Pharma insiders often argue that the industry’s business model and challenges are unique, and so its approach to meeting those challenges must also be unlike that of any other industry. But Baba Awopetu, Manager of Brand Strategy, EMEA at Stryker, says when you look closely, pharma isn’t as different from other industries as it might think.
Often pharma argues it is unique because its products and operations are highly regulated, Awopetu says. But as he points out, the financial sector is also highly regulated. And like pharma, the financial services industry is also feeling the effects of a demanding customer base.
“The barriers to getting a pharma product through to be used by patients is getting higher and if anything goes wrong, there’s a lot of media hype around it,” Awopetu says. “But if you look at the financial services industry, there are a lot of the same kinds of protections for consumers and media scrutiny when it comes to selling financial products.”
Some in the pharma industry also argue that it is limited in its capacity to alter its central proposition, he says.
“In other words, the medicine and the capital equipment are a central piece of the proposition it delivers,” Awopetu explains. “However, things like capital equipment companies and big industrial companies also rely heavily, if not exclusively, on their core products. But some of these companies have found ways to be a little bit more innovative in terms of the way they think about what their actual proposition is.”
Pharma also believes its “social burden” sets it apart from other industries, he says.
“Granted the line between profits and saving lives can be a very thin one, but many consumer goods companies are feeling the same kind of pressures – McDonald’s, Coke and others and their alleged contribution to obesity, for example,” Awopetu explains. “Everybody is under a lot of scrutiny these days. There’s barely anyone whose profits haven’t been linked somehow to their social responsibility, so pharma is not that unique really.”
Other arguments include the need to manage complex inter-relationships among groups and the fact that pharma is a knowledge-based industry, but as Awopetu points out, in today’s markets this is true for many other industries.
The difference, he admits, however, is that it is a challenge to find another industry where all of these characteristics are present at once. But there is much to be learned by pharma from how other industries have tackled some of these challenges, because many of them are ahead of pharma in addressing many of these issues, Awopetu points out.
“People who are competing in industries where margins are 5-6% have had to become better marketers, especially where they don’t have patent protection,” he says. “They survive and die on the basis of their brand. When we look at the challenges the pharma industry faces and some of the similarities with these other industries, we start to realize that perhaps looking at what some of these industries have and are doing to survive may well provide some key lessons for us.”
Customer focus
Awopetu says many industries have tried tricks to manipulate their customers, but the conclusion they usually come to is that the best way to drive customer loyalty is to truly meet the needs of the customer. Most have achieved this by having a culture that is customer-focused right from the core.
“Pharma must focus on delivering value for both doctors and patients and that goes beyond just selling them tablets,” he argues. “It may mean doing more to educate doctors and making sure products are used in the most appropriate way to benefit patients. Perhaps incentives must be based not only on how much is sold, but also on the service reps have provided to customers.”
Pharma talks a lot about segmentation , Awopetu says, but he suggests that more “mature” markets have realized that those that win are those that can take a slightly deeper look into the market to be able to understand the different attitudes and behaviors that drive trends in the market.
“If you think about BMW and Mercedes, they have more in common than not, but they focus on two different segments – one focused on ownership and the other looking for driveability,” he says. “People really into cars prefer BMW and people after status prefer Mercedes and the companies focus on building their product propositions to the needs of these two consumer groups.”
Awopetu says that for pharma this means that we can’t go in and treat all customers the same and that targeting should follow segmentation.
“Before you target the customer, the first thing you must understand is something about the customer that you can package a solution around,” he explains. “Then, you focus on the ones that fit into your category and have the most prescriptions. Engaging with the customer and delivering real value will ultimately lead to repeat business and longtime loyalty.”
Segmentation is done particularly well by the telecommunications industry, Awopetu says.
“They use every piece of information they have, break customers into groups and make sure those groups are relevant, both in the way they engage with the customer and also what they offer the customer,” he explains. “But what’s important is not the information they have; it’s the right kind of philosophy and principle that carries them beyond the information. It’s the desire to better meet the needs of the customer than the competitor.”
Branding
Branding something other than their products is something some industries are doing very well, Awopetu says.
The medical device industry, for example he explains, has set up education platforms and sponsors whole groups of doctors or surgeons, which ultimately still helps drive its products, but in a much more altruistic way.
Some industries are even beginning to apply the branding process from the sales recruitment stage, Awopetu says.
He asks: “Can your rep be differentiated from the competition? Can you recruit for distinct core capabilities and then train, develop and promote around it? When we think about branding, we need to move beyond the product itself to the reps.”
Ethical responsibility
Awopetu says even traditional companies like Procter and Gamble have had to adapt their approaches to things like multi-channel marketing and social responsibility.
“We’re all dealing with a more consumer-powered environment,” he says. “Ultimately, what pharma is finding out, as are other industries, is that there’s no longer anywhere to hide. Everybody’s being asked questions about the level of profit their industry is taking versus the level of value it’s delivering.”
Awopetu stresses that pharma could make more of the solutions that it does actually deliver – the lives it saves.
“Pharma is so conservative that it ends up being on its back foot all of the time, because it doesn’t talk about the lives it saves and the changes it brings,” he says. “We don’t do enough to make our own case.”
The biggest lesson pharma companies will learn, Awopetu stresses, is that no formula for success is permanent and the secret to success lies in constant innovation and reinvention of already successful business models. As the chairman of Tesco famously said “our secret to success is paranoia” – and Awopetu suggests that it is a message pharma would do well to bear in mind.
