Value innovation in pharmaceutical marketing

By Rob Halkes, Van Spaendonck Management Consultants

Current marketing efforts of pharmaceutical companies are mostly product driven and generally focused. Instead, a differentiated approach to targeted audiences and accounts will be more productive in the long run. Besides, pharmaceutical companies have to develop specific added value to product features to develop new partner relationships with health care professionals. Added value like differentiated and specific services of support and information to prescribers and patients.

The concept of value innovation presents to pharmaceutical companies the prospect of an improved market position and performance.
It presents:

• a way to develop a unique proposition, and a way to market this proposition to selected parties in the health care market,
• to develop sustained performance by way of continuing partnership in the business of health on the basis of unique added value to health care professionals and patients.

A specific segmentation of targeted audiences leads the way to account focus and forthcoming partnership with potential accounts. Through multi channel marketing, communication, and customer relationship development, partnership is possible. Partnership will flourish development of proposition, and generates in cooperation products and services that are new to the market. Services marketing may generate new customers and accounts. Sustained performance will be within reach. In short, a new business model for medical and life sciences is within reach.

Case Example network marketing and account focus.
In the Dutch pharmaceutical market several developments have influenced prescription policies of GP’s. The liberalisation of the health care market have led the health care insurance companies to challenge GP’s on their policies on treatment of chronic conditions. To respond adequately to this challenge, GP’s would individually need to spend a lot of time on filling out requested forms and evaluate their own policies and routines in chronic care. Instead, they set on to associate themselves into groups to cooperate with each other to response and to form a stronger alliance to negotiate with the health care insurers. These groups went also on to develop prescription policies, endorsed to do so by extra reimbursement schemes from the part of the insurance companies.

In an early stage, we have acknowledged the potential impact of these health care groups on actual prescription routines. With the pharmaceutical company that we worked with, we configured an account team that would focus specifically to these groups. Upon researching the existence, number and composition of the groups by the team, we made a segmentation and targeting of these GP networks by use of three criteria: potential, probability of success and needed investment. Account managers were trained in network management and development and cooperation schemes with marketing and sales management were developed and tested.

As a result, the pharmaceutical company has also benefitted from “first encounter effects” with the decision making units of these networks and has experienced direct responses from these groups in requests for support and endorsement in specific chronic areas. For example, in supporting projects concerning treatment schemes for chronic care and in specific forms of patient support.

A head start in commercial relationship with these groups and consequent business results could be made by the pharmaceutical company as opposed to the competition. Upon this, initiatives have been taken to develop more sustainable partnership to develop chronic care treatment by cooperation between health care professionals, health care insurers and the pharmaceutical company. On the basis of these business partnerships, the pharmaceutical company is able to reduce the number of sales reps and yet to uphold its ROI. Van Spaendonck is de management consultant.

Case example adding value by way of developing experience co-creation in health care.
Experience Co-Creation (ECC) is a concept in which the consumer is actively involved in shaping the way in which he or she wants to use offered products and services in specific ways, according to how he or she sees this fit to ones own needs and desires. (See for examples the website of eccpartnership.com. ECC is a concept forwarded by C.K. Prahalad and Venkat Ramaswamy, The future of competition, 2004).

In health and pharmaceutical care, this way of thinking assists health care providers to create a context of care to the patient, with facilities that are medically sound and offers the patient the possibility to configure one’s own preferences in how to cope and comply with the needed therapy and to do so in a medically valid way.

In the business of implantable devices for cardiac pace making or cardioverter defibrillation (ICD), new technical features have been developed to be able to monitor relevant physiological parameters that relate to Quality of Life (QoL) and well being of the patient. It is also possible to remotely monitor the patients by use of data storage and communication of the devices with remote supervising centres. It may even, with advancement of research, lead to the possible prevention of malfunctioning of the heart and/or the prevention of heart arrest or fibrillation.

Yet, to implement the use of these devices, evaluation of health care practice and treatment routines need to be reconsidered. New conditions for adequate care are posed to the parties involved: structured cooperation, clear division of responsibilities, adequate communication and instant support of patients. Also, new reimbursement schemes for extended care and reduced costs, and all other kinds of aspects of integrated care need to be considered, to optimize outcomes of treatment and increase satisfaction and assurance of the patient with his or her loved ones. In this context, it is obvious that the challenge to coach and support the patient is complex and will not easily be done. It certainly seems as though the application of personal support and guidance in face to face contacts will be too costly. But creating remote communication channels and perform interactive guidance by way of distant care, however, makes that possible.

Surely, extensive cooperation between parties involved need to be construed in partnership. But with this partnership sustainable business is immanent.

The patient then will “co create” with these integrated and added facilities in cooperation with all suppliers of care, devices and communication facilities, his or her own and preferred health care experience. A new kind of disease management may emerge.

The project will be implemented over Europe. Van Spaendonck is the management consultant.
 
Case example of the transformation of sales representatives to consultants in health care practice.

A pharmaceutical company, strong in production of insulin, has taken up the challenge to improve its market position. Due to specific market conditions (refer case 1), management has decided that more gain in market share would only be due by adding specific value to health care practices in the treatment of the patient with diabetes in the primary (GP) health care market.

Although a lot of different projects of health care support and innovation have been performed, also by the competition, little or no projects have addressed the need to develop cohesive and integrated care concerning all parties involved. To do so poses a problem to those GPs and primary heath care centres, that do want to (further) develop and integrate the different and complex components of health care to the patient. Yet protocol and standards as well as formats for several aspects of care for the diabetic patients are available. And until now, projects initiated and performed with the assistance of pharmaceutical companies have mostly been piecemeal in relation with a cohesive and inclusive model of diabetes care.
The pharmaceutical company has decided to support the health care centres by introducing diabetes care consultants with extensive know how of diabetic treatment practices. They have also construed a specific model to develop and implement sound and viable health care practice in small steps.

Yet, to advance these first and basic provisions into more inclusive forms of care, the company needs to extend more disciplines to its own organisations, like for instance organisation development expertise, change agents and  the like. Multidisciplinary efforts need to be made to advance specific practises of care. To do so, will have an impact on several and different aspects of the business of the company, like development of and integration of the new functions of diabetic care consultants within the company. Their relationship with marketing, medical and sales need to be defined and integrated in organisational processes, information and communication. Impact need to be addressed to market approaches, account management, key account and opinion leader management, advocacy development not only to the company’s products and health care services, but also to its new position of consultants in health care innovation and development. Implications for medical advice, pharmaco vigilance and the like, need to be addressed too. Etc.

Further, consequences for cooperation with other parties involved such as health care insurance companies or professional associations need to be elaborated. Also, multi party contracts, preferably with health care insurance companies, and implications for reimbursement schemes for the offered consultancy, must be considered in the frame of the change of business model of the company. A specified business case must ground the development of the new position. Three basic concepts are needed: a model of integrated health care for the diabetic patient with specific schemes of implementation; a specific account management model to enable differentiated relationship and activity management for different segments of accounts, and a specific model for implementing the needed changes in the organisation and to hire, develop or train and integrate the newly created functions.

Needless to state, that this kind of repositioning of the company goes far beyond the traditional and classic business model of a pharmaceutical company. But, the development of needed and functional added value to health care practice, must be integrated in a vision of how to cooperate with health care providers so as to create desired cooperation in the advancement of health care practices.

Forthcoming account relation development offers goodwill for ones products. In further development one could, by way of cooperation and partnering with health care insurance companies, develop sustainable and improved business upon their interest in quality improvement of chronic care in cost effective ways. Van Spaendonck is the management consultant.