Pharmaceutical development: Marketing teams step into drug R&D

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With the average cost of taking a drug from pipeline to launch soaring past $800 million, more pharmaceutical companies are integrating product-marketing teams earlier in the research and development process, and even giving them the ability to halt or greenlight a drug in development.

That's according to a new study from Durham, N.C.-based Cutting Edge Information titled "Early-Stage Pharmaceutical Marketing: Uniting R&D and Commercialization."

The report found that pharmaceutical companies "must connect their markets and science to optimize resource allocation at the earliest development stages."

"This is still a fairly new concept, even for some [companies] in the top 10," said Jon Hess, senior analyst for Cutting Edge Information. "But the cost of developing a drug is astronomical, so they're trying to focus on those drugs that really have the greatest potential to first make it to market and, once they reach market, to drive revenue and turn positive return on the investment."

Cutting Edge Information profiled 14 pharmaceutical companies, including AstraZeneca, Aventis, Eli Lilly, Merck, Novartis and Pfizer, as well as several biotech firms and Procter & Gamble Pharmaceuticals. For the purposes of the study, however, each was blinded. Of the companies contacted by Advertising Age, several did not return a call. Of those that did, the drugmakers declined to comment and cited the confidentiality of their business policies.

more focused

But one pharmaceutical-marketing executive said the marriage of marketing teams and R&D teams was bound to happen.

"We've been doing it for a few years now," the executive said, "and what we've found is that it gives us a more focused look at the development of a drug. I think every company needs to take a look at that, given the submissions-approval ratio."

Since 1996 through 2002, FDA approval of new drugs has dropped from 53 to 26. But spending on research and development has gone from $17 billion in '96 to $32 billion last year, giving credence to one of the study's conclusions, that R&D spending is up because it takes so much more money to bring a drug to market.

"I've seen it with clients and non-clients," said Mike Guarini, managing director of Ogilvy Healthcare, a unit of WPP Group's Ogilvy & Mather, New York. "They are trying to integrate internally earlier in the process. Typically, consumer agencies haven't been called in that early in the process, but I think I'm seeing some trend to get consumer shops involved. Maybe not to the degree that the pharmaceutical companies are doing it internally, but to the point where the [ad] agency or a branding shop can give some input."

But that has brought criticism from some, who question whether people without a medical or scientific background are qualified to make a go or no-go decision on a drug in development.

the bottom line

"That is a concern in the industry," said Ken Kaitin, director of Boston-based Center for the Study of Drug Development at Tufts University. "There is a lot of concern that there are a sizeable number of products that have scientific benefit that are being killed."

Mr. Kaitin said, however, that if a company is making a decision to kill a compound, it is also taking those financial resources and putting them into what might be the next blockbuster.

"The bottom line to all of this," he said, "is that the scientists, the clinical investigators and such have had their roles diminished because now there's this other field involved. But there's a tremendous incentive to make decisions earlier on."

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