Pmca Pmcatag 2011 Okelly Marketing in Turbulent Times

8/18/2019 Pmca Pmcatag 2011 Okelly Marketing in Turbulent Times

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Pharmaceutical Marketing in Turbulent Times -

Developing innovative approachesto face new challenges

Vienna, 7 November, 2011


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Current context and challenges

Demand for healthcare is rising

Aging population, increase of chronic diseases

New diseases and growth of existing diseases

Increased expenditure on healthcare

Demands for increased level of care at a lower cost

Increased regulatory control and price pressure

Decreasing R&D productivity

Continued penetration of generics


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Trends

Shift in decision-making power and influence

transfer of decision-making authority from doctors to policy-makers andpayers

Shift in healthcare roles

primary care, secondary care and patient self-care and this will lead to ashift in needs

Shift in public healthcare focus

from palliative care to preventative care and compliance (vaccines,health management)

Shift in geographic focus

developing markets will be the growth drivers in the coming years

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Trends

Shift in the Sales and Marketing model

the traditional model is becoming obsolete

Shift in portfolio focus

from blockbusters to specialised medicine

Shift in the pricing model

value-based pricing/performance-based pricing using outcomes data

Shift in the way Pharma engages with the customer

from one-way “push” communication with a narrow customer focus to atwo-way “dialogue” with a wide range of stakeholders

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What must the Pharma industry do?

Innovate in everything we do!

What will this require? A radical change in mindset

How we define the market boundaries

How we define who our customers are

How we define our value-chain

How we organise ourselves

How we work

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Value Innovation

What is it?

What does it mean?

Why has it not been a focal point for pharma in the past?

Industry too rich

Narrow mind-set

Why is it relevant now?

Revenue streams are shrinking Increased competition

Past business models and commercial practices are no longer relevant

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What do these companies from different sectors

have in common?

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http://e/http://www.starbucks.co.jp/index.htm


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8What are Value Innovators doing?

1. They reconstruct market boundaries Especially barriers in mindset

2. They expand beyond existing demand A superior understanding of customers, dissatisfied customers ,

and non-customers

3. They break the Value-Cost trade-off Creating superior value at a lower price

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Breaking the Value-Cost Trade-off

Source: ‘Blue Ocean Strategy’, Chan Kim, Renee Mauborgne; Harvard Business School Press, 2005

Careful...decreasing Costsdoes not mean decreasingPrice!

Decrease

Unnecessary

Costs

IncreaseBuyer

Value

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1

0

The mindset challenge is to learn and unlearn

Innovation is not only about finding the new idea

It is about getting rid of the old idea

Which one is more difficult?

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Blue Ocean Strategy

Based on the book “Blue Ocean Strategy” by ChanKim and Renée Mauborgne, INSEAD Professors

Published in 2005 by HBS Press

#1 worldwide business book bestseller

Over 30 local translations

Based on a study of 100+ companies over a 10 yearperiod

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Why seek Blue Oceans?

Launches within Red Oceans(line extensions, etc)

Launches Creating Blue Oceans

Total Launches 86% 14%

Revenue Impact 62% 38%

Profit Impact 39% 61%

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Business launches of 108 companies


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Red Ocean Strategy

Compete in existing market space

Benchmark and beat the competition

Exploit existing demand

Make the value-cost trade-off

Choose differentiation OR low cost

Blue Ocean: a new approach to innovation

Source: Kim and Mauborgne, “Value Innovation”, Harvard Business Review, 1997

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Blue Ocean Strategy

Create new market space

Make the competition irrelevant

Create and capture new demand

Break the value-cost trade-off

Choose differentiation AND low cost


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Applying Blue Ocean Strategy to Pharma: CSFs

The BOS methodology is very flexible and can be applied to almostany aspect of business activities

But, to be successful, there are two main requirements Aradical change in mind-set

Change in vision of healthcare structure, stakeholders, competitors and theinternal organisation

A company-wide commitment to innovation

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Pharma Innovation examples

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Innovation example 1:

Implementing a patient-focused culture

Innovation example 2: Digital Technologies and the Use of Social Media Networks –

revolutionising pharma communications


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Orphan drug company founded in 1992, headquarted in Cheshire, CT One drug on the market: Soliris (Eculizumab) with several indications:

Initial indication: PNH (rare hematologic disorder), launched in 2007

New indication: Hemolitic-uremic syndrome, launched in 2011

Several additional indications currently being investigated Seen as one of the most striking biotech success stories in recent years by many

industry analysts

The company decided to develop its own full-fledge pharma operation (vs

partnering with established companies) in order to fully control the quality ofthe product, process & relationship

The company’s focus, as driven by the Founder /CEO Lenny Bell, is on each

single patient


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The recipe for success?

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The company has been tremendously successful: formal launch in 2007 (FDA approval in March and EMA approval in June), Alexion

revenues reached $541mn in 2010, with $97mn in net income, and 800 employees

The company’s stock (ALXN) listed on the NASDAQ has skyrocketed.

The company’s market cap is currently in excess of $12bn,

Alexion's 2011 full year revenue guidance has been revised upwardbased on Q3 2011 results, to the range of $770 to $775mn:40% growth over 2010


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In order to mobilize the entire organization, you

have to realize first the Value of each Patient

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What is the Value of a Patient to the company?

In the example of Alexion, parameters of the equation may include The price of Soliris: around 400.000 $ / patient / year*

If for example, the average duration of the relationship with each patient = 10

years (fictitious estimate), even with discounted cash flows and the projectedincidence of price renegotiations in several countries, it clearly appears that theValue of a Patient to the company amounts to several million dollars

If you fully realise this fact, you will then be able to ensure a “VIP”

service level for the Patients and quality in everything your teamdoes

*source: Forbes magazine, 2010


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Single-patient focused culture: what does it mean

in practice?

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The company has to develop targeting at patient level. The commercialprocess is centred around the patient: Patient identification is key: you must ensure that each potential patient is

validated, correctly diagnosed at the right centre, and that the treatment is fundedand initiated without delay

The local teams ensure that funding-related administrative paperwork is handledefficiently in each country, or in each region and hospital in countries with adecentralised healthcare system

Once the treatment has been initiated, the effort focuses on improving complianceand the services to the patient

Pharmaco-vigilance is of utmost importance and everyone in the teammust be trained on how to handle PV issues and patient requests. Allassociates at all levels must be trained on Disease and Drugunderstanding!


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Potential implications for the Pharma industry?

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The change of focus of many pharma companies from Mass Marketto Specialty might go even further in the direction of Niche diseaseareas including Orphan / Ultra-Orphan E.g., the recent acquisition of Genzyme by Sanofi-Aventis and the fast growth of

Alexion

Is it interesting and possible to initiate this type of patient-focusedmindset and single-patient driven commercial model in your

organisation?

If so, how can you make it happen?


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Pharma Innovation examples

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Innovation example 1:


Innovation example 2: Digital Technologies and the Use of Social Media Networks –

revolutionising pharma communications


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Digital: A new way to engage the consumer

New access devices… …and new channels

Internet: 1.8 Bn users

Mobilecommunication

PC: 1.7 Bn devices

Tablets / readingdevices:66 Mn devices

Phones andSmartPhones:4.9 Bn devices

SOURCE: Pyramid Research Q4 2010; Yankee Global Connected View

http://i.bnet.com/blogs/verizon-prepping-the-ipad.jpghttp://kara.allthingsd.com/files/2011/01/groupon-logo.jpeghttp://findicons.com/files/icons/1788/large_icons_social/512/blog.pnghttp://cordobo.com/wp-content/uploads/ie-pure-css-logo/


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Building a Digital Strategy


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Digital has become truly global…

71% of Internet users are outside ofNorth America / Western Europe

Asia accounts for almost half of worldmobiles

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15

14

MEA (16)

Asia(24)

45

Eastern Europe(19)

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Latin America(23)

10

Western Europe(7)

North America

(4)

1410

6

11

11Latin America(15)

Western Europe(3)

North America

(5.5)

48

Asia(19)

Eastern Europe(9)

MEA (25)

Internet users by region, Percent, 2006-10 CAGR, % Mobile devices by region, Percent, 2006-10 CAGR, %

100%= 4.9 billion100%= 1.8 billion

SOURCE: Pyramid Research Q4 2010; Yankee Global Connected View


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… But mix varies across regions

1017

51

28

8797

5364

9389

000022

MEA1 N. America AsiaLat. America E. Europe2W. Europe

148

126 TabletsMobiles

PCDigital device penetration by regionPercent of population

MobileDominant

2CAGR, %

2011-15E 8.310 10.511.94.62 43 60-153 88110 997251

PCDominant

SOURCE: Pyramid Research Q4 2010; World Bank1 Middle East & Africa 2 Includes Russia and Turkey


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Digital is changing how consumers engage with

brands

Community: Consumers share their product experience throughblogs, on-line communities and social networks

Information: Consumers use internet to evaluate an increasinglylarge pool of brands

Interactivity: Consumers expect two-way relationships betweenconsumers and brands

Personalization: Consumers expect manufacturers to learn aboutthem and provide personalized solutions

Convenience: Consumers shop for brands and look for bargains fromthe convenience of their home or on-the-go

SOURCE: Press searches

http://www.sxc.hu/browse.phtml?f=download&id=995748


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Research shows that key stakeholders are

increasingly engaged in digital

SOURCE: emarketer.com, Pew Research Center, press searches

Consumers

Internet is the first source patients and families go toresearch a health-related question

HCPsPhysicians and other health care providers (HCPs)are using the internet to help inform their clinicalpractice

In OTC, retailers are aggressively investing in onlinespace and look to partner with CPGs to drive in-storetraffic

Retailers


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How companies are making headway in the digital

space

Some examples: Customized HCP advice through iPhone application to build direct

relationships with HCPs and gather insights

Branded educational content and advice for consumers

e.g. brand/company-sponsored websites providing disease information,Facebook apps, advice and brand education, assistance programmes

Sponsored on-line communities e.g., Facebook groups for mothers of ADHD children, diabetesdaily.com

cancerforums.net, cnsforum.com

Links to on-line and off-line retailers

Multi-category digital newsletters e.g., Harvard Health Publications

http://www.pepto-bismol.com/http://www.pepto-bismol.com/


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Some key questions regarding social media

How critical is social media to the future of Pharma marketing?

What role should social media play in overall strategy?

What are the key opportunities of social media?

How, as a highly regulated industry, can we participate in socialmedia while mitigating compliance risk?

What ROI can be expected from investment in social media?

What are best practices for our industry?

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Conclusions

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There is good reason to be excited for the future in pharma! In large companies, the main struggle will be to overcome inertia and

organisational hurdles that smaller companies don’t have

But if we have the courage to think differently, promote creativity and

avoid over-processing/over-controlling, we can succeed and createsignificant value for ALL stakeholders

In spite of all the change we’re seeing, one thing remains true:

Never lose sight of the need to develop a clear and effective marketingstrategy which leads to a clear and relevant communications strategy

To do this, as always, we need to understand our customers and engagewith them in meaningful ways


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THANK YOU


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Consulting and Training consultants An international team, with headquarters in Paris, France

Certified trainer and practitioner in innovative “Blue Ocean Strategy”methodology by the Blue Ocean Centre at INSEAD, Fontainebleau,

France R&D team in London focused on computer simulation

development

Experience across a wide number of business cases and therapeutic

areas in both classical pharmaceuticals and biotech:

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Pmca Pmcatag 2011 Okelly Marketing in Turbulent Times