Expect the evolution in pharma's sales and marketing structure to create big changes for meetings.
“In the past six months, we have seen one or two challenges in our industry,” joked Terri Breining, CMP, CMM, president of Concepts Worldwide Inc., Carlsbad, Calif., who gave the opening remarks during the Fifth Annual Pharmaceutical Meeting Management Forum.
Organized byand the Center for Business Intelligence, the conference was held March 29-31, 2009, at the Baltimore Convention Center.
Despite the obstacles created by the economic crisis, company mergers and layoffs, the ever-changing regulatory environment, and the ongoing scrutiny of meetings by the media, Breining urged perseverance.
“We can’t let up. We must all continue to do excellent work and continue to make the business case for meetings,” she said. “Now is not the time to roll over or fly under the radar. It may feel hopeless right now, but it certainly isn’t. I know for sure we will get through this.”
One of the challenges facing the industry is the evolving sales and model, said keynote Joseph D. Palo, adviser in PricewaterhouseCoopers’ Pharmaceutical and Life Sciences Industry Group, New Canaan, Conn.
With the cost of bringing a new drug to market reaching upwards of $1 billion, finding a profitable sales-and-marketing model for products is becoming increasingly critical to a company’s survival, noted Palo.
Projections based on the PwC report,"Pharma 2020: Marketing the Future” indicate that the pharmaceutical industry will nearly triple in value to $1.3 trillion by 2020, yet much of that growth will be in developing countries.
Despite the overall growth of the industry, markets in Europe and the United States are on pace to shrink in value by 2020, added Palo. One reason: Roughly two-thirds of the prescriptions filled in the United States are for generic drugs, which have very low profit margins. And while prescription drugs are a $217 billion industry in the United States “the industry is powered mainly by the profits it makes in only the branded 35 percent of the market,” said Palo.
Other challenges that are cutting away at profits include the lengthy and expensive research and development process, the relatively small percentage of drugs that receive FDA approval, and the comparably short amount of time drug companies have to market and sell approved drugs before patents run out.
The result is a “broken” marketing model where getting a premium price for a drug is essential to recovering the initial investment. In addition, just 3.5 percent of overall sales and marketing spend is allocated to meetings, said Palo, with the majority of spend going to samples, detailing, and unmonitored promotions.
Shift to Specialty Products
But innovations in technology are shifting the way pharmaceutical companies go to market. According to PwC research, over the next few years the pharmaceutical industry will focus less on developing drugs to treat disease and more on specialty products, which can change the underlying nature of the disease. Diagnostic markers will identify patients who have a high likelihood of responding to these new products; they will be prescribed by specialists and geared toward a smaller population, said Palo. Specialty drugs currently make up 25 percent of the U.S. pharma market, yet more than 60 percent of industry research and development is now dedicated to these products, which can command price tags of $10,000 to $600,000 per patient.
“By developing drugs that deliver positive outcomes, pharma companies increase the chances of getting the premium prices,” added Palo. “Since R&D is such a costly process, pharma companies can take some of the commercial risk out of developing a product by bringing the payer’s perspective into the process early and making sure that the market is willing to pay for these new products.”
Greater Need for Education
The marketing implications of this shift will be substantial, Palo said. Companies will rely less on samples and more on education and smaller, highly skilled sales forces to promote drugs. The result: a greater need for educational meetings to train sales reps as well as to bring thought leaders together to discuss how these products will be used.
According to Palo, as the industry adapts its approach to product development and sales and marketing, meeting professionals can expect to see
- an increase in pharma companies collaborating with payers on the types of products they develop;
- multiple smaller product launches taking the place of large launches;
- more smaller pharmaceutical companies bringing drugs to market;
- multi-country launches planned in shorter succession; and
- increased development of highly specialized and targeted pharmaceuticals driving a need for more training meetings for physicians and sales forces.
“Meetings provide one of the great exchange venues for information, motivation, and collaboration,” said Palo. “They offer a means for physicians to learn about changes [in the industry] and apply those changes so that all of us as patients can live better as a result.” The"Sixth Annual Pharmaceutical Meeting Management Forum will be held March 15–16, 2010 at the Philadelphia Marriott Downtown.