pharmaceutical marketing - state of the industry in 2011

Pharmaceutical Marketing: State of the Industry in 2011

October 26, 2011

www.KantarMediaNA.com © 2011 Kantar Media 1

Today’s Agenda

1. Ad Spending: 15 Years of DTC

2. Pharmaceutical Ad Spend Changes

3. The Role of Traditional Media

4. Web Marketing Challenges: Building a Direct Consumer Relationship

5. Social Media & Health

6. Pharmacies & Pharmacists

© 2011 Kantar Media www.KantarMediaNA.com 2

Ad Spending: 15 Years of DTC (Direct-to-Consumer)


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Pharmaceutical Marketing in Flux

• Rise of digital

• Rise of social media channels

• Evolving regulatory environment

• Maturing of mainstream blockbuster drugs

• Fewer new drugs brought to market

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An Industry in Massive Transition

• Transition from broad-based to

targeted therapies

• Health-care standalone agencies are

now being broadened into wider agency

networks

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Change Means New Opportunities For Pharmaceutical Marketing

• Globalization

• Personalized medicines & therapies

• Potential for niche drugs

• Diversification into broader health-care

portfolios

• Broader healthcare communications


Pharmaceutical Media Spending: 15 Years of DTC

1997 – 2006: Explosion of Pharmaceutical

1997

“Brief summary” (often

not so brief) of side

effects was required to

be included when a

brand was named in a

pharma ad

Direct-to-consumer advertising

regulations were loosened

FDA guidance introduced: TV ads

allowed to name pharma brand without

summary, but must include “major

statement” of important risks with

referral to source

FDA guidance

formally adopted

Explosion of DTC! Ad spending by pharmaceutical

marketers increased from $700 million in 1996 to $5.4

billion in 2006

1999 2006



1996 – 2006: Explosion of Pharmaceutical Marketing



1997 – 2006: Explosion of Pharmaceutical

Ad spending by

pharmaceutical

marketers peaked

at $5.4 billion

Spending declined every year to $4.3 billion in 2010, a 20%

decrease over 5 years.

2006 2010

Ad spending by

pharmaceutical

lowers to $4.3

billion

2009

Spending

dropped by

8.8% between

2009 and 2010


Pharmaceutical Media Spending : 15 Years of DTC

2006 – 2010: Pharmaceutical Marketing Declines


Pharmaceutical Ad Spend Changes

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• Consumer skepticism has INCREASED↑

• Heavily marketed drugs on market have DECREASED↓

• New drugs entering market have DECREASED↓

• Consumer spending has DECREASED↓

• Pharmaceutical marketing spending has DECREASED↓

Blockbuster and heavily marketed drugs are losing their patents and going generic:

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Ad Spending Changes

Pharmaceutical Marketing Spend Decreases


Top 10 Pharmaceutical Advertisers

Pharmaceutical Marketing Spend Decreases


Pharmaceutical Ad Spending by Category 2010


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Top 10 Most Advertised Prescription Drugs


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Imperative to Create Brand Value Changing Along With the Industry

• Health industry is changing →

pharmaceutical marketing must change

• Pharmaceutical companies must create

value with:

– More targeted innovation & fewer big

breakthroughs

– Drugs that deliver smaller, measurable benefit

– Less spending


Proactive Health

Serving the Consumer

• Pharmaceutical marketers must…

– target patients with specific needs

– find innovation in niche audiences (e.g.

cancer treatments)

– play a role in advising and helping the

consumer


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Regulatory Environment

A Challenge to Pharmaceutical Marketing

• Additional pharmaceutical marketing challenges stem from

federal regulations

– Research, development, testing, and marketing of drugs are all regulated

– However, there is a lack of real FDA digital marketing guidelines

• Affordable Care Act: President Obama’s healthcare reform act

– Government influence on RX drugs has increased

– Need to reach 30 million new prescription drug consumers who were

previously uninsured

– New annual taxes on pharmaceuticals


• Previous DTC focus has been on physicians

• However, the healthcare Industry has become customer-centric

• Pharmaceutical industry must transition from marketing to physicians to marketing

directly to consumers on the Internet

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Regulatory Environment

A Need to Embrace Digital

Marketing to physicians Via expensive media channels

Marketing to consumers Via economical digital channels


The Role of Traditional Media


Pharmaceutical Advertising

Current Media Landscape

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Traditional media will survive


• Consumer reach via TV, magazines and journals will remain essential

• However, their function will change

• The focus must shift to appropriate use, continued use, & compliance

Traditional Media

The Evolving Role of Television & Print Pharmaceutical Advertising


Television: Commercial Tuneaway

How Well Do Pharmaceutical TV Ads Retain Viewers?

• Channel changing occurs most with anti-smoking, impotence and anti-depression

drug ads, with 6% of the audience tuning out

• Average tuneaway for all commercials = 3%


Television: Commercial Tuneaway

How Well Do Pharmaceutical TV Ads Retain Viewers?

• Average tuneaway for all commercials = 3%

• Wrinkle removers (2.2%) and stomach medications (2.5%) are the only

medications to beat the tuneaway average, with the smallest percent of the audience

changing the channel


Television: Commercial Retention

Pharmaceutical Marketers Struggle To Retain Viewers

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• Retention is better if viewers have a condition or know someone who does

• Industry average is 95%

• Osteoporosis and overactive bladder commercials have the best retention

• Contraceptive and eye-lash growing ads have the worst retention


Web Marketing Challenges:

Building a Direct Consumer Relationship


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Web Marketing Challenges

Healthcare Online Presence

• Medical online presence

– 57% of online population turns to Internet as

1st mode of research

– 82% of people deem access to online health

information as “critical”

– Physicians and hospitals rely on the Internet

for research and marketing purposes


• Despite the healthcare industry’s online presence, the pharmaceutical online

presence is small

• Some pharmaceutical marketers experiment, most stick to drug R&D

• Marketers are concerned about:

– violating regulations that could lead to FDA sanctions

– appearing too aggressive to consumes

– crossing privacy lines

– their lack of experience in digital marketing

– Adverse Event Reporting System

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The Cautious Pharmaceutical Industry


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Delicacy of Pharmaceutical Marketing

Adverse Event Reporting System

• Intended to monitor negative effects

attributed to RX drugs

• Pharmaceutical marketers mandated to

report adverse event

• Marketers fear that web communications

(e.g. blog postings and comments to a

social media page) could fall under this

mandate


30

Pharmaceutical Sites Cautiously on the Sidelines

Lack of Digital Guidelines

• No official FDA guidelines

• No shortcuts for communicating risks

• Offline rules don’t always translate to

online


• Despite the challenges, some pharmaceutical companies attempt to connect in the

social media space

AstraZeneca on Twitter Boehringer Ingelheim on Facebook


Small Pharmaceutical Online Presence


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Largest Pharmaceutical Internet Display Advertisers

Internet Display Spend: A Small Piece of the Pharmaceutical Pie

• In 2010, $203 million was spent on pharmaceutical Internet display advertising, out

of a total $4.3 billion (4.7%)

• Pfizer spent only 2.8% of its advertising in digital

• 4 out of the top 5 pharmaceutical display advertisers decreased their Internet display

ad spend from last year


• Majority of consumers visit non-branded sites

liked WebMD

– According to Kantar Media Compete, only 4.2% of

unique visitors to cancer websites were to branded

sites in Q4 2010

• Quality amount of time is spent on prescription

drug websites like Humalog.com

Time Spent on Prescription Drug Websites


Maneuvering the Digital Landscape

Drug Companies Must Be Creative

Companies must go beyond the obvious:

• Johnson & Johnson’s created an online tool for its Realize gastric band

• Encourages treatment adherence


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Web & Social Media Are Future For Pharma

Pharma Behind the Digital Curve

• Pharma marketers must find a way to

connect with consumers via the Internet

and social media

• Two key web issues

– Privacy

– Brand Safety


• Social media provides Insights into positioning, consumer response & targeting

• However, according to Kantar Media Cymfony data, only 1% of conversations

mention DTC ad campaigns across therapeutic areas

• Blog & forum negativity:

– Posts mention negative side effects in DTC branded campaign mentions

• Discussion of general conditions is greater than discussion of brands

– Only 8% of diabetes forums posts are

branded discussion

Social Media Share of Discussion

“Unbranded” Medical Discussions


Diabetes-Related Brand Names Mentioned In Forums

“Unbranded” Medical Discussions


Pharmacies & Pharmacists


Pharmacies

The Hub of American Healthcare

40

• Americans submit almost 4 billion drug

prescriptions each year

• Vast majority of these prescriptions are

filled at pharmacies

• Pharmacy = place of high consumer

interaction, creating a unique opportunity

to interact with customers

• People make more trips to the pharmacy

than their doctor


• Patients are taking on more decision-

making

• Aging population is taking more drugs

• Rise of generic drugs leads to rise of

consumer confusion

• Pharmacists are “Medication Therapy

Experts”

• 82% of people say they buy the over-the-

counter drug recommended by their

pharmacist

Pharmacists

Consumers Rely on Pharmacists More Than Ever


• Helping customers understand the evolving healthcare world

• Establishing trust in customers

– “With us, it’s personal” - Rite Aid

– “Ask me about anything” - Target

• Pharmacists balance private advantages with health advantages

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Aggressive Campaigns

Being Proactive: Helping Customers Stay Healthy

TOP 5 RETAILERS

IN PHARMA AD SPEND

2. CVS Caremark Corp. ↓

4. Rite Aid Corp. ↑

1. Walgreen Co. ↑

3. Walmart Stores ↓

5. Target ↑


Baby Boomer Caregivers on the Rise

Drugstore Visits Increase

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• With an aging population and chronic conditions which require medication, caregivers

are on the rise and are taking on more decision making

• According to Kantar Media’s 2011 MARS OTC/DTC study, the number of caregivers

researching medical information has increased by 45% in 2011


Top 10 Prescribed Pharmaceuticals


This pharmaceutical analysis was

completed by AdAge using Kantar Media

data. If you’re interested in an analysis for a

different vertical, please contact us.

Thank You


To discuss any particular data point or a specific analytics capability, please contact our team:

www.KantarMediaNA.com

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