Towards Value Innovation In Pharma SFE Conference London 062007


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Presentation with initial thoughts about the need for pharma company's to develop a new business model

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Towards Value Innovation In Pharma SFE Conference London 062007

  1. 1. Towards Value Innovation in Pharma 31 May, 2007 Drs. A. R. J. Halkes MHA PR54936/RHA/GZA Perspectives for an imaginative role in health care
  2. 2. The growing problem… <ul><li>Pharma revenues and margins are under threat </li></ul><ul><li>The pharmaceutical industry has an ever more diminishing access to target audiences: </li></ul><ul><ul><li>Customers, health care workers, as well as patients, consumers </li></ul></ul><ul><li>Influence on prescription gets more and more mediated through networks of several kinds around the doctor </li></ul><ul><li>Growing sepsis in public and media about integrity and the sustainability character of the industry </li></ul><ul><li>There seem to be less and smaller blockbusters among us than might be necessary for several companies to uphold their current positions in the market? </li></ul>
  3. 3. IMS study : changes in pharmaceutical markets are underway globally, with the most emphasis in the advanced markets of the industry 1 1. Trends in Sales Force Effectiveness, IMS 2005 USA UK Ger Can France Italy Iber L.A. Japan China India Turkey Benlx Nordic <ul><li>Developing healthcare systems </li></ul><ul><li>Information sources poor </li></ul><ul><li>Pharma looking for sales deployment models </li></ul><ul><li>Pharma in wait mode, not a burning platform for change </li></ul><ul><li>Relationship selling, access not yet an issue </li></ul><ul><li>Basic methodologies for sales deployment </li></ul><ul><li>Prescriber access challenge </li></ul><ul><li>Major ROI concerns </li></ul><ul><li>Industry reputation </li></ul><ul><li>Distribution complexity </li></ul><ul><li>Increasing no. of stakeholders </li></ul><ul><li>Shifting portfolio </li></ul>Advanced Markets (60%) Urgent need for change Mature Markets (25%) Some pressure for change Emerging Markets (15%) Changing/Developing models
  4. 4. What would be a negative response from the pharmaceutical industries in advanced markets? <ul><li>To put more and more effort and investment into an ever growing sales force </li></ul><ul><ul><li>More effort into a lesser approachable target group floats contacts to individuals who come to shut the door </li></ul></ul><ul><li>Focus on targeting systems </li></ul><ul><ul><li>When the base of information about ‘intimacy’, depends on estimation of sales reps about actual ‘sales’ to doctors – problems of mismatching effort with individual doctors, will result in resentment to the industry </li></ul></ul><ul><li>Enhancing volume of marketing towards consumer </li></ul><ul><ul><li>What information will come across to what audiences? </li></ul></ul><ul><li>Search for molecules in competition </li></ul><ul><ul><li>When biddings on promising findings pushes stress on revenues, yet uncertain, how to manage this ever growing gap with diminishing revenues? </li></ul></ul>
  5. 5. Market perspectives under such conditions <ul><li>In a worst case scenario, imagine what being in a price fighting market, would do to your industry </li></ul><ul><li>In a context of growing sepsis about the value of (certain) pharmaceutical companies to health care, there’s the risk of intensifying government rules over the industry </li></ul><ul><li>When investment power comes instead of intelligence and innovation in research will we then wind up with a war on molecules? </li></ul>
  6. 6. Other responses are available <ul><li>CRM and multi channel management, when applied correctly, poses the promise of adequate and positive relating to targeted audiences and of overcoming the commercial trap in relation management </li></ul><ul><li>Remodelling R&D logistic management may lead to enhancements through different phases of time to market </li></ul><ul><li>But, most of all, rethinking the concept of value innovation may emerge into changed market positions and positive relations with enthusiastic audiences </li></ul>
  7. 7. ‘Adding value’ <ul><li>Originally grounded in efficient market theory </li></ul><ul><li>Implies: </li></ul><ul><ul><li>Thinking in chains </li></ul></ul><ul><ul><li>Measurable in discrete quantities </li></ul></ul><ul><ul><li>A specific activity (favorably conducted in cooperation) </li></ul></ul><ul><ul><li>A proper – unique – value to specific target groups </li></ul></ul><ul><ul><li>With perspective of optimalisation and discovering opportunities </li></ul></ul><ul><li>Clients of the Pharmaceutical industry </li></ul><ul><ul><li>Prescriber – ‘Customer’ </li></ul></ul><ul><ul><li>Patient – ‘Consumer’ </li></ul></ul><ul><ul><li>In the chain of care delivery, </li></ul></ul><ul><ul><li>added value to the one may </li></ul></ul><ul><ul><li>result in added value to the other, </li></ul></ul><ul><ul><li>and vice versa </li></ul></ul>
  8. 8. Value innovation Product benefits Brand benefits Service benefits Acquisition costs Customer Value-surplus Costs of - buying -production - handling - services - etc Margin Creation of Customer Value (W. Reijnders 2005) Price <ul><li>E.g.: Information search Travel expenses </li></ul><ul><li>Wait time </li></ul><ul><li>Consult or guidance </li></ul><ul><li>Annoyances of </li></ul><ul><ul><li>Building </li></ul></ul><ul><ul><li>Personnel Others </li></ul></ul><ul><li>et cetera </li></ul>E.g.: - accessibility - consult / service - attitude problem solving client directed friendly et cetera Brand characteristics Confidence Function Emotion Et cetera Customer desired product range: breadth, length, depth of assortment Complementarities Cohesion Services Guarantee Et cetera
  9. 9. Creating added value by the pharmaceutical industry – a positioning issue <ul><li>Sources for added value: </li></ul><ul><li>Disease management </li></ul><ul><li>The care delivery value chain </li></ul><ul><li>Compliance efforts </li></ul><ul><li>Technology </li></ul><ul><li>The creation of added value by Pharma poses the industry for its fundamental question of identity. Positioning is all about choosing a distinctive customer value proposition Porter, M. (2001), Interview in Fast Company (March 2001) </li></ul>
  10. 10. Sources for Value innovation in Pharma <ul><li>Information and education </li></ul><ul><li>Compliance Patient empowerment </li></ul><ul><li>Care Delivery Value Chain from a “transaction” perspective: </li></ul><ul><ul><li>Medical Perspective </li></ul></ul><ul><ul><li>Customer perspective </li></ul></ul><ul><ul><li>Organisational Perspective </li></ul></ul><ul><li>Customer Value: De “customer experience cycle” </li></ul><ul><li>Organisational Perspective </li></ul><ul><ul><li>Logistics </li></ul></ul><ul><ul><li>Administration and registration (EPR) </li></ul></ul><ul><ul><li>Technology </li></ul></ul>
  11. 11. Porter en Teisberg Accessing Measuring Informing Knowledge development Monitoring/ Managing - Monitoring and managing the Patient’s condition - Monitoring compliance with therapy - Monitoring lifestyle modifications Recovering/ Rehabilitating -Inpatient recovery - Inpatient and Outpatient rehab - Therapy fine- tuning - Developing a discharge plan Intervening -Ordering and administering drug therapy -Performing procedures -Performing counseling therapy Preparing -Choosing the team - Pre- intervention preparations - pretesting - pretreatment Diagnosing - Medical history - Specifying and organizing tests - Interpreting data - Consultation with experts - Determining the treatment plan Monitoring/ Preventing - Medical history - Screening - Identifying risk facotrs - Prevention programs Provider Margin Patient value (Health results per unit of cost) The care delivery value chain. Porter and Teisberg, 2006, 204 Feedback loops (Results management and tracking, staff/physician training, technology development, process improvement) (Patient education, patient counseling, pre-intervention educational programs, patient compliance counseling) (Tests, Imaging, patient records management) (Office visits, lab visits, hospital sites of care, patient transport, visiting nurses, remote consultation)
  12. 12. E.g. <ul><li>Diabetes </li></ul><ul><li>COPD </li></ul><ul><li>Contraception </li></ul>
  13. 13. Added value to whom: Synergetic Marketing <ul><li>The ADDED VALUE X RELATIONSHIP matrix </li></ul><ul><li>relates </li></ul><ul><li>Marketing and Brand management </li></ul><ul><li>from medical PROFILING </li></ul><ul><li>to </li></ul><ul><li>Sales, </li></ul><ul><li>to </li></ul><ul><li>Customer and consumer relationship management </li></ul><ul><li>and to </li></ul><ul><li>Communication, multi channel management </li></ul>
  14. 14. The “Added Value X Relationship” Matrix II Product support services Customer Individualizing surplus value <ul><li>1 Relation getting </li></ul><ul><li>No relation </li></ul><ul><li>Selling encounters </li></ul>3 Extended Rx 5 Enhanced Long term and life time 4 Long term 2 Ad hoc Rx V General practice and partnership IV Therapy enhancing support packages III Implementation and consumer directed support Services I General and selling communication and tools Terms of relation ship
  15. 15. A defined concept of pharmaceutical value in health care is at the bottom of the model Commercial processes <ul><li>Content of contacts and service provision </li></ul>Selling processes <ul><li>Development of intensified relationship </li></ul><ul><li>with customers </li></ul>From outbound communication to To interactive partnership <ul><li>The concept defines </li></ul><ul><li>and formulates different: </li></ul><ul><li>Relationship patterns x </li></ul><ul><li>Level of value added, service provision x </li></ul><ul><li>Level of preferred relationship and partnership </li></ul>CRM Repeat Life time Long term Ad hoc Cross package Domain package Product service Core product Terms of relation ship Individualizing surplus value
  16. 16. Dimensions of value innovation <ul><li>Development and management of Added Value Strategies on company and product level to value propositions for targeted audiences </li></ul><ul><li>Commercial sourcing of customer value management (segmentation and profiling) to differentiation of added value propositions </li></ul><ul><li>Defining approaches and communication conditions development and implementation of specific communication mix and multi channel communication to differentiated and targeted audiences </li></ul><ul><li>Defining organisation and process Creating and implementing organisation conditions to implementing new sales and marketing procedures E.g.: Account directed teams, front and back offices, dedicated brand teams etc., defining and creating system conditions </li></ul><ul><li>Innovation and change development </li></ul>
  17. 17. Some implications to the industry <ul><li>Differentiation in market and target audience approach according to </li></ul><ul><ul><li>Product – disease – combination </li></ul></ul><ul><ul><li>Country structure of health provision </li></ul></ul><ul><ul><li>Product phase of presence on market </li></ul></ul><ul><ul><li>Position and positioning of the company </li></ul></ul><ul><ul><li>… </li></ul></ul><ul><li>“ Share of voice” </li></ul><ul><ul><li>Entrance condition to the market more than sufficient sales </li></ul></ul><ul><ul><li>Optimizing more than maximizing </li></ul></ul><ul><ul><li>Creating awareness more than prescription </li></ul></ul><ul><ul><li>Exasperation more than “value” </li></ul></ul><ul><li>Quality of reps </li></ul><ul><ul><li>Reps? </li></ul></ul><ul><li>Organisation </li></ul><ul><li>Client focus “outside in,” in stead of product focus “inside out” </li></ul>
  18. 18. References <ul><li>Trends in Sales Force Effectiveness, Driving sales excellence in a complex market, IMS 2005 Pharma Futures: Long Term Value Outlook on the Pharmaceutical Industry WHO Priority Meds Meeting, 24 th November 2005, Sophia Tickell, Director IBM Business Consulting Services, Pharma 2010:The Threshold of Innovation. IBM corporation 2002 </li></ul><ul><li>Bonini, S.M.J. McKillop, K and Mendonca, L.T., What consumers expect from companies, McKinsey Quaterly, 2007, nr. 2 </li></ul><ul><li>Medicijnenprijzen kunnen veel lager, Elsevier, mei 2007 </li></ul><ul><li>Minister neemt farmaceuten onder de loep, Trouw maart 2006 </li></ul><ul><li>Pharmacists' Role in Healthcare Still Evolving. C. A. Kenreigh, PharmD; Linda Timm Wagner, PharmD, Medscape Pharmacists 2006;8 (2)  </li></ul><ul><li>Taking CRM to the Next Level: Web-assisted relationship- and community-building for the pharmaceutical industry. Datamonitor Dec. 2006 </li></ul><ul><li>Porter, Michael, E. and Teisberg, Elizabeth Olmsted , Redefining Health Care. Creating Value-Based Competition on ResuHarvard Business School Press, Boston Massachusetts lts. 2006 </li></ul><ul><li>'Druk op farmaceuten stijgt' Financial Times, 23 jan. 2007 </li></ul><ul><li>Factoren gerelateerd aan farmacotherapietrouw van chronisch zieken. Resultaten van studies uitgevoerd in Nederland sinds 1990. A. van den Brink-Muinen, A.M. van Dulmen, NIVEL 2004 Utrecht </li></ul><ul><li>Theo B.C. Poiesz en W. Fred van Raaij, Synergetische Marketing, Financial Times Prentice Hall, Amsterdam 2002 </li></ul><ul><li>IBM Business Consulting, Pharma 2010:The Threshold of Innovation. IBM corporation 2002. </li></ul>
  19. 19. Van Spaendonck Management Consultants <ul><li>Specialists in Pharma market business development consultancy </li></ul><ul><li>20 years of experience in pharma market developments in the Netherlands </li></ul><ul><li>Expertise in actual developments and regulations in the Dutch health care market </li></ul><ul><li>Experience in working for all kinds of health care institutions and organisations </li></ul><ul><li>Track record in marketing and sales development </li></ul><ul><li>Track record in consultancy support for merger and alliances </li></ul><ul><li>Track record in roadmap development and implementation </li></ul><ul><li>Specialists in “strategic change” </li></ul><ul><li>Accounts </li></ul><ul><li>Abbott </li></ul><ul><li>Astra Zeneca </li></ul><ul><li>Boehringer Ingelheim </li></ul><ul><li>GlaxoSmithKline </li></ul><ul><li>Janssen Cilag Leo Pharma </li></ul><ul><li>MSD </li></ul><ul><li>Novo Nordisk </li></ul><ul><li>Nycomed (Altana) </li></ul><ul><li>Organon </li></ul><ul><li>Pfizer </li></ul><ul><li>Pharmacia </li></ul><ul><li>(Sanofi Aventis) </li></ul><ul><li>Sanofi Synthelabo </li></ul>
  20. 20. Rob Halkes <ul><li>Senior Consultant in Health Care Development and Pharmaceutical Business </li></ul><ul><li>Drs. A. R. J. Halkes MHA Van Spaendonck Management Consultants Hogeweg 85                   T +31 418 578000 Postbus 2005                 F +31 418 578010 5300 CA Zaltbommel     M +31 653 420722 The Netherlands </li></ul><ul><li>E I </li></ul>