The past year may well be one that pharmaceutical companies operating in China are keen to forget. Over the past 12 months, four international pharma giants have become entangled in a major anti-corruption drive, standing accused of bribing doctors to increase drug sales.
GlaxoSmithKline (GSK) was the first in the spotlight, facing allegations that it spent 3 billion yuan to pay off doctors. Chinese authorities did not hold back: a high-profile investigation was launched, GSK was labelled a criminal “godfather”, and four executives were arrested. In the wake of the scandal, the company’s pharmaceutical and vaccine sales in China nose-dived 61 per cent.
A few weeks later, an investigation was launched by US regulators into Sanofi’s practices, after it was accused of spending 1.7 million yuan in 2007 on kickbacks for doctors. Around the same time, Novartis launched an internal investigation following a whistleblower’s claims of bribery. Eli Lilly was next to be embroiled when an anonymous source was quoted in a local paper saying that bribes were “extremely common” at the company, with the level of the problem “just as bad as at GlaxoSmithKlein”.
Although the dust has begun to settle, it is likely that the events of last year will have a lasting impact on the way pharmaceutical brands market to doctors in China, and beyond.
The well-worn strategy of using doctors to spread messages about new brands and products has been laid bare, open to scrutiny domestically and internationally. At its best, this marketing model can create a positive peer-to-peer network of objective physician recommendations. At its worst, it can enter the murky depths of bribery, corruption and scandal. An opaque spectrum fills the space in-between, providing little clarity on whether paying for doctors to travel to medical conferences nestles next to backhand cash sweeteners or complimentary USB drives.
The industry’s annus horribilis in China, however, has at least gone some way to clarifying the rules around the relationship between big pharma and doctors. It is difficult to say whether other countries will follow with such a forceful clampdown, but it is clear many governments across the region are also flexing their muscles when it comes to healthcare regulations, particularly in developing markets.
The tightening regulatory environment in some markets is symptomatic of an evolving healthcare landscape. As governments invest more heavily in the sector, and ballooning economies result in growing patient numbers, there is a clear imperative to create and enforce robust regulations surrounding the delivery of healthcare.
VJ Yamat, Havas Life’s Southeast Asia director for healthcare, says the message is clear: if pharmaceutical companies are to seriously pursue Asia they must accept that fact that it is a highly regulated market. “If your strategy is to try to look for loopholes… you may get away with it sometimes, but it cannot be a long-term strategy,” he says. “If you can’t play by the rules, then maybe you are not ready to attack [the] market.”
Asia is fast becoming a key powerhouse for the global pharmaceutical market. Analysts Frost & Sullivan forecast the global healthcare market to expand at a compound annual growth rate of less than a 6 per cent CAGR from 2012 to 2018. In Asia-Pacific, the firm expects more than double that rate, reaching 12.8 per cent over the same period.
If companies are to continue to cash-in on this opportunity, it is clear that they will have to adopt strategies that reflect the new regulatory reality. Ipsos Healthcare director Adrian Mak says the recent events in China triggered many companies to develop control points around how they interact with doctors. “[It] was a serious wake-up call for all giant pharmaceutical companies,” he says.
New approach to physician marketing
While the tightening of an already heavily regulated sector may make pharmaceutical operations more complicated in future, some believe it provides a platform to create more effective marketing strategies. Amar Urhekar, president of McCann Health Americas and former vice-president for Asia-Pacific, says there is now a “phenomenal opportunity” for companies to rethink how they engage physicians.
He says attention must now be focused on building platforms to reach medical professionals in faster, effective and impactful ways. “The spotlight [also] has to move from the commercial transactions to… evidence-based, scientific communication to medical professionals, which is honestly what we should all be doing anyway as pharmaceutical marketers,” he adds.
The opportunity to change tack is a reality that hasn’t passed big pharma by. In December, GSK said it would stop paying doctors to attend medical conferences, and end the practice of paying health professionals to speak on its behalf to audiences who can prescribe or influence prescriptions. At the same time it also promised to “increase its focus on developing its multi-channel capability” to provide information about its products, and to support medical education.
Historically, sales reps have been the stepping stone between big pharma and doctors. For years, bands of sales staff have marched across countries in an effort to educate doctors about new and existing products. The practice is so common that a study cited in a 2009 PWC report mentioned a Malaysian doctor who was visited by 16 multinationals and nine local generics companies in five-weeks.
But Rohit Sahgal, regional MD for Asia-Pacific at Ogilvy CommonHealth, says the model will soon become “untenable”, partly due to a lack of sales reps and time pressures on physicians. He notes that in a tier-two or three city in China a doctor could in some cases see around 100 patients each day. “The rep meeting would generally be during the [doctor’s] precious break,” he says. “It’s the ‘couple of minutes moment the rep would have to impart brand education..”
A tightening regulatory environment is further affecting the strategy, as access to doctors becomes more difficult. The long-held pharmaceutical prophecy that more sales reps means more sales is beginning to falter. Sahgal says the massive influence of smartphones, digital and social media on the region means many pharmaceutical companies are increasingly looking to electronic means to communicate and market to doctors. “The traditional method is probably going to evolve in Asia very quickly into utilising technology,” he says. “It will be accelerated by markets such as Greater China, the Southeast Asia belt, with a push towards more virtual and social-media driven communications to doctors.”
Mobile is a particularly important option — a branded app can be quickly downloaded on smartphones or tablets by a much higher proportion of doctors than could ever have been reached by dogged sales reps. McKinsey also suggests virtual interaction with physicians significantly improves the accuracy of the marketing message because “it leaves less room for the human error/interpretation risk than an army of sales reps”.
Despite the advantages of mobile, marketing budgets continue to be constrained as the pipeline of ‘blockbuster’ drugs continues to dry up. While mobile strategies may be more cost-effective than flooding markets with sales reps, the capital outlay of developing the necessary infrastructure and creating content is not cheap. Despite the teething problems, however, Yamat is confident it will become standard in the long-term.
In this era of pressured marketing budgets, some companies are also looking towards more strategic communication strategies that target specific key opinion leaders, or key geographical areas. In this area “big data” can play a significant role, Yamat adds. “If you are going to take a very bullseye approach [to marketing] you need to have data to help you ascertain the doctors and geographies that should provide high yields with very minimal costs,” he explains.
The increasing prevalence of insurance plans, and the move towards electronic patient records in China and other markets, is set to provide a treasure trove of information for pharmaceutical companies. “That’s got a strong role to play and we are seeing governments beginning to be more open with some of that data,” says Graeme Jacombs, managing director for Asia-Pacific, Middle East & Africa at Kantar Health. “That can really help to provide a lot of valuable information about diseases and which treatments are most effective.”
Effective consumer engagement
The other side of the coin for pharma companies is how to effectively engage patient populations without falling foul of regulations. Although consumers are the sole end-users of drugs, pharmaceutical companies have to comply with strictly enforced rules about direct-to-patient marketing.
While rules covering over-the-counter drugs are more lenient, the regulatory environment surrounding advertising prescription drugs is a minefield. New Zealand is the only market in Asia-Pacific that is on par with the United States in allowing direct communications between brands and consumers in this category. Across the rest of Asia, advertising prescription drugs directly to consumers is strictly prohibited, and rules are vigorously enforced.
This regulatory environment has left pharmaceutical companies far behind many other sectors in terms of digital marketing to consumers. Social media is particularly problematic area owing to a lack of control over how a message may evolve on Twitter or Facebook. “When we talk about digital in the consumer marketing world, it is all about innovation,” says Urhekar. “We want to do that in the pharma sector, but you have an arm and a leg tied down because you never know what could turn into a backlash, particularly in the open world of digital.”
However, an increasing number of pharmaceutical companies are dipping their toes in the digital waters when it comes to consumer marketing. One major approach has been to support grassroots communities in specific disease areas, such as diabetes or cardiovascular health. Big pharma is beginning to augment drugs with added-value services, such as supporting mobile apps to help patients monitor their disease and increase drug compliance.
Others are developing apps or websites to help educate societies about a specific disease area. This is a particularly important strategy in countries like China, Indonesia, or India, where regular medical check-ups are not considered the norm. The clear incentive for pharmaceutical companies is the direct relationship between demand for drugs and bottom line growth.
But Jacombs also points out that supporting grassroots communities can be an important differentiator for pharmaceutical companies. He says that in an era when a competitive edge can no longer be achieved through sales might alone, pharmaceutical companies will increasingly need to demonstrate value to governments, patients, and the wider society.
He adds that as the image of pharma companies takes a battering in light of events like the 2013 scandals in China, demonstrating to patients that they are genuinely committed to enhancing people’s health is a positive step forward for pharmaceutical companies. But he adds: “It is still an area that pharma is scratching the surface of, certainly in Asia. There is a lot more to be done.”
Opinion: Agencies need a flexible approach
One of the big questions in pharma today is the generalist versus specialist composition of the promoted portfolio. This decision not only changes the shape of the organisation, but also the approach and skillsets of brand marketing teams.
The current approach is the speciality medicine model, with niche drugs targeted at a relatively small number of patients. Part of the reason why this model is so attractive is that it seems to involve far less risk than investing in the huge infrastructure needed to promote a primary prevention drug in a user-pays environment. But in reality, few pharma companies have shifted to either extreme — most continue to promote their aging blockbusters to the broader medical populations alongside their newer, niche cousins.
What we are seeing today is a clear divergence between the marketing models for each of these types of brands. Chronic prevention drugs are focused on building economical (virtual) connections with doctors, rather than traditional face-to-face relationships. These medications need strong branding, and are increasingly looking to consumer marketing for inspiration.
By contrast, the more specialised medicines are working to build more intense relationships with a smaller number of doctors. Medical education, and creating key opinion leader advocates, is essential to success in this smaller, intensely scientific world.
This divergence has echoed through agencies as well. Speciality healthcare agencies now need to deliver the carefully nuanced scientific campaigns for niche drugs, and also be capable of creating strongly branded consumer angles for the blockbuster agents looking for broad healthcare practitioner appeal.
James Hammond is chief strategy officer at Sudler China and Dentsu Sudler Japan
This article was first published in the May 2014 issue of Campaign Asia-Pacific