Pharma companies needs to look at social media

A wide range of companies have embraced social media (SM) and integrated SM programs into their marketing plan. But pharmaceutical companies are not sure how to integrate this approach and are just starting to learn. I can understand why Pharma is reluctant towards SM – the rules are not clear about what you can do and not do.

FDA is seeking input on SM and a public hearing will be held on November 12 and 13, 2009. EU has banned all DTC advertising and all correspondence needs to go via medical practitioners. Healthcare professionals act as gatekeepers of information and has to ‘educate’ the public. This means that all SM activities have to be directed towards healthcare professionals. But what if information is giving to the wrong people?

On the Internet, patients can assemble in support groups and share knowledge about products, treatments etc. – across countries. Knowledge sharing take place everywhere on Twitter, Facebook, patient groups and other media solutions. The big question is: what role can Pharma companies play and how can social media be utilized?

Traditionally, the sales force has been the heart of Pharma marketing. Detailing, samples, conferences and services have been used to build an emotional involvement with customers and the sales force has been a crucial part of this strategy. To create a positive Buzz around your product you need to involve KOL’s and doctors and get them to embrace your treatment. SM could play an important role in the involvement of KOL’s and doctors.

The use of media
Pharma companies have corporate websites, product-sites etc. and is maybe using one or two of the “new media things”. But they lack knowledge of what to do and how to do it and to create a strategy that encounter the marketing objectives. Healthcare professionals are choosing products based on safety, efficacy and some emotional attachment: “I know it works, my patients are responding well to the treatment, the manufacturer’s reputation is recognized and I know they are very ethical”. SM can affect these emotional attachments and improve the company reputation. But you have to do it right – big surprise!

A place to start
Before you can get started you have to understand what SM is all about. When you have done that, research and pinpoint your target customers: how are they using SM, how can you target them and what kind of information are they looking for? You simply needs to understand what Facebook, Twitter, Youtube etc. can give you, how your customers are using them and what combination is the most effective! But most importantly, you have to make a clear-cut strategy and make your objective smart and measurable.

Always keep in mind your target customer, understand them and what you are doing – strategize. If you can grasp all three, I believe you can create a powerful platform and create an unmistakable brand awareness.

To measure your success or failure, you can measure data points like brand ambassadors in a program, conversations that are generated from them, time spent on websites, referrals etc. I found a very interesting Blog post about this matter:

http://social.eyeforpharma.com/story/explore-be-bold-measure-healthcare-word-mouth-and-web-20

I think, Pharma companies needs to modify their marketing focus and start to implement other and new approaches. SM can leverage the brand awareness and give valuable information about your target customers. But you have to ‘go all in’ and research your customers use of SM, make an effective strategy and remember to measure your results.

Don't you dare cut your marketing budget

Nobody can runaway from the recession – it is a reality and we have to work with it. Some people are already noticing better times in the horizon, but nobody can be sure. Traditionally, a downturn in the economy means cutting marketing budgets. And according to a survey by marketingprofs.com, the financial crisis is causing immediate 2008 budget cuts and already affecting the 2009 budgets. In a recession, consumers become value oriented, distributors are concerned about cash, and employees worry about their jobs. But don’t let you get carried away by the negative mood. A downturn is no time to stop spending on marketing. It is a unique opportunity to consolidate your market position and increase your competitive advantage.

My message is clear: Don’t you dare cut your marketing budget – only if you are in a desperate need of working capital. If the budget is cut, your message could get lost in all the “noise” made by competitors. It’s time to get smart about your marketing dollar and spend it to bring results. That’s easier said than done.

How to do it

The key is to know your customers and look at your marketing spending as an investment – not an expense. Remember to: Devise a strategy, maintain market spend, assess and allocate the budget, research your customer thoroughly, target and reach out to them.

In other words it is extremely important to be well positioned. I firmly believe that if you get these things right your company could survive any recession and possibly thrive in them.

I have found the following guidelines:

1. Research the customer. Instead of cutting the market research budget, you need to know more than ever; how consumers are redefining value and responding to the recession.
2. Maintain marketing spending. This is not the time to cut advertising. It is well documented that brands that increase advertising during a recession, when competitors are cutting back, can improve market share and return on investment at lower cost.
3. Adjust product portfolios if/when consumers trade down to models with fewer options.
4. Support distributors. In uncertain times, no one wants to tie up working capital in excess inventories.
5. Adjust pricing tactics. Customers will be shopping around for the best deals.
6. Stress market share. Companies are in a battle for market share and, in some cases, survival.
7. Emphasize core values.

Good luck surviving the recession and remember you have a unique opportunity to improve your market position – if you are willing to act instead of only reacting.

Another mega Merger and Acquisition: something is cocking in Pharma

The trend continues to bring us mega M&A’s. Merck has today consolidated its position as one of the biggest Pharma companies by announcing the acquisition of Schering-Plough Corp. for USD 41.1 billion in stock and cash. The acquisition will give the company more firepower to fight the battle against the drooping sales, generic competition and intense pricing pressures.

Merck and Schering are already partners in a couple of popular cholesterol fighters, Vytorin and Zetia (together these drugs generate USD 4 billion in annual sales) and the two companies is said to be a “perfect match”. The deal will form the world’s second-largest prescription drugmaker, only topped by Pfizer. The planned merger of Pfizer and Wyeth, a deal worth USD 68 billion, is said to be the way out of the major revenue gap that will emerge in 2011, when Pfizer’s blockbuster cholesterol-treatment drug, Lipitor, will begin to face US generic competition.

Merck’s strategy has been to buy small companies and rights to individual experimental drugs, but this has all changed. Merck has long been trying to find suitable strategies to address the falling revenue, as blockbusters like Fosamax and Zocor have seen generic competition hammer sales the last couple of years, and now the company has left “the small company strategy” and acquired a top 20 Pharma company. In addition the deal will improve earnings per share and cash flows as Merck loses patent protection on top brand names like Singulais (allergies) and Cozaar (high blood pressure). Compared to Merck, Schering has relatively few drugs nearing patent expiration and this has, in my opinion, enhanced the strategic fit.

The transaction is expected to close in the fourth quarter and the shared 2008 revenue of the two companies totalled USD 47 billion. The combined company will have a more diverse portfolio across important therapeutic areas, including cardiovascular, respiratory, oncology, neuroscience, infectious diseases, immunology woman’s health and other areas.

The big question is: how will the stock market respond to the deal? When the Pfizer-Wyeth deal was announced the Pfizer share slumped by 10% and I believe the same thing will happen to the Merck share.

The Orphan Drugs Act (ODA): Pharma’s new blockbuster approach

As earlier described the Pharma companies have experienced a staggering decrease in growth rates, cut-backs in approved products and an increasing threat from generic manufactures. The crisis (and I am not thinking about the current economic crisis – the Pharma industry is often unaffected by the state of the financial market) forces the companies to be risk-averse and focus on large therapeutics felts – future blockbusters with a solid revenue stream. Because of Pharma’s focus on big indications, for example cholesterol-lowering medications, the competitive environment is fears and many companies have looked for different strategic approaches and one answer is orphan drugs.

An estimated 6,000-7,000 rare diseases and conditions, affecting 25 million Americans, remain either untreatable or are treated with therapeutics that are not very effective (e.g. they are non-specific, or offer limited symptomatic relief) or causes serious adverse effects. The signing of the ODA by Ronald Reagan in 1983 was meant to give hope to more than 25 million Americans suffering from a rare disease or condition and no doubt the ODA has made an impact. 325 drugs have received market authorisation, as of April 2008 – in the decade before the act was passed, only 10 treatments had been developed for rare diseases. Naturally the act has an effect on the companies too.

The ODA provides direct incentives to developers of drugs for rare diseases and disorders (i.e. those affecting <200,000>

• Seven years of marketing exclusivity: completely bars competition from similar compounds
• R&D tax credits
• FDA counselling and fast-track programs
• Grant funding of clinical development
• Short review time: FDA has the recent years used about 2,5 months on approval – which is significant lower compared to the approval time of NME’s and NDA’s
  

The ODA has made niche products an interesting business and there are currently more than 303 drugs in development for orphan indications . Cancer and cancer-related conditions are the most common indication for orphan drug development, accounting for 142 of 303 therapies listed in the PhRMA.

The idea behind the ODA was to get Pharma to develop new alternatives to untreated rare diseases and Pharma has made it a good business. The market pull incentives to compensate for low sales has made some orphan drugs blockbusters (see figure 1).


Figure one depicts a number of examples of orphan drugs reaching blockbuster status. But how can a drug targeting <200,000 people secure an annual cash flow of minimum USD 1,000 millions? The answer is simple: by setting a high price. The most widespread criticism of the orphan drug legislation has been the sky-scraping treatment cost. Many healthcare professionals, patients etc. have expressed that the only error in the orphan drug act is the missing regulation of the price. If the price was regulated it would improve the accessibility and affordability, but should naturally not conflict with the interests of the Pharma companies to invest in the segment. Development companies are in the market to generate shareholder value and have to create a positive ROI and when the indication is small it affects the price.

According to the Global Markets for Orphan Drugs report (by BCC), the total market size of orphan drugs in 2006 was USD 58.7 billion and is expected to rise to USD 81.8 billion by 2011. Around 60% of the orphan drugs are biologics and the report depicts the most promising categories within biologics to be monoclonal antibodies, interferons/interleukins, growth hormones, and plasma products. The future success of the orphan drug blockbuster strategy is depending upon the entry of biogenerics. The biogeneric market is very attractive to generic manufactures nevertheless the approval process is not made clear-cut by FDA, yet. But no doubt legislations permitting biogenerics is on the way – just look at Europe, where EMEA has approved a couple of biogenerics. This will only change the name of the game when a drug is loosing patent protection. In my opinion the above incentives of the ODA will still make the orphan drug blockbuster strategy an attractive approach. But in time the competitive environment of orphan drugs can be too crowed and push Pharma in other directions.

Victoza® (liraglutide) from Novo Nordisk

Novo Nordisk is fighting hard to get liraglutide approved by FDA as soon as possible. The company filed for European and U.S. approval last year and FDA is expected to approve the drug around May 2009. The approval process has been delayed due to FDA’s extended data requirement.

Liraglutide is a human GLP-1 analogue, designed to induce the same effects as a blood sugar-improving hormone and will be competing head on with Eli Lilly/Amylin’s Byetta. FDA has already approved Byetta and the product could hereby profit from a first mover advantage. But Byetta has run into trouble. Byetta has been linked to an increased risk of deadly pancreatic disease. This has forced FDA to strengthen the warnings about life-threatening pancreas when using the product. The FDA says that Byetta and other suspect drugs should be promptly discontinued if pancreatitis is suspected. Novo has not experienced any of the above problems in the clinical trials with liraglutide and it should be easy to discriminate all links to pancreatitis and create a competitive advantage compared to Byetta.

Victoza® (liraglutide) contra Byetta

Liraglutide has three advantages:

• Liraglutide is a once daily injection (Byetta is a twice daily)
• The Lead-6 data has indicated a better efficacy compared to Byetta
• No link between the product and pancreatitis
  

If Novo Nordisk can utilize the once daily version, the better efficacy and Byetta’s impaired reputation , the first mover advantage of Byetta could be effect less and Victoza could quickly meet its blockbuster potential and secure a market leader position.

However Victoza’s success could be short termed. The expected launch of Byetta Lar (once-weekly injections) in mid 2010 will be a serious challenge, due to the impressive results in clinical trials. Byetta Lar has documented a weight loss in the size of 4-5 kg, after one-year treatment – compared to “only” 2-3 kg with Victoza. Byetta Lar could challenge the possible market leader position of Victoza – if the product is approved.

Goldman Sachs has predicted the global sales of Victoza to reach DKK 6,000 million in 2012. In my opinion Novo has to focus on pushing the product and build up a strong market position within the six first months of launch – if not the predicted global sales will be diminished. Novo has to utilize the window of opportunities before Byetta Lar is approved. If they succeed the product could be a future cash cow.