Published on September 30, 2014
1. Ensuring Profitable ROI in Pharma Marketing: Using Analytics & Metrics to Improve the Bottom Line Discover how to accelerate your business © Copyright 2014 Eularis All rights reserved. No part of this report may be reprinted or reproduced or utilized in any form or by any electronic, mechanical or other means, known now or hereafter invented, including photocopying and recording, or in any information storage or retrieval system, without permission from the publishers. While every effort has been made to ensure the accuracy and integrity of material presented, no responsibility or liability can be accepted by the publisher for its completeness or accuracy. The views expressed in this report are not necessarily those of the publisher. For the full report, please visit: www.eularis.com or email us at firstname.lastname@example.org
2. Eularis ©2014 www.eularis.com Overview 2 The report will help Pharmaceutical marketers navigate and understand marketing analytics and develop skills to harness competitive advantage
3. Eularis ©2014 www.eularis.com 3 Overview The Pharmaceutical environment is turbulent and, as a result, what used to work to create industry-wide growth of 20% no longer does. The profit generated from brands is in decline as market growth slows in the major Pharmaceutical markets and this inevitably leads to marketing budget cuts. The only way for a brand to grow effectively - and cost-effectively - is to improve the bottom line effectiveness of each marketing spend. Pharmaceutical marketers are under even more pressure to get more ‘bang for their buck’ from their marketing spend and be able to justify it. This in-depth report answers the questions that Pharmaceutical marketing directors are asking: How do we successfully measure our individual marketing activities’ bottom line return, and prove it to the CFO? How do we prove exactly which marketing components are really growing our bottom line How do we know what aspects need to be changed, and how, to grow the bottom line by a specific amount This report explains the different methods being used such as ROI, promotional response models, econometrics and predictive algorithms and the pros and cons of the different approaches. There are step-by-step guidelines on successfully implementing these approaches for real and measurable results and numerous case studies of actual Pharma brands who have successfully navigated these waters. Consideration is given to what they did to measure and improve - and prove - bottom line return. The report will help Pharmaceutical marketers navigate and understand marketing analytics and develop skills to harness competitive advantage. This report will focus on: The practical skills every marketer needs for measuring the effectiveness of their marketing Which tools and best practices really make a difference The measurement principles that drive successful marketing measurement How to propel strategy, growth, and bottom line return Case studies in measurement of sales force return, eDetailing return, compliance/adherence programs, CME speaker programs, advertising campaigns, PR campaigns, CRM implementation return, and much more Key points of relevance in these case studies New ideas you can apply to your area of marketing responsibility – be it sales force, advertising, eDetailing, CME, CRM, PR or any other related field. For the full report, please visit: www.eularis.com or email us at email@example.com
4. Eularis ©2014 www.eularis.com The Need For Marketing Measurement 4 The demands for greater accountability of marketing from the CEO, CFO and the Board are increasing the pressure to find reliable ways to measure the results of marketing activity
5. Eularis ©2014 www.eularis.com 5 The Need For Marketing Measurement The demands for greater accountability of marketing from the CEO, CFO and the Board are increasing the pressure to find reliable ways to measure the results of marketing activity. As long as marketers are not able to adequately justify their marketing budget spends and the bottom line results, the discipline will not gain the respect it deserves. And it does deserve respect; after all, marketing creates incoming revenue and the goodwill upon which the future revenue and long term value of the company are based. A recent survey by McKinsey & Co., found that measuring marketing effectiveness, and strengthening the brand, are the top two concerns of head of marketing. A study by Forrester Research in 2005 concluded that: Only 1 in 3 marketers said that they built marketing budgets based on knowledge of the spending required to meet corporate goals Only 13% of senior marketers felt confident in their ability to forecast the sales impact of their marketing programs Faced with a 10% budget cut, only 2 in 5 marketers felt they could predict the impact on sales Research by Marketing Research Council showed that in large UK companies, less than 10% of executive meeting time went on marketing. In many companies marketing is not even represented at board level. Marketers are under pressure from competitors, regulators and – increasingly – their customers. On top of all that, they seem to be losing their influence in the boardroom as well. At least that was the conclusion of a study conducted by Webster, Malter and Ganesanm that explored the extent to which marketing may have lost its place at the boardroom table. The study interviewed the CEOs and Chief Marketing Officers (CMOs) of 12 corporations as well as 40 other CMOs. Many familiar concerns were expressed, including the pressure to meet short-term financial goals, an inability to quantify marketing’s contributions to the firm, and the shift of responsibility for marketing strategy from the corporate to the strategic business unit level. One CMO summed it up by saying ‘Marketing has lost its seat at the table’. In this report, the authors discuss potential ways for marketers to regain their board level influence. For the full report, please visit: www.eularis.com or email us at firstname.lastname@example.org
6. Eularis ©2014 www.eularis.com Basic Marketing Return Measurement Principles 6 Do you get confused with the tools and techniques for measuring Return-on- Investment (ROI)?
7. Eularis ©2014 www.eularis.com 7 Basic Marketing Return Measurement Principles Actual Marketing Return is minus original investment and, of course, we are considering discretionary individual marketing activities against each other, not marketing as a whole. To convert this to ROI, this Marketing Return is expressed in a percentage of the original investment. ROI = Marketing Return (i.e. Gross Margin – Marketing Investment) Marketing Investment It is represented this way so that when the gross margin is equal to the marketing investment, the ROI is 0% and the investment is considered to be breakeven. As a simple example, a person buys 100 shares of stock at $40 each for an initial investment of $4,000. Add to this the cost of the transaction which was $25. There is a risk that all $4,025 will be lost. This is the true investment. If the shares were all sold the next day for $4,500, the income is $4,500. Deducting the initial $4,025 investment from the $4,500 return nets $475 which is the total return. When putting this in a ROI % equation you get 11.8% ROI: %ROI = $4500 - $4025 = $ 475 = 11.8% $4025 $4025 Now let’s consider another ROI calculation where all profits are generated immediately (to temporarily avoid an explanation of Net Present Value): A company has developed a new product and will need to generate sales through marketing. The marketing campaign has a total budget of $100,000 and this is the total investment at risk (i.e. the amount that will be lost if no sales are made through this specific marketing campaign). Let’s say the marketing campaign generates $500,000 in product revenue, which has a cost of goods of $250,000 and additional expenses of $100,000. The gross margin is $500,000 – $250,000 – $100,000 which equals $150,000. The % ROI is calculated as below: %ROI = $150,000 - $100,000 = $ 50,000 = 50% $100,000 $100,000 The marketing campaign earned 50% above the initial investment. For the full report, please visit: www.eularis.com or email us at email@example.com
8. Eularis ©2014 www.eularis.com 8 Basic Marketing Return Measurement Principles One other thing to keep in mind when dealing with ROI is the ROI hurdle rate. The ROI Threshold or ROI Hurdle Rate is the minimum ROI level for an investment. It is up to a company to decide what this is, but it often around 25%. Theoretically, it should be equal to the discount rate, both of which should represent the company’s cost of securing capital. However, this is not a practical expectation since the ROI threshold may need to be adjusted higher to account for margins of error in calculations, protecting against potential overlap and recovering general marketing expenses. Sometimes companies set this based on the level of risk anticipated for the marketing investment. Once a company sets its ROI hurdle rate, this is used to assist deciding which activities get funded and which do not. For the full report, please visit: www.eularis.com or email us at firstname.lastname@example.org
9. Eularis ©2014 www.eularis.com Challenges That Affect Pharma Marketing Measurement 9 It is understandable that marketers become easily fixated with measuring marketing performance and wanting to demonstrate accountability
10. Eularis ©2014 www.eularis.com With the increasing pressure the Pharmaceutical industry is under today, it is understandable that marketers become easily fixated with measuring marketing performance and want to demonstrate accountability. As an industry Pharmaceuticals is facing many challenges which all need a greater focus on marketing measurement and results. There is also a need to move away from historically based ROI models, (including historically based econometric & promotional response models as well as historically based predictive models) to a measurement system that takes into account the constantly changing environment in which companies operate. There are currently five main drivers that could change the Pharmaceutical industry forever. 3.1: DECLINING GROWTH The industry is experiencing sales growth decline which halved between 2004 and 2005 as evidenced by IMS data. We have sales growth decline in all markets (apart from Latin America), increased sales and marketing costs, increased pricing issues (patent expiry, generics, parallel trade and so on) and increasing evidence that many sales and marketing activities are not having the impact they were once thought to have. One widely cited example of this is the fact that since 1999, the top 40 Pharma companies have doubled their investment in their sales forces and yet during the same period, only had a 15% increase in prescriptions. Another example of this is the fact that DTC Rx advertising has increased steadily since 1997 and yet the percentage of patients asking for a drug brand has been decreasing since 2003 (despite constant increases in DTC Rx advertising). 10 Specific Pharmaceutical Industry Challenges That Affect The Measurement Of Marketing For the full report, please visit: www.eularis.com or email us at email@example.com
11. Eularis ©2014 www.eularis.com LEGALLY AGGRESSIVE COMPETITORS To add to all the troubles the industry is already facing, further threats to the financial well-being of big Pharma are appearing. Patent protection is crucial for Pharmaceutical companies who have spent billions in research and development of the drugs. Given the shorter patents currently available for Pharmaceutical brands and with a lack of blockbusters in the pipelines, Pharmaceutical companies look for ways to protect exclusivity for their brands and the competition they are facing has never been greater. This year alone (2006) over $20 billion in sales of branded Pharmaceutical drugs will be subjected to generic competition. It is estimated that by 2010 this will exceed $100 billion. Companies look at a range of options – new indications for their products and new formulations are the most common outcomes. Extended release formulations create significant opportunities for Pharmaceutical companies to extend the hold on their compound as changes in formulation require new patents. These drugs tend to have some variation of Extended Release in their name and usually end with one of the following suffixes: “ER”, “XL”, “SR”, “CR” and “LA”. These drugs offer major benefits to both Pharma companies and patients. Extended Release drugs have a great benefit for Pharmaceutical CEOs – the ability to obtain patent protection on old brands that have a new extended release formulation. These can give old brands with expired patents a new lease of life and the Pharmaceutical company a much needed new patent as the one on the original molecule expires. By moving their patients from the original molecule to the extended release version, companies may cannibalize their original brand but it keeps the market free of generic competition. Generics manufacturers file lawsuits continuously against patented drugs in an attempt to reduce or end the patent. In addition to that, more worryingly from big Parma’s point of view, generic manufacturers are working on developing their own XR versions. ANDAs are being submitted to obtain regulatory approval to market these extended release versions, and this is resulting in some high profile patent infringement lawsuits. In the majority of cases, the patent holder wins the case, however the protection the patent offers varies from drug to drug and the loopholes are being vigorously explored by generics lawyers. Although there have been a number of lawsuits recently, aimed at reducing or protecting blockbuster patents, a potentially serious one has emerged recently. This was Wyeth versus Teva in the US. Following Teva’s submission of an ANDA (Abbreviated New Drug Application) for generic extended release venlafaxine capsules (the equivalent of Wyeth’s Effexor XR), Wyeth claimed for infringement of three of their patents. They specifically alleged that TEVA’s generic drug infringed three of their OB listed patents [US6274171 US6419958 & US6403120]. 11 Specific Pharmaceutical Industry Challenges That Affect The Measurement Of Marketing For the full report, please visit: www.eularis.com or email us at firstname.lastname@example.org
12. Eularis ©2014 www.eularis.com Metrics Progression: From Activity Tracking To State-of-the-art Analytics 12 Pharmaceutical marketers must determine the most effective objectives for eDetailing projects
13. Eularis ©2014 www.eularis.com Not too long ago, companies relied in large measure on anecdotal evidence, marketers’ experience and rudimentary tools to plan their marketing strategies and tactics, implement them and measure their effectiveness. I n the rich pipeline/blockbuster days, it was simply accepted that marketing cost money and the impact was not seriously questioned as there was industry wide growth of 20% and good profit margins. Marketers and their bosses are increasingly feeling pressure to demonstrate accountability. Early endeavors to address this issue relied on techniques used by CFOs to quantify spending. The result for marketing has been less than impressive. That is because using this data to plan marketing activity allocation and marketing budget allocation requires more than a ROI technique; in fact, it requires more than a straightforward mathematical or statistical technique. The good news is that marketing measurement and metrics are progressing. Despite the progress, the gap in using relevant marketing measurements and analytics is still high and must be closed if companies are going to effectively bring the discipline of financial performance analysis into marketing. There are a number of methods Pharmaceutical companies use to demonstrate accountability. These range from basic activity tracking to really analyzing and optimizing cross country and brand portfolios. All of these have their place but not all of them neatly or accurately tie into guiding what strategic marketing decisions must be made moving forward for real bottom line return now or in the near future. ROI is a term or a concept used in multiple ways across and within companies. It does not always mean ‘ROI’ in the traditional ‘Return on Investment’ formula approaches. Various other methods are currently employed to measure ROI. These include market research techniques, Customer Relationship Management (CRM) interaction analysis, traditional Return on Investment (ROI) techniques, Marketing Mix Models, Econometric Models, and Predictive Analytics (Historically based, Analogue based and Current market based). 13 Metrics Progression: From Activity Tracking To State-of-the-art Analytics For the full report, please visit: www.eularis.com or email us at email@example.com
14. Eularis ©2014 www.eularis.com CASE STUDY 1: ASACOL WEBSITE (US) A classic example of activity tracking being mistaken for ROI was reported in the White Paper by DB Marketing Technologies. In this study Procter & Gamble wanted to grow brand awareness and prescriptions for Asacol used to treat ulcerative colitis. The small number of sufferers, of which there are only 500,000 in the US, caused the company to decide against mass media with a broad focus and to take their agency’s advice and create a web-based approach’. This had the aim of targeting new patients as well as hopefully increasing compliance in existing patients. The agency developed a focused Website providing a lot of information on the condition of ulcerative colitis, the benefits of Asacol as a treatment and advice on how to make lifestyle changes to reduce the impact of the illness. Patients could enroll for personalized information on treating the condition. The Website was marketed with a print campaign targeting 30 metropolitan areas, as well as internet marketing. P&G were very happy with the ROI which they measured in terms of Website ‘hits’. In the first month the Website had 48,000 hits, which the sponsor was led to believe meant they were reaching 10% of the US ulcerative colitis population. This is activity tracking. Websites can be set up to be able to track everything and are thus a great medium for really measuring results. Although this example will have been exceptionally successful in its results, the approaches used to demonstrate it to management were inadequate and misleading in what they suggested. By tracking this activity, they were not tracking ROI, but simply activity itself (albeit at a basic level). To know the return they would have needed to take it further and to have assessed how this linked into the number of new scripts they got from this activity and whether this was more in terms of profit than their outlay for the Website. 14 Metrics Progression: From Activity Tracking To State-of-the-art Analytics For the full report, please visit: www.eularis.com or email us at firstname.lastname@example.org
15. Eularis ©2014 www.eularis.com More Accurate Metrics To Improve Financial Performance 15 By combining validated current market data with predictive algorithms, marketers can achieve the highest possible levels of predictive accuracy
16. Eularis ©2014 www.eularis.com Most ROI, promotional response and econometric predictive models are failing to take into account current market confidence (i.e. customer perceptions, customer sentiment, customer dynamics, customer, brand equity) and market data. This is crucial. However this data must be validated against prescribing behavior to have any real degree of accuracy. Then, this validated current dynamic data must be utilized in combination with predictive algorithms. By combining validated current market data with predictive algorithms, marketers can achieve the highest possible levels of predictive accuracy. The Eularis Analytics system collects current up-to-date data, validates this against all brands in the category and prescribing behavior so the underlying real influencers can be identified, then analyses this in predictive algorithms that include market share data and brand spend data to provide a prediction that has the highest degree of mathematical certainty possible. This accuracy is largely due to taking both validated current customer market data and hard financial data into account. This model was developed in collaboration between the Pharmaceutical industry and leading actuarial Professors. Although this model is not 100% accurate, it has been found in studies examining over ten years of back data, to be sufficiently accurate for measurable brand growth. This system takes approximately 8 weeks from beginning to end and requires less than an hour of input from Pharmaceutical marketers and yet has been found in independent studies to have an extremely high accuracy level. Given the restriction of access to physician brick level and individual level prescribing data in Europe from April 1st 2007, this approach is extremely attractive in these markets for both marketing/channel mix optimization as well as targeting and segmenting physician groups in lieu of physician prescribing data availability. 16 More Accurate Predictive Metrics To Improve Financial Performance For the full report, please visit: www.eularis.com or email us at email@example.com
17. Eularis ©2014 www.eularis.com CASE STUDY: A BRAND IN DECLINE A successful core brand had been in decline for several years. To slow the decline the company increased activity spend dramatically to almost double its competitors and yet the brand continued to decline, with no market share impact from increased spend and activities. The client approached Eularis in January 2005 as they had negative ROI and were unsure how to allocate spend across the mix to slow decline. Figure 5.3 shows that the brand was at 17.8% market share in June 2004 and despite high levels of communications activities, the product was only performing at a 17.5% market share. Also, a lot of money was being spent on strategies that were either badly planned in terms of messages or executed poorly. 17 More Accurate Predictive Metrics To Improve Financial Performance For the full report, please visit: www.eularis.com or email us at firstname.lastname@example.org
18. Eularis ©2014 www.eularis.com CURRENT PICTURE OF BRAND The results for the brand for January 2006 can be seen in Figure 5.4. By this stage the brand had moved further down. Instead of 17.8% market share, it was now at 17.5% market share – exactly the level it was performing at six months previously. The picture was very similar to the previous period – a lot of communications activity and spend but not having sufficient impact on the brand to stop the decline in market share. Now the brand was performing at 17.2% market share (as seen under the ‘product’ chunk of bars on the x axis. 18 More Accurate Predictive Metrics To Improve Financial Performance For the full report, please visit: www.eularis.com or email us at email@example.com
19. Eularis ©2014 www.eularis.com Figure 5.5 shows that ‘direct mail’ is having no impact on the physicians prescribing behavior. The Eularis system then analyses how focus should be directed in various areas. In this example, it shows how the reps should be focusing their time within a detail call. Interestingly honesty about where the drug lies came up as an area for improvement. Although an interesting area, it did turn out that this product had around nine key product messages which was making the physicians skeptical about the validity of their claims. 19 More Accurate Predictive Metrics To Improve Financial Performance For the full report, please visit: www.eularis.com or email us at firstname.lastname@example.org
20. Eularis ©2014 www.eularis.com By inputting the promotional spend for all brands in the category (bought data), the analysis gives an indication of how to allocate the rep and communications budgets for optimal market share gain. This can also be done for multiple target groups, so one could look at how to divide spend amongst different physician segments or types, or how to divide marketing budget between consumer versus physician focused marketing spend as we do in the U.S. Current target market data was utilized with overall promotional budgets provided to predict a market share response to a given marketing budget allocation. The analytics make use of the knowledge from the brand driver data, combine this with uncovered understanding of which programs are impacting market share by how much and feed in overall promotional spend provided for all brands within a category which is calculated accordingly. 20 More Accurate Predictive Metrics To Improve Financial Performance For the full report, please visit: www.eularis.com or email us at email@example.com
21. Eularis ©2014 www.eularis.com ACTIONS AND RESULTS The brand’s market share went up from 17.5% to 18.3% in a six month period despite several years of straight decline previously. The results for July 2005 can be seen in Figure 5.9. It can clearly be seen that the brand has moved to 18.3% market share, but on top of that the brand is now performing at a much higher level of 19.7% which means that the good work done in the past seven months has actually not only moved the brand up to 18.3% but now it has enough confidence to support a 19.7% market share. Now the team redo it every six months to ensure new market environment and perception factors are accounted for continually for continuous refinement and growth in market share. In January 2006, the brand was at 19.8% market share (0.1 market share point above our prediction of 19.7%). 21 More Accurate Predictive Metrics To Improve Financial Performance For the full report, please visit: www.eularis.com or email us at firstname.lastname@example.org
22. Eularis ©2014 www.eularis.com Assessing Performance Of The Marketing Mix 22 How can companies ensure that their marketing messages are heard?
23. Eularis ©2014 www.eularis.com 6.1: PRODUCT MESSAGES AND MARKET SHARE: ARE THEY WORKING? Doctors get bombarded with product messages every day. It was recently reported by IMS Health that in 2005, around 34 million messages were delivered by sales reps to doctors per month (around 400 million annually). IMS also reported that in the Overactive Bladder (OAB) Market alone, around 650,000 messages were delivered per month in 2005. With this staggeringly high level of promotional noise how can companies ensure that their marketing messages are heard? Furthermore, how can a marketer ensure that the right messages deliver the crucial element that is actually influencing the physicians prescribing behavior? Many Pharma marketers measure message recall and intent to prescribe. Recall is interesting as you will get some idea of what the doctor remembers about what they were told about a brand, if they remember it at all. However, measuring recall to measure financial impact of a message is not the same thing. They may recall a message very well, but it may be a message that is not influencing them to prescribe. Measuring messaging financial impact is crucial as different messages have been shown to have vastly different impacts upon prescribing. Recently I [the author, Dr. A Bates] was asked by a client to evaluate GP analytics results for the past year and to provide them with an analysis of which messages their key competitor brand was providing, what the financial impact of those messages was for their key competitor compared with their own and what it meant for where their message strategy should be. First we analyzed which messages were having what financial impact in the therapy category. Then we analyzed which messages each competitor brand was focused on and how effective they were being in terms of prescribing impact with that message. It became abundantly clear that the messages of the main competitor were heavily focused on the three key messages that were having the most prescribing impact for the category and they ignored all other messages that were having less influence. These messages were clear, focused and concise and that gave maximum market share for the category. The competitor brand had other advantages they may have wished to speak about but they had good restraint and focused on their core message. Figure 6.1 shows a comparison of the impact for the key messages influencing prescribing for the top leading competitive brands in that category. 23 Assessing Performance Of The Marketing Mix For the full report, please visit: www.eularis.com or email us at email@example.com
24. Eularis ©2014 www.eularis.com These were the key messages the leading brand had chosen and they were also the messages bringing three times the financial impact of any other messages (1.5% versus 0.5% market share). See the graph of the brand messages below for the top four brands in the category on these top financial impact messages. Getting your messages to be the ones that have most impact seems to be a tricky thing for many Pharma brands. CASE STUDY: PRIMARY CARE BRAND STAGNATED A primary care brand was in a crowded marketplace at a decent market share and had been growing well until the last two years. The brand team regularly commissioned a number of primary market research studies including Detail Follow-ups (DFUs) to understand how the detailing was influencing the doctor perceptions of the product, and how the sales force was performing. They had data on message recall and on share of voice and knew they were performing at the same level as key competitors in this regard. Using this data, they had formulated some changes but alas the results remained the same. The team commissioned ‘Intent to Prescribe’ research to uncover the physicians’ intent following the changes implemented. Physicians said they intended to prescribe more of this brand but sales stayed static. Undeterred by failure to impact a change, the team searched for other methods to measure performance and uncover real influencers that would have more actionable recommendations. To answer these questions, the team turned to Eularis analytics which have been described in earlier chapters. 24 Assessing Performance Of The Marketing Mix Available for viewing in full report For the full report, please visit: www.eularis.com or email us at firstname.lastname@example.org
25. Eularis ©2014 www.eularis.com They were eager to know: How effective are our reps in delivering key messages? Is our key message differentiated enough against competitors? How effective are our messages and should these be changed? Which of our messages provides the most influence on changing actual prescribing behavior? Are our sales materials providing the appropriate messages for most influence on prescribing? Are our sales materials providing the best use of the messages? Is our call frequency appropriate or should it be changed? How much market share is our detailing getting us compared with our promotional activities?. How should the focus of the detail call be broken down? What activities should we be teaching the reps to be able to do better? We know our share of voice is the same as our key competitors but what are they doing differently to our sales force? The Eularis analytics system was implemented and the picture of this brand can be seen in Figure 6.4. This shows that the field force activity (quality) was just supporting the current market share as evidenced by the flat line (i.e. equivalent to the current market share of 24.7%) but would not be effective in growing the market share if it continued as it was despite the results of the ‘intent to prescribe’ research. 25 Assessing Performance Of The Marketing Mix When looking at the overall analytics for the brand it can be seen that, although the product messages were reasonably well entrenched from all the previous good work, the promotional effort was now lagging behind key product messages it had previously established. For the full report, please visit: www.eularis.com or email us at email@example.com
26. Eularis ©2014 www.eularis.com This means that the brand could defend its current market share but not necessarily get more market share from their budget if they continued doing what they were doing. Recommendations around message focus and focus within the detail call were made. For example, Question 9, around how should the detail call be broken down is shown graphically below in Figure 6.5. The recommendations around messages, rep activity, detail aids (and promotional activity reallocation, although that is not within the remit of this article) was followed and the results for the brand six months later can be clearly seen in Figure 6.6 (Picture of the Brand After Implementing Eularis Recommendations). 26 Assessing Performance Of The Marketing Mix The market share had increased by 2.6% but importantly now the field force could be clearly seen to be having a real impact on market share results. Available for viewing in full report Available for viewing in full report For the full report, please visit: www.eularis.com or email us at firstname.lastname@example.org
27. Eularis ©2014 www.eularis.com Accurately Measuring Pharma Brand Situations 27 Companies need internal and external benchmarks but they also need ‘Brand Potential’ analytics
28. Eularis ©2014 www.eularis.com 7.1: MEASURING MARKET SHARE AND SALES POTENTIAL OF PRE-LAUNCH BRANDS Pharmaceutical companies all have procedures for launching new brands. The preparation time usually starts with a market assessment around ten years prior to launch. This is followed by: a competitive assessment market potential analysis brand optimization and promotional effectiveness analysis launch plan launch and post launch monitoring and optimization. As a company moves closer to launch, there are many questions they need to consider, such as: Have we positioned the drug optimally? Are our messages the ones that will give us maximum benefit? How much market share should we have at launch against competitors? How will we know exactly what competitor weaknesses we can exploit? How do we know what the optimal combination of sales and marketing activities will be for maximum growth? Have we done everything right? To answer these questions, companies need internal and external benchmarks but they also need ‘Brand Potential’ analytics. The type of things that these analytics can help with is to examine the actual brand potential based on its current inherent attributes from clinical trial data, and to look at how well a brand with that kind of inherent level of attributes should perform in that category, given the current market environmental factors and validated physician perceptions data. It will also be able to show the brand team what is needed in terms of messages, rep activity and promotional activity etc - and allocation of these to really grow the brand by a specific amount. 28 Accurately Measuring Pharma Brand Situations Like Pre-launch Brands, Generics/OTC For the full report, please visit: www.eularis.com or email us at email@example.com
29. Eularis ©2014 www.eularis.com The brand team conducted Eularis analytics in two time periods prior to launch (one at 12 months and one at six months prior to launch) and, thereafter, at six monthly intervals. In conducting these analytics in two time periods prelaunch, the brand team was able to understand the vulnerabilities in its competitors and position itself in the best possible way. The team also understood the core brand market share potential based on its own clinical trial results which were input into the system. It were then able to focus on positioning messages with potential to give most marked increase in market share and plan its marketing effort to match the areas recommended by the analytics for maximum growth. The results of all this pre-launch analytics planning can be seen in the picture of the brand at launch with a 3.3% market share and a lovely strong growth picture (Figure 7.2). 29 Accurately Measuring Pharma Brand Situations Like Pre-launch Brands, Generics/OTC Between launch and six months the activity was tweaked to incorporate the findings from the analytics at launch (in the picture above) and adjustments were made to the marketing effort to areas analytics recommended would provide maximum growth. AstraZeneca trained reps to do detail with the emphasis shown in analytics and the budget was allocated according to the budget mix recommended by the system. The picture of the brand at six months post launch can be seen in the graph on the following page. Available for viewing in full report Available for viewing in full report For the full report, please visit: www.eularis.com or email us at firstname.lastname@example.org
30. Eularis ©2014 www.eularis.com Market share had grown to 10.3% and it was still on track for rapid growth and yet AstraZeneca continued to use the Eularis analytics system to grow the brand further. Market share came in at 3.3% within one month post launch and had more than tripled very quickly to 10.3% by month six by following the system’s recommendations. 30 Accurately Measuring Pharma Brand Situations Like Pre-launch Brands, Generics/OTC It was redone every six months to ensure new market environment and validated perception factors against the competitors were constantly taken into account for continuous refinement and growth in market share. The brand continues to be a market leader in this category and the team has consistently used the Eularis analytics since pre-launch in that market. For the full report, please visit: www.eularis.com or email us at email@example.com
31. Eularis ©2014 www.eularis.com Measuring Multiple Brands And Across Regions 31 We need to ensure we have the best mix that makes optimal use of budgets for overall bottom line growth and profit of the company
32. Eularis ©2014 www.eularis.com 8.1: PAN-PORTFOLIO AND PAN-COUNTRY ANALYTICS The way most Pharmaceutical companies are organized is in functional silos. One team is responsible for one brand and solely that brand. However, this may not be the most appropriate way forward for best bottom line results for the company. For the health of the company, in today’s turbulent times, we need to be able to take a more prospective view of portfolio performance and actually model investments, tactics, budget mix and market dynamics across a portfolio to ensure we have the best mix that makes optimal use of budgets for overall bottom line growth and profit of the company. CASE STUDY: MEASURING A COMPANY’S PERFORMANCE One company has nine priority A1 brands in a mix of primary and secondary care. Until recently the company had worked in a functional silo approach and each brand had a brand team in each country (plus regional and global brand teams). Performance of brands was mixed. But what about the company bottom line across brands? To understand this using traditional analytics is a difficult feat. The company operates in 107 countries and, taking into account different product/category/country combinations, the quantity of date to collect is significant. By undertaking an intensive concomitant four month project, the company gained the ability to determine, with high accuracy, which markets should receive what resources and how to allocate them within portfolios within a market. Once this was set up for all A1 products, the process would be redone annually but the time-frame to do it thereafter would be only two months as the systems set in place first time round were established. The company was now able to know, with a high degree of mathematical accuracy, which products in which countries should spend what on marketing and, within a country and portfolio, how that budget should be allocated across activities for maximum bottom line growth for the company. GATHERING DATA There were many factors to be considered when setting up the initial project. These included examining each brand and each of its segments (indications, target audiences etc) in each country. They then needed to examine each country and the size of the markets and the growth potentials of the markets and the disease areas for each product. Eularis conducted market research in the main countries identified as the priority markets in terms of volume and/or growth potential. Given that the affiliates have a far greater knowledge of local market conditions and will need to execute strategies and tactics derived from the research in the long run, it was imperative to get their full participation and local research was done after identification of local issues with the local marketing teams. This involvement did include a political buy-in but the local teams also wanted access to the final data on their own markets as, clearly, this helps them get better results also. 32 Measuring Multiple Brands And Across Regions For the full report, please visit: www.eularis.com or email us at firstname.lastname@example.org
33. Eularis ©2014 www.eularis.com This data was collected, with local input, in a significant market research project on each brand in each country which examined a variety of factors around the brands and their competitors. Consistent methodology was applied in each country and to each brand. The reason for this was that previously each brand had been using a variety of indices and analytics to determine how to allocate resources but they were not uniform in their approach, although some regional groups had consistency across brands. Globally it was like comparing apples and pineapples! After the research was done, the Eularis process was applied. Firstly validation within categories to uncover growth drivers, then predictive algorithms for each and then individual brands in each country were analyzed together to uncover where the real growth opportunities were. Out of all the brands and countries analyzed, the ones with the highest growth potential were subjected to even more in-depth analytics right down to the level of messages and tactics with key stakeholders. WHAT WAS UNCOVERED ABOUT CURRENT PRACTICES? It was discovered that the company had some serious mismatches between allocation and potential. The first insight generated was that the company was significantly over-investing in areas with lower growth potential (North America and Japan). North America and Japan were important markets for the brands but their potential did not justify the percentage of the spend they were getting if the company’s bottom line was considered. The second insight generated was that there was under-investing in high growth potential markets such as Asia and Latin America. Together they were receiving only 24% of the global marketing budget and yet their growth analysis and profit potential analysis showed that it should, in fact, be receiving closer to 34%. The third insight generated from this was that three of its brands had the lion’s share of the marketing budget but these were the brands that had already grown and were less likely to grow as much as some of the smaller A1 brands. Imbalances across both the portfolios and regions emerged and if these were addressed, the potential increase in profitable growth was predicted to be in the hundred million range! 33 Measuring Multiple Brands And Across Regions For the full report, please visit: www.eularis.com or email us at email@example.com
34. Eularis ©2014 www.eularis.com WHAT THE COMPANY DID To address these issues and ensure that the optimal growth occurred, the company started to reallocate overall budgets across portfolios and countries as recommended by the analytics, as well as across individual sales and marketing activities for each brand in each country for optimal global growth. Marketing budget was reallocated from the mature markets and products to the emerging opportunities in the way the analytics recommended. They freed up some of the investment in the U.S. and put it into where it would provide more return. It was not necessarily an easy process but the Global CFO saw it as a necessary one, given all the issues the industry and the company were facing with investors. The results two years later were good. They had continued high growth in priority A1 brands and countries which was higher than their key competitors. Importantly not only their sales grew but so did the bottom line profit. The investors were also impressed and the share price increased despite a gloomy market. Everyone was happy: brand managers who saw their sales and bottom line growing, the country managers who saw the same and the global CFO who saw the global company bottom line grow and, finally, the CEO and investors who saw good growth and return for their efforts. Now the company is displaying the Eularis global results in an Intranet so that individual teams in any country can look at their data and pull out different cuts of data to compare in different ways. Importantly, the project is an annual one and only takes two months to complete now that the resources and infrastructure is in place. Marketers are understandably focused on measurement. Measurement produces many benefits for brands. However, the most important metric is bottom line growth and by taking a global cross portfolio approach, CEOs, CFOs, and all marketers can benefit from real growth and know that they are working in an environment that will continue to prosper, as the allocations are justified on a global level and each brand is contributing the maximum level it is able. 34 Measuring Multiple Brands And Across Regions For the full report, please visit: www.eularis.com or email us at firstname.lastname@example.org
35. Eularis ©2014 www.eularis.com Customer Relationship Management & Technology Analytics 35 Many companies are facing a key strategic choice: whether or not to continue investing in CRM – and if so, how?
36. Eularis ©2014 www.eularis.com CASE STUDY: A FAILING CRM SYSTEM This company had spent significantly on a company-wide CRM system. The sales force used the system but the rest of the company (marketing teams) did not. However, despite high spends on their CRM system, they were finding no obvious improvement in bottom line company market share. The client approached Eularis in January 2006 as they had a CEO directive to use our system to look at CRM. The graph depicted in Figure 9.3 shows that for the size of the company, although they had a good technology for their CRM system, their approach to staff training and the incentives they offered those who used the system were not optimal to grow the overall company market share. 36 Customer Relationship Management & Technology Analytics In addition, they were failing to maintain customer relationships or increase customer value using the system. It was used more as a sales contact system rather than taking full strategic advantage of the power available to them. From this data and the detailed recommendations that followed, the company took action. Available for viewing in full report Available for viewing in full report For the full report, please visit: www.eularis.com or email us at email@example.com
37. Eularis ©2014 www.eularis.com ACTIONS TAKEN The company refocused on training both their sales and marketing teams to use the CRM system and learn how to interact with different value customers and how to use it to plan marketing strategy. They added incentive schemes for staff using the system successfully. Then they added focus to customer maintenance and value growth (while continuing strong initiation of relationships with new customers). The next step was reallocation of focus to the areas recommended by the analytics. RESULTS Six months later the analytics were redone. At that time the company market share had gone up from 2.4 to 3.0, not necessarily all due to the CRM system enhancements, but it was now being used in a manner that could be proven to be increasing sales and marketing results. Now the CEO wants it redone every six months to ensure new market environment and activity is accounted for continually for ongoing refinement and growth in company market share. The results from the next time period can be seen in the graph in Figure 9.4a and b. 37 Customer Relationship Management & Technology Analytics For the full report, please visit: www.eularis.com or email us at firstname.lastname@example.org
38. Eularis ©2014 www.eularis.com By using this approach, a company can … Identify all CRM factors (software, organizational, people, customer initiation, customer maintenance, customer value growth) really influencing the bottom line Identify strengths and weakness related to the company/brand size Evaluate which aspects are having the most impact on actual bottom line Quantify the impact from each CRM aspect Determine the most effective CRM focus 38 Customer Relationship Management & Technology Analytics For companies committed to this new customer value journey, there are some natural next steps: Assess which constraints have significantly hampered recent customer value efforts Identify alternatives for organizing future customer value initiatives for success Identify two to three high profit customer segments on which to experiment with this new approach Develop the leadership and organization to pursue at least one to two of these experiments Employ the new analytics outlined above to develop insights and ideas for new customer solutions For the full report, please visit: www.eularis.com or email us at email@example.com
39. Eularis ©2014 www.eularis.com Using Marketing Measurement In Your Organization 39 The greater demands for accountability of marketing from the CEO, CFO, the Board, and other executives, mandate a greater focus on measurement of marketing
40. Eularis ©2014 www.eularis.com CONCLUSION The basic issue is balance: balance between non-financial and financial aspects is important. Non-financial metrics often give a better view than financial but must be carefully integrated with financial in order to make sense of the bottom line impact of the non-financial aspects. The other area that must be balanced is a rigorous analysis of the current, not the past, situation. Today’s reality can be measured; the future can only be guessed at. However, the use of predictive analytics based on today’s facts is going to yield a higher accuracy than predictive analytics for hypothetical futures based on out-of-date historical data which is largely irrelevant in a changing environment such as Pharma. Looking at the future does not drive the business: the actions we take now do and the competitive advantage will arise from applying rigorous analysis to today’s facts and using them intelligently. 40 Using Marketing Measurement In Your Organization For the full report, please visit: www.eularis.com or email us at firstname.lastname@example.org
41. Eularis ©2014 www.eularis.com The World Trade Center Leutschenbachstrasse 95 8050 Zürich Switzerland Tel: +41 (0)44 308 39 86 Fax: +41 (0)44 732 67 52 Email: email@example.com Contacts Kamiyacho MT 14th Floor 4-3-20 Toranomon Minato-ku 105-0001 Tokyo Japan Tel: +81-3-54043585 Fax: +81-3-44966445 Email: firstname.lastname@example.org Eularis Europe Eularis Japan 12/F Shui On Plaza 333 Huai Hai Zhong Road Shanghai, 200021 China Tel: +86 (021) 5116 0767 Fax: +86 (021) 5116 0555 Email: email@example.com Eularis China Unit 10-18, 32 Floor Tower 1, Millennium City 1 388 Kwun Tong Road Kwun Tong, Kowloon Hong Kong Tel: +852 2824 8071 Fax: +852 3010 0811 Email: firstname.lastname@example.org Eularis Hong Kong 415 Madison Avenue 14th Floor NY10017 New York USA Tel: +1 646 673 8408 Fax: +1 917 591 7502 Email: email@example.com Eularis North America 41
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