Evolving sales trends and attitudes towards common business practices have presented pharma with a new problem - exactly who are pharma's customers these days?
Let's back up a little.
In my last few articles we considered new ways to approach customers, looking at CLM as dynamic customer relationship management and the role of reps as customer relationship managers. I've had a lot of feedback on this, both online and offline, and I'm encouraged, since people tend either to agree enthusiastically or disagree vehemently. Perfect... the last thing I'd want is a tepid, "why not?" response.
Nevertheless, ever desirous of being provocative, I'm going to suggest that even before we start talking about how to approach customers, pharma companies have pretty poor definitions of who their customers actually are.
Granted, there has been a real effort to expand the customer definition, particularly when it comes to including payers and regulators. I'm willing to bet that most of these newly identified customers would say that this effort hasn't been sufficient. During the last eyeforpharma SFE and commercial excellence forum, who can forget Omar Ali, of the NHS, pointing out that while ten years ago he was treated as a clerk, now he's one of the most important people in the UK for the pharma industry... and he is still often treated as a clerk!
Nevertheless, while there are significant strides to be made, payers at least are increasingly taken seriously.
But what about the others? Who else are pharma's customers?
From a purely theoretical point of view, a customer is often defined as someone who buys something from you. However, it's more complicated for pharma companies. A lot of business definitions implicitly assume that the same person chooses, pays and consumes the product or service being presented. In ethical pharma, these roles are typically separated: the prescriber chooses, the payer pays and the patient consumes. Pharma has traditionally focused on the chooser, which makes sense.
However, the distinctions between the different roles are beginning to break down: Patients often have to make substantial co-payments and are increasingly informed and anxious to participate in the choice of their therapies, allotting them some of the prescriber and payer roles; Prescribers are suffering penalties for over-prescribing, making them payers to some degree; payers are involved in treatment guidelines, making them deciders... and so on.
The 4 Ps
In such an environment, pharma has to stand back and think carefully about customer definition. In order to do so, you should consider the question: who cares? Who cares about whether the patient is treated or not? Who cares about the patient's progression? Who cares about your product's fate?
The most obvious answer is "the patient". More than anyone else, the patient certainly cares about his or her progression and the details of the treatment. Certainly, the prescriber cares as well (we hope). The payer cares, since they're paying for it and expect to get health results for their money.
But that's not all. There are also those who actually provide everything the patient needs for treatment. These include a multitude of caregivers, ranging from nurses (both inside and outside healthcare institutions) to family members. It also includes pharmacists. Pharmacists not only distribute drugs, they provide advice, information, guidance and support to patients.
All of these represent customer groups for the pharmaceutical industry and they can be grouped into four "P's": Prescribers, Payers, Patients and Providers. The fate of your products is in the hands of these P's, yet pharma has had a distinct tendency to ignore many of them. Why?
On one hand, there's a simple underestimation of their importance. Having just learned in the past twenty years or so that it makes sense to target customers on the basis of their potential, the industry is still struggling with determining exactly how to define potential in the case of prescribers. Is it the number of patients? The number of prescriptions in the class? Should you take into account innovation? What about attitudes? If now you start including customers who don't even generate prescriptions then it all gets doubly confusing.
If necessity is the mother of invention then pharma marketing is an orphan.
Secondly, any innovation in pharmaceutical marketing has been dampened by the fact that pharma makes too much money to feel real pain. Even today, in hard economic times, pharma still makes far more money than most industries. The top three fortune 500 companies generated an average profitability of a little over 5% in 2011, whereas the top three pharma companies generated over 18% profitability. If necessity is the mother of invention then pharma marketing is an orphan and certainly, anything that smells of straying from the tried and trusted path to profitability will be understandably met with caution.
However, I honestly don't believe that 18+% profitability has been the result of pharma's sales and marketing efforts. I think pharma sales and marketing has certainly allowed pharma to take advantage of its true value engine - R&D - but it could have done much better, and what's worse, the wave of GP-oriented blockbusters that lies behind these kinds of results is fast breaking on the reef of reality.
What is that reality? It's that the customer in pharma isn't a customer at all, but a consortium of individuals and organizations, all of whom participate in the customer paradigm. All four of the P's have their roles to play and if we consider the relative importance of the four P's, there has been a distinct tendency for the impact of prescribers to decrease in many markets. By focusing on only one of the P's - the prescriber - pharma is turning a blind eye to a great big swath of its own customers, all of whom are increasingly important. Kudos to those who have started to take payers seriously, but they're only halfway there, there are two other P's to consider.
In the next few columns I plan on turning a light on both patients and providers, looking at both the advantages and difficulties of engaging with them, but first, I suggest reflecting on the 4P framework as a working definition of the pharmaceutical customer.
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