Patent expiry & social media: a pharma story of biblical significance
Richard Heale
The Thoughtware Group
(Continued from “Social media and corporate influence: tuning in to the opportunity?”)
In the beginning Pharma created its ‘block-buster’ fatted calves.
Protected by aging patents they will over the next six years put US$267 billion of revenue at risk through patent expiry.
Further costly implications, now reaching daunting proportions, include loss of economies of scale and impact upon research and development models.
Is it too late for Pharma to stem the tide of this commercial Armageddon?
Are Pharma’s current remedies capable of holding back the inevitability of the lifecycle tide?
Is new Pharma Thoughtware required that will circumvent this perpetual reoccurrence?
The ‘false idol’ of patent protection
Has Pharma a flawed marketplace perception of product lifecycle marketing born out of patent protection?
Isn’t it totally understandable that Pharma marketing management will not implement strategies that extend a product lifecycle beyond, what is seen as, the inevitable commercial oblivion of patent expiry? Especially when marketing budget parsimony, caught in the shadow of the typical $1bn R&,D investment spectre, can be career shaping.
Patent protection may facilitate recouping the R&,D budget but incurs Pharma the cost of a false sense of market reality.
"...they will over the next six years put US$267 billion of revenue at risk through patent expiry."
Do patents create a self-fulfilling prophesy?
Are ‘payers’ the grim reaper of pharma products?
Patent protection is gone. Cheap price generics are available. Is that the end of life as we have known it for a Pharma product? Is it really that black and white?
Whatever the government, health insurance or patients payer mix the question is: “Why pay more than is required for a prescribed treatment?”
Furthermore, in certain payer scenarios the final coffin nail in the Pharma product lifecycle is legislation enshrining generic prescribing. Why then, in such post-patent scenarios, would a physician or patient demand an ex-patent alternative or a pharmacist break the law?
Consequentially, why would post-patent expiry Pharma product marketing exist?
Moreover, pre-patent expiry, why would Pharma develop any form of product loyalty knowing that when patent protection is lifted, legal or rebate requirements render that loyalty worthless?
Therefore, is the fate of the Pharma product lifecycle not sealed?
Pharma’s roads to salvation?
Will Pharma’s remedies to extend or circumvent patent expiry work? Can initiatives such as:
• innovation
• regulatory and legal strategies
• introducing fixed-dose combinations
• investing in generics
• pricing strategies
• switching from prescription to OTC
• divestiture
rescue a Pharma product from what appears to be the inevitable?
Is the only alternative to somehow change the Pharma liturgy or create a new dogma?
Aren’t there more cost-effective alternatives to building ‘defensive walls’?
Or is Pharma resistance useless against the dark forces of payer pressure to utilise cheaper substitutes?
Old Testament parables
Several Pharma product case-studies show how market-share, sales and revenue can be maintained under the competitive seduction of low priced multiple generics.
"Patent protection may facilitate recouping the R&,D budget but incurs Pharma the cost of a false sense of market reality."
The majority of these exemplars are for orphan drugs often operating in special circumstances. Nevertheless, along the marketing continuum between mass and orphan drugs there are lessons to be learned and applied.
From the ‘Market Introduction’ stage of Pharma product marketing, strategies for positioning, relationship and communication can create product awareness, differentiation and in some cases physician loyalty.
Product features and benefits driven marketing approaches combined with targeted sales tactics have been shown capable of creating robust physician relationships, albeit in specialised markets. These relationships are often underpinned by value-add drug associated services and or products.
But these products and services have been added to a Pharma product rather than integrated into the total product treatment package. Significant support products and services are few and far between. Their existence is often driven by unusual circumstances and they are normally what Pharma marketing considers necessary not what other marketplace stakeholders say they require or believe represent value.
This is not brand-building.
While non-Pharma’s marketing objectives are to strengthen and extend a product life-cycle, through brand building, Pharma’s brand Thoughtware stops at patent expiry.
Product ROI follows a defined path from launch, to growth, to maturity, and then post-patent oblivion. The stages of brand building are never called-up to fight for ROI expansion or extend the duration of the ROI fight.
New Testament opportunities
Although brand and associated consumer loyalty has been recognised as a potential defence against patent expiry it has either never delivered or been given the opportunity to deliver. [See for example: http://mmj.sagepub.com/content/8/4/293.full.pdf ]
Currently the twenty-first century Pharma marketplace is not only challenged by patent expiry thinking but fundamental new forces.
"Hordes of patients and physicians are utilising the technologies of Web 2.0, particularly social media, to change marketplace rules and dynamics."
Hordes of patients and physicians are utilising the technologies of Web 2.0, particularly social media, to change marketplace rules and dynamics.
These technologies facilitate relationship building through a high level of detailed communication. Marketing and sales become about listening not telling, dialogue is open and transparent, the marketplace is a community with common objectives, marketing is learning from valued piers, ‘brand twenty-first century’ represents a different way of thinking.
Pharma is challenged. Again!
Pharma, its agents and suppliers, again find themselves trying to add to their existing marketing model. Problematically, the marketing platforms and the communication channels or Web 2.0 do not fit comfortably with a product marketing model.
Pharma requires more than the superficial. For example, views of a product life-cycle and value-chain not only need to be rethought but also integrated with those of physicians and patients.
As if by divine salvation Web 2.0 marketing complements a brand building marketing model.
Or is it “divine retribution” when one considers the challenge such an opportunity brings to Pharma?
In the Brand building model understanding what stakeholders value and the choices they make, the development of consumer loyalty through value-adding patient and physician service solution infrastructure, partnership developing dialogue, all create the Pharma product as a true brand.
The challenges are considerable.
Ultimately, payers, backed by physician and patient loyalty, could well demand a brand be maintained in the marketplace un-challenged because of the value it represents when compared to the price of a generic.
But the rewards are immeasurable.
There is a great deal at stake here, ultimately the brand ownership of a disease area or at least an indication.
The last judgement
The impact of patent expiry is not on trial here. Rather, it is Pharma’s slowly failing business model.
"...views of a product life-cycle and value-chain not only need to be rethought but also integrated with those of physicians and patients."
Social media is not a ‘here today gone tomorrow’ phenomenon. What it represents is in people’s soul – the desire to communicate with and learn from others.
Pharma requires an entire marketing rethink.
This time it’s not about turning Pharma’s physical brochures into web sites.
It requires the health economist to calculate ROI’s for market expansion and extension versus the risk of that extension not being realised.
It involves change management at ‘brand’ manager, board and shareholder level, different ways of utilising systems, networks and tools, understanding partnerships and influencers, new forms of marketplace behaviour, skills and Orgware.
It needs Pharma to acknowledge that dealing with a marketing paradigm shift requires new enlightened Thoughtware and leadership.
Pharma has to acknowledge that this is what ‘payer’s have been demanding for some time. [ See: http://www.pharmatimes.com/Article/11-04-26/New_UK_industry_code_allows_GP_pharma_price_deals.aspx ]
The Thoughtware Group Program to address this challenge is ‘Brand Pharma 2.1’.
About the author:
The author gratefully acknowledges the cartoon contribution to this article of Jock Macneish (Thoughtware Group) and the editorial skills of Oxford PharmaGenesis™ Ltd.
The opinions expressed above are those of the author.
The Thoughtware Group is represented in the European and North American pharmaceutical marketplaces by Oxford PharmaGenesis™ Ltd (www.pharmagenesis.com, tel: Graham Shelton +44 (0)1865 390144, e-mail: graham.shelton@pharmagenesis.com).
What opportunities does social media present to the challenge of patent expiration?
