Healthy Skepticism Library item: 5941

Warning: This library includes all items relevant to health product marketing that we are aware of regardless of quality. Often we do not agree with all or part of the contents.

Publication type: news

Roner L.
Putting marketing ROI strategies to work
Eyeforpharma 2006 Aug 10

Full text:

Robert Noble, Marketing Director for Diiachi Sankyo in the US, says one
thing he’s learned in his many years in the pharma industry is that the
bottom line is the bottom line. And the better you can become at
measuring
the ROI of individual programs, the better you will look to your
company.

With new drug approvals down, late-stage pipelines thinner than ever
and
line extensions, reformulations and combination products becoming
bigger
parts of pharma’s bread and butter, Noble told attendees at
eyeforpharma’s
recent Marketing ROI USA Congress in Philadelphia, it is growing
increasingly important to understand where to most effectively spend
money
to promote products.

For example, in the anti-hypertensive market which is a key area for
Noble’s
company, he says there have only been three “transformational
innovations”
since the 1960’s: the first beta-blocker in the late ’60s, the first
ace-inhibitor in the ’80s and the first Angiotensin Receptor Blocker
(ARB)
in 1994. All other introductions in the category, Noble says, have all
been
“incremental innovations.”

So for a relatively small company trying to compete with some of the
biggest
names in the business, Noble says making smart investments in promoting
its
brands is “do or die.”

“For us, it’s a David and Goliath type of story,” he says referring to
the
Biblical tale. “We have ‘David’ budgets up against the ‘Goliath’ ones
of our
competitors. So spending well can give us a competitive advantage – and
a
substantive increase in profitability to reinvest in our core
business.”

Daiichi Sankyo’s ARB Benicar, Noble says, was the seventh compound in
the
ARB class to enter the highly undifferentiated market.

“It was a really big challenge for us,” he recalls. “We had minimal
managed
care presence for at least the first six months and we were competing
with
companies with big traditions in the cardiovascular space. If the enemy
is
bigger than you, you have to out-maneuver them.”

Noble chalks Benicar’s success up to precise execution.

“It has taken very good segmentation plans – where reps call and the
messages they deliver – and early and frequent measurement of our
promotional effectiveness coupled with timely adjustment,” he says.

He is quick to point out that all companies are under pressure – from
management, stockholders and co-promotion partners – to maximize their
assets.

Like other companies, Noble says his team works ROI calculations into
its
marketing plans and while he says they may not be the most
sophisticated at
assessing ROI, they have “done a decent job so far.”

Diaiichi Sankyo’s vendor partner Navigant Consulting has played a key
role
in helping the company evaluate its marketing approaches. Navigant’s
Alex
Cavallo says one of the challenges is the number of “moving parts” in
most
marketing systems.

“It’s hard to monitor for all of the relevant factors at once,” Cavallo
says.

Controlled experiments, regression analysis or a combination of the two
are
most commonly used to determine the impact of marketing programs,
according
to Cavallo. In a regression, you might model the total prescriptions a
physician writes at a particular point in time as a function of
physician
characteristics and your marketing activities, he says.

But in a controlled experiment, impacts are assessed by examining the
responses of both test and control groups of physicians, where the
difference in changes in mean over time can be attributed to the
effects of
a marketing program. The goal, Cavallo says, is to identify ways in
which
the responses differ that can help you target your marketing program
and
increase the ROI.

“With regression-based approaches, to the extent possible, if you have
information on what your competitors are doing with respect to
marketing,
quantifying that gives you a better picture of how the dynamics of the
market are changing,” he says. “But you can still get useful
information
even without competitor information.”

Cavallo says companies can examine marginal effects, which reveal how
results, for example, would change if one more sample or detail was
added to
a given physician.

“Looking at those effects you can realize gains from optimization
simply by
reallocating your marketing plan,” he says. “With a regression
approach, you
can evaluate ROI on a scenario-by-scenario basis.”

First, Cavallo says, you must compare what actually happened – the
physician
level total response – to what the model predicts would have happened
given
existing levels of marketing investment. Then, you have to create a
hypothetical scenario – maybe not marketing at all.

The incremental volume would be different between those two numbers for
each
physician, he says.

“And if you add it up, multiply by price and divide by total marketing
expenditures, that gives you an ROI estimate based on revenue,” Cavallo
says. “In principle you can do this for any hypothetical scenario and
the
predictions can help you understand how effective different channels
are. If
you have big differences in marginal effects, you’re not at an optimal
allocation.’

Cavallo say brand teams should invest in marketing activities just up
to the
point that the added benefit equals the added cost. But optimization
can
boost revenues, he says.

Noble advises that companies should:
. Measure new programs
. Keep asking why and digging deeper
. If using simple tools, still try to measure
. Use more sophisticated tools when possible
. Pilot new ideas and continue to learn and adapt
. Use experts and give them clear direction

He also cautions:
. Don’t measure if you can’t act against it
. Don’t assume it will get done unless you champion it

Lastly, he quips, “Don’t try this at home! It’s really important to use
internal and external experts, like Alex, to really do it right.”