maintain share of voice typically achieved through the reinforcement of core messages, provision of samples, patient education materials, and managed-care coverage updates. To meet these less complex promotional needs, a number of modern, cost-effective sales representative classifications have been developed for the U.S. market. (See Figure 1, below.)

FIGURE 1: MATURE BRAND REPRESENTATIVE CLASSIFICATIONS SERVING THE U.S. MARKET

*All classifications with the exception of Shared Representative could be deployed on a full-time or part-time basis. Shared Representatives by definition are part-time.
**The cost to deploy Traditional Primary and Specialty Representatives would warrant a $$$ classification.

This industry-wide move to deploy representatives better suited to the level of interaction required to support the brand’s position in its lifecycle also clearly recognizes the need to provide more value to the physician in the sales presentation. Today’s physicians often do not have the time or willingness to have extensive interactions with sales representatives during patient hours. This trend was reinforced in ZS Associates’ Access Monitor published earlier this year, reporting the number of physicians willing to see representatives fell another 20% in 2009 and that representatives were unable to complete over 8 million planned calls at a cost of nearly $1 billion. In light of mature brands’ lacking important new data and branded and generic competition, it becomes critical to understand both the information needs and communication channel preferences of the target physician.

The availability of significantly improved data integrating ICD9 codes and patient demographics along with physician prescribing habits, combined with the rich demographic storage capabilities in today’s SFA platforms, greatly enhances the ability of pharmaceutical companies to develop a highly targeted tactical mix appropriate in scope and effort for promoting a mature brand to physicians. Wasted efforts against staunch non-writing physicians can be avoided, while physicians just needing samples and literature refills can be handled with a customer service call or virtual interaction. Others who prefer personal interaction can be assigned an established market representative or invited to participate in webinars and live video detailing sessions.

In many instances, alternative channel promotional tactics offer attractive, cost-effective opportunities to maintain share of voice for mature brands. Not only can they eliminate costs associated with field representation, they allow physicians to choose to receive brand messaging when convenient via one or more technology-based channels such as an e-detail or physician web portal. Indeed, more and more studies report that physicians have become increasingly receptive to technology- enabled delivery of branded information, treatment modalities, and the latest scientific studies. In 2009 and 2010 reports, Manhattan Research indicated that physicians are ahead of the technology acceptance curve versus other market groups’ acceptance. For instance, 72% of those surveyed owned and used a smartphone across a variety of applications and mobile websites. Physicians also engage in peer discussion groups in increasing numbers via social media websites such as Sermo. One major pharmaceutical company has entered into an agreement with Epocrates to provide a direct link within Epocrates’s online and mobile information portals to answer physician questions.

It’s therefore not surprising to learn that a major pharmaceutical company successfully replaced its entire 430 person full-time field force detailing its mature proton-pump inhibitor brand with a 300-seat call center in 2009. This is certainly a bold step considering that the brand doesn’t lose exclusivity until 2014, but one that has paid off in maintaining share of voice cost- effectively.

STRATEGIC PARTNERSHIPS

The most successful lifecycle management tactics employed for mature brands can still be difficult for a pharma company to enact due to lack of a particular required specialty expertise or the cost of field implementation in a reduced headcount environment. Recognizing this, many in the industry have formed strategic partnerships with outsourced promotion service providers to implement or pilot mature brand sales strategies.

These outsourced providers have ready access to a variety of sales professionals with varying levels of experience in virtually every therapeutic area. The fact that they can spread the overhead related to fielding a team or setting up a non-personal promotion effort over many assignments also makes these providers a cost-effective alternative to going it alone. There have been an increasing number of requests for out- sourced services expressly configured to handle mature brands. One advantage outsourced promotion service providers offer is their ability to match the field promotional investment to the most relevant promotional drivers for the mature brand or to pilot tactics without disrupting ongoing promotional efforts. In addition, such engagements provide an attractive means by which to move to a more variable cost structure, sending results directly to the top- and bottom-line while providing the flexibility to scale up or down without disrupting the internal field sales core.

A case in point is the use of an outsourced field team by a major pharmaceutical company to promote a CNS brand to primary-care physicians. The company had undergone field realignment as part of its reengineering, and no longer had all the personnel needed to cover the brand, but recognized the brand still offered potential revenue and profit contribution. They elected to partner with an outsourced promotion service provider and set up a dedicated team to exclusively represent the brand in designated territories throughout the country. To further leverage the investment in these outsourced teams, the company added several additional mature products to the portfolio carried by the outsourced mature market representative.

Unlike past engagements which maintained an emphasis on numbers of calls made, today’s contracts focus on driving ROI as a leading performance indicator. This has led to outsourced promotion service providers taking on a partnership role in defining the territory coverage. While the pharmaceutical company may provide a plan, the outsourced provider can suggest modifications based on geography, various business models, and past experience to establish the environment for mutual success.

In cases such as this, the outsourced provider and pharmaceutical company work closely together to target prospects. Upon evaluation, not all physicians in a particular geography may be detailed, rather only those who have been strong prescribers or who exhibit the potential to increase their prescribing will be placed in the call plan to maintain and potentially grow the business. In the case of the CNS brand, the outsourced provider made it a priority to find representatives with experience in the territory because the brands being represented faced significant generic competition.

With the recent surplus of experienced primary- care representatives on the market, the outsourced provider was able to build a team with strong selling skills and the ability to respond positively to changing call plans, and to do so cost-effectively. Although there are some overall salary savings due to the current economic climate, most cost efficiencies come from the outsource provider’s ability to leverage all the costs associated with fielding a team across its entire client base. The end result is impressive; within the first 15 months of coverage, the outsourced team generated incremental top-line revenue of $156 million. Not only has market share risen, but ROI is also significantly higher than that of the in-house team, showing a bottom-line incremental profit of $132 million in the same 15 months of coverage. This translates to a 34% higher profit per dollar invested over the legacy team. (see diagram right).

However, not all mature brands require a dedicated mature market representative. Indeed, often the promotional requirements for these mature brands lend themselves to more creative deployments than those of launch and growth brands. One such example comes from the women’s health therapeutic area. In this instance, a large pharmaceutical company elected to reduce its emphasis within women’s health and removed its legacy team from four products—two Rx and two OTC. The goal for these products was to maintain a share of voice in a highly competitive and mature space and to do so cost-effectively through sampling. Tapping a team of customer service field representatives to provide samples was the desired approach, leading the company to the use of a shared- team customer service model supplied by an outsourced promotion service provider. This field model allowed them to tightly manage their budget via a fixed per-call pricing structure and to supply costly samples only to targeted prescribers.

This use of a shared-team model to support promotional efforts also has proven successful in the promotion of mature OTC products. One case involved a nationwide promotion to primary physicians of a usage extension for a 20-year-old OTC analgesic, positioning it as a migraine treatment to boost its overall revenues. At the end of three years, the sales team was able to generate a 22% increase for the period and an 186% increase in physician and pharmacist recommendations to patients. (See graph, opposite.)

Another pharmaceutical company explored the use of coupons as a means to stimulate the trial and ongoing usage of an adult nutritional drink supplement. The pilot ran over a three-year period and called for coverage of primary-care physicians in two intra-state markets, with one sales call per target for the pilot period. The initiative achieved its coupon redemption goal in retail outlets serving the two target markets within three months after all targets had been reached. The shared-team approach was particularly well suited to this assignment given that the program was fairly limited and the company was required to pay only for the calls that were successfully made rather than support a full-time representative for the same period.

MATURE BRAND PROMOTION COMES OF AGE

Although mature brands may not be the newest, most innovative, or highly differentiated products, their promotional future is still bright. Deploying lifecycle management strategies is no longer restricted to costly, one-size-fits-all field representation. New, cost-effective representative types, deployment models, and growing alternative channel promotion options are making it more efficient and logical to extend a brand’s contribution to the top and bottom line deeper into its lifecycle. Strategic partnerships with outsourced promotion service providers offer the opportunity to minimize product promotion risk and optimize return on investment for both pilots and full-scale deployments alike. By devising promotional strategies that take advantage of these cost-effective alternatives and new approaches, the pharmaceutical industry has the tools necessary to generate incremental profits while providing a service to healthcare practitioners and their patients.
REFERENCES

IMS Forecasts Global Pharmaceutical Market Growth of 5% to 8% Annually through 2014;
Maintains Expectations of 4% to 6% Growth in 2010. Company Press Release.
www.imshealth.com

Taking the Pulse v.10: Physicians and Emerging Information Technologies. A
Promotional Webcast. Manhattan Research.

Rich Micali is SVP, Sales Services, at PDI. He can be reached at micali@pdi-inc.com.