February 2008
	Developing Countries Are Developing in Pharmaceutical Marketing Research OK, by now I’m sure you are sick of it! For months, virtually every presentation I make and article I write has included my fixation with two key shifts in pharmaceutical marketing research. More specifically, it has been reported that in one year the amount spent on U.S. pharmaceutical marketing research dropped 25 percent. Moreover, people weren’t talking about this as though it were a part of a cycle, but rather an inexorable trend. This announcement lined up with conversations I had been having with colleagues who work for the country’s major pharmaceutical companies. Spending was off significantly, they told me, and they were concerned their jobs would be the next to go. I talked to people who previously had five people reporting to them and now had none, who had procurement departments breathing down their necks to save more and more money on projects they were conducting, who were being severely restricted in the number of conferences and training sessions they were able to attend, and – not surprisingly against this backdrop and combined with the prediction that things would get worse before they got better – weren’t feeling very good about going to work every day. The other observation on which I have been fixated was the forecast by PricewaterhouseCoopers (PWC) that the pharmaceutical industry’s top line would double – yes double – between now and 2020. Much of this growth, the report observed, would come from developing countries, where common sense dictates that premium prices realized by brand-name drugs in the United States prior to their patent expiration could never be charged, and where marketing and other business practices would have to be made extremely efficient if any bottom line were to be realized whatsoever. But then, as a coup de grace, I was presented with a report “Investing for Life: Meeting Poor People’s Needs for Access to Medicine Through Responsible Business Practices” from the United Kingdom aid group Oxfam. Two billion people, the report claimed, are denied access to medicine based on pharmaceutical companies’ defense of their intellectual property rights. To ensure access, the report said, these companies should be willing to sell their products at a discount based on a country’s ability to pay for the medications and/or even give them the right to manufacture generic versions. What all this will mean for the future of the pharmaceutical industry is unclear, but several things are manifestly obvious. First, given the large percentage of industry growth that developing countries will account for, we are going to take them very seriously. Second, given the differences between selling drugs through CVS at Main and Broad streets in any town, USA, and marketing them in Brazil, we must come way up the learning curve, very quickly, on the real dope of how to market products in the developed and developing countries, if we are to maintain the growth of, and – in the face of the “generic cliff” in the United States – the profitability of, the pharmaceutical industry. I’ve said this all before, but what I haven’t said is that over the last several years, pharmaceutical companies are actually starting to do just that. A review of our practice at GfK V2, for example, drilled down into our field department to determine where client companies are actually sending us to conduct research. As a result of this process, I was both surprised and gratified that while PWC and I are talking about expanding our purview geographically, many pharmaceutical companies have already started this process in a rather significant way. First, keep in mind that about 40 percent of GfK V2’s caseload in 2007 was international in nature. That number has been steadily creeping upward in recent years. Of greater interest is the fact that, when I asked Jennifer Steinberg, one of our senior international field coordinators, to comment on where our clients want us to conduct research and the trends in these requests, her responses astounded me. Not surprising, of course, is that outside the United States the major research activity remains in the G5 countries. Although significant differences exist across these countries in terms of their health care systems and philosophies, there is a significant amount of cooperation among them, enhanced by a dedication to the protection of intellectual capital paralleling that in the United States as well as the money to pay reasonable prices for brand-name products. This situation has been relatively constant for the past several years. What has changed substantially in recent years is the distribution of other places we go, and the frequency with which we go there. A second tier of countries, Jennifer tells me, has emerged as rather frequent destinations for our researchers. These include Brazil, Canada, Mexico, South Korea and Japan. Different hypotheses can be offered as to why these countries are gaining in research popularity. Brazil, the “B” in the BRIC countries that are attaining so much notoriety, is enjoying a booming economy which is apparently accompanied by booming pharmaceutical sales. Canada, because of its proximity and primarily English-speaking population, has always been easy pickings, but historically was not considered worth pursuing assiduously because of its relatively small size (30 years ago we typically talked about the market up north as being approximately 10 percent of our own). As the percentage of the marketplace for which the United States accounts has declined substantially and the value of Canadian currency has increased, ignoring Canada is clearly a strategic decision being reconsidered by many companies. Mexico and Korea I can’t explain, but I’m sure the researchers in my company who work extensively in these countries can, and I plan to interview them, determine what’s going on and include this information in subsequent articles. All I can tell you now is that one researcher on our staff has made two trips to Seoul (by way of Sao Paulo) for projects in the last few months alone. That was unheard of in the pharmaceutical industry a few years ago but is now increasingly commonplace. Finally, Japan has always accounted for a significant percentage of the pharmaceutical marketplace worldwide, but has often been avoided because of substantial differences in the practice of medicine and the tremendous expense and inconvenience of doing research there. But now, many increasingly agree that while it is a tough place to make money in the pharmaceutical industry, Japan can no longer be ignored. Next, our field files revealed a third tier of countries where pharmaceutical marketing research has grown substantially in recent years. These include Sweden, the Netherlands, Belgium, Poland, Russia (in addition to the work we do there, other GfK companies have 12 pharmaceutical marketing researchers working in Russia. I will elaborate on their work in subsequent issues of Vanderveer’s Views) and Turkey. For years people have asked us to do research in Turkey, and the amount of such work has been increasing. This, too, I will write more about in months to come. A fourth group of countries is tapped less frequently, but still often enough to earn honorable mention here. They include Australia (a country that used to be more popular), the Czech Republic (more frequently since 2006), Greece (more frequently since 2007) and Thailand (more frequently since 2007). The least frequent, but occasionally requested are Argentina, Austria, Denmark, Finland, Portugal, India, Switzerland and Taiwan. Are the kinds of projects being done in these countries all the same? I don’t know. I was just fascinated by the array of places where our 275 U.S.-based pharmaceutical marketing researchers are being asked to conduct research, and this does not even include the 250 GfK researchers in foreign countries who spend all or part of their time conducting pharmaceutical work. I am curious about the kind of work going on in each of these countries. I also want to know how developing a body of knowledge about the delivery of health care and the marketing of pharmaceuticals across these countries can help our industry provide their citizens with better health care and help us move, finally, in the direction of global marketing. Much effort will have to be put toward answering such questions. At the end of this month, for example, I have convened a three-day workshop in Miami of the management of all GfK companies in South America to explore pharmaceutical business and opportunities in their countries. So I should soon be able to begin filling you in on how these issues play out in this part of the world. In the meantime, if you have inputs to share with us in this regard, please don’t hesitate to contact me at rvanderveer@gfkushc.com. Richard B. Vanderveer, Ph.D. Group Chief Executive Officer GfK U.S. Healthcare Companies