With sales close to $1000 Billion, the pharmaceutical company is undoubtedly the largest market today. It all began when apothecaries(small time pharmacists) began distributing raw drugs to wholesale manufacturers. With the advent of organic chemical synthesis by the German dye manufacturers and other advances in pharmacology, these rudimentary pharmacists began the journey towards the largest market of today's world.
Speculations have been around since many years concerning the industry's tremendous competition. Harvard professor Bill George asks: "Is the role of leading pharma companies to discover lifesaving drugs or to make money for shareholders through financial engineering?"
To put it in simple words, pharmaceutical companies manufacture drugs which generates huge profits and satisfies the investors. No company or investor will be willing to invest time or money for research on aspirin even if it had the potential to cure breast cancer.
1. Evaluating a pharma company
Investing in a pharmaceutical company is a test on your patience. Of course the time brings sweeter fruits if the seeds are sown properly. It takes no less than 20 years for a product to come to your nearby store after it had began it's journey from the scientist's journal. The reason for the long wait is the amount of time spent on research, testing and other entities such as the Food and Drug Administration(FDA) approvals. With a high probability of a start up company being acquired by a bigger fish, the investors are left to decide between the different products which such small companies innovate. Even tough these companies require heavy funds way before the product enters the market, they have a noticeably high return on equity.
2. The process
Drug patenting is the process where a company can hold sole rights to market a particular drug. During this period the company enjoys high retail prices in order to win back the money and efforts invested developing the medicine. Once the patent period expires, other companies are allowed to market the drug under their own brand. The prices, hence, reduce drastically owing to the increased competition.
Even tough protection of knowledge is very important, it is a very serious issue when it comes to curing a growing epidemic. Hence, regulators are making it difficult for big companies to win patents. Another interesting deal signed in 1994 called the Trade Related Aspects of Intellectual Property Rights levies the rights to manufacture a patented medicine to a generic drug maker.
These measures are taken keeping in mind the value of human life over pharmaceutical competition.
3. Marketing mantra for a pharmaceutical company
The industry focuses on three different sets of audiences to market their product: Consumer, Physician & Pharmacist.
Direct to consumer marketing is not allowed in many countries but for a few exceptions like the USA. That being said, there are various ways to reach the consumer. A famous way of reaching to the mass is through awareness campaigns. For example, running an education campaign for asthma will surely touch millions and brand recall is bound to happen.
Medical representatives directly communicate with physicians to tell them about the latest launches. This type of marketing involve free samples to the doctor, drug composition explanation and the price range. The doctor is now aware of the product, its effect and which patient can afford it. However with more number of physicians becoming employees of bigger hospitals, centralized purchasing has become more common. Hence, relationship building with these medical centres is extremely crucial. This means medical reps need to build connection with the decision makers and also demonstrate the benefits in a way much better than the traditional "features and benefits". This has become increasingly important owing to the fact that a single entity shifting to a competing product will be a huge blow to the company.
Similar is the case with pharmacists. In this case, the medical shop owner needs to be aware which physicians have been targeted by these medical reps so that he can analyse and appropriately plan his sales and stocks.
Medical representatives directly communicate with physicians to tell them about the latest launches. This type of marketing involve free samples to the doctor, drug composition explanation and the price range. The doctor is now aware of the product, its effect and which patient can afford it. However with more number of physicians becoming employees of bigger hospitals, centralized purchasing has become more common. Hence, relationship building with these medical centres is extremely crucial. This means medical reps need to build connection with the decision makers and also demonstrate the benefits in a way much better than the traditional "features and benefits". This has become increasingly important owing to the fact that a single entity shifting to a competing product will be a huge blow to the company.
Similar is the case with pharmacists. In this case, the medical shop owner needs to be aware which physicians have been targeted by these medical reps so that he can analyse and appropriately plan his sales and stocks.
4. The future
With radical shifts in the way of functioning and thinking, the strategies for these market mammoths need to be flexible.
- Increasing compliance to regulators
- The number of viral diseases multiplying with the population surge
- Restrictions on physicians prescriptions
- Growing independence of different sectors of healthcare
- Rising performance based bonuses
- People willing to pay good money for health solutions
It is indeed going to be fun to see how these companies grow and dodge these challenging hurdles. Let's wait and see!
Synopsis
Pharma is the biggest industry in the world and is highly research oriented. They have a unique style of communication and it varies with each target.
Here are few samples with varied tones:
1. Brand publicity
2. Vitamins in a simpler format(water instead of pills) is more relatable
3. Emotional marketing creating brand recall
4. Direct marketing to a large mass
Hope you have gained a little insight on how the industry works. These facts are important to know before handling a pharmaceutical client.
Peace and cheers!
- Aakshay Subramaniam
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