North America accounted for 45% of the global pharma market last year, thanks to the first year of implementation of the Medicare Part D benefit and the resulting increase in prescriptions, according to the report from IMS.
While the picture is certainly rosy for big pharma, there still are many challenges ahead.
"To sustain growth, pharmaceutical companies need to stay ahead of the dynamics that are rebalancing the marketplace worldwide," said Murray Aitken, senior VP-corporate strategy at IMS. "This requires a sharper focus on realizing productivity gains from their sales, marketing and launch investments; a comprehensive assessment of their R&D and portfolio strategies to support opportunities in both emerging and mature markets; and a commitment to better demonstrate the value of their medications among key stakeholders."
Such challenges present opportunities for would-be vendors, said Carol Krugman, director of client services at experience marketing agency George P. Johnson Co. "Pharma companies are focused on running leaner and meaner than they ever have," Krugman said. "If you have a product or service that enhances consolidation efforts or can provide a proven ROI beyond what is already being achieved, you have a much better chance of getting in the door."
Sandra Holtzman, president of Holtzman Communications, added that whatever product or service you market, industry expertise is a must before approaching big pharma companies. "You need working knowledge of drug processes for manufacturing and clinical trials, as well as an understanding of regulatory issues," she said.
Another important consideration, Krugman said, is that pharma companies work in an environment of continuous, high-stakes risk. "They invest huge amounts of time and money to develop a small number of products that can be taken off the market at any time due to unexpected side effects," she said. "So one of the first things someone wanting to work with pharma companies needs to know is that the people whom they want to reach are very aware of the responsibility they have to get it right every step of the way."
Credibility, Proof and Patience
Just having a great product or service is not enough to get your foot in the door. "You need to establish credibility and credentials specific to pharma from the outset," Krugman said. "With the shift to procurement-based decisions in most of the large companies … a contact within the company to help identify who's who and how purchasing decisions are made is invaluable."
Data and rationales are must-haves for marketing messages, said Kelley Connors, principal at KC Healthcare Communications. "On average, it costs up to $2 billion dollars to bring a drug to market over a period of 10 to 15 years," Connors said, and "for every 5,000 to 10,000 compounds that enter the research and development pipeline, ultimately only one receives approval."
"The difference in doing business with pharma is that the time line for adoption of products and services is directly related to 1) where products are in their lifecycle; 2) when the next blockbuster is expected to launch; or 3) if the product or service creates a bigger or more profitable market, or expedites product to market," Connors said.
According to IMS, the industry expects to introduce 30 new drugs in 2007 and only another 25 to 35 in 2008. Few will be what the industry defines as a blockbuster—a drug geared for a wide audience and expected to generate more than $1 billion in revenue annually.
And the drugs that are launched are no longer necessarily for the North American marketplace. "The geographic balance of the pharmaceutical market continues to shift away from the U.S. toward the world's emerging markets—countries with a per-capita Gross National Income of less than $20,000," said IMS' Aitken. "These countries currently represent 17% of the global market, but will contribute 30% of growth next year."
Today, any company with a truly global presence—a consistent, centralized operation in Europe, Asia/Pacific and Latin America—is attractive to multinational drug companies, Krugman said. "Consolidation and cost-cutting are moving many companies to a regional approach. If you can provide a product or service not only in the U.S. but also in the company's regional business units, you are that much more competitive."
Conversis is one marketer that has recently capitalized on big pharma's global push. A provider of globalization, internalization, localization and translation (GILT) services, the company has already doubled its 2006 revenue in just the first quarter of 2007 because of its focus on the pharmaceutical and medical industries. "With the constant growth of pharmaceutical companies, this was an ideal market to tap," said Gary Muddyman, Conversis' CEO-managing director. "And because of all of the risk factors, the pharmaceutical industry isn't embraced by the GILT industry. This provided Conversis with an opportunity to gain an even larger market share."
Conversis started selling to the pharma industry on a small scale a few years ago, Muddyman said. "We had to prove ourselves and establish trust within the industry," he said. "Repetition of our marketing messages was key, as we had to make to continue to stay in front of our audience. We noticed it took several rounds of initiative to reach the key decision-makers."