Pharmaceutical Promotional Effectiveness: Benchmarking Top Tier Companies by Country, Channel, Therapy Area and ROI - Market Research Reports

Contents:

Overview

Introduction

Pharmaceutical Promotional Effectiveness benchmarks 14 leading pharmas’ investment in primary care physician and patient targeted promotion from 1998-2001. Datamonitor compares and contrasts investment strategies by company, therapy area, channel, country and return on investment, resulting in a series of recommendations for successful promotion.

Scope

Quantifies top tier and company-specific trends in promotional ROI
Provides appropriate promotional mixes for each of the following countries: the US, France, Germany, Italy, Spain and the UK
Benchmarks 14 leading pharmas according to their promotional effectiveness
Assesses the impact of spiraling promotional costs on corporate cost structure and growth
Presents best practice recommendations for promotional success across 13 therapy areas and indications

Report Highlights

Pharmas sacrifice margins on promotional investment for revenue growth because, if revenue growth is sufficient, they can show a rise in earnings – a key requirement of the investment community. As a growth strategy, this is unsustainable.

Promotional excellence, not expenditure, drives commercial success. Larger companies generate higher sales because of their bigger portfolios, not because they are better at promotion.

To remain competitive, top tier companies should expect to spend 12 times more on US promotion than on any other single market.

Reasons to Purchase

Benchmark your ROI in patient and primary care physician targeted promotion against the industry’s leaders
Understand key drivers of declining productivity and adjust your promotional strategies accordingly
Identify countries and channels that require funding reallocation to increase ROI
Adjust your promotional mix to improve your competitive position in 13 major disease markets
Save time and money experimenting in new markets by learning from best practice case studies

DRIVERS AND TRENDS

Returns on promotional investment are declining as growth in investment outpaces growth in ethical sales. Since revenues are linearly proportional to promotional expenditure, companies must invest more to make more: there are no economies of scale. The only way to overcome this is to improve the effectiveness of promotion. While some top tier pharmas are closer to realizing this goal than others, most over-invest in promotion relative to the commercial potential of their products.

Investing more in promotion to drive revenue growth is unsustainable
Decreasing productivity reflects: increasing investment in detailing activities, greater reliance on the US for growth, a lack of economies of scale, and general over-investment in promotion

CORPORATE PROMOTIONAL INVESTMENT: BENCHMARKING THE LEADING PHARMAS

A lack of correlation between ROI and ethical sales demonstrates the variable performance of companies – some are just better at promotion than others.

Is there a ‘glass ceiling’ that limits the benefits of constantly increasing sales rep headcount?
Which companies currently display best practice in promotion, relying on the impact of their strategies rather than the size of their investments to generate revenues?

ALIGNING THE PROMOTIONAL MIX WITH THERAPEUTIC MARKET

Indications associated with greatest growth in promotional investment or highest absolute spend are among those displaying the lowest relative ROI, notably rhinitis, diabetes and arthritis.

What is the most effective channel mix in the hypertension market?
How can companies exploit switching opportunities through choice of promotional mix?

ALIGNING THE PROMOTIONAL MIX WITH GEOGRAPHIC MARKET

Pharmas are switching promotional investment to the US from Europe, with France and the UK registering net losses in expenditure from 1998 to 2001.

What is the trade-off in investment between DTC marketing and physician detailing in the US?
What is the most appropriate promotional mix to adopt in Germany? How is this different from France?

ACTION POINTS

Promotional ROI is declining. Investing more in promotion will only increase revenues, not margins.

Promotional excellence, not expenditure, drives commercial success. Larger companies generate higher sales because of their bigger portfolios, not because they are better at promotion.

To remain competitive, top tier companies should expect to spend 12 times more on US promotion than on any other single market.

Pharmas sacrifice margins on promotional investment for revenue growth because, if revenue growth is sufficient, they can show a rise in earnings – a key requirement of the investment community. As a growth strategy, this is unsustainable.

APPENDIX

The CAM Group: data collation and methodology
Glossary of terms
Defining Datamonitor’s ‘promotional universe’
Datamonitor’s Revenue Potential Index methodology

DATASETS

Table 1: Growth in promotional investment is outpacing growth in ethical

revenues

Table 2: Returns on promotional investment by top tier pharmaceutical

companies, 1998-2001

Table 3: Ethical sales and promotional investment of 14 leading pharmaceutical

companies, 2001

Table 4: Detailing and marketing channel investment by top tier companies,

2001

Table 5: The ratio of investment in detailing to marketing channels is increasing

in favor of detailing, 1998-2001

Table 6: US sales rep headcount and ethical sales, 2000

Table 7: Investment in detailing and marketing channels by company, 1989-

2001

Table 8: Promotional investment in the US is more than 12 times higher than in

any other major market

Table 9: Revenue Potential Index scores per company

Table 10: Leading companies’ portfolio composition*, 2001

Table 11: Ethical revenues per Revenue Potential Index score: the largest

companies are not optimizing their revenue potential

Table 12: Benchmarking relative returns on promotional investment by therapy

area and indication

Table 13: Adjunct therapy revenues per Revenue Potential Index score

Table 14: Johnson & Johnson’s Procrit promotional mix, Q1-Q3 2001

Table 15: Arthritis therapy revenues per Revenue Potential Index score

Table 16: Merck and Pharmacia’s COX-II therapy promotional mix, Q1-Q3 2001

Table 17: Asthma therapy revenues per Revenue Potential Index score

Table 18: GlaxoSmithKline and Merck’s asthma therapy promotional mix, Q1-Q3

2001

Table 19: Diabetes therapy revenues per Revenue Potential Index score

Table 20: GlaxoSmithKline’s diabetes promotional mix for Avandia, Q1-Q3 2001

Table 21: Gastroenterology therapy revenues per Revenue Potential Index score

Table 22: AstraZeneca’s gastroenterology promotional mix, Q1-Q3 2001

Table 23: Hyperlipidemia therapy revenues per Revenue Potential Index score

Table 24: Pfizer and Merck’s hyperlipidemia therapy promotional mix, Q1-Q3

2001

Table 25: Hypertension therapy revenues per Revenue Potential Index score

Table 26: Merck and Pfizer’s hypertension therapy promotional mix, Q1-Q3 2001

Table 27: Rhinitis therapy revenues per Revenue Potential Index score

Table 28: Pfizer and Schering-Plough’s rhinitis therapy promotional mix, Q1-Q3

2001

Table 29: Women’s health revenues per Revenue Potential Index score

Table 30: Merck and Lilly’s osteoporosis therapy promotional mix, Q1-Q3 2001

Table 31: Growth in promotional investment in the six major markets, 1998-

2001

Table 32: Promotional investment by top tier pharmaceutical companies by

region, 2001

Table 33: Relative channel mix by therapy area/indication, 2001

Table 34: Italy, Spain and Germany are more reliant on detailing channels than

the UK, France and the US, 2001

Table 35: Promotional investment by channel in each of the five major European

markets, 2001

Table 36: Benchmarking US promotional spend by the top 14 pharmaceutical

companies

Table 37: US changes in the promotional mix, 1998-2001

Table 38: Leading companies’ investment in DTC marketing, 2001

Table 39: Relative investment in DTC marketing by company, 1998-2001

Table 40: Benchmarking promotional spend in France by the top 14

pharmaceutical companies

Table 41: Changes in the promotional mix in France, 1998-2001

Table 42: Changes in the promotional mix in Germany, 1998-2001

Table 43: Benchmarking promotional spend in Germany by the top 14

pharmaceutical companies

Table 44: Changes in the promotional mix in Italy, 1998-2001

Table 45: Benchmarking promotional spend in Italy by the top 14 pharmaceutical

companies

Table 46: Changes in the promotional mix in Spain, 1998-2001

Table 47: Benchmarking promotional spend in Spain by the top 14

pharmaceutical companies

Table 48: Benchmarking promotional spend in the UK by the top 14

pharmaceutical companies

Table 49: Changes in the promotional mix in the UK, 1998-2001

Table 50: Proportionate channel mix in each of the six major markets, 2001

Table 51: Datamonitor’s promotional universe

Table 52: Estimated data points and methodology

Table 53: Revenue Potential Index metrics and ranking system