As is often the case, it’s not a single driver that shapes a trend but rather a confluence of many. This month we examine some of the challenges brand managers face marketing to other countries and how to cope with the distress of parallel importation.
Q: We’ve hit a plateau in the U.S. with some of our biologics and we’d like to try to develop more business for them in other countries worldwide. What are some of the most important marketing challenges we need to address?
First, every country is its own unique environment and has its own idiosyncrasies. If you intend to expand internationally, do not expect to shoehorn your current marketing strategy—even if it has been eminently successful in the U.S.
In my job with Symphony Health Solutions, I get to talk to global marketers about how to approach new markets and how to make sense of the mishmash of global pharmaceutical data. One of the first challenges you will face in determining where you want to go is that global data—the tool you need to make decisions—is not standardized across the world. Each market uses different metrics and things such as packaging, dosages, strengths and course of therapy can vary country by country.
As a result, it can be daunting to do market-to-market comparisons. Fortunately, today there are emerging technologies that can help tame this task by standardizing key metrics in all of the major markets worldwide.
Another challenge: the way patients are treated for disease varies widely from country to country. One of the reasons for this is that medical schools across the world do not offer the same approaches and treatment protocols. Patients in Japan, for example, are treated for RA very differently than the way we treat it here in the U.S.
The way patients pay for their meds is also very different and poses another challenge. In Japan, patients typically pay about 20% of the cost of their medicines and the rest is covered by public healthcare. But, that 20% can be very expensive for some patients, especially when dealing with a biologic that may cost thousands of dollars per month.
So, even if a drug is going to be a miracle for them and put the disease into remission, some patients do not want to pay for it or simply cannot afford it.
The other issue that trips-up global marketers is distribution, particularly when it comes to specialty drugs such as biologics and oncologics. Here in the U.S., many of these drugs are dispensed through mail-based pharmacies but require extensive follow up, which is usually done by a consulting pharmacist who calls on the patient directly. These calls can be frequent—sometimes daily—to explain how to administer the product, to see how patients are doing, warn them what not to eat, or check whether there are any potential reactions with other drugs.
In most other countries though, specialty pharma distribution does not exist, although it is starting to come into play in the U.K. and a few other places. But in countries where it’s not in play, the physician is the one tasked with the follow up and most are not inclined to prescribe those meds that are easier to administer when other treatment options exist.
The bottom line is that in many countries, including Germany, India and Russia, many docs would prefer to prescribe a generic pill rather than an expensive biologic that requires a lot of follow up. As a result, companies selling drugs that require this kind of attention are going to need to develop a mechanism for it, as well as an education platform for the patient. Moreover, they are going to have to sell hard to that market. They’ll have to let patients know why they really need the product.
Distribution can be a huge obstacle in other ways as well. In the U.S. and other countries such as the U.K. where chains are allowed, manufacturers can develop a relationship with a Walgreen’s or Boots chain that can lead to having their product stocked with high awareness in those pharmacies. However, in Germany, for example, pharmacy chains are not allowed so each individual pharmacy has its own buying patterns. This makes it much harder for pharma companies to get their products stocked widely.
The Biggest Challenge: Parallel Importation
Possibly the biggest challenge facing the global brand manager is a phenomenon called parallel importation. This occurs when a pharmacy imports drugs from another country where they are available at a lower price. Outside the U.S. it’s legal for a pharmacy to engage in this practice. In Germany, for example, a pharmacy may decide to import certain drugs from South America or Turkey where they are available at a greatly reduced price.
New and emerging technologies can help us see demand for a drug by looking at what is being dispensed to patients through pharmacies in a target country. We also can see what is being purchased by pharmacies from local distributors. For many drugs, the amount being dispensed is far greater than the amount coming from local distribution. By calculating that difference we can determine the crude amount generated by parallel imports.
Looking at a recent data pull we did in Germany (see Figure 1), which shows potential parallel imports account for between 10% and 53% of total dispensed prescriptions, you can see the relevance of this phenomenon. Based on this data alone, parallel importation is probably going to keep a good number of brand managers up at night.
Some pharma companies are seeking to curtail this issue by raising the prices of their drugs in places such as South America to reduce parallel imports into Germany, France, U.K. and other large European countries where costs are higher.
So, while many brand managers say, “I want to have my brand available in as many countries as possible because that will grow my brand and my revenues,” they may not realize the impact of differing price points on the overall value of their drug in the global marketplace. Bringing your product to market in South America where prices are suppressed could easily lead to eroding sales in the vital European market.