Here is a 14 pages report I did in May 2012 for my school. The subject was the marketing, advertising and sales in the pharmaceutical field. It is focused on the French market, but most of information are worldwide.
I let you discover main parts of it in this following table of contents:
– Discovering of the market
–Create and sale a drug
–The pharmaceutical market in the world
–The pharmaceutical market in France
–Databases of information
–Decreasing of sales representative’s visits
–Way of promotion
–Pharmaceutical companies’ image
–The doctors and patients targeting
Nowadays, people use more and more medicine and drugs. As they are less considered as special products but as classical goods, comparable to food or clothes, we find them in the daily life. This trend is in contradiction with the fact there are more and more side effects so that they can be very dangerous for the consumer. Furthermore, people use every time more information sources (internet, family circle…) which are costless, compare to doctors, in terms of money and time.
All these trends and facts permit pharmaceutical companies to use marketing and special sales techniques to improve the consumption of their products. Nowadays, they promote their products with different ways according to their targets (professional or mass market), the kind of drug, the legislation of the country and some other factors. These targets can be doctors, hospitals, patients, associations, pharmacists, paramedics and the mass market.
In this report we are going to explain how pharmaceutical companies promote their products. We will describe new trends of consumption of these drugs, the French legislation which control the way of promoting drugs, and explain difference of marketing according to the kind of drug and their targets.
DISCOVERING OF THE MARKET
CREATE AND SALE A DRUG
There is a lot of time between the creation of the drug and its sale. Before selling the drug, the pharmaceutics companies have to run a lot of test on the product with pre-clinical development and clinical trials. After all these tests, the pharmaceutical companies must also get the approval of the competent certifying agencies. In the USA, it‘s the FDA, in France it’s the HAS ; Of all compounds investigated for use in humans, only a small fraction are finally approved.
But even if the product is approved by the organisms, the pharmaceutical companies have to persuade different and separate actors that the drug is effective. And it’s generally more complicated than other common products. Indeed, the patient or the consumer has first to feel the need of seeing a doctor. Then, after the diagnosis, the doctor has to write a prescription that includes the drug. It means that the doctors must be convinced that the drug is the best solution to treat the disease the patient has. If all of these conditions are respected, then the consumer will buy the drug.
That is why the pharmaceutical companies spend a lot of money in advertisement.
For example in 2008 in the USA, pharmaceutical companies spent at least $20.5 billion (this figure doesn’t include the distribution of free samples). About $12 billion were spending for physicians, nurse practitioners and physician assistants. $4.7 billion to DTC advertising (Direct To Consumer), $3.4 in sponsoring professional meetings and events and $ 0.4 billion in advertisements in professional journals. The same year we can also point that domestic sales of pharmaceuticals and medicines totaled $189 billion with another $ 38 billion spent on research.
These figures, found on the Congressional Budget Office, don’t talk about the free samples which represent about 60% of the expenditures in pharmaceutical marketing. According to a study carried out by two Canadians Mr Leo-Paul Lauzon and Mr Marc Hasbani, the ten fist pharmaceutical companies spent about $750 billion in marketing between 1996 and 2005. This budget is about 2.6 times more than the money spent on researches in the same period.
Finally, the pharmaceutical industry is one of the ten sectors which spends the most in advertising with an augmentation of 14% between 2005 and 2006.
In France, the budget for medical marketing increase by 1.2% in 2010. Following, the chart resumes the different expenditures according to the different French actors. We can also add that in France, the distribution of free samples is less used than in the USA.
THE PHARMACEUTICAL MARKET IN THE WORLD
In 2010, the global pharmaceutical market was about $870 billion (Compare to less than $200 billion in 1990). This sector is growing every year with, for example, a growth of 5.8% in 2009. Nowadays the American market is the most important with 39% of the global market. The other countries in Europe (Germany, France, Italy, Spain and the United Kingdom) represent about 17.5% of the global market and Japan represents 11%. The French market is the second market in Europe after the German market. We can also note that the pharmaceutical industry is not concentrated: it means that the five first companies represent only 27% of the global market.
THE PHARMACEUTICAL MARKET IN FRANCE
In France, the pharmaceutical market represents about €50 billion in 2010. About half of this turnover is made by selling the drugs abroad (€24 billion). Over the past 10 years the French drug exportations increased by 7% with a balance of trade of €7 billion in 2010.
In France, the distribution of the drugs is made thanks to different channels. The following chart shows that most of the drugs produced in France are sold to retailers.
Proprietary drugs are medicines with a patent possessed by the pharmaceutical company which produces it. So, in general, it is a drug which heals a special disease, and there is no equivalent; each drug treats one specific condition. The market for this kind of drug is reduced but the medicine has the monopoly.
Companies which produce this kind of drugs have different objectives and targets.
They can promote their technological advancements and their innovations. They can also increase their image by pointing up their participation in the improvement of medicine in general.
They don’t target the mass market because of the specificity of the drug, dedicated to a very restricted population. So, they focus their marketing on doctors and selected people who can need this drug. These people have to know there is a drug which can help them in their case.
In the case of proprietary drugs, the image of the medicine is more important than the image of the company. Doctors will remember the drug for its benefits which is unique.
Finally, these drugs have a high value-added and create high profits for pharmaceutical companies. But it has to be profitable for companies because of patents, R&D, and all resources needed to create this new drug.
To protect the drug created and the lot of investments needed to developed it, every laboratory uses patents. These patents can be extended for 10 years. After this period, other pharmaceutical companies can produce and market drugs which use the same molecule. It’s what we call Generic drugs.
With the generic drugs, pharmaceutical companies have to gain the confidence of the public, so that they can be chosen instead of their competitors.
They promote their product to pharmacists, who can recommend it; or to mass market. As these drugs are not very different, companies can’t communicate about their technological advancement. So they promote the ethical and moral value of the company. In this case, the image of the company is more important than the effectiveness of the product. These drugs have a low value-added and are profit limited.
Today, before booking an appointment with a doctor, people use different ways of information: first, they inquire advices on the internet on specialized websites and forums. If they don’t find the information they are looking for, they generally ask the people they know. If this way of information doesn’t work either, they ask their pharmacists. At the end, it’s only if they didn’t succeed to get the information they were looking for, that they finally go to see a doctor.
This is called self-medication.
This way of treating yourself can be very dangerous considering there are a lot of side effects and contraindications. So, if the information the consumers collected are not complete, the medicine could have worse effect than the good effect expected.
About that, there are regularly advertising from the French government by TV or radio. These advertisings are warning mass market from the dangerousness or the lack of effect from taking a wrong medicine. (These advertising have a second objective which is to reduce the consumption of drugs paid back by the social security.)
In France the self-medication wasn’t very used: between 1960 and 1990, this trend even decreased by 30%. But nowadays, with the development of internet and specialized websites (such as doctissimo) the self-medication is increasing. According to the figures of the IMS Health, in 2007 the sales of drugs without any prescription represented about 13% of the global sales in terms of volume, and 6.1% in terms of value (€ 1.9 billion). The OTC, the “Over The Counter” drugs (the drugs you can buy in the pharmacists without any prescription) represented €1.57 billion.
According to the Afipa, the association which regroups the producers of self-medications drugs in France, the French National Health and pension organization could save about € 2.6 billion thanks to the self-medication.
DATABASES OF INFORMATION
According to this trend of self-medication and the increasing of drugs coming from unknown companies, authorities created free databases of information accessible to everyone on internet.
Following, examples of these databases:
– A European database about all drugs authorized in European Union: www.eudrapharm.eu
– Public reports about authorized products (EMEA The European Medicines Agency website): www.emea.europa.eu
– Notices about drugs – Information about drugs took out from the market.
We can also talk about doctissimo.fr the first French website dedicated to the health and the well-being. In 2011 the website has 33 million visitors per months and 177 millions web pages seen. The same year, the website was the seventh French website the most visited.
DECREASING OF SALES REPRESENTATIVE’S VISITS
For many years, sales representatives visiting doctors and hospitals were the main way for medicine producers to promote their products. The goal of the sales rep was to persuade doctors that their products were better than others, expecting that they would recommend their products to their future patients.
Even if this way of promoting drugs is still widely used, medicine producers use it less and less (as we can see on the chart below).
There are different reasons to explain the change of the marketing policies. First of all, there is a doctor’s saturation. Doctors are too much solicited from these sales representatives, and it is harder for the salesmen to get appointments, and these appointments are less effective. The second reason is the cost of these sales reps. It is very expensive to send them on the field, and it is a huge time consumption. More-other, companies using too much this way of promotion annoy doctors and it affects their ethnic image.
All these reasons explain the decreasing of sales reps visits. In the same time, it is the mass market advertisement which is increasing a lot. That shows, as the previous paragraph said, the increasing of personal choice about medicine, and the fact that people seem to pay less attention to the doctor prescriptions.
Budgets for drugs marketing in 2010 compare to 2009 in France
WAY OF PROMOTION
In France, the legislation controls clearly the way of promoting drugs. It is divided in two categories.
Firstly, public communication is allowed only for drugs we can buy in a pharmacy without a doctor prescription. Drugs refundable by social security and a list of poisonous substances don’t get this authorization. The advertisement can be done through radio, TV, leaflet, display stands… However, products have to be allowed to be promoted by the Agence Française de Sécurité Sanitaire et des Produits de Santé. These advertisements have to include these messages: “Ceci est un médicament”, “Pas d’utilisation prolongée sans avis médical”, “Lisez attentivement la notice”, and “Demandez conseil à votre pharmacien”. From pharmaceutical companies point of view, advertisement is only the first step giving basic information to patient. The second step is finding more information through the instructions or a pharmacist.
Secondly, all other medicines can only have a restricted communication. This law includes all drugs refundable by the social security. Producers have only one way to promote their products: they can’t do mass market advertisement, but it is possible for them to communicate to medical profession or specialized media. Even the communication through doctors is restricted: 50% of the advertising area has to be for instructions and the price has to be written in the top right corner.
These restrictions annoy pharmaceutical companies. Furthermore new drugs are rare and there are more and more generic drugs. Laboratories have to be creative and sometimes beat the game, like this example below:
A company producing antidepressants sold them as insomnia treatment. Why? Because antidepressants are refundable by the social security, while drugs against insomnia are not. It looks costless, for a patient, to use antidepressant. But, for the company, the market of people having insomnia is much more important than the market of people ailing of depression.
PHARMACEUTICAL COMPANIES’ IMAGES
As told in this report so far, self-medication is a real trend that pharmaceutical companies have to understand and consider in their marketing.
As other goods, it is easier for consumer to trust a quality of a product if it is manufacture by a famous brand. This way of thinking works also for drugs and medicines. This is why public is generally more focused on the company than on the product. Few years ago, nobody knew pharmaceutical companies which produce the drugs. Nowadays, everybody knows the name of big laboratories such as Novartis, Sanofi-Aventis, Boiron or Servier. The fame of these companies gives them a natural credibility among public. Consumers will choose easier a product from a famous laboratory than a product from an unknown company. This is true for all goods and services. Whatever their price, their fame are a pledge of quality.
Some companies use illegal way to promote their product by giving great advantages to doctors. These techniques include, bribing, sumptuous gifts, lunch in gastronomic restaurants, or seminar in luxurious places. These practices are difficult to stop but are efficient for laboratories.
Pharmaceutical companies usually promote their discovery in newspaper, ensuring great effects; while trials are not complete. For example:
The Vioxx, produced by Merk and launched in 1999, a drug against osteoarthritis presented as revolutionary, was remove from the market in 2004 because its consumption increased risks of heart attack.
THE DOCTORS AND PATIENTS TARGETING
As told earlier, sales rep are less effective than in the past. The management of client relationships is now use by all kind of business from industries to services, and pharmaceutical companies follow this trend; they are targeting doctors and patients. Sales rep focus on doctors interested in the product or who have patients who need it. Companies create database of doctors with profiles (prescriptions habit, patients,…). This technique is full of benefits; sales rep are more effective, companies need less sales rep and information goes directly to the right people. All these facts make the laboratories’ communication more effective and cost less than sending a lot of sales rep on the field.
In this report we saw that pharmaceutical companies invest a lot in marketing and in the promotion of their products, even more than in R&D. With the expensive investments necessary to produce new medicines, laboratories have to make profits. As other companies, their goal is to make money, which can be contradict with the public healthcare. They try to sell their drugs by any ways; even if it is dangerous for the consumer. Hopefully, all countries created laws which restrict marketing abuses from these companies.
So, laboratories promote their product mostly through legal way. The most used is the communication focused on doctors, expecting they will recommend the drug to their patients. This technique is evolving because of the saturation of the doctors.
The communication to mass market, called also DTC, more restricted, is also used a lot, because of trends like the self-medication. The generic drugs, available without doctor prescriptions, have a wide and profitable market, but can have side effects and be dangerous if the patient is not well informed. Furthermore, let’s not forget that some drugs were removed from the market, after being sold for years.
Pharmaceutical companies’ interests are generally not the same as ours. Their communication they make about their product it is rarely complete. Finally, we have to find more information about these products before consume it.
Finally, we would like to underline that a drug is not a common good. It has to be consumed carefully, and after inquired about it closely.
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