Successfully reported this slideshow.
We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. You can change your ad preferences anytime.

Towards Value Innovation In Pharma SFE Conference London 062007


Published on

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

Published in: Health & Medicine, Business
  • Be the first to comment

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>