Reuters Events | Pharma

Thought leadership and innovation for the Pharmaceutical Industry

 

It’s not enough to have a customer experience strategy, give it a little funding, and hope it somehow takes off.  Companies outside of healthcare that are winning in experience treat it like a core product.  

 

That means they have a senior leader overseeing a team and full P&L dedicated to the success of that experience, both the overall and micro-moments.  What is keeping pharma companies from doing this?  If you follow the money, things become clear.  Traditional confines based on milestone dates put a tremendous amount of stress on an organization to maximize its investments in a finite window of time.

 

The following highlights the dynamics that occur today around funding priorities, and how that works against the success of customer experience efforts.

 

Time pressures on drug development and patent expiration

There are many phases of drug development, and the three that tend to garner the most attention are Phase III, Launch, and Patent Expiration.  For those at large pharma companies, not only does funding quickly shift to drugs as they approach and move through steps, but the office culture shifts.  And it pairs with the following anxiety:

 

• Stage III: “We’re so close to turning this investment into a return.  How fast can we responsibly move through this phase and hopefully start recognizing a return?”

• Launch: “The clock is ticking on day one.  How do we generate demand ASAP?”

• Patent Expiration: “Let’s make one last push to drive demand before our patent expires this year.”

 

While these pressures are real, these milestones make it easy to guide pharmaceutical companies’ budgetary priorities.  Companies over-invest in drugs that are in Stage III up until patent expiration.  Drugs before Stage III and after patent expiration get relatively less investment.  

 

Customer experience innovation is not the same thing as clinical innovation

The byproduct of the scientific process and regulatory requirements is that healthcare leaders get a very easy to understand, linear path to success: a clear sense of where they are, and what the next set of requirements will be. However, innovation in customer experience is different, particularly with digitally-based experiences.  

 

Here, the research begins at launch.  Companies must constantly analyze when, where, and how customers are engaging. If you look at recent innovations with Pillpak, PatientsLikeMe, and Oscar Health, nearly all their recent innovations come from observing how customers engaged a variety of features of their in-market-product in the months and years prior.  None of it was done in a lab, where they moved things through three stages of research before regulatory approval.  Most of it isn’t patented.  They are not running their businesses based on protected income from patents; they are earning from their customers by creating relevancy and value every month, every year.

 

Customer experience should garner the same investment as drug development  

A 2013 analysis done by Forbes estimated the average drug development cost to be $350 million before it is available for sale.  At Prophet, we’ll see pharmaceutical companies spend at least $100 million in marketing in the first year or two, and often more.  In short, looking at those two numbers, most drugs in the market today have more than $500 million of investment behind them, and many have multi-billion dollars.  Contrast the investment levels pharma companies are spending on customer experience.  It can often be well under $100 million, and frequently under $10 million.  Amazon’s purchase of PillPak for $753 million grabbed headlines last year.  When you contrast the multi-billion-dollar investments that go into a single drug launch, spending less than $1 billion for an experience-first business like PillPak seems like one heck of a deal.

 

Winning in customer experience requires staying close to customer needs, providing relevant solutions, and constantly innovating and evolving in-market.  Great customer experiences aren’t developed in labs. There aren’t “big bang” launches, and they are not protected by patents.  Remember, Amazon started simply by selling books and has been quietly and systemically layering on innovative experiences for nearly 25 years.  While there are signature product launches and patents, there is also a tapestry of little innovations around micro-moments that defines the “Amazon experience” as we know it today.  This is where success in modern pharma is going.  No stages.  No Launches.  No patents. 

 

Paul Schrimpf is Partner at consultancy Prophet.com