Pharma's New Prescription for CRM
Significant changes are in the air in the marketing of pharmaceuticals, and drug firms will need to adjust their CRM programs. CRM vendors will likewise need to improve their offerings to pharmaceutical firms. The days of mass marketing are giving way to a trend toward micro marketing, and the role of the sales rep is morphing into that of an information provider rather than a persuader.
12/07/09 4:00 AM PT
Retail pharmacies in the U.S. filled 3.65 billion prescriptions in 2008, and another 238 million prescriptions were filled by direct mail. Each Rx was issued by a physician -- which explains why the pharmaceutical industry in the U.S. spends heavily on marketing efforts aimed at doctors, including customer relationship management programs.
All large pharmaceutical companies in the U.S. have robust CRM programs aimed at the physician community, and many of the hundreds of other drug producers also employ some type of CRM program directed at doctors.
"The pharmaceutical industry has achieved significant gains by using CRM," E. Sujith, team leader and healthcare analyst at Frost & Sullivan, told CRM Buyer. "Both the big and mid-sized firms have embraced CRM in full swing. The industry has witnessed significant ROI in areas such as marketing mix effectiveness and sales force productivity,"
At first glance, it seems that such a mature CRM market in the pharmaceutical sector doesn't provide for much future growth. However, pharmaceutical companies that are satisfied with their conventional CRM programs will find themselves behind the curve in the highly competitive industry in the future.
More Precise Marketing Ahead
"The whole marketing approach to pharmaceuticals is in flux. There are lots of changes under way, including less reliance on sales representatives spending lots of time visiting doctors. That whole 'show up and blather' model is fading," Dale Hagemeyer, an industry analyst at Gartner, told CRM Buyer.
"The CRM capabilities that are used now will have to be modified to integrate these changes," he added.
Estimates of the CRM pharmaceutical market vary according to the scope of activities covered -- ranging from automated appointment tracking to full scale data collection and analytics -- but it's clear that drug firms are not bashful about spending money on CRM.
"We see the market as a little bit flat right now, but it will start to move up again in a couple of years," Eric Newmark, research manager for life sciences business systems at IDC, told CRM Buyer.
U.S. drug firms spent US$309 million in CRM in 2008, according to the firm, and will remain at about that level in both 2009 and 2010. Spending is expected to hit $323 million in 2011 and $343 million in 2012.
The U.S. market could burgeon even more than that, suggested Frost & Sullivan's Sujith, who predicted that "total spend" on pharmaceutical CRM would reach around $612 million in 2008 and grow to $816 million by 2014.
However, the shape of CRM programs will likely be quite different in five years.
"There is a lot of pressure by insurance firms to reduce the level of payments for physician's fees," said Hagemeyer. "As a result, doctors have to make up the lost revenue by seeing more patients. So the doctors no longer have time to spend 20 or 30 minutes with some drug company sales rep."
Also, pharmaceutical firms are trying to reduce costs in general, and with the exclusive patents on major revenue products running out, profit margins are being squeezed. Pharmaceutical companies have cut thousands of sales rep positions.
The remaining sales reps will have to deal with making fewer, and shorter, sales calls on doctors, and they will have to be more productive with each call. CRM tools can be employed in this process. The vast array of medical data available to drug firms, such as prescription writing patterns and demographic information that are now part of CRM programs will need to be further refined.
Improving the Information Cycle
"Any information that a sales rep picks up in the field can be integrated back to a main CRM system to improve the targeting of physicians by using cross analysis that can be directed, for example, to specialized email generation or Web site promotion. This continuous flow of information within the system has become the basis for what is being called 'closed loop marketing' (CLM)," IDC's Newmark said.
If one drug firm's system detects that a doctor has shown partiality to a competing product, special attention can be given to pointing up the advantages of that firm's alternative offering.
"The days of the long lunch with a doctor are almost gone," observed Hagemeyer. "What is really happening is that sales reps are morphing from being persuaders to being facilitators of information. Doctors can do their own research on the Internet. So the sales rep has to deal with that. We see them as taking a concierge role with the doctors."
In that role, reps can set up Internet chats and co-browsing sessions in which there is no physical face-to-face contact. Instead of meeting during business hours, these sessions can take place in the evening or on weekends. The idea is to provide authoritative information that is targeted to a physician's interest or specialty in a more professional context, versus the traditional lunch and sales pitch method.
A spinoff of this technique is the scheduling of Key Opinion Leader (KOL) meetings, where a sales rep invites many doctors to meet with a medical authority to talk about certain therapies in a peer-group context.
Technology is crucial to the CLM and KOL functions. Pharmaceutical firms and their sales reps need the information technology resources to generate the clinical and therapeutic information and match it to the needs of their customers -- the doctors. Sales reps can now use tablet PCs and associated technologies to manage everything from finding clinical data to scheduling KOL seminars.
The expansion and integration of CRM systems will be required to meet the needs of a changing marketplace, Hagemeyer stressed in recent reports on the changing landscape in pharmaceutical marketing.
"From a technology perspective, this means having superior customer data integration and reducing latency in capturing data, processing, and getting it out to the field so it can be incorporated into a call plan," he said.
CRM Supports Comprehensive Plans
"The prevailing trend that we have observed is using CRM to integrate marketing and sales initiatives to achieve a 360-degree view of the customer," Vicki Crow, chief customer officer for the Americas at Cegedim Dendrite, told CRM Buyer.
"This is achieved by centralizing every customer touch point into a single repository so that there is a full visibility of reactions and responses to interactions across channels," she explained. "Through the use of advanced and predictive analytics, account managers can determine next steps and adjust tactics such as targeting [and] messaging, and channel accordingly."
Pharmaceutical firms have been using medical science liaisons (MSLs) for years, Crow noted. An MSL is a person with a medical, pharmacy or life science degree, often employed by a pharmaceutical firm. As a result of their professional background, MSLs have more credibility -- and more leeway -- in discussing actual drug impact and clinical matters with physicians than other sales representatives.
"What is new is how companies are focusing on leveraging CRM technology to more effectively support the MSL's objective of building strong relationships with KOLs by mapping their influence network, their background, and previous interactions. The output is increased collaboration and communication across the enterprise," noted Crow.
The goal of pharmaceutical companies to improve the quality and reliability of information provided to physicians, as well as improve and expand the channels of communication, will likely involve greater use of CRM techniques.
"Today, there's an attempt to do less mass marketing and more micro marketing as companies want to build meaningful relationships with their stakeholders," said Crow.
"There are many companies that have changed their approach at reaching stakeholders from a one-way communication to achieve meaningful two-way communications," she noted, "where the pharmaceutical company is a trusted source for medical information. Through the right CRM system, the company can manage all information related to the stakeholder to make the message more relevant and beneficial."