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GfK Healthcare | September 2010 | |
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Investing in the Future of Health Care  That the traditional pharmaceutical industry is facing major challenges in the years to come is hardly startling news. Yet many companies, their associates and the agencies that service them go about their day-to-day business as if nothing has changed. Thus I was fascinated by a call for presentation proposals that I received from EphMRA for its 2011 conference in Basel, Switzerland. Given the global focus of this organization, it is important to note that while much talk in such circles in recent years has focused on emerging nations, this call for papers reminded us that the U.S. marketplace is still a large component of the worldwide pharmaceutical industry, and that the challenges our country is facing cannot be ignored by those making investment decisions in health care. Against the backdrop of the general theme, “Stepping It Up,” one section of the conference will focus on a vision of a new marketplace in the United States. In this marketplace, according to the author of the call for papers, “The economic interests of large, corporatized group practices will drive selection and use of pharmaceutical therapies. “Conventional representatives will become increasingly obsolete. Pharma’s sales personnel will become ‘account teams’ using an entirely different marketing approach. “The changes we are seeing in the U.S. mean that practices will occupy the role of ‘gatekeeper,’ running their practices or groups of practices with strict financial goals.” This scenario, if accurate, will demand that money formerly invested in pharmaceutical advertising, including both promotion directed at professionals and DTC, will need to be substantially redirected. The question is, how? A key consideration in investing in the future of the health care industry and the businesses that service it, as I have noted before in other contexts, is that the changes about to occur, which will be more revolutionary than evolutionary, will virtually negate the role of marketing research in making long-term planning decisions. Rather, both manufacturers and the agencies that service them will need to rely far more than has historically been the case on informed brainstorming and scenario planning. We will have to redouble our efforts to determine whether the straw man scenario that the EphMRA author has provocatively laid out is a likely eventuality, consider what will be the drivers of such a world and, most importantly, plan what we will do by way of response to such a marketplace. To support these efforts, a new kind of research will become increasingly important in which competitive and environmental intelligence processes are put in place to monitor the direction and speed of power in the marketplace. Key here as well will be the development of rapid response strategic planning, which will help us to develop new ways of doing business. Taking the risk of being labeled as somewhere between radical and heretical, I would also recommend that we begin now to set in motion an accelerated process that starts to pull back on investments in areas that we know will not be functional in any foreseeable vision of the new world. While admittedly most pharmaceutical companies have already made significant cuts in the sizes of their sales forces, this reduction process can likely be accelerated without significant loss in revenues. Additionally, in a world in which group practices are being increasingly run on a for-profit basis, with profit optimization becoming increasingly challenging under health care reform, I would suggest that we rapidly begin to pull back on investing in such areas as DTC advertising. Patients will increasingly have little or no say in specifying the particular pharmaceutical agent they will receive, and the physician will have significantly decreased patience for dealing with the drug requests that these advertisements encourage them to make. In this month’s Orange Pages, I describe in some detail a book titled Different. Written by Youngme Moon, a Harvard Business School professor, this thoughtful, recently published book explains that to be perceived as different, one increasingly needs to be genuinely different. As an example, Ms. Moon points to IKEA, which in addition to enjoying virtually universal recognition has turned furniture buying on its ear. Ask the average person to describe IKEA, and he or she will likely tell you a story about a furniture store with virtually no sales people that requires you to pick up your own furniture and take it to check out, and then figure out how to get it home and assemble it yourself. No focus group or other marketing research technique would ever lead a company to open such a chain of stores, but IKEA has been extremely successful. A thorough reading of Ms. Moon’s book might well give you the mind expansion necessary to begin thinking about how we should go about starting to invest in radical changes in health care marketing that will be required to respond to the radical changes at work in the U.S. health care marketplace.  Richard B. Vanderveer, Ph.D. CEO, GfK Healthcare   |