Response Magazine - June 2008

Pharmaceutical Market

The Virtual

Drugstore

Pharmaceutical companies are projected to generate $10.6 billion in sales through direct marketing in 2008. That number is expected to reach as much as $15.2 billion by 2012, according to a study from the Direct Marketing Association (DMA).

In recent years, DR marketing has become essential to all those in the industry — from small research and development companies to large pharmaceutical retailers — as an effective way to reach physicians and consumers. The pharmaceutical DR marketing budget for 2008 is estimated at more than $1 billion, meaning that DR will represent an ROI of $10.27 for every $1 spent.

On top of these huge expenditures, the pharmaceutical market is changing in other ways. Patents on drugs are expiring and therefore more generics will be released in the next few years, granting a major opportunity for smaller companies to compete with the “Big Pharma” leaders. So for those manufacturing generics, it will be up to the marketers to create value for the drug, target individuals, follow buying patterns and reach out to fully engage the consumer.

“We’re now seeing the effectiveness of the 60- second spot waning and failing to engage the patient because of the way media is changing,” says Jay Bolling, president of Montgomeryville, Pa.-based Roska Healthcare. Doctors and patients are turning to digital outlets — such as the Internet, PDAs, mobile phones and electronic clipboards — for education.

Broader economic constraints have also impacted the pharmaceutical industry. Therefore, general advertising spend is down and targeted, more accountable DR efforts are up. Not to mention, advertising pharmaceuticals involves adhering to Federal Drug Administration (FDA) requirements.

“There has been a steady increase in direct response marketing, largely because it is a great marriage between the needs of the healthcare consumer, the regulatory requirements of the industry and the accountability and effectiveness requirements of pharmaceutical manufacturers,” says Keli Bennett Walbert, a partner at W² Healthcare Consulting.

However, the strictness of conveying “fairness” and educational information can actually benefit the DR space. “FDA requirements for the distribution of patient information in media also results in the inclusion of response vehicles in all media — either an 800 number or Web site — thereby allowing manufacturers to meet network requirements for DR media rates,” says Bennett Walbert.