April 2007
	Readying Bold New Strategies for a Discontinuous Future Having just returned from the PMRG Conference in Las Vegas, I came away with one major thought on my mind. As luck would have it, that thought was instilled in the closing session, where as usual only about a third of the more than 500 conference attendees were still present. (What is with people who schlep all the way across the country and then bail out before the closing bell?) The thought came from Dr. Glenna Crooks, who is one of my favorite thinkers and speakers in pharmaceutical strategy. Having been deeply involved at the federal level with healthcare policy in several administrations, Dr. Crooks gets how things work in a way far more profound than the way the world is seen by the average pharmaceutical marketing researcher, including me. Glenna first got my attention several years ago with a brilliant presentation she made about the important “covenants” that need to exist linking all the players in healthcare, and how many of these covenants have broken down and are badly in need of repair. I confess that having heard her presentation and then reading her book on the same topic, I will never think of “pharmaceutical marketing” in the same way again. Sure we need to gain market share and make money for our stockholders, but can we really do it at the cost of breaking down our covenants with physicians and their patients? This time around, she got me with another thunderbolt. Citing and agreeing with a pronouncement by futurist Jonathan Peck, she suggested that within the next two decades or so, there would be no such thing as the protection of intellectual property – patents as we know them in the pharmaceutical business – and that the profitability of pharmaceutical companies would then be dependent upon their speed, agility and efficiency in marketing their version of a product that would be offered by numerous companies around the world. Yikes! Talk about a paradigm shift. How do we even begin to get ready for such a fundamental transition in our industry? First, I think we need to consider for a moment whether they are right in their predictions. You should think about this and draw your own conclusions, but I believe that they are indeed correct. We already see mini-versions of this world around us. Of the four prescription medications I take regularly, only one is provided by my pharmacist in the branded (i.e., patent-protected) form. Moreover, the healthcare plan under which the GfK U.S. Healthcare Companies operate has built into it, not by us but by the plan provider, a significant difference in out-of-pocket expense for branded versus generic drugs based on a multi-tiered co-pay system. With numerous major brands facing what our European colleagues call “patent expiry” in the next few years, we may soon find ourselves in a world in which so many excellent drugs are available generically, read cheaply, that patent protection for the few drugs still covered might not even matter. While I have heard some observers of the pharmaceutical industry predict that India, China and several other countries will soon become huge and viable marketplaces due to their moving toward the protection of intellectual property, we might in fact see the entire world, including most of the pharmaceutical marketplace constituted by the United States, moving in the opposite direction. Neither Dr. Crooks’ comments, nor my pondering of these comments, offer any quick-fix suggestions as to what the pharmaceutical industry should do under these circumstances. But one thing is clear. We as an industry, both cooperatively and competitively among pharmaceutical companies, had best increase our focus on “scenario planning” for a pharmaceutical marketplace that is far different than what we have enjoyed for the past several decades. Meanwhile, a walk around the exhibitors’ booths at the same PMRG conference suggested that our industry is moving in exactly the opposite direction. More and more marketing research agencies appear every year at this event offering the same old marketing research methodologies. As I toured the exhibit area, I kept asking myself whether the pharmaceutical industry really needs another agency to supply it with focus groups and lists of doctors who will participate in online research, or whether it needs to invest substantially in an “Institute for the Future of the Pharmaceutical Industry” that brings together the Dr. Crooks of the world to examine alternatives to our traditional we-can-make-so-much-money-on-our-product-because-it-is-patent-protected model. Simply reducing headcount and other expenses, as many pharmaceutical companies are doing, will not suffice. In fact, now is the time for pharmaceutical companies to increase their investments, but in pursing new business models rather than flogging old ones, if we are going to be profitable in the short run and ready for the paradigm shift Dr. Crooks sees over the next several decades. As a final note on this point, let me emphasize that I believe pharmaceutical marketing researchers can serve a major role in helping the industry make this transition. Increasingly, though, I believe our contribution will not be worked by getting together three focus groups of PCPs, or by trying to figure out how to get any meaningful value out of longitudinal patient level data. Rather, as we have in areas like oncology, where increasingly our work focuses on tapping the brains of Key Opinion Leaders, we will need to study and carefully organize the thinking of such visionaries as Dr. Crooks, study the demographic, regulatory and other drivers will be at work in the future that will shape our industry, and develop and be ready to execute bold new strategies for responding to a future that is discontinuous, i.e., qualitatively and substantially different, from the pharmaceutical industry’s past and present with which we are so comfortable. It’s a big challenge that will require a lot of work, and substantial amounts of thinking that go well beyond data collection and analysis. I, for one, welcome this challenge, and encourage you to move your thinking, your company and the pharmaceutical industry toward what might well turn out to be more of an exciting and profitable place than we have ever known. Richard B. Vanderveer, Ph.D. Group Chief Executive Officer GfK U.S. Healthcare Companies