Healthy Skepticism Library item: 10127

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Publication type: news

Jones P, Holladay .
Getting The Mix Right | Part 2: The Economics of the Online Channel
Pharmaceutical Executive 2006 Oct 1
http://www.pharmexeceurope.com/europharmexec/article/articleDetail.jsp?id=377770&pageID=1&sk=&date=

Notes:

Graphs not reproduced here. Follow link to Pharmaceutical Executive site for access to these.

Full text:

Getting The Mix Right | Part 2: The Economics of the Online Channel

The online channel has huge potential. A survey conducted by Pri-Med Research1 shows that nearly two-thirds of all primary care physicians in the US now access the internet at least once a day for work purposes. Similarly, 45% of general practitioners (GPs) in the UK use the internet at least once a day, and 75% use the internet at least several times a week, for clinical or professional information (Figure 1). Conversely, only 45% of British GPs are prepared to see more than two sales representatives per month. So the potential online audience is much bigger than the potential offline audience.

The online audience is also much easier to reach. There is a limit to the number of doctors any one representative can see, not only when those doctors are based in geographically remote areas, but also because of the decline in the number of doctors who will see representatives anyway. And even when a representative succeeds in getting an appointment, the average amount of time he or she spends with the GP is decreasing. So the opportunities to secure a face-to-face meeting, and the impact the representative can make during the meeting, are both on the wane.

Table 1: Doctors´ preferred channels for receiving product information.

The internet does not suffer from such restrictions. A recent survey of 540 British doctors shows, for example, that e-detailing is one of the more popular ways of receiving product information. Asked which channels they preferred, 67% of respondents cited postgraduate meetings, 49% e-detailing and only 27% visits from sales representatives (see Table 1).

One of the reasons doctors give for preferring the online channel to most other channels for receiving product information is that they can download material from the internet at a time and place of their own choosing, rather than having to cram an appointment with a sales representative into an already busy working day. A second is that the medium is better adapted to the communication of complex details. A typical presentation lasts between 6 and 11 minutes, and the best presentations provide balanced information; they are not the simplistic sales pitch which many representatives stand accused of delivering.

However, the online channel offers the industry some major advantages, too. A doctor who looks at a presentation in the comfort of his or her home is likely to be in a more receptive frame of mind than one who has patients lining up outside the door. The quality of the feedback he or she provides is likely to be very much richer and purer than feedback that has been filtered through a third party. And last, but by no means least in an industry where advertising and promotional activities are coming under increasing scrutiny, the content of the presentation a company provides cannot be subverted. Once the copy has been approved, it cannot be changed – either wittingly or unwittingly – during transmission. Nor can it be undermined by errors of judgement on the part of a sales representative, and no pharmaceutical company can monitor the conduct of all its representatives all the time.

The economics of the online channel

Figure 1: The frequency with which GPs access the internet.

Doctors like the online channel, then, and it has certain practical advantages for Pharma as well. But the key question is: can it be used to increase sales? And here the evidence is conclusively, yes. We shall look more closely at the economics of one particular approach – e-detailing – below, although there are clearly many other ways of using the internet to market pharmaceutical products, including educational programmes and peer-to-peer communications (see sidebar, The permutations of e-detailing).

Research conducted by OnMedica shows that message recall rates from controlled e-detailing are very high. In follow-up studies of 607 doctors who received e-details on five different products, between 50% and 80% of the respondents spontaneously recalled the key message. More to the point, 63% said that they expected to increase the number of prescriptions they wrote for the product concerned. They estimated that they had written an average of 7.6 prescriptions (excluding repeats) in the 3 months preceding the e-detail, but anticipated writing an average of 10.3 prescriptions (excluding repeats) in the 3 months following the e-detail – an increase of 35.5%.

Figure 2: Changes in prescribing of a recently launched product after e-detailing.

So how do these ‘soft data’ translate into sales? IMS Consulting recently assessed the impact of e-detailing on two products in different therapeutic areas and different stages of their lifecycles; one drug had only been on the market for 12 months, while the other had reached early maturity.

Case studies

The first study focused on the new brand and compared the prescribing behaviour of two matched groups of doctors on the sponsoring company’s target list; one group was e-detailed, while the other was not. As Figure 2 shows, the number of doctors prescribing the brand grew more rapidly in the group who had been e-detailed. The increase in the number of prescriptions written by the doctors who had been e-detailed was even more marked, at four times the average increase in the control group.

Figure 3: Changes in prescribing of a relatively mature product after e-detailing.

The second study covered the more mature brand. It compared the prescribing behaviour of two matched cohorts of doctors on the sponsoring pharmaceutical company’s target list – only one of which had been e-detailed – with the prescribing behaviour of a third group of doctors who were not on the company’s target list and had received no direct promotional materials at all. Again, the increase in both the number of users and number of prescriptions per user was greater among the doctors on the target list who had been e-detailed than on those who had not. More unexpectedly, however, there was also a major shift in prescribing patterns in the group of doctors who had been e-detailed but were not on the company’s target list (see Figure 3). Yet, without e-detailing, the company could never have reached this group and secured the resulting improvement in sales.

Both these studies provide convincing evidence of how powerful a selling tool e-detailing can be, when properly executed. But it is possible to take the analysis a stage further. We have calculated returns on investment for the two campaigns 3 months and 12 months after they ended, based on the incremental increase in sales of each product – that is, the difference in uptake between the group of doctors who were e-detailed and the group who were not. We have also used modelling techniques to compare these returns with the hypothetical returns from an equivalent number of personal details, drawing on data from pharmaceutical companies, contract sales organizations, recruitment agencies and a market survey to estimate the cost and performance of a typical personal detailing campaign.

Our analysis shows that e-detailing of the product that was recently launched cost 70% less than personal detailing of the same product would have cost. It generated a 29% increase in sales during the 3 months after the campaign (compared with a projected 11% increase in sales from personal detailing). Three months after the e-detailing campaign was completed, the costs of the campaign still outweighed the additional revenues it had generated, but by the end of the year there was a 1.2:1 (23%) return on investment. Conversely, with personal detailing, the overall return would have been -0.86:1 (-87%).

Permutations of E-Detailing

A similar pattern emerged with our analysis of returns from e-detailing and personal detailing of the product that was relatively mature. The e-detailing campaign cost 70% less than personal detailing would have cost. It generated a 15% increase in sales during the 3 months afterwards (compared with a projected 10% increase in sales from personal detailing). Again, the cost of the e-detailing campaign outweighed the incremental sales it generated during the 3 months afterwards. But by the end of the year the return on investment from the e-detailing campaign was 1.2:1 (16%) – compared with -0.77:1 (-77%) for the equivalent number of personal details.

Modelling techniques such as these can be used to forecast the relative returns from every channel, be it on- or off-line, although it is essential to match the marketing approach and evaluation methodology. They can also be used to predict the impact of using different channels in different ratios and thus to determine the best sales and marketing mix for any given company or brand.

Lessons for sales and marketing executives

Of course many factors can influence the success or failure of a specific online programme, but this is true of any form of promotional activity. The precise approach, strategy, content, degree of interactivity and balance between security and ease of use are all critical elements.

It is essential, for example, to tailor the strategy and content of any e-detailing campaign to the market size and maturity of the product being promoted, although whether a drug is new or old is not an issue in itself. It is also important to differentiate the content of any online programme from that of the personal detail – not least because doctors are becoming increasingly disillusioned with printed detail aids which rely on the ‘hard sell.’ And it is helpful to provide additional materials such as information on new indications or developments in the treatment of a particular disease – although, here, independent health information providers have an obvious advantage over pharmaceutical companies, since GPs generally find their sites more credible.

Similarly, no matter what form an e-communication programme takes, it is vital to target the right doctors – those with the highest prescribing levels in any given market, and thus those most likely to increase sales – prior to starting a campaign. Targeting blindly is a waste of resources. That said, some companies may well find it pays to revise their selection criteria; the second of the two studies we discussed above shows that many of the doctors who were not on the sponsoring company’s target list responded very favourably to e-detailing.

Lastly, it is crucial to measure the results. Using quick and dirty methods to choose a control group will not produce accurate measurements of the impact of a particular campaign. Nor will measuring the campaign for a period of less than 3 months. And without accurate data no company can complete the cost/benefit analyses that will enable it to determine the optimal sales and marketing mix for its products.

Conclusion

The online channel will not replace personal detailing, but it can deliver far better results than those a company can achieve through its sales force alone. It provides another route to the doctor – a route that is more popular and, arguably, better suited to communicating the growing complexity of modern medicines than a brief call from a sales representative. Properly integrated with the sales force, it can also generate synergies like higher call rates and clearer messaging.

Moreover, as it costs significantly less than personal detailing, it can be used to promote drugs that are unsuitable for marketing through sales representatives. It can, for instance, be used to promote mature brands with growth potential, where using a full sales force would be an uneconomic or impractical application of limited resources. It can also be used to promote products that have gone off patent, when there is a valid reason for doing so.

In short, the online channel offers pharma alternatives that are more economical, and often far more cost-effective, than flooding the market with sales representatives. The key is to understand where and when these alternatives are most appropriate: on which products and audiences and in what circumstances they work best. That, in turn, requires accurate evaluation of different channels, and analysis of why past campaigns have succeeded or failed, in order to identify the optimal promotional mix for any given brand or business.

Paul Jones pjones@uk.imshealth
is the European head of the promotion management practice at IMS. Nic Holladay is commercial director of OnMedica Group.

References

1. eCME Usage and Perception Study, Pri-Med Research, 7 Sep 2005.