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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

By Editor on Aug 10, 2006

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's budgets up against the Goliath's 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'sre not at an optimal allocation.'s

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'st measure if you can'st act against it

Don'st assume it will get done unless you champion it

Lastly, he quips, Don'st try this at home! It's really important to use internal and external experts, like Alex, to really do it right.