Category Captain Management: transitioning from just a source of supply to a genuine strategic partner
St. Joseph’s University
Bill Trombetta discusses a marketing strategy that although it has been around since the mid-1950s, is currently re-emerging today – Category Captain Management. Bill explores how this strategy is already being used by big pharma such as Pfizer and GSK and how it will continue to evolve in the future.
Who said the following: “We are beloved by investment banks and stockholders but we are perceived by physicians and patients as little more than ‘pill pushers’”¹? This quote, paraphrased, illustrates the tension between the current, rapidly disappearing blockbuster model in pharma and emerging needs by pharma’s downstream customers (hospitals, doctors, payors) for value over and above just the mere physical ingredients of a molecule or compound. We see this currently with an increasing disdain for what sales reps bring when they detail a medical practice. And we see medical schools and professional societies turning down pharma funding as biased and not useful. There must be a better, fundamental way for pharma to compete. What if a company could become so valuable to its customers that they would not leave even for a low price competitor? I suggest a strategy that has been around since the mid-1950s: Category Captain Management (“CCM”).
What is Captain Category Management?
According to an article in the Journal of Public Policy &, Marketing, CCM is a supplier / customer process for managing an entire product category (insert drug or device) as a strategic business unit to deliver enhanced results for the customer, in CCM the firm takes on a significant role in managing the category². The starting point for the Category Captain is not how much the firm’s sales or market share can increase or how much profit he can make, rather, the firm’s focus is what help does his customer need, over and above just supplying physical product and enhancing the customer’s ability to compete and survive in an ever increasingly hostile healthcare marketplace.
“…the firm’s focus is what help does his customer need, over and above just supplying physical product…”
Examples of CCM in healthcare
As early as 2000 to 2003, Pfizer offered a CCM package to Florida Medicaid in lieu of discounting its drugs more than the Medicaid discount rate to get its drugs on formulary. In asthma, diabetes, and congestive heart failure, Pfizer put together a powerful disease management program that resulted in the most difficult market segment in healthcare, Medicaid patients changing their healthcare behavior and achieving dramatic metrics in decreasing Emergency Room use for asthma, A1C blood level scores at 7.0 for diabetes, and moving congestive heart failure patients’ severity levels down from Stage IV through Stage I reducing expensive hospital stays. In addition, the hospitals, doctors and nurses in the dozen hospitals Pfizer worked with, viewed Pfizer as substantially more than just a supplier of drugs.
Vaccines provide another opportunity to go beyond just supplying a physical compound. Glaxo has come up with ways to make pediatricians more efficient when vaccinating children in the United States. Vaccines are not a money maker for pediatricians. With combination vaccines there is even less financial incentive. Glaxo put together a value added packaging scheme for its vaccines that make pediatricians and their staff more efficient in administering and monitoring children. Glaxo also helped to increase reimbursement in low paying states such as Texas, Mississippi and Alabama.
Novartis has moved to CCM in two cardiovascular drugs: Diovan and Tarka. With Diovan, Novartis has worked with physicians to help patients get blood pressure diagnosed and levels down beyond just the drug itself. Eli Lilly is using CCM with Zyprexa. Its reps help doctors in diagnosing levels of depression and working to increase compliance, however, the Lilly rep offers this help with no condition that the doctor has to write Zyprexa. The physician is free to write a competitor’s drug. In market areas where Lilly is applying CCM, market share is up.
“Vaccines provide another opportunity to go beyond just supplying a physical compound.”
The final example of how CCM can apply in healthcare is REMS: Risk Evaluation and Mitigation Strategies. The FDA in 2008 came up with new legislation to deal with very risky, dangerous drugs: REMS. Most drugs are not subject to REMS. Of the few drugs that have a REMS requirement, few of them get the very restrictive constraints on how the drug can be administered and delivered and who is certified to administer the drug in what setting. But those drugs that have the most restrictive REMS packages can be under an inherent disadvantage in the marketplace when a competitor’s drug does not have the REMS requirement. The physician is at risk in writing a dangerous drug, in addition, the doctor has medical education obligation to the patient for which the doctor does not get reimbursed. Stepping into this opportunity to help the doctor with this regulatory burden are drug wholesalers such as Cardinal and McKesson.
With traditional marketing in disrepute, a new strategy is emerging that goes beyond just the physical features and attributes of a drug. CCM enables a company to transition from a mere supplier to a strategic partner. The goal of the Category Captain is to improve the performance of its downstream customers such as hospitals, doctors, including improving healthcare outcomes of patients.
1. Answer: Dr. Sidney Taurel, former CEO of Eli Lilly in a 2005 interview with Roger Longman in In Vivo.
2. (G Gundlach,D. Desrochers &, A Foer 2003 “Analysis of Antitrust Challenges to Antitrust” Vol 22 No. 2, pp. 201-215).
About the author:
Dr. Bill Trombetta is Professor of Healthcare &, Pharmaceutical Marketing, St. Joseph’s University, Phila PA, USA. In addition to his PhD in Marketing from THE Ohio State University, he is also an attorney licensed in New Jersey &, New York specializing in healthcare and antitrust law. He served as a Deputy Attorney General in the State of New Jersey, Dept of Law &, Public Safety, Division of Criminal Justice, Antitrust Section.
What are the benefits of Captain Category Management?