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ThePharmaceuticalIndustry OnlineJuly 2002

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The Pharmaceutical Industry Online

Table of Contents 3

Methodology 5

The eMarketer Difference 6

The Benefits of eMarketer’s Aggregation Approach 7

“Benchmarking” and Projections 7

I E-Business Activity and IT Spending 9

A. Introduction 10

B. E-Commerce Trade 11

C. E-Business and IT Spending 18

II Online Advertising 29

A. Introduction 30

B. Direct to Consumer Advertising 35

C. Physician Sales 48

III Selling to Consumers and Physicians Online 53

A. Consumers Online 54

B. Physicians Online 66

C. Selling Pharmaceutical Products Online 75

Index of Charts 81

Reuse of information in this document, without prior authorization,is prohibited. If you would like to license this report for yourorganization, please contact David Iankelevich [email protected], or 212.763.6037.

Written by Steve Butler

Also contributing to this report:Yael Marmon, researcherAndrew Raff, researcherTracy Tang, researcherAllison Smith, senior editorDana Hill, production artist


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July 2002

Welcome to eMarketer

Dear Reader,

Welcome to eMarketer’s coverage of the state of e-business in the pharmaceutical industry. This reportconsiders how pharmaceuticals manufacturers have been affected by the internet so far, andexamines the leading trends that are shaping the way in which pharmaceutical firms will use theinternet in the future.

The report is broken down into three primary sections that look at how the internet is impactingpharmaceutical companies in the following areas of their operations:

■ Pharmaceutical firms and their trading partners■ Pharmaceutical firms and online advertising■ Pharmaceutical firms and online consumers & physicians

eMarketer’s Pharmaceutical Industry Online ReportTM will provide pharmaceutical companies with asense of how their e-business strategies compare with those of their industry counterparts. This studyincludes several benchmark examples of e-business success stories, along with perspectives fromother leading industries as well.

This report will also be relevant to those companies that work closely with the pharmaceutical industry,such as distributors, retailers/pharmacists, advertising agencies, consultants and technology vendors.

If you have any questions or comments concerning eMarketer or any of the material in this report,please call, fax or e-mail us.

Steve ButlerSenior Analyst

Steve ButlerSenior Analyst, [email protected]

eMarketer, inc.821 BroadwayNew York, NY 10003T: 212.677.6300F: 212.777.1172

Methodology 5

The eMarketer Difference 6

The Benefits of eMarketer’s Aggregation Approach 7

“Benchmarking” and Projections 7




Index of Charts 81


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eMarketer’s approach to market research is founded on a philosophy ofaggregating data from as many different sources as possible. Why? Becausethere is no such thing as a perfect research study and no single researchsource can have all the answers. Moreover, a careful evaluation andweighting of multiple sources will inevitably yield a more accurate picturethan any single source could possibly provide.

The eMarketer DifferenceeMarketer does not conduct primary research. Neither a research firm nor aconsultancy, eMarketer has no testing technique to defend, no research biasand no client contracts to protect.

eMarketer prepares each market report using a four-step process ofaggregating, filtering, organizing and analyzing data from leading researchsources worldwide.

Using the internet and accessing a library of electronically-filed researchreports and studies, the eMarketer research team first aggregates publiclyavailable e-business data from hundreds of global research and consultancyfirms. This comparative source information is then filtered and organizedinto tables, charts and graphs. Finally, eMarketer analysts provide conciseand insightful analysis of the facts and figures along with their ownestimates and projections. As a result, each set of findings reflects thecollected wisdom of numerous research firms and industry analysts.

“I think eMarketer reports are extremely useful andset the highest standards for high quality,objective compilation of often wildly disparatesources of data. I rely on eMarketer’s researchreports as a solid and trusted source.”— Professor Donna L. Hoffman, Co-Director, eLab, Vanderbilt University

www.eMarketer.com©2001 eMarketer, Inc.

Analyze

Aggregate

Filter

Organize


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Methodology

E-Business Activityand IT Spending

Online Advertising

Selling to Consumersand Physicians Online

Index of Charts

The Benefits of eMarketer’s AggregationApproachObjective: information is more objective than that provided by any singleresearch sourceComprehensive: gathered from the world’s leading research firms,consultancies and news organizationsAuthoritative: quoted in leading news publications, academic studies andgovernment reportsAll in one place: easy to locate, evaluate and compareReadily accessible: so you can make quick, better-informed businessdecisionsAbove the hype: accurate projections that business people can use withconfidenceTime saving: there’s no faster way to find internet and e-business stats,online or offMoney saving: more information, for less, than any other source in theworld

“Benchmarking” and ProjectionsUntil recently, anyone trying to determine which researcher was mostaccurate in predicting the future of any particular aspect of the internet didnot have a definitive source with which to do this. For instance, over 10firms predicted e-commerce revenues for the fourth quarter 1998 onlineholiday shopping season, and yet no single source could be identified afterthe fact as having the “correct” number. In the Spring of 1999, however, theUS Commerce Department finally began measuring e-commerce B2Cactivity so business people and others could have a benchmark with whichthey could compare and evaluate projections.

eMarketer has adapted its methodology to recognize that certaingovernment and other respected, impartial sources are beginning toprovide reliable numbers that can be consistently tracked over time. Mostof these established sources, however, only measure past results; typically,they do not make predictions.


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Methodology


Online Advertising


Index of Charts


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Methodology


Online Advertising


Index of Charts

Today, eMarketer formulates its Essential E-Business Numbers by firstidentifying the most established, reputable source for a given sector beingmeasured and then adopting that organization’s figures as benchmarks forthe historical/current period. For instance, eMarketer’s US internet userfigures will be based on a combination of the most recent data from the USCensus Bureau and the International Telecommunication Union. Using thisdata as the benchmark for 2000 and 2001, eMarketer will make projectionsfor subsequent years based on the following factors:

■ a comparative analysis of user growth rates compiled from otherresearch firms

■ additional benchmark data from internet rating firms, e.g.,Nielsen//NetRatings and Jupiter Media Metrix, which use panels tomeasure internet user activity on a weekly and monthly basis

■ an analysis of broader economic, cultural and technological trends inthe US

Similarly, US e-commerce revenues are being “benchmarked” usinghistorical data from the US Department of Commerce, and broadbandhousehold and penetration rate forecasts are being built off baseline datafrom the Organization for Economic Cooperation and Development (OECD).

Through this benchmarking process, eMarketer will be holding itself –and our projections – accountable.

“When I need the latest trends and stats on e-business, I turn to eMarketer. eMarketer cutsthrough the hype and turns an overabundance ofdata into concise information that is sound anddependable.”— Mark Selleck, Business Unit Executive, DISU e-business Solutions, IBM

IMethodology 5


A. Introduction 10

B. E-Commerce Trade 11

C. E-Business and IT Spending 18



Index of Charts 81


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Methodology


Online Advertising


Index of Charts

A. IntroductionAlthough worldwide business-to-business e-commerce is forecast to reach$2.3 trillion by 2004, the pharmaceutical industry has taken a conservativeapproach to internet commerce and will make its largest contribution to thegrowth of e-commerce activity during the latter part of this decade.

Rather than being driven online by competitive pressures from startupbusiness-to-business exchanges, most pharmaceutical companies havetaken the time to develop e-business strategies that are being implementedover the long term. Many companies have also elected to pursueindependent initiatives, rather than participate in an industry-sponsoredbusiness-to-business exchange.

In the United States, eMarketer projects that business-to-business e-commerce trade will grow to $1.3 trillion by 2005, while online trade inthe health care industry will reach $86.4 billion by 2004. Trade inpharmaceutical products accounts for roughly 23% of that total.

But despite this conservative approach to e-commerce by pharmaceuticalcompanies, over the long term internet-based trade betweenpharmaceutical firms and their trading partners will see substantial growth,with many observers expecting change to occur gradually, over a 5- to 10-year time span.

Revised US B2B E-Commerce Forecast, 2001-2005 (inbillions)

2001 $306.12

2002 $481.98

2003 $720.97

2004 $1,011.17

2005 $1,333.02

Source: eMarketer, February 2002

036279 ©2002 eMarketer, Inc. www.eMarketer.com


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B. E-Commerce TradeAs a subset of the chemicals industry (NAICS code 325) in the UnitedStates, business-to-business sales of pharmaceutical products (NAICS 3254)accounts for approximately 22% of total chemicals industry trade,according to the US Economic Census of 1997.

In 1999, online and offline business-to-business trade in the chemicalindustry totaled $420.3 billion, and reached $451.6 billion in 2000,according to the US Census Bureau.

As part of its annual survey of e-commerce activity in the manufacturingsector, the US Census Bureau unfortunately does not break outpharmaceutical industry trade as a portion of e-commerce trade within thechemicals industry. However, top-level figures for the chemicalmanufacturing sector do provide a rough idea of broader industry trends.

The US Census Bureau’s definition of e-commerce includes transactionsfor goods and services that are conducted via any electronic channel,which includes the internet as well as electronic data interchange (EDI)networks.

According to US Department of Commerce data, e-commerce trade forthe chemical products industry reached $58.8 billion in 1999, but fell to$52.9 billion in 2000. As a percent of total industry trade, electronic tradein the chemicals industry accounted for 14% of all trade in 1999 and 11.7%of trade in 2000.

By comparison, e-commerce trade as a percent of total trade in the entiremanufacturing sector was 18.1% in 1999 and 18.4% in 2000.

Value of US Chemical Manufacturers' E-CommerceTrade, 1999 & 2000 (in billions)

1999 $58.83

2000 $52.97

Source: US Census Bureau, 2002


E-Commerce Trade (including EDI) As a Percent ofTotal US Chemicals Industry Trade, 1999 & 2000

1999 14.0%

2000 11.7%




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Although no reason was given for chemical manufacturers’ decreased useof e-commerce networks between 1999 and 2000, it should be noted thatthe latest figures are preliminary and are subject to revision after havingbeen released in the spring of 2002. One other possible explanation for thisunexpected decrease may be due to the relative inexperience thatbusinesses have in reporting e-commerce activity, which was only initiatedfor the first time during the 2000 Annual Survey of Manufacturers.

Turning to the US Commerce Department’s separate survey of e-commerce activity in the wholesale sector, total business-to-business tradein drugs and druggist sundries (NAICS code 4222) was $146.2 billion in1999 and $166.7 billion in 2000.

The US Commerce Department has found that nearly $66 billion in e-commerce trade was conducted between businesses in the drugs anddruggist sundries industry in 2000, up from $52.2 billion in 1999.

As a portion of industry trade, e-commerce revenues within the drugs anddruggist sundries industry makes up the highest proportion of e-commercetrade as a portion of total trade of any manufacturing or wholesalesegment of the entire US economy.

E-commerce trade accounted for nearly 40% of all revenues within thisindustry in 2000. By comparison, e-commerce trade made up 7.2% of allwholesale sector revenues in 1999 and 7.7% in 2000.

E-Commerce Trade (including EDI) As a Percent ofTotal US Drugs and Druggist Sundries WholesaleTrade, 1999 & 2000

1999 35.7%

2000 39.6%



Value of US Wholesale Drugs and Druggist Sundries'E-Commerce Trade (including EDI), 1999 & 2000 (inbillions)

1999 $52.20

2000 $65.97




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Unique among its other sectoral e-commerce studies, the US CommerceDepartment’s survey of e-commerce activity for the wholesale sector askedrespondents to break out EDI activity as a portion of total e-commerce trade.Not surprisingly, EDI networks were found to account for the largestproportion of e-commerce trade in the drugs and druggist sundries industry.

More specifically, the US Census Bureau found that EDI made up 88.3%of wholesale sector e-commerce activity in 2000, while EDI in the drugsand druggist sundries segment accounted for $58.4 billion, or 88.7%, of the$65.9 billion in e-commerce trade during 2000.

As a result of this heavy reliance upon EDI networks – particularly on thewholesale-distribution side of the pharmaceutical industry demand chain –it is likely that pharmaceutical companies’ trading partners will continue torely upon their investments in these legacy systems for some time.

Indeed, rather than abandoning EDI, several leading US drug storeretailers are in the process of expanding their EDI networks by encouragingsmall and mid-size suppliers to trade with them electronically via internet-EDI or related EDI data-translation services. For example, among theretailers that are expanding their EDI networks with the help of GE GlobalExchange Services are Eckerd, Rite Aid, Walgreens and Albertson’s, all ofwhich have announced plans to connect thousands of smaller suppliers viainternet-EDI networks in early 2002.

One other sell-side initiative for the pharmaceutical industry is worthmentioning as well, although it is less concerned with transaction-based e-commerce and instead focused upon facilitating internet-basedcommunication between manufacturers and retail pharmacies. As asubsidiary of the National Association of Chain Drug Stores (NACDS),ChainDrugStore.net’s primary mission is to help retail pharmacies and theirtrading partners coordinate product-related marketing and merchandisinginformation via the internet.

As of April 2002, the sell-side marketplace had a membership of 120retailers, with more than 32,700 stores enrolled in its network. On thesupply-side, manufacturers such as AstraZeneca, Pharmacia,GlaxoSmithKline and Bristol-Myers Squibb were listed as members.However, it appears that ChainDrugStore.net is in an early stage of its roll-out, offering first generation collaborative services to its membership, and avision to provide marketing plan integration services over the longer term.

Turning to the buy-side of the pharmaceutical industry’s demand chain,the Center for Advanced Purchasing Studies (CAPS) published a survey ofnine leading pharmaceutical companies in 2000, providing an in-depthlook at procurement activities among industry leaders.

Among the nine companies that were included in the survey wereAstraZeneca, Biogen, Bristol-Myers Squibb, Genentech, Glaxo Wellcome,Merck, Pharmacia, Searle and SmithKline Beecham.


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The CAPS study found that on average, these large pharmaceuticalcompanies did approximately one-third, or 31.6%, of their total purchasingvia electronic channels in 1999. Five of the nine respondents used EDI toexchange documents relating to a wide variety of purchasing transactions,while all nine respondents confirmed that they used the internet for someelectronic purchasing.

Not surprisingly, each pharmaceutical company’s purchasing activitywas heavily concentrated among a few large suppliers, with an average15.7% of all companies’ active suppliers accounting for 90% of theirpurchasing departments’ buying activity. An average 81.3% of directmaterials purchasing was influenced or assisted through pharmaceuticalcompanies’ purchasing departments, compared with an average 53.8% ofindirect purchasing activity.

On the back end, SAP’s ERP-based procurement solution was used internally bytwo-thirds of respondents to the CAPS study, followed closely by SSA’s BPCSsolution. Multiple solutions were listed among some companies’ responses, asseparate divisions have often deployed different back-end solutions.

“Many ERP [enterprise resource planning] packages do not always satisfy all of thepharmaceutical companies’ needs and must be heavily customized.”– Penny Schumacher, J.D. Edwards

Pharmaceutical Companies' Use of ElectronicChannels for Processing Purchasing Transactions,1999 (as a % of respondents)

Internet 100.0%

Electronic invoice matching 100.0%

Intranet 88.9%

PO release/creation 88.9%

Requisitioner input 88.9%

Electronic funds transfer 88.9%

Bar code receiving 55.6%

EDI acknowledgment 55.6%

EDI to supplier 55.6%

Enterprise resource planning (ERP) 55.6%

Evaluated receipt settlement 33.3%

Note: n=9Source: Center for Advanced Purchasing Studies, 2000



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Just two respondents to the survey said that they utilized front-ende-procurement applications in 1999, with Ariba being the only vendorwhose solutions had been adopted.

The CAPS study went on to find that 24.2% of purchases by pharmaceuticalcompanies were processed using procurement cards, at an average amount of$197 per transaction. Most procurement card transactions were authorizedfor both indirect and direct purchases, including MRO and lab supplies.

Leading Procurement Systems Used byPharmaceutical Companies, 1999 (as a % ofrespondents)

SAP 66.7%

BPCS 55.6%

Oracle 33.3%

Custom/proprietary 33.3%

JD Edwards 22.2%

Prism 22.2%

Gemms 11.1%

Lawson 11.1%

Other 11.1%



Pharmaceutical Companies Authorizing Payment viaProcurement Cards, by Product, 1999 (as a % ofrespondents)

Services 88.9%

MRO 77.8%

Lab supplies-consumables 66.7%

Lab supplies-chemicals 55.6%

Temporary labor/services 33.3%

Travel/meetings 22.2%

Fleet 11.1%

Packaging 11.1%

Other 11.1%




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As part of InternetWeek’s 2001 study of the top 100 technology users acrossall industries, the magazine’s survey found that technology leaders in thechemicals and pharmaceuticals industry were processing about 18% oftheir purchase orders via the internet as of mid-2001, with 17% of suppliersoffering internet-based product sourcing.

Among the eight companies listed as technology leaders in the chemicalsand pharmaceuticals space were American Home Products (Wyeth), Bristol-Myers Squibb, Dow Chemical and Dupont.

The study discovered that companies were saving an average 8% of thecost of indirect materials that they were purchasing via the internet,compared with an average 6% on their purchase of direct materials.

As for their use of business-to-business exchanges for purchasing, thechemicals and pharmaceuticals companies in this survey said that theywere conducting 16% of their purchase orders via an e-marketplace byearly 2001. Once again, it should be noted that the featured companies inthis survey were cited as industry leaders in terms of their use oftechnology, so the results of this study should be viewed as being biased infavor of advanced technology adopters.

An example of one of the e-business leaders from the InternetWeeksurvey is Bristol-Myers Squibb, which claims to have achieved savings ofmore than $90 million through its deployment of Ariba’s sourcing networkand Ariba Buyer e-procurement software. By mid-2001, the pharmaceuticalmanufacturer was in the process of extending the deployment of Ariba’ssolutions company-wide to the firm’s 30,000 buyers.

Average Cost Savings Achieved via E-Procurement byChemical and Pharmaceutical Companies, 2001

Indirect materials procurement 8%

Direct materials procurement 6%

Source: InternetWeek, 2001


Internet-Based Purchasing Activity of LeadingChemical and Pharmaceutical Companies, 2001

% of purchase orders concluded via the internet

18%

% of strategic sourcing dollars spent online

7%

Source: InternetWeek, 2001



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Bristol-Myers Squibb had also begun to experiment with the use ofprocurement cards at the end of 2000, which were being utilized as a meansof better-controlling purchasing by permitting the purchase of only pre-authorized products via the Ariba Network.

In 2001, the company reported that through internet-based procurementit had achieved cost reductions of between 5% and 10% on the price ofmaterials and services, while at the same time significantly reducing orderadministration costs and inventory levels.

E-Business Profile: Comparison of Bristol-MyersSquibb's Traditional and Online ProcurementCapabilities, 2001

Traditional/Manual

Internetprocurement

Price of materials and services – 5%-10%reduction

Purchase and fulfillment cycles 7.3 days 2 days

Administration cost $120 perorder requisition

$30 per orderrequisition

Inventory – 25% to 50%reduction

Source: Bristol-Myers Squibb, 2001



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C. E-Business and IT SpendingPharmaceutical companies rely heavily upon information technology,which is used across several areas of their operations, from research &development to manufacturing, and retail services – not to mention theadministrative systems that are required to run such companies withthousands of employees spread across the globe.

And because the demand for medication remains relatively constantduring good and bad economic times, the pharmaceutical industry is lesssusceptible to the ups and downs of the global economy, when comparedwith other industries. As a result, pharmaceutical companies have largelymaintained their IT spending patterns during the recent economic slowdown.

London-based research firm Datamonitor predicts that worldwide IT andnetworking equipment spending by pharmaceutical companies will growfrom $24 billion in 2001 to reach $34 billion by 2004, increasing by acompound annual growth rate of 11.5% between 2001 and 2004.

North American pharmaceutical companies are expected to spend more than$15 billion on information technology in 2004, according to Datamonitor,while Western European companies will spend more than $11 billion.

By comparison, Gartner Dataquest predicts that US pharmaceuticalcompanies will spend $5.5 billion on information technology in 2005,increasing by a compound annual growth rate of 12.8% from the $3.0billion spent on IT in 2000.

Worldwide IT Spending by PharmaceuticalCompanies, 2001 & 2004 (in billions)

2001 $24.0

2004 $34.0

Source: Datamonitor, 2002


IT Spending in the US Pharmaceutical Sector,2000-2005 (in billions)

2000 $3.0

2001 $3.4

2002 $3.9

2003 $4.4

2004 $4.9

2005 $5.5

Source: Gartner Dataquest , August 2001



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Gartner goes on to predict that spending on software will see the strongestgrowth, with a CAGR of 19.6% between 2000 and 2005, while spending onexternal IT services will grow by a CAGR of 17.3% through 2005.

As for the breakdown of pharmaceutical companies’ IT budgets, thelargest proportion of their technology dollars are predicted to go towardoutsourced IT services, which will account for 58% of IT spending in 2005– up from 53% of pharmaceutical companies’ IT budgets in 2000.

This increased reliance upon third-party IT service providers is part of awider trend that Gartner and other technology research firms are predictingfor large enterprises in general, which are finding outsourcing to be a cost-effective means of managing much of their less-strategic IT assets, insteadof doing it them themselves.

In the case of pharmaceutical companies, outsourcing administrative ITneeds permits them to focus their internal IT resources on research &development or e-business initiatives.

Indeed, two substantial multi-year IT outsourcing contracts have beensigned with IBM Global Services by Aventis and AstraZeneca over the pasttwo years, which will see IBM manage the server operations, e-mail, PCs,and communications services of these two pharmaceutical firms.

Network equipment

11%Hardware

14%

Software 17%

Outsourced IT services 58%

Breakdown of US Pharmaceutical Industry ITSpending, by Category, 2005 (as a % of total market)

Source: Gartner Dataquest, 2001


US Pharmaceutical Companies' Spending on ITServices as a Portion of IT Budgets, 2000 & 2005

2000 53%

2005 58%

Source: Gartner Dataquest, 2001



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Both contracts cover the IT needs of each company across their globaloperations, with Aventis paying IBM more than $1.5 billion for 10 years ofservice and AstraZeneca paying $1.7 billion for its seven-year deal.

According to InformationWeek’s annual survey of the top 500technology leaders in the United States, companies in the biotechnologyand pharmaceutical industry are some of the biggest spenders oninformation technology. The study found that the average annual IT budgetamong the largest biotechnology and pharmaceutical companies was$691.3 million in 2001, ahead of the retail industry whose technologyleaders had an average IT budget of $500 million, and behind firms in thetelecommunications and banking industries, where IT budgets were nearthe $1 billion mark.

On the other hand, biotechnology and pharmaceutical companies’ ITspending as a percent of sales was closer to the average across allcompanies, at 4.1% in 2001. By comparison, telecommunications firmswere spending about 10.6% of their sales on information technology, whileretail firms were spending less than 2% of their sales on IT.

Nearly half of the top biotechnology and pharmaceutical companies thatInformationWeek identified as technology leaders evaluated their ITspending on a monthly basis in 2001, while 25% of respondents reviewedtheir IT spending on a quarterly basis.

Percent of Biotechnology and PharmaceuticalCompanies' Revenues Spent on IT, 2000 & 2001

2000 5%

2001 4%

Source: InformationWeek, 2001


Frequency of Biotechnology and PharmaceuticalCompanies' IT Spending Evaluation, 2001 (as a % ofrespondents)

Monthly 49%

Quarterly 25%

Twice a year 13%

Annually 13%

Source: InformationWeek, 2001



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Online Advertising


Index of Charts

In terms of pharmaceutical industry spending on internet-related or e-business initiatives, Cap Gemini Ernst & Young estimates that in 2000,pharmaceutical companies spent between 0.5% and 1.0% of their totalsales, or $2 billion annually, on such projects.

Of the 101 companies that Cap Gemini Ernst & Young surveyed inJanuary 2001, 77% of respondents had established a separate business unitresponsible for e-business, with just over 60% of companies having acentral team running their e-business strategies.

Most pharmaceutical companies see themselves as average to slightlybelow average when it comes to assessing their own level of e-businessdevelopment, when compared to that of their competitors. However, as thestudy’s authors have noted, expectations that the internet would radicallytransform their business have largely been tempered, and there is lessurgency to push through changes than there was in the past.

“The winners will be those companies thataccurately predict that the pace of change will be agradual industry transformation, and manage theirportfolio of investments accordingly.”– Cap Gemini Ernst & Young/Insead

De-centralizedorganization runby businessunits orregions6%

Yet to establish acorporate strategy

22%

Central e-business venture fund11%

Central e-business team61%

Organization of Pharmaceutical Companies'E-Business Strategy Implementation, 2001 (as a % ofrespondents)

Source: Cap Gemini Ernst & Young/Insead, 2001


Methodology



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Indeed, the conservative approach taken by leaders in the pharmaceuticalindustry has prevented many companies from making costly mistakes with e-business projects that have not produced a satisfactory return on investment.

Among the operational areas where pharmaceutical companies expect theinternet to have the largest impact, marketing and sales is correctly identifiedas the area most subject to change. As discussed in the following chapter,from online advertising to e-detailing and website initiatives, the internet haswithout question opened up a significant number of new opportunities forpharmaceutical companies on the sell-side of their operations.

On the other hand, as mentioned in the previous section, the internet hasimpacted the buy-side of pharmaceutical companies’ operations as well. Inmost cases, e-commerce projects have begun with e-procurementinitiatives for the purchase of indirect materials, or laboratory equipmentrelated to research & development activities.

Because of their complexity, supply chain and product lifecyclemanagement initiatives have typically come later for most firms, althoughthere are case studies of pharmaceutical companies that have already metwith e-business success in each of these areas of their operations.

Pharmaceutical Companies' Assessment of theirE-Business Development, 2001 (as a % of respondents)

Leading 8%

Slightly above average 21%

Average 41%

Slightly below average 28%

Lagging 2%



Area of Operations that Pharmaceutical CompaniesExpect to be Most Impacted by E-Business, 2001 (as a% of respondents)

Marketing and sales 68%

Research and development 13%

Supply chain 13%

Same impact across entire company 6%




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Survey respondents to the Cap Gemini Ernst & Young study expected majorchanges to their companies’ procurement operations over the long term,while it was estimated that the internet would have less of an impact –although a significant one – upon their logistics operations.

Among the factors that e-business executives at pharmaceutical companieslisted as the leading barriers to change, cultural issues were the top issue,followed by the measurement of e-business projects’ return on investment.

While companies in other industries have found that active, high-levelexecutive support for e-business initiatives has helped to shepherd changesthrough their organizations, the need to measure ROI has slowed down e-business projects across all industries, as chief financial officers and CEOshave required business managers to think through e-business proposalsmore thoroughly.

Anticipated Impact of E-Business uponPharmaceutical Companies' Procurement Operations,2001 (as a % of respondents)

Will transform operations 13%

Will result in major changes 61%

Will result in minor changes 26%

No change 0%



Anticipated Impact of E-Business uponPharmaceutical Companies' Logistics Operations,2001 (as a % of respondents)

Will transform operations 4%

Will result in major changes 48%

Will result in minor changes 35%

No change 13%




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Furthermore, tracking ROI has been difficult to do in many instances aswell, especially when there is a lack of historical data against whichmanagers may compare results, or when the greatest benefits are moredifficult to measure, such as customer or employee satisfaction.

Over the past few years, one of the leading areas of e-business in whichpharmaceutical companies have been greatly interested has been customerrelationship management (CRM).

In its most recent annual survey, InformationWeek found that thebiotechnology and pharmaceuticals industry leads all other industrieswhen it comes to deploying CRM systems. Compared with 80% oftechnology leaders in the banking industry, for example, 88% of biotechand pharmaceutical firms said that they had widely-deployed CRM systemsby mid-2001.

Leading Barriers to Pharmaceutical Companies'E-Business Strategy Implementation, 2001 (as a % ofrespondents)

Cultural change 33%

Measurement of ROI 25%

Technical capability 12%

Resources 10%

Infrastructure 7%

Cost unknown 7%

Implementation 4%

Budgetary process 2%




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This data is supported by another survey that was conducted by ForresterResearch, which found that pharmaceutical companies were much morelikely to have a CRM project underway or completed, when compared withother Global 3500 companies.

“More than firms in many other sectors,pharmaceutical companies maintain longrelationships with the same groups of patients,physicians and HMOs.”– Datamonitor

Indeed, pharmaceutical companies’ unique relationships with patients,physicians, and other health care providers make the case for adopting CRMtechnology rather compelling. Unlike the consumer packaged goodsindustry, for example, where customer relationships with manufacturers andtheir brands can often be fleeting, relationships between pharmaceuticalmanufacturers and their customers are often of a longer duration.

However, as Cap Gemini Ernst & Young points out in its study,pharmaceutical companies have only begun to shift from relying uponmass-marketing techniques to more targeted marketing campaigns.Pharmaceutical companies are also criticized for historically being ratherproduct-centric in their marketing efforts, and they are urged to develop amore customer-centric approach through the use of internet tools.

In response to this criticism, Datamonitor has found that among 82% ofpharmaceutical companies, there is a high degree of interest in adoptingCRM technologies of some kind. However, the research firm has also foundthat 44% of the projects that had been attempted in early 2002 had eithermissed their deadlines or failed completely.

Percent of Pharmaceutical Companies with CRMProjects Underway or Completed, 2002

Pharmaceutical industry 60%

Global 3,500 38%

Source: Forrester Research, 2002


Pharmaceutical Companies' Interest and Successwith CRM, 2002 (as a % of respondents)

Planning CRM initiatives

82%

CRM projects missed deadline or failed completely

44%

Source: Datamonitor, 2002



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On the other hand, there is some controversy over the evaluation ofpharmaceutical companies’ CRM initiatives to date, as other research firmshave noted that opinions on the success or failure of these and other e-business projects often depend upon who is asked. More specifically,consultants at Information Systems Marketing have found that ITprofessionals are more likely to see CRM initiatives as failures from atechnical standpoint because of missed deadlines or integration problems,while line of business managers often find such projects to be immenselysuccessful from a productivity standpoint.

Among those pharmaceutical companies that are moving forward withCRM initiatives in 2002, many of the leaders are now building upon theirearlier deployments of operational CRM projects by implementinganalytical CRM applications that will help them better understand theinformation that they are now able to gather about their customers.

As an example of one pharmaceutical company’s progress with thedevelopment of its e-business strategy, Novartis provides a useful case study. As of early 2001, Novartis had completed two of its top e-businesspriorities, first by consolidating its indirect procurement activity withAriba’s e-procurement solution, and then by rolling out a website thatfacilitated internet-based self-service to its wholesale customers.

This latter initiative, the Novartis Customer Connection, was first pilotedin early 2000 and was eventually rolled out to Novartis’ 72 wholesalersover the course of that year. Designed following consultations with itscustomer group, the website provides Novartis’ wholesalers with access toits back-end databases, thus permitting its customers to check shipmentsand order status at their convenience.

The website’s success has freed up Novartis’ customer service reps fromroutine clerical duties, which in turn permits them to provide better, value-added services to the company’s clients. The company has also reduced itsbacklog of customer rebates and sped up the processing of product returns.

Moving forward, Novartis is now focused upon using the internet tostrengthen its relationships with physicians as the next major element of itse-business strategy. This phase is being implemented through Novartis’participation in the internet-based detailing network iPhysicianNet.

For more information about e-detailing, please see chapter II


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As an example of a pharmaceutical company’s use of the internet to selldirectly to health care providers, Aventis Pasteur has developed a self-service website called VaccineShoppe.com, through which it sells a varietyof its vaccines to physicians, hospitals and other agencies. During the firstquarter of 2002, VaccineShoppe.com posted sales exceeding $150 million,with $100 million of that total coming from sales of Aventis Pasteur’sinfluenza vaccine.

VaccineShoppe.com was initially launched in March 2000 and has seen ayear-over-year increase in online sales of more than 700% since the firstquarter of 2001. The website is described as being well-integrated withAventis Pasteur’s customer service system, and it is able to provide userswith up to date account information as well as product information.

Finally, one other e-business initiative is worth mentioning as well. In early2001, a joint venture project between Johnson & Johnson and Merck met withsurprising results for both companies’ advertising and marketing operations.

What started out as an online collaborative website that was intended forsharing creative information between the two companies’ marketing teamssoon evolved into an extranet through which internal and externalorganizations were able to share creative ideas, ranging from print ads to video spots.

According to eWeek magazine, this informal collaborative solution costless than $10,000 to develop, and wound up saving Johnson & Johnsonand Merck more than $200,000 in travel expenses alone. The extranetsolution also helped the companies reduce the time involved in developinga related coupon promotion by one-third.

As a result of the success of this extranet, Johnson & Johnson and Merckare expanding the use of such collaborative extranets to other brandmanagers within the company.

E-Business Profile: Online Sales Activity viaVaccineShoppe.com, Q1 2002Approximate value of online orders $150 million+

Online sales as a % of total Aventis Pateur customer orders 30%+

Source: Aventis Pasteur, 2002


E-Business Profile: ROI for Johnson & Johnson-Merck'sPepcid Complete Collaborative Extranet, 2001Cost to develop < $10,000

Travel expense savings $200,000

Time savings for development of coupon promotion reduced by one third

Source: eWeek, 2001

040393 ©2002 eMarketer, Inc.

www.eMarketer.com

IIMethodology 5



A. Introduction 30

B. Direct to Consumer Advertising 35

C. Physician Sales 48


Index of Charts 81


29



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A. IntroductionAs an advertising medium, the internet remains in the early stage of itsdevelopment in 2002, with many traditional advertisers still learning aboutthe benefits of online advertising.

eMarketer estimates that overall spending on internet advertising in theUnited States will increase to $8.1 billion in 2002, up slightly from $7.3billion in 2001. As the internet becomes more widely accepted as amainstream media channel, online advertising is forecast to growsubstantially, reaching $13.5 billion by 2005.

For further information about the latest trends in online advertising,please see eMarketer’s Online Advertising report

Pharmaceutical companies are expected to have a significant impact uponthe growth of online advertising, as prescription drugs are among the mostheavily advertised products in the United States.

US Online Advertising Spending, 1996-2005 (inbillions)

1996 $0.27

1997 $0.91

1998 $1.92

1999 $4.62

2000 $8.20

2001 $7.30

2002 $8.10

2003 $9.20

2004 $11.40

2005 $13.50

Note: eMarketer figures for future forecasts (2001-2004); InteractiveAdvertising Bureau (IAB)/PricewaterhouseCoopers figures for historicalperiod (1996-2000)Source: eMarketer, February 2002; Interactive Advertising Bureau(IAB)/PricewaterhouseCoopers, 2001



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In its year-over-year comparison of first quarter advertising spending,Nielsen Media Research found that prescription drugs slipped one place tobecome the fourth most advertised product category in early 2002, behindautomobiles, restaurants and motion pictures. Advertising spending forprescription drugs did see slight growth, however, rising from $607.7 millionin the first quarter of 2001 to $614.3 million in the first quarter of 2002.

Using a broad definition that includes advertising and promotionalspending, the pharmaceutical industry again comes out near the top as oneof the leading spenders on promotional activity as a percent of sales. In1999, for example, pharmaceutical companies spent an average 13.6% oftheir sales revenues on product promotions, ahead of soap and detergent,cosmetics and toy manufacturers.

Top Ten Product Categories in the US Based onAdvertising Spending*, Q1 2001 & Q1 2002 (in millions)

Q1 2002 Q1 2001

1. Automotive $1,902.0 $1,732.3

2. Restaurants $983.5 $864.2

3. Motion pictures $663.7 $490.1

4. Prescription drugs $614.3 $607.7

5. Telephone service $599.9 $486.1

6. Department stores $362.6 $299.7

7. Direct response services $350.9 $304.8

8. Beer $250.4 $183.4

9. Financial investment services $247.3 $199.5

10. Auto dealership $239.9 $207.1

Note: *based on spending in the following media: Network TV, Cable TV,Hispanic TV, Spot TV, Syndicated TV, National Magazine, Spot Radio (19markets), FSI CouponSource: Nielsen Media Research, May 2002



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It is important to note that the cost of direct to consumer advertising forpharmaceutical companies is a relatively small part of their overallpromotional budgets, while the greatest portion of pharmaceuticalcompanies’ spending is directed at physicians.

Percent of Company Sales Devoted to Advertisingand Promotion in the US, by Industry, 1999

Department stores 3.7%

Tobacco products 3.9%

Sporting and athletic goods 5.6%

Malt beverages 7.5%

Soap and detergent 10.7%

Perfumes and cosmetics 11.9%

Games and toys 12.0%

Dolls and stuffed toys 15.2%

Source: AdAge Global, February 2001; Kaiser Family Foundation, February2002



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Indeed, when US pharmaceutical companies’ advertising and promotionalbudgets are broken down by spending category, free samples and salesvisits to physicians’ offices accounted for more than three-quarters ofpharmaceutical companies’ $15.7 billion in spending during 2000.

For 2001, IMS Health estimates that pharmaceutical companies spent atotal of $16.4 billion on promotional activities, with about 64% of thattotal targeted at physicians. Nonetheless, direct-to-consumer advertisingby pharmaceutical companies still cost the industry a substantial $2.4billion in 2000 and more than $2.6 billion in 2001.

Breakdown of Pharmaceutical Promotion Spending,1996-2000 (as a % of manufacturer sales)

1996

12.9%

1.2%

14.2%

1997

13.8%

1.5%

15.3%

1998

13.7%

1.6%

15.3%

1999

11.8%

1.8%

13.7%

2000

11.8%

2.2%

14.0%

Physician promotion Consumer promotion Total promotion

Note: numbers may not add to total due to roundingSource: Kaiser Family Foundation, February 2002



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In light of these escalating promotional expenses, the internet providespharmaceutical companies with an effective way of reaching highlytargeted audiences of both consumers or physicians. Whether it is throughthe use of online advertising as a means of marketing their brands, or theuse of e-detailing sessions to reduce the cost of sales visits to physicians’offices, pharmaceutical companies have begun to experiment withinternet-based solutions as a means of more effectively spending theirpromotional dollars.

There is still a great deal of progress to be made, however, as Cap GeminiErnst & Young estimates that by late 2001, the pharmaceutical industry wasinvesting between 0.5% and 1% of sales and marketing spending oninternet ventures, amounting to between $2 billion and $4 billion globally,according to the consulting firm’s calculations.

Breakdown of US Pharmaceutical Industry PromotionSpending, 2000 (in billions)

Free samples* $7.95

Office promotion $4.04

Direct-to-consumer advertising $2.47

Hospital promotion $0.77

Medical journal ads $0.48

Total $15.71

Note: *valued at the retail market priceSource: CMR, IMS Health, June 2001; Kaiser Family Foundation, February2002


Medicaljournal ads3%

Hospital promotion5%

Direct-to-consumer

advertising16%

Office promotion26%

Free samples50%

Breakdown of US Pharmaceutical IndustryPromotional Spending, 2000

Source: CMR, IMS Health, June 2001; Kaiser Family Foundation, February2002



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B. Direct to Consumer AdvertisingWhile pharmaceutical companies’ overall promotional spending hasremained constant through the 1990’s, the industry’s direct-to-consumer(DTC) advertising has increased substantially from about $266 million peryear in 1994 to nearly $2.5 billion by 2000, according to data fromCompetitive Media Research (CMR) and IMS Health.

IMS Health estimates that direct to consumer advertising by the industryreached $2.6 billion in 2001, while the Quantum Group forecasts thatpharmaceutical companies’ DTC spending will grow by about 5% to 10% in 2002.

As a percent of ad spending across all industries, the Quantum Groupgoes on to estimate that pharmaceutical industry direct to consumeradvertising accounts for 3% of all advertising in the United States.

US Pharmaceutical Industry Direct-to-ConsumerAdvertising, by Media Type, 1996-2000 (in billions)

1996

$0.57

$0.22

$0.79

1997

$0.76

$0.31

$1.07

1998

$0.65

$0.66

$1.32

1999

$0.71

$1.14

$1.85

2000

$0.89

$1.57

$2.47

Print and other Television Total DTC

Note: numbers may not add to total due to roundingSource: CMR, IMS Health, 2001; Kaiser Family Foundation, February 2002



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Without question, pharmaceutical companies’ use of advertising has beenhighly effective at reaching consumers, with steady growth in the percentof consumers reporting that they have been exposed to advertisements forprescription medication.

Breaking down the media mix of pharmaceutical industry DTC advertisingin the United States, IMS Health reports that in 2001, television was themost effective channel through which manufacturers were able to reachconsumers with their brand campaigns. The study went on to find thatinternet ads were effective as well, with 49% of consumers saying that theyhad learned about a pharmaceutical brand via the internet.

In 2001, Vioxx, Celebrex and Nexium were the three leading prescriptiondrug brands by ad spending across all media, according to CMR.

US Consumers Who Had Seen or Heard an Ad forPrescription Medication, 1997-2000 (as a % ofrespondents)

1997 (1) 63%

1998 (2) 70%

1999 (3) 81%

2000 (4) 91%

Note: (1) Prevention magazine survey, 1997; (2) Prevention magazinesurvey, 1998; (3) Prevention magazine survey, April 1999; (4) Jim LehrerNews-Hour/Kaiser Family Foundation/Harvard School of Public HealthSurvey, September 2000Source: Kaiser Family Foundation, February 2002


Percent of US Consumers Learning AboutPharmaceutical Brands, by Advertising Channel, 2001

Television 89%

Journal/magazine ads 75%

Newspapers 53%

Internet 49%

Source: IMS Health Publications, 2002



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As for the relative success of these leading advertisers, IMS Health foundthat Claritin, Viagra, Celebrex, Vioxx and Allegra were the most frequentlyrequested prescription drugs by consumers, according to a late-2001 surveyof 2,300 physicians. IMS Health also noted that about 43% of physiciansfrom its survey said that they had seen an increase in patient requests forprescription drugs in general.

Although pharmaceutical companies have over the past few years takentheir place among the leading offline advertisers, the pharmaceuticalindustry was not among the top 10 online advertisers in 2001, according todata from CMR.

Top 15 Advertised Prescription Drugs, 2001 (inmillions)

Ailment 2001 Ad dollars

Vioxx Osteoporosis $135.4

Celebrex Arthritis $130.4

Nexium Heartburn $126.1

Viagra Impotence $90.6

Allegra Allergy $98.1

Zocor Cholesterol $85.6

Gluco-XR Diabetes $80.9

Claritin Allergy $79.7

Imitrex Migraine $70.6

Flonase Nasal $69.0

Paxil Depression $65.1

Zyrtec Allergy $62.7

Procrit Anemia $59.5

Singulair Asthma $57.9

Zoloft Depression $55.9

Source: Competitive Media Reporting (CMR), 2002



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This is expected to change, however, as more studies proving the benefitsof online advertising become available, and as pharmaceutical companiesgain a better sense of how they can most effectively add internetadvertising to their overall media mix.

In a separate assessment of the online advertising space, Jupiter MediaMetrix estimates that pharmaceutical companies spent an estimated $89million, or 4%, of their total DTC advertising budgets on onlineadvertisements in 2001. Jupiter does not include branded websites or e-mail marketing initiatives as part of this figure.

By comparison, companies in the consumer packaged goods industry arespending between 1% and 2% of brand campaign budgets on internet-based advertising.

Top US Online Advertising Spending, by Industry, 2001(in millions)

Retail

$533.3

Media and advertising

$450.5

Financial

$327.2

Computers and software

$251.1

Local services and amusements

$238.4

Public transportation, hotels & resorts

$126.3

Automotive, automotive access and equipment

$107.5

Government and organizations

$89.7

Telecommunications

$79.2

Insurance and real estate

$67.2

Source: CMRi's AdNetTrackUS, March 2002



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Using a more inclusive definition of online promotional spending thanJupiter Media Metrix, a comparative estimate by Forrester Research putspharmaceutical companies’ online spending as a percent of their DTCbudgets at 9% in 2001. Forrester goes on to predict that the pharmaceuticalindustry’s online presence will account for an average 18% ofmanufacturers’ DTC promotional budgets by 2004.

As part of its survey of 14 leading pharmaceutical firms, Forrester Researchfound that nearly all respondents made use of product- and disease-specific websites as a means of reaching consumers, while a further 79% ofrespondents appeared to be comfortable with banner ads and sponsorships.

In order to increase the effectiveness of their online marketing, Forresteradvises pharmaceutical companies to integrate their online advertisingcampaigns with their broader brand campaigns as a means of meetingcustomer needs throughout consumers’ decision-making process.

For example, banner ads and sponsorships should complement televisionand radio ads by increasing consumer awareness of brands, or drivingtraffic to branded websites where people can access further information.Forrester goes on to suggest that branded websites should be designed tohelp consumers during the pre-sale stage, when they are choosing betweenalternate drugs, and also during the post-sale relationship, by providinginformation that helps consumers use their medication effectively oranswer any further questions that consumers may have.

Pharmaceutical Companies' Online Spending as aPercent of DTC* Budgets, 2001 & 2004

2001 9%

2004 18%

Note: *Direct-to-ConsumerSource: Forrester Research, July 2001


Channels through Which Pharmaceutical CompaniesMarket to Consumers Online, 2001

Product-focused websites 86%

Disease-specific websites 86%

Banner ads and sponsorships 79%

Search-engine optimization 36%

Content syndication 29%

Note: n=14, multiple responses acceptedSource: Forrester Research, July 2001



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Such an integrated campaign was recently run by AstraZeneca, which usedtelevision and print ads to encourage people to visit a branded website,purplepill.com, for its Nexium product. Once on the website, consumerswere able to obtain free samples of Nexium by printing a coupon for aseven-day supply of the drug, which they could then redeem with aphysician’s prescription at their local pharmacy.

Permission-based e-mail marketing can also be used as a means ofensuring customer loyalty during the post-sale phase, by giving consumersa chance to receive further coupons or other discounts that may drivefuture purchases.

Among the changes that pharmaceutical companies expect to see as aresult of internet marketing, one-third of the respondents to Forrester’ssurvey believe that the internet will help them better segment theirmarketing campaigns, by enabling them to target their advertising orwebsite initiatives at specific groups of people.

Pharmaceutical companies also expect to use the internet to buildstronger relationships with their customers – a strategy which many firmsare already pursuing through disease-specific websites and other onlinecommunity-building efforts.

As for the evaluation of the success or failure of their online advertisinginitiatives, pharmaceutical companies are measuring their ROI by lookingfirst at website traffic, followed by the number of prescriptions generatedthrough their online ad campaigns.

Pharmaceutical Companies' Expectations of How theInternet Will Change the Way They Market toConsumers, 2004

More effective segmentation

36%

Stronger relationships

36%

Cross-channel marketing

21%

More sophisticated tools

21%

Compliance programs

14%

Every product will have an online component

14%




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However, measuring the effectiveness of web initiatives has provendifficult for many internet advertisers to do, especially when trying todetermine the role that online initiatives play in generating offline sales. Asa result, more than one-third of respondents to the survey admitted thatthey were not able to measure their online ROI very well.

Nonetheless, several leading pharmaceutical companies have found theirway online, with Bristol-Myer’s Squibb spending as much as $4.5 millionon its internet advertising campaign in 2001.

How Pharmaceutical Companies Measure their ROIfor Online Advertising, 2001

Website traffic

50%

Scripts generated

29%

Statistical analysis of website traffic

21%

Follow-up surveys

14%

Do not measure well

36%




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It is interesting to note, however, that while many of the leading internetadvertisers such as Bristol-Myers Squibb and Merck have substantiallyincreased their online spending during the past year, a few companies suchas Johnson & Johnson and GlaxoSmithKline have reduced their spending.

When it comes to choosing the most popular online destinations forconsumers, WebMD is by far the preferred choice for 82% of onlineconsumers who are seeking health-related information. Other leadingdestinations include Drkoop.com and Mayoclinic.com.

Top Pharmaceutical Advertisers Online, 2001 (inthousands and as % change over 2000)

Bristol-Myers Squibb $4,548.1 (198.0%)

Johnson & Johnson $3,921.9 (-38.1%)

GlaxoSmithKline $3,485.0 (-45.1%)

American Home Products $3,103.6 (122.9%)

Merck & Co. $2,840.4 (231.4%)

Pfizer $2,766.4 (-47.1%)

Eli Lilly & Co. $1,901.6 (-58.1%)

Aventis $1,889.2 (2.2%)

Pharmacia $1,739.1 (7.3%)

Novartis $614.2

Roche Holdings $419.2 (-43.0%)

Pharmaceutical Research $172.3 (73.6%)

Shire USA $3.5

Source: Competitive Media Reporting (CMR), 2001



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Following its acquisition of the portal assets of Medscape, WebMDestimates that its website will attract as many as 15 million consumers permonth, while more than 575,000 doctors are said to be using its network.

As for those health-related websites where consumers are most likely toread or consider online advertising, highly targeted websites appear to bemore effective than general health websites.

Popularity of General Medical Information Sitesamong US Online Consumers, December 2001 (as a %of respondents)

WebMD

82%

Dr. Koop

40%

MayoClinic.com

23%

DiscoveryHealth.com

16%

Yahoo! Health

16%

HealthCentral.com

11%

AOL Health

9%

CBS Health Watch

9%

OnHealth.com

7%

InteliHealth.com

3%

HealthAnswers.com

2%

Other

6%

I have never visited a medical information site

10%

Note: n=500Source: Vividence Corporation, 2002



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At the top of Harris Interactive’s study of more than 100,000 consumers, itwas found that advertising on dental health, gay health and marathon &running websites was most effective at capturing consumers’ attention. Onthe other hand, general health and information websites were aboutaverage, while pharmaceutical companies’ websites fared slightly better.

Types of Health Care Websites Where Consumers AreMost Likely to Read or Look at Advertising, 2001 (as a% of respondents)Dental health 41%

Gay health information and resources 40%

Marathon and running 40%

Vegetarian information 33%

Sex and sexuality 30%

Drugstores 29%

Vitamin and supplement manufacturers/stores 28%

Child and parenting 27%

Diet and nutrition 27%

Disability information 26%

Fitness and bodybuilding 26%

Health insurance 25%

Women’s health 25%

Men’s health 24%

Pharmaceutical resources 24%

Alternative/integrative medicine 23%

Pharmaceutical companies 23%

Health and medical news 22%

Hospitals 22%

Doctor directories 21%

Professional health resources and associations 20%

Mental health 19%

Drug information 18%

Clinical trials 17%

Medical diseases and conditions 17%

Government health resources 15%

Health references and directories 15%

Medical journals 13%

Average 25%

Source: Harris Interactive, 2001



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Among those websites that were the most successful at encouragingvisitors to look at online ads were 800dentist.com, dental.com, Asimba.comand the Gay Financial Network (gfn.com), each of which had more than50% of their visitors saying they would read or look at advertising that wasplaced on their website.

Results from the Harris Interactive study are supported by those of aseparate survey conducted by Reuters Business Insight, in which it wasfound that while approximately 60% of all visitors to consumer websitesare “likely” to read or look at an online advertisement, just 23% of visitorsto pharmaceutical companies’ websites are “very likely” to do so.

In addition to providing advertisers with a means of targeting consumersmore effectively than most other media, perhaps the most compellingreason for pharmaceutical companies to turn to internet advertising is itsrelatively low cost when compared to television and print.

Cyber Dialogue estimates that the cost of driving a single consumerrequest for a specific drug can be as high as $220 when it is accomplishedvia print ads, or $197 via a television ad. By comparison, internet ads costas little as $14 per request, according to the research firm’s calculations.

On the other hand, Cyber Dialogue has discovered that television and printads are far more compelling than internet ads, when it comes to measuringthe percent of consumers who are driven to request a specific medicationfrom their physician.

Estimated Advertising Cost to Drive a SingleConsumer Request for a Specific Drug, by Medium,2000

Print ads $220

Television ads $197

Internet ads $14

Source: Cyber Dialogue, 2000


Percent of US Consumers Requesting Specific Drugsfrom their Physician as a Result of Direct Advertising,by Medium, 1999

Television ads 8%

Print ads 5%

Internet ads 2%

Note: n=2,700Source: Cyber Dialogue, 2000



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A more recent study conducted by Johnston, Zabor, McManus found that44% of consumers who were driven to a pharmaceutical brand’s websitevia a direct-to-consumer campaign intended to ask their physician toprescribe that particular brand. Magazine and television ads were found tobe the most effective media at driving website traffic, and while internetbanner ads were not considered in the study, search engines were found tohave reached a smaller percentage of consumers.

A total of 6,709 patients, caregivers and physicians were surveyed for thestudy, which was released in March of 2002.

Although online advertisers have in the past relied upon click-throughrates as a means of measuring the effectiveness of their online ads, in 2002there is a growing body of research that is beginning to show that internetadvertising should instead be evaluated as a branding tool.

Recent studies measuring the effectiveness of online advertising in theconsumer packaged goods industry, for example, have shown that bannerads raise consumers’ brand awareness by as much as 35% when comparedwith a control group. Furthermore, consumer purchase intent has beenfound to increase by as much as 22% when individuals have been exposedto more than 12 online ads.

Among the conclusions that have been reached by this early research, ithas been suggested that CPG companies should increase their internetadvertising from an average 2% of a brand campaign’s media mix, to about15% of its overall spending.

For further information about online advertising and the CPGindustry, please see eMarketer’s CPG Online report

In a study conducted on behalf of Bristol-Myers Squibb by Dynamic Logic,female consumers were surveyed on the effectiveness of an onlinebranding campaign for VANIQA, a pharmaceutical product designed tohelp slow the growth of unwanted facial hair in women.

Percent of Consumers Intending to Request aPrescription Drug After Having Been Driven to aBrand's Website, by DTC* Advertising Channel, 2002

Magazine ads 46%

Television ads 44%

Radio ads 37%

Internet search engine 19%

Physician’s referral 14%

Note: *Direct-to-ConsumerSource: Johnston, Zabor, McManus, Inc., 2002



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As part of the study, female visitors to iWon.com’s iWon Daily and iWonToday web pages were surveyed on their responses to three different stylesof VANIQA ads, with the results compared to those of a control group whohad not been exposed to the ads.

In terms of brand awareness and message association, respondents whohad been exposed to the online ads showed a 37% increase in brandawareness and a 73% increase in message association when compared withthe control group.

The study went on to find that large rectangle ads had the greatest effect onreaching consumers, as rectangle ads produced a 45% increase in brandawareness and a 98% increase in message association among those femaleconsumers who had had one exposure. Large rectangle ads boostedmessage association among the target group of women by 104%, and brandawareness by 52%.

Large rectangle ads were also most effective at increasing purchaseintent, which saw a lift of 16%, versus a banner ad lift of 6%.

With pharmaceutical products’ advertising strategies becoming increasinglysimilar to those of consumer packaged goods, both groups are expected tobenefit from further research into the effectiveness of online brandingcampaigns that is expected to be released during the latter half of 2002.

Over the longer-term, eMarketer expects that this research will help bringa larger portion of direct-to-consumer advertising online.

For more information about online advertising, please see eMarketer’sOnline Advertising report

Lift in Consumer Brand Awareness and MessageAssociation After One Exposure to VANIQA OnlineAds, 2001

Brand awareness 37%

Message association 73%

Note: Lift was measured versus control group that had not been exposedto adsSource: Bristol-Myers Squibb, Dynamic Logic, 2001


Lift in Consumer Purchase Intent After One Exposureto VANIQA Online Ads, by Ad Format, 2001

Large rectangle 16%

Skyscraper 14%

Banner 6%

Note: Lift was measured versus control group that had not been exposedto adsSource: Bristol-Myers Squibb, Dynamic Logic, 2001



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C. Physician SalesWhile pharmaceutical companies have channeled a significant portion oftheir promotional resources into direct-to-consumer advertising, thelargest share of their promotional budgets continues to be directed atphysicians, who naturally play the most important role in determiningwhich medications are prescribed to their patients.

In a late-2001 study that was conducted on behalf of Pfizer by MarketMeasures/Cozint, it was found that 61% of physicians believe that DTC adshave a beneficial effect on their interactions with their patients. Just under70% respondents said that they did not feel pressure to prescribemedication that their patients had inquired about, thanks to their havingseen a DTC ad, while more than 80% were satisfied with the outcome of theoffice visits in which a DTC ad was mentioned.

Among those physicians in the study that were treating high cholesterolconditions, 54% said that a DTC ad had been influential in getting theirpatient to discuss their condition with them, while 55% of respondents whowere treating mood or anxiety orders said that a DTC advertisement hadinfluenced their patients as well.

In a separate study of 2,300 physicians that was conducted by IMSHealth, physicians were most likely to fulfill patient requests for allergyand arthritis medications, while anti-obesity prescriptions were the leastlikely to be prescribed upon request. Among the reasons why physicianswould not prescribe medications, the most common are: issues relating tothe inappropriateness of the medication for a patient’s condition, lack ofinsurance coverage, and concern about side effects.

According to data from Competitive Media Research and IMS Health, officepromotions account for approximately one-quarter of pharmaceuticalcompanies’ overall promotional budgets. These office visits by salesrepresentatives, or detailing sessions, as they are better known, are viewedas one of the most effective ways for pharmaceutical companies to promotetheir products to physicians, while at the same time providing them withthe proper information that they need to treat their patients.

Percent of US Physicians that Are Likely to FulfillConsumer Requests for Brand-Name PrescriptionDrugs, by Drug Type, 2001

Antihistamines/nasal steroids for allergy 59%

COX-2 inhibitors for arthritis 52%

Anti-obesity medication 20%

Source: IMS Health Publications, 2002



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Index of Charts

On the other hand, the ballooning size of pharmaceutical companies’ salesforces and the frequent disconnects between sales representatives andphysicians have also been well documented.

ZS Associates, for example, estimates that US pharmaceutical companiesspend more than $10 billion per year on sales force promotions of theirproducts, accounting for 60% to 70% of their total promotional budgets.Furthermore, a study by Health Strategies Group has found that 43% ofsales representatives’ calls end at the receptionist’s window.

As a result of these rising costs and increased competition for physicians’attention, many pharmaceutical companies have begun to considerinternet-based solutions as a means of cutting costs, while at the same timegetting better information to physicians at a time that is more convenientto them.

In January of 2001, Cap Gemini Ernst & Young found that about one-third of the North American and European pharmaceuticals companies thatit surveyed were in the process of piloting e-detailing projects. Americancompanies were expecting that once such initiatives were completely rolledout, their sales costs would be reduced by as much as 50%.

In a separate study by PharmaWeb, the software vendor found that 68%of the pharmaceutical companies it surveyed believe that the internet willhave the greatest impact upon how they contact physicians in the future. Afurther 30% of pharmaceutical companies see e-detailing as the mosteffective way of reaching physicians.

Indeed, if the promotional materials of several e-detailing solutionsvendors are to believed, the savings through internet-based detail sessionsmay be as much as 45% to 90% off the cost of live sessions. For example,RxCentric estimates that the average cost per minute of an online detailingsession is $12 to $15 per minute, versus an estimated $100 per minute by atraditional method.

Comparative data from iPhysicianNet places the cost of using a field repat $200 per office visit for visits that presumably last two minutes, versusan average $110 session cost for an online detail that lasts eight minutes.

As for the physicians’ side of the equation, RxCentric conducted a study inearly 2002, with 71% of physicians confirming that they had alreadyparticipated in an e-detailing session, and a further 90% of physicians statingthey would participate in an e-detailing session within the next few months.

Estimated Cost of an E-Detailing Session vs. aTraditional Detailing Session, 2002E-Detailing session $12 to $15 per minute

Traditional session $100 per minute

Source: RxCentric, 2002



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Survey data from solution providers confirms that physicians have so farreacted favorably to e-detailing sessions. In a study of US surgeons’ interestin using its e-detailing solution, Aptilon Health found that physicians spentan average of12 minutes viewing product information, compared to thetypical 2 to 3 minute interaction that physicians usually grant offline sales representatives.

Similar data was cited by iPhysicianNet, which estimates that doctorsgive sales reps using its network an average 8 minutes online over twosessions, compared to an average two minutes per session in the field.iPhysicianNet goes on to estimate that pharmaceutical companies’ salesreps who use its network complete between 15 and 25 detailing sessionsper day, compared to about 4 per day for the average field rep.

And finally, a comparative estimate by Medexonline puts the averageonline detail session at 8 minutes, versus an average 3 minutes with atraditional call.

According to Lathian Systems’ study of 733 physicians who attended asmany as two e-detailing sessions for a topical antifungal prescription drugcalled Naftin, the average length of physicians’ first e-detailing session wasnearly five minutes long. Among the 369 physicians that accepted a secondsession, the total length of time they spent with a product presentationaveraged more than eight minutes.

Compared to a control group of physicians who did not participate inonline detailing sessions, prescriptions among those physicians who hadparticipated in one e-detail session were up 19%. More significantly, thosephysicians who had sat through a second online detailing session increasedthe number of prescriptions by 51%.

Average Time Spent by Physicians per E-DetailSession for a Product Presentation of Naftin, 20011st virtual detail session 4:58 minutes

2nd virtual detail session 6:09 minutes

Source: Lathian Systems, 2002


Percent Increase in Number of Prescriptions Issuedfor Naftin by Physicians Who Participated inE-Detailing Sessions, 2001

Participants in one detail session 19%

Participants in two detail sessions 51%

Source: Lathian Systems, 2002



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In response to questions about its e-detailing solution, 98% of physicianssaid that they found Aptilon’s solution to be a useful way to learn about a product, while 83% said it increased the likelihood that they would try the product.

Furthermore, almost two in five of the physicians surveyed said they visitedAptilon’s e-detailing site more than once.

Of course, a large part of the success of e-detailing solutions has to dowith the fact that sessions may be conducted at a physician’s convenience,rather than when a sales representative shows up at his or her office.Physicians Interactive has found, for example, that more than 70% of the7,866 e-detailing sessions it tracked were conducted outside of traditionaloffice hours, either in the evenings or during the weekend.

However, despite the success of online detailing sessions, a study byNovartis found that 58% of the primary care physicians it surveyedpreferred to have an equal number of both online and in-person detailsessions. Some pharmaceutical companies are therefore complimentingtheir online sessions with regular sales calls, through which sales reps areable to distribute samples to physicians directly and maintain a morepersonal customer relationship.

US Physicians' Responses to Aptilon Health'sE-Detailing Solution, 2002 (as a % of respondents)

Is a useful way to learn about a product 98%

Increased knowledge about the product 90%

Increased interest in the product 87%

Increased likelihood to try the product 83%

Source: Aptilon Health, 2002


Timing of E-Detailing Sessions among US Physicians,2000 (as a % of total e-details)

<8 am 4%

Office hours 28%

5pm> 34%

Weekend 34%

Note: n=7,866 e-detailsSource: Physicians Interactive, 2001


IIIMethodology 5




A. Consumers Online 54

B. Physicians Online 66

C. Selling Pharmaceutical Products Online 75

Index of Charts 81


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A. Consumers OnlineAt a faster pace than radio or television media, the internet has become afar-reaching advertising and communications channel that is used inmillions of homes around the world. eMarketer estimates that 565 millionpeople worldwide already have internet access, with penetration ratesexpected to reach 54.5% of the population in the United States by the endof 2002.

The internet is already a regular part of consumers’ everyday lives, not onlyas an entertainment medium and communications device, but also as aconvenient and trusted resource for finding information about a wide rangeof topics, from financial services to medical advice. By now, severalconsumers have as many as five years of internet experience, and they havebecome much more adept at using the internet, often as an early step in thedecision-making process for their most important purchases.

Internet Users in G-7 Countries, 2000-2004 (as a % ofeach country’s total population)

2000* 2001* 2002 2003 2004

Canada 40.6% 42.7% 46.5% 55.3% 65.8%

France 14.3% 26.4% 35.5% 41.7% 44.4%

Germany 29.0% 36.1% 44.1% 48.8% 50.8%

Italy 22.9% 27.7% 33.3% 36.5% 37.9%

Japan 29.4% 45.7% 47.9% 51.2% 54.7%

UK 30.2% 40.2% 47.8% 52.4% 54.3%

US 45.0% 51.4% 54.5% 61.3% 58.0%

Note: *eMarketer's year 2000 and 2001 baselines are from theInternational Telecommunication Union's estimate of internet users aged 2years and older, who have accessed the internet within the previous 30daysSource: eMarketer, May 2002



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In a late 2001 study conducted by the Vividence Corporation, it wasdiscovered that the internet has become the second most popular place foronline consumers in the United States to look for information aboutmedical symptoms. Only physicians are a more valued resource.

According to the Pew Internet & American Life Project, 59% of all USinternet users, or 64 million Americans, went online in 2001 in search ofhealth information. This was a 36% increase over the previous year’s study,when it was estimated that 47 million Americans, or 55% of all internetusers, went online for health information.

By comparison, a January 2002 Harris Interactive survey of 1,318 internetusers in the United States, France, Germany and Japan found that 203million people went online at least once to look for health information,with 110 million Americans saying that they had done so. The study wenton to estimate that more than 48 million people in Japan had gone onlinein search of health information, followed by 31 million Germans and 14million people in France.

Where US Online Consumers Look for Informationabout Medical Symptoms, December 2001 (as a % ofrespondents)

Physician

77%

Internet

75%

Friend/family member

41%

Publications (journals, books, etc.)

35%

Other

4%



Percent of American Internet Users Who Have GoneOnline to Seek Health Care Information, 2000 & 2001

2000 59%

2001 55%

Source: Pew Internet & American Life Project, March 2002



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As a percent of survey respondents, Japan had the greatest proportion ofpeople who said they had used the internet to find health information,ahead of Germany and the United States.

When it comes to specific online resources, Americans showed a preferencefor medical journals and commercial health pages, while people in Japanmost frequently went to disease-specific websites. In France, commercialhealth pages were most popular among the survey’s respondents, whileGermans often looked for health information on academic or researchinstitutions’ pages.

Pharmaceutical companies’ web pages fared best in the United States,where direct-to-consumer advertising from a variety of media channels haslikely raised consumers’ awareness of manufacturers’ products and theirrelated websites. By contrast, pharmaceutical companies’ websites were theleast likely place where Japanese people looked for health care information,and the second-to-last online resource for people in France.

Types of Health Care Websites Visited by OnlineHealth Information Seekers in Selected CountriesWorldwide, January 2002

Medical journals

Commercial health pages

Academic or research institutions

Pharmaceutical companies

Medical societies

Patient support or advocacy groupfor specific diseases

News media

Government websites

Hospitals

Individual doctors

US

45%

44%

43%

34%

34%

29%

29%

25%

16%

11%

France

45%

52%

50%

18%

21%

30%

28%

29%

21%

10%

Germany

33%

40%

50%

27%

45%

42%

40%

24%

14%

15%

Japan

27%

32%

33%

23%

35%

46%

33%

34%

36%

25%

Source: Harris Interactive, May 2002


Percent of Internet Users Who Have Looked forHealth Information on the Internet for SelectedCountries Worldwide, 2002

Japan 90%

Germany 86%

US 80%

France 69%

Source: Harris Interactive, May 2002



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Online consumers in the United States place the greatest trust in websitesthat are run by national medical institutions, according to a 2001 surveyconducted by Jupiter Media Metrix. Americans also place a great deal oftrust in websites that are either run by their doctors, or those that arerecommended by their physicians.

On the other hand, pharmaceutical companies’ websites are among theleast-trusted by American consumers, along with other websites that areperceived to be of a commercial nature.

US Consumers' Most Trusted Websites for AccurateHealth Care Information, 2001 (as a % of respondents)

National medical institution 59%

Doctor's website 50%

Doctor-recommended website 50%

Condition website 38%

Hospital website 34%

Government website 31%

Commercial health website 21%

Pharmaceutical website 11%

Drugstore website 9%

Health plan website 9%

Source: Jupiter Media Metrix, Inc., 2001



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In a later study that was published in 2002, Jupiter Media Metrix has goneon to find that the use of health websites by consumers is rather infrequentand typically occasion-based. Just 14% of survey respondents said thatthey went online for health information at least once per week, comparedto 42% of respondents who go online once or twice every few months.

Jupiter’s results were supported by those from the Pew Internet andAmerican Life project, which found that although 59% of Americans havegone online in search of health information in 2001, only 5% of all internetusers, or about 6 million Americans, go online to look for healthinformation on any given day.

The study conducted telephone interviews with 500 people between Juneand August of 2001, finding that most of those Americans who did goonline for health information were looking for information about aparticular illness or condition.

Searches for information on prescription drugs were high on the list aswell, with 64% of respondents saying that they had gone online for suchinformation. The researchers also noted that patients who had seen a doctorin the past year were more likely to go online to search for specific druginformation than those people who had not seen a doctor.

At leastonce aweek

14%Twice peryear orless20%

One to threetimes per

month24%

Once or twiceevery fewmonths42%

Frequency with Which US Online Consumers Use theInternet to Seek Health Information, 2002 (as a % ofrespondents)

Note: n=2,251Source: Jupiter Media Metrix, Inc., 2002



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By comparison, in a separate study that was released by Decision Analystin mid-2001, it was found that although 85% of internet users turn to theinternet for general health information, just 25% of all users go online tolook for specific information about pharmaceutical products.

In the majority of cases, internet users say that they go online on behalf ofsomeone else who has been diagnosed with a medical condition, while afurther 58% of respondents said that they have turned to the internet ontheir own behalf.

Reasons Why US Internet Users Go Online for HealthInformation, 2001 (as a % of respondents)

Information about a particular illness or condition

93%

Information about nutrition, exercise, or weight control

65%

Information about prescription drugs

64%

Gathered information before visiting a doctor

55%

Information about alternative or experimental treatments ormedicines

48%

Information about a mental health issue like depression oranxiety

39%

Information about a sensitive health topic that is difficult to talkabout

33%

Information about a particular doctor or hospital

32%

Diagnosed or treated a medical condition on own, withoutconsulting your doctor

18%

Source: Pew Internet & American Life Project, May 2002



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Because so many consumers go online looking for specific informationrelated to a disease or medical condition, it should come as little surprisethat many pharmaceutical companies have attempted to address this needby establishing disease-specific websites.

As for those consumers who do visit pharmaceutical companies’ brandedwebsites, an early 2002 survey conducted by Johnston, Zabor, McManusfound that nearly three-quarters of respondents identified themselves aspatients, while 41% of respondents said that they were not currently beingtreated by the drug that was on the branded website that they visited.

A total of 6,709 visitors to pharmaceutical companies’ websites werequestioned in this survey.

Reasons Why US Internet Users Go Online for MedicalAdvice, 2001 (as a % of respondents)

Know someone who has been diagnosed with a medicalcondition

81%

User has been diagnosed with a new health problem him/herself

58%

User has been prescribed a new medication or course oftreatment

56%

User is dealing with an ongoing medical condition such asdiabetes or high blood pressure

47%

User has unanswered questions after a doctor's visit

47%

User has decided to change diet or exercise habits

46%

User is a caregiver to someone else

38%



Background of Visitors to Pharmaceutical BrandWebsites, 2002 (as a % of respondents)

Patients

73%

Not currently being treated by website’s brand

41%

Note: n=6,709Source: Johnston, Zabor, McManus, Inc., 2002



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The study went on to find that among those website features that usersfound to be most valuable, quality of content was the leading feature.Website layout/design and navigational ease were lower on the list, whilethe speed with which visitors could navigate the website was the second-most important feature to users.

Similar results were found in the Pew Internet and American Life Projectstudy, which looked at health care websites in general. According to thissurvey, ease of website navigation and trust in website content were amongthose features that would bring them back to specific health-related websites.

Ease ofnavigation

13%

Layout and designof website19%

Speed of navigation31%

Quality of content37%

Features of Pharmaceutical Brand Websites that AreMost Valued by Website Visitors, 2002 (as a % ofrespondents)

Note: n=6,709Source: Johnston, Zabor, McManus, Inc., 2002


Reasons Why US Internet Users Return toHealth-Related Websites, 2001 (as a % of respondents)

Website is easy to navigate

30%

Trust advice and information on website

25%

Website specializes in a particular health condition of interest

14%

Website was recommended by friends or family

13%

Like certain features of website

7%

Website was recommended by doctor or other health careprovider

6%




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As for those features that drive consumers away from health-relatedwebsites, any appearance of commercialism is the biggest turn-off for 47%of survey respondents. Concerns about the quality of a website’sinformation are important as well, as consumers like to know the sourceand publication date of the information that they are receiving.

In the Vividence Corporation’s study of consumers’ use of pharmaceuticalcompanies’ websites, it was also discovered that website visitors aresignificantly more likely to buy brand-name drugs after having visited apharmaceutical company’s website than they would prior to a website visit.

Reasons Why US Internet Users Turn Away from aHealth Information Website, 2001 (as a % ofrespondents)

Website is too commercial

47%

User could not determine the source of information

42%

User could not determine when information was last updated

37%

Website lacked endorsement of trusted independentorganization

30%

Website appeared sloppy or unprofessional

29%

Website contained information known to be wrong

26%

Information disagreed with doctor's own advice

20%



Likelihood of US Online Consumers to RequestBrand-Name Drugs After Visiting Drug-Specific Sites,December 2001 (as a % of respondents)

Before visiting site 38%

After visiting site 72%




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Among those features that would bring consumers back to a drugmanufacturer’s website, consumers were most interested in seeing updatedinformation about either the drug they were inquiring about or thecondition itself.

The study’s authors went on to report that providing general informationabout the condition being treated is important to consumers as well. Morespecifically, pharmaceutical companies are advised to build credibility andtrust with their website visitors by giving consumers information abouthow the specific medication being offered fits into the overall landscape ofpotential treatments.

Reasons Why US Consumers Would Return to aPrescription Drug Website, 2001 (as a % ofrespondents)

Detailed, up-to-date information on the drug

75%

Detailed, up-to-date information on the condition

71%

Promotions and offers

38%

Newsletter about the treatment of the condition

34%

Advice from experts

32%

Guides for caregivers

23%

Patient support programs

20%

Patient testimonials

14%

Community features like message boards or chat rooms

13%

Prescription/appointment reminder feature

12%

Tools to find a doctor

8%

Other

5%




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Other information resources that consumers said they would like to see ona prescription drug website are as follows:

■ Diagnostic checklists■ Description of side effects■ What not to eat or drink when taking the offered drug■ What drugs not to take while using the offered drug■ What conditions preclude use of the drug■ Expected prognosis (how long until user will feel better)■ Expected number of doctor visits■ Alternative treatments (including nutrition, exercise, meditation)■ How the treatment compares to other treatments■ An easy way to share or forward information found on the website

Cap Gemini Ernst & Young found in early 2001 that more than 40% of thepharmaceutical companies it surveyed were in the process of developingdisease-specific channels, upon which both physicians and patients would beable to collaborate on managing information relating to specific conditions.

Biogen, for example, has developed two separate websites related to itsmultiple sclerosis medication, Avonex. The first is a branded website,Avonex.com, while the second is a non-branded website calledMSActiveSource.com. According to Biogen, its community website has anactive membership of 30,000 people as of early 2002.

In preparing its community-based website, Biogen surveyed 191 MSpatients, finding that most wanted access to information related to theirdisease, including secondary sources that provided scientific information.

Although Biogen originally expected that it would take three years to see apositive return on its investment, the company has reported that its combinedwebsite initiatives have produced a positive ROI within eight months.

Another example of a condition-specific website that has been developedby a pharmaceutical company is Schering/Key’s freebreather.com.

Online Information Sought by Multiple SclerosisPatients in the US, 2001 (as a % of respondents)

Research and clinical trial information 76%

Disease management tools 70%

Information on therapy options 68%

Scientific information 63%

Note: n=191 MS patientsSource: Pharmexec.com, Biogen, 2001



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Targeted at asthma sufferers as well as parents of children with asthma, thewebsite was launched in August of 2001 with the aim of providing visitorswith information that helps them to better-manage their condition. Thewebsite also provides pollen counts and weather conditions by zip code, andupdates visitors with current medical information and reports on asthma.

What is most interesting, however, is the fact that Schering’s name doesnot appear on the website, which instead lists as many as 23 drugs from awide variety of other firms.


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B. Physicians OnlineAccording to a September 2001 Harris Interactive/Boston Consulting Groupsurvey of 400 US physicians, 89% of respondents said that they use theinternet on a regular basis. The study went on to find that physicians spendan average of 8 hours online per week, with approximately three hoursdedicated to medical activities. By comparison, eMarketer estimates that theaverage internet user in the United States spends 5.1 hours online per week.

A separate Fulcrum Analytics study that was released in February of2002 found that three-quarters of American physicians had internet accessat work. Of those physicians that have internet access, 60% of respondentssaid that they rely upon a dial-up internet connection.

When it comes to tracking the online habits of physicians, the HarrisInteractive/Boston Consulting Group survey discovered that most doctorscontinue to use the internet as an information and communications resourceto research clinical matters or read information from medical journals.

Although physicians were found to be much more loyal visitors tohealth-related websites than their consumer counterparts, doctors have notyet embraced many of the interactive capabilities of the internet for theirown practices. Security concerns and uncertainty about the cost/benefits ofusing interactive tools were the leading reasons why physicians said thatthey had not adopted internet-based solutions such as electronicprescribing or electronic medical records.

According to the Fulcrum Analytics survey, just over half of physicians whoreferred to themselves as “professional” internet users had a website for theirpractice, while 34% of all physicians said that their practice had a website.

Online Activities of US Physicians, 2001 (as a % ofrespondents)

Research clinical matters*

90%

Read journal articles

78%

Communicate with colleagues

61%

Complete continuing medical education

45%

Attend online conferences

31%

Note: n=356; *including information on treatments and the latest medicalnewsSource: Boston Consulting Group (BCG), September 2001



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Although 61% of physicians who did have a website provided online e-mail contact information to their patients, the vast majority ofphysicians’ websites were nothing more than static brochure-ware withalmost no interactive capabilities. A further 59% of respondents said thattheir website provided only general health information to their visitors.

Despite this conservative approach to internet technology, several physicianshave indicated their plans to adopt interactive capabilities such as electronicmedical records and electronic prescribing over the mid- to long-term.

“Doctors have been steadily adding the internet totheir medical bag of tools.”– Robert Leitman, Harris Interactive

Harris Interactive found that 22% of physicians were already using electronicprescribing tools in early 2001, with an additional 20% of its surveyrespondents indicating that they plan to adopt such capabilities by mid-2002.

US Physicians with a Website for their Practice, 2002(as a % of respondents)

Professional users 52%

Daily users 40%

All physicians 34%

Source: Fulcrum Analytics, Deloitte Research, 2002


Online Patient-Care Tools Used by US Doctors'Practices, February 2001

Online communications with patients

26%

13%

Electronic medical records

22%

20%

Electronic prescribing

11%

20%

Remote disease monitoring

5%

9%

Currently use Plan to use within 18 months

Source: Boston Consulting Group, Harris Interactive, 2001



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By contrast, the Fulcrum Analytics study found that most physicians werenot making electronic prescriptions in early 2002, although 40% ofrespondents to its survey said that they did have an interest in using such asystem in the future, if it were designed and managed properly.

And in a separate estimate from Forrester Research, analysts therebelieve that less than 3% of medical practices in the United States are usingthe internet to arrange prescription refills in early 2002.

According to the Boston Consulting Group study, about one-third ofphysicians are reluctant to adopt e-prescribing solutions because of theirhigh cost and unclear benefits. The survey went on to find that 19% ofphysicians believe that electronic prescribing would detract from thedoctor-patient relationship.

On the other hand, it was found that 35% of those physicians who hadadopted an e-prescribing solution had done so because it improved theiroverall efficiency. Another 23% said that they had done so in order todeliver better care to their patients.

As for the impact of e-prescribing solutions, 45% of physicians said thatthey had seen a major improvement in formulary compliance, and anadditional 36% of respondents said that e-prescribing solutions had had amajor impact upon their practice’s efficiency. A further 33% of physicianssaid that e-prescriptions had positively impacted the quality of patient care.

It is interesting to note that although electronic prescribing has beenslow to take off in North America, other regions of the world have alreadybeen using e-prescriptions for more than two years.

Reasons Why US Physicians Have Adopted ElectronicPrescription Capabilities, 2001 (as a % of respondentsusing this online tool)

To improve overall efficiency

35%

To deliver better care

23%

To meet the requrements of health care plans

16%

To improve formulary compliance

9%

Source: Boston Consulting Group (BCG), September 2001



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For example, almost 90% of primary care physicians in the UK havereported that they were often making e-prescriptions in late 2000,compared to 52% of their peers in New Zealand and 44% of primary carephysicians in Australia. By comparison, just 9% of primary care physiciansin the United States were able to make the same claim.

Turning to the broader question of how the internet has affected thephysician-patient relationship in the United States, the Kaiser FamilyFoundation has discovered that American physicians and their patientsquite frequently discuss diseases or treatments that patients have readabout online.

Doctors that "Often" Make Electronic DrugPrescriptions for Selected Countries Worldwide, 2000(as a % of primary care physicians and specialists)

UK

87%

16%

New Zealand

52%

14%

Australia

44%

12%

US

9%

6%

Canada

8%

11%

Primary care Specialists

Source: Harris Interactive, Commonwealth Fund, Harvard School of PublicHealth, October 2001



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For the most part, physicians have reported that they view this patientinterest as a positive development, because it often results in a more activeengagement on the part of patients in their own medical treatment.

On the other hand, it is interesting to note that internet-based informationhas had a relatively low impact upon physicians’ decisions to prescribedrugs, as most doctors feel that they continue to hold the final decision indetermining the best medication for their patients.

Respondents to the Harris Interactive/Boston Consulting Group surveyindicated that the internet has a had either a minor impact or none at allupon their ultimate decisions to prescribe drugs.

As for the patients’ perspective of the online relationship with their doctors,Jupiter Media Metrix found in its survey of 3,047 chronically-ill patients,that 71% of respondents would like their physicians to be able to renewtheir prescriptions online.

Not sure1%Major impact

13%

No impact at all26%

Minor impact60%

Impact of Internet-Based Information Upon USPhysicians' Decisions to Prescribe Drugs, 2001 (as a %of respondents)

Note: n=356Source: Boston Consulting Group (BCG), September 2001


Frequency with Which US Physicians Speak withPatients About Specific Diseases or Treatments thatPatients Have Heard About Online, 2001

Very often 19%

Somewhat often 41%

Rarely 31%

Never 6%

Source: Kaiser Family Foundation, March 2002



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Rather than have the internet replace the person-to-person contactbetween patients and doctors, most patients in the Jupiter survey indicatedtheir preference for having the internet streamline their interaction withphysicians’ administrative staff and front-office operations.

On the other hand, in a separate survey conducted by Datamonitor, theresearch firm found that 17% of respondents to its survey said that theywould like their doctors to recommend internet-based sources ofinformation. A further 16% of the patients surveyed said that they wouldlike their physicians to be able to send their prescription renewals directlyto their pharmacy.

How US Patients Would Like to Interact with theirPhysicians Online, 2002

Ask questions where no visit is necessary 77%

Fix appointments 71%

Get new prescriptions for medication (renewals) 71%

Receive results of medical tests 70%

None of these 6%

Don't know 4%

Note: Base: all adults who are onlineSource: Harris Interactive, April 2002


Ways in Which US Consumers Would Like the Internetto Have a Role in the Doctor-Patient Relationship,2001

Would like doctor to suggest information on the internet

17%

Would like doctor to use the internet to send prescriptiondirectly to pharmacy

16%

Would like to be able to schedule doctor's appointment online

15%

Would like to discuss information found on internet with doctor

14%

Would like to ask doctor about medication found online

14%

None/do not want the internet to have a role

24%

Source: Datamonitor, October 2001



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Despite the internet’s marginal influence upon prescription decisions,pharmaceutical companies’ websites have nonetheless become an effectivechannel for communicating with both physicians and consumers.

For example, Fulcrum Analytics has found that in early 2002, 32% ofphysicians have visited pharmaceutical companies’ corporate websites,with nearly two-thirds of physicians using such websites to learn aboutnew drugs, and half of all physicians visiting them as a means of learninghow to prescribe new drugs.

A separate study conducted by Johnston, Zabor, McManus found that fewphysicians would actually begin to prescribe a pharmaceutical brand afterhaving visited a particular brand’s website. However, the survey does confirmthat such websites are useful in increasing physicians’ brand awareness anddriving future discussion or learning about a specific medication.

In addition to their use of PC-based internet connections, a growingnumber of physicians are increasingly turning to handheld computingdevices as a means of both organizing their daily schedules and researchingthe latest medical news.

Reasons US Physicians Visit Pharmaceutical CompanyWebsites, 2001 (as a % of respondents)

Learn about new drugs 61%

Learn how to prescribe new drugs 51%

Note: n=384Source: Fulcrum Analytics, Deloitte Research, January 2002


Health Care Providers' Course of Action After HavingVisited a Pharmaceutical Brand's Website, 2002 (as a% of respondents)

Will search for more information on the brand

34%

Will discuss brand with colleagues

21%

Will discuss brand with patients

15%

Will begin prescribing brand

10%

Source: Johnston, Zabor, McManus, Inc., March 2002



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Personal digital assistants (PDAs) with always-on internet access have justarrived on the market in early 2002, opening the door to an even moreconvenient and effective way for physicians to access medical informationof all kinds via the internet.

Harris Interactive estimates that the percentage of American physiciansusing handheld devices has almost doubled between 1999 and 2001, risingto 26% of all physicians last year. PDA penetration rates are even higheramong younger physicians, who are also more comfortable with using theinternet to access information that is related to their work.

Fulcrum Analytics has found that 84% of physicians who own PDAs haveprimarily used their devices so far for managing their schedules. However,a significant 57% of respondents to its survey said that they already usetheir PDAs to access information from drug databases.

In another study conducted by PDA-software vendor AvantGo, 33% of the3,482 physicians it surveyed wanted to be able to write prescriptions viatheir handheld devices. However, Fulcrum Analytics has found that just 6%of US physicians were writing electronic prescriptions via handheld devicesin 2001, up from 4% of physicians in 2000.

Percent of US Physicians Using Handheld Devices,1999 & 2001

1999 15%

2001 26%

Source: Harris Interactive, 2001


How US Physicians Use Their PDA’s, 2001 (as a % ofrespondents who currently own a PDA)

Maintain their personal schedules 84%

Manage their professional scheduling 67%

Access drug databases 57%

Note: n=360Source: Fulcrum Analytics, Deloitte Research, January 2002



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The AvantGo study went on to find that 86% of physicians thought thatpharmaceutical companies could dramatically increase the value of theirmobile services by providing wireless access to the latest information onnew drugs or clinical trial results.

And finally, in a separate forecast by WR Hembrecht & Co., the investmentbank predicts that more than 20% of US physicians will be using handheldcomputers for clinical transactions by 2004.

Functions Physicians Worldwide Would Like to Haveon Their PDAs, 2002 (as a % of respondents)

Access medical reference sites

48%

Write and transmit prescriptions

33%

Access pharmaceutical manufacturers websites

28%

Keep records of clinical trials

27%

Note: n=3,482Source: AvantGo, April 2002



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C. Selling Pharmaceutical Products OnlineJust as consumers have become more comfortable with using the internet asan information resource, they have over the past few years become muchmore comfortable spending their money online as well. eMarketer predictsthat consumers in the United States will spend a total of $75 billion oninternet-based purchases during 2002, up from $50.9 billion in 2001.

By comparison, Jupiter Media Metrix predicts that US business-to-consumer e-commerce revenues totaled $30 billion in 2001, and will reach$86.8 billion by 2005.

Breaking down its forecast of business-to-consumer e-commerce sales,Jupiter estimates that the US online health care market generated revenuesof approximately $400 million during 2001. By Jupiter’s definition, theonline health care market includes sales of not only prescription drugs, butpersonal care products as well.

Total US E-Commerce B2C Revenues, 2000-2005 (inbillions)

2000* $40.7

2001* $50.9

2002 $75.0

2003 $100.3

2004 $126.0

2005 $155.6

Note: *eMarketer's year 2000 and 2001 baselines are derived from USDepartment of Commerce figures and eMarketer travel estimates. (USDepartment of Commerce does not include travel in its B2C figures); 2001figure includes DOC revised estimate for Q4 2001Source: eMarketer, June 2002


US B2C E-Commerce Revenues, 2000-2005 (in billions)

2000 $24.1

2001 $30.0

2002 $39.3

2003 $55.0

2004 $70.2

2005 $86.8

Note: travel not includedSource: Jupiter Media Metrix, Inc., October 2001



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Jupiter also predicts that by 2006, online health care sales will increase to $23billion, while web-influenced health care spending that occurs via both onlineand offline channels will soar to $60 billion within the next four years.

In its examination of pharmacy sales, the National Association of ChainDrug Stores (NACDS) has produced a preliminary estimate that retailprescription drug sales in the United States reached $165.2 billion in 2001,with traditional chain drug stores expected to account for just over 40% ofall sales. Independent drug stores were forecast to account for 20.7% oftotal sales, while mail order sales were expected to make up a significant16.8% of sales.

Looking to the future of internet-based prescription drug sales, it is likelythat online sales will be most competitive with mail order drug sales,although retail drug purchases should see some migration online as well.

“Being small, lightweight and valuable, most drugsare ideal for all types of distance selling, especiallyelectronic commerce.”– Mr. Benito Arrunada, Universitat Pompeu Fabra

As Mr. Arrunada goes on to point out, online drug sales are best suited forthose medications that treat long-term, chronic illnesses, for which patientscan estimate in advance their demand for medication.

On the other hand, it is expected that physicians and consumers will findit convenient to place new prescription orders or refill short-termprescriptions via the internet, and then pick up prescriptions at their localretail store or pharmacy.

Massmerchant

9.3%Supermarket

12.1%

Mail order16.8%

Independentdrug stores

20.7%

Traditional chaindrug stores41.2%

Breakdown of Projected US Retail Prescription DrugSales, by Channel, 2001

Source: National Association of Chain Drug Stores, 2001



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In the United States, three of the largest pharmaceutical benefit managers(PBMs) have come together to form RxHub, an internet-based network thatis designed to help standardize electronic prescriptions and thetransmission of information between physicians, PBMs, health care plans,and pharmacies.

RxHub’s backers include the three largest PBMs in the United States–AdvancePCS, Express Scripts and MerckMedco – who collectively share125 million patients and account for more than three-quarters of allinsured retail prescriptions in the United States. The three companies areexpected to spend as much as $60 million over the next few years to buildtheir network.

As of May 2002, the non-profit hub was in the process of obtainingindustry feedback on its electronic prescribing technology specifications,which it plans to publish during the latter part of this year.

Although pharmacies have expressed their concern over the neutrality ofRxHub, whose primary backers also happen to operate significant mailorder operations, RxHub has been working to assure network participantsof its neutrality, by emphasizing that patients will continue to be able todetermine how their prescriptions are ultimately fulfilled.

When it comes to gauging the e-commerce capabilities of independentpharmacies, the National Community Pharmacists Association found that76% of independent pharmacies in the United States had an internetconnection in 2000, while 47% of the companies it surveyed operated theirown website. Of those pharmacies that had a website, 49% said that theywere able to conduct e-commerce.

In a broader study that was conducted by Mr. Arrunada of the UniversitatPompeu Fabra in Barcelona, 113 international online pharmacies wereanalyzed during February and March of 2001. It was found that themajority of the surveyed websites were pure-play internet companies, withjust 5.3% having links to pharmaceutical benefit managers.

Internet Capabilities of Independent Pharmacies inthe US, 2000

Internet access 76%

E-Mail access 70%

Website 47%

Source: National Community Pharmacists Association, 2001



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On average, the websites had been in operation for 13.7 months, with theoldest website operating for 7 years. Almost all online pharmacies providedprice lists, with nearly three-quarters of the group indicating that they wereable to sell to foreign markets.

Just under one-third carried a full range of drugs, while more than one-third carried only a single product. On average, the online pharmaciesthat were surveyed carried 7.26 drugs, with 14.2% of the sample groupselling products other than medication.

The average express delivery price for pharmaceutical products fromthese websites was $17.25, with delivery costs ranging from $7 to $26.

Service Capabilities of Online Pharmacies, 2001 (as a% of surveyed websites)

Provide price lists 95.6%

Sell to foreign markets 70.2%

Have telephone assistance lines 52.2%

Provide access to a pharmacist 34.5%

Require a doctor's prescription 30.1%

Have VIPPS, Verisign or HON certification 22.0%

Sell generic drugs 14.2%

Note: n=113 online pharmaciesSource: Universitat Pompeu Fabra - Spain, 2001


30+31.9%

2 to 2934.5%

133.6%

Number of Drugs Sold by Online Pharmacies, 2001 (asa % of surveyed websites)

Note: n=113 online pharmaciesSource: Universitat Pompeu Fabra - Spain, 2001



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“Drug sites litter the web, but most fail to supportconsumers’ purchase decisions.”– Elizabeth W. Boehm, Forrester Research

As for online pharmacies’ ability to compete with traditional, offlinepharmacies, a Kiplinger’s Personal Finance study found in mid-2001 thatafter shopping around on six different online pharmacy websites – CVS,Drugstore.com, Eckerd.com, Familymeds.com, Prescriptiononline.com andWalgreens – online prices for a basket of prescription medications wereconsistently 20% to 30% lower than the lowest offline price.

Although no single website always had the lowest price, the study foundthat by shopping around, consumers could find a better price bypurchasing their medication online.

One of the best known online pharmacies that has survived the highs andlows of the dot-com boom is Drugstore.com. Sales via Drugstore.com were$43.9 million during the first quarter of 2002, and were expected to reach$46 million in its second quarter, ended June 2002.

Drugstore.com has forecast total sales of $200 million for 2002, of whichabout 55% will come from the sale of pharmaceutical products.

After acquiring 718,000 new customers in 2001, Drugstore.com estimatesthat by the beginning of 2002, it had approximately 2.4 million customers.The company plans to add 800,000 to 900,000 new customers this year,and has articulated a strategy that focuses upon higher-value customers, asopposed to bargain hunters.

As of May 2002, Drugstore.com’s brick and mortar partner Rite Aid soldits remaining shares in the company, saying that it preferred to focus uponits core retail business.

E-Business Profile: Net Sales via Drugstore.com, 2000& 2001 (in millions)

2000 $110.0

2001 $145.3

Source: eMarketer, Drugstore.com, 2002


Methodology 5




Index of Charts 81


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Index of ChartsRevised US B2B E-Commerce Forecast 10

Value of US Chemical Manufacturers’ E-Commerce Trade 11

E-Commerce Trade (including EDI) As a Percent of Total US Chemicals IndustryTrade 11

E-Commerce Trade (including EDI) As a Percent of Total US Drugs and DruggistSundries Wholesale Trade 12

Value of US Wholesale Drugs and Druggist Sundries’ E-Commerce Trade(including EDI) 12

Pharmaceutical Companies’ Use of Electronic Channels for ProcessingPurchasing Transactions 14

Leading ERP-Based Procurement Systems Used by PharmaceuticalCompanies 15

Pharmaceutical Companies Authorizing Payment via Procurement Cards, byProduct 15

Average Cost Savings Achieved via E-Procurement by Chemical andPharmaceutical Companies 16

Internet-Based Purchasing Activity of Leading Chemical and PharmaceuticalCompanies 16

E-Business Profile: Comparison of Bristol-Myers Squibb’s Traditional andOnline Procurement Capabilities 17

Worldwide IT Spending by Pharmaceutical Companies 18

IT Spending in the US Pharmaceutical Sector 18

Breakdown of US Pharmaceutical Industry IT Spending, by Category 19

US Pharmaceutical Companies’ Spending on IT Services as a Portion of ITBudgets 19

Percent of Biotechnology and Pharmaceutical Companies’ Revenues Spent on IT 20

Frequency of Biotechnology and Pharmaceutical Companies’ IT SpendingEvaluation 20

Organization of Pharmaceutical Companies’ E-Business StrategyImplementation 21

Pharmaceutical Companies’ Assessment of their E-Business Development 22

Area of Operations that Pharmaceutical Companies Expect to be MostImpacted by E-Business 22

Anticipated Impact of E-Business upon Pharmaceutical Companies’Procurement Operations 23

Anticipated Impact of E-Business upon Pharmaceutical Companies’ LogisticsOperations 23

Leading Barriers to Pharmaceutical Companies’ E-Business StrategyImplementation 24

Percent of Pharmaceutical Companies with CRM Projects Underway orCompleted 25

Pharmaceutical Companies’ Interest and Success with CRM 25

E-Business Profile: Online Sales Activity via VaccineShoppe.com 27

E-Business Profile: ROI for Johnson & Johnson-Merck’s Pepcid CompleteCollaborative Extranet 27

US Online Advertising Spending 30


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Index of ChartsTop Ten Product Categories in the US Based on Advertising Spending* 31

Percent of Company Sales Devoted to Advertising and Promotion in the US, byIndustry 32

Breakdown of Pharmaceutical Promotion Spending 33

Breakdown of US Pharmaceutical Industry Promotion Spending 34

Breakdown of US Pharmaceutical Industry Promotional Spending 34

US Pharmaceutical Industry Direct-to-Consumer Advertising, by Media Type 35

US Consumers Who Had Seen or Heard an Ad for Prescription Medication 36

Percent of US Consumers Learning About Pharmaceutical Brands, byAdvertising Channel 36

Top 15 Advertised Prescription Drugs 37

Top US Online Advertising Spending, by Industry 38

Pharmaceutical Companies’ Online Spending as a Percent of DTC* Budgets 39

Channels through Which Pharmaceutical Companies Market to ConsumersOnline 39

Pharmaceutical Companies’ Expectations of How the Internet Will Change theWay They Market to Consumers 40

How Pharmaceutical Companies Measure their ROI for Online Advertising 41

Top Pharmaceutical Advertisers Online 42

Popularity of General Medical Information Sites among US Online Consumers 43

Types of Health Care Websites Where Consumers Are Most Likely to Read orLook at Advertising 44

Estimated Advertising Cost to Drive a Single Consumer Request for a SpecificDrug, by Medium 45

Percent of US Consumers Requesting Specific Drugs from their Physician as aResult of Direct Advertising, by Medium 45

Percent of Consumers Intending to Request a Prescription Drug After HavingBeen Driven to a Brand’s Website, by DTC* Advertising Channel 46

Lift in Consumer Brand Awareness and Message Association After OneExposure to VANIQA Online Ads 47

Lift in Consumer Purchase Intent After One Exposure to VANIQA Online Ads, byAd Format 47

Percent of US Physicians that Are Likely to Fulfill Consumer Requests forBrand-Name Prescription Drugs, by Drug Type 48

Estimated Cost of an E-Detailing Session vs. a Traditional Detailing Session 49

Average Time Spent by Physicians per E-Detail Session for a ProductPresentation of Naftin 50

Percent Increase in Number of Prescriptions Issued for Naftin by PhysiciansWho Participated in E-Detailing Sessions 50

US Physicians’ Responses to Aptilon Health’s E-Detailing Solution 51

Timing of E-Detailing Sessions among US Physicians 51


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Index of ChartsInternet Users in G-7 Countries 54

Where US Online Consumers Look for Information about Medical Symptoms 55

Percent of American Internet Users Who Have Gone Online to Seek HealthCare Information 55

Types of Health Care Websites Visited by Online Health Information Seekers inSelected Countries Worldwide 56

Percent of Internet Users Who Have Looked for Health Information on theInternet for Selected Countries Worldwide 56

US Consumers’ Most Trusted Websites for Accurate Health Care Information 57

Frequency with Which US Online Consumers Use the Internet to Seek HealthInformation 58

Reasons Why US Internet Users Go Online for Health Information 59

Reasons Why US Internet Users Go Online for Medical Advice 60

Background of Visitors to Pharmaceutical Brand Websites 60

Features of Pharmaceutical Brand Websites that Are Most Valued by WebsiteVisitors 61

Reasons Why US Internet Users Return to Health-Related Websites 61

Reasons Why US Internet Users Turn Away from a Health Information Website 62

Likelihood of US Online Consumers to Request Brand-Name Drugs AfterVisiting Drug-Specific Sites 62

Reasons Why US Consumers Would Return to a Prescription Drug Website 63

Online Information Sought by Multiple Sclerosis Patients in the US 64

Online Activities of US Physicians 66

US Physicians with a Website for their Practice 67

Online Patient-Care Tools Used by US Doctors’ Practices 67

Reasons Why US Physicians Have Adopted Electronic Prescription Capabilities 68

Doctors that “Often” Make Electronic Drug Prescriptions for SelectedCountries Worldwide 69

Impact of Internet-Based Information Upon US Physicians’ Decisions toPrescribe Drugs 70

Frequency with Which US Physicians Speak with Patients About SpecificDiseases or Treatments that Patients Have Heard About Online 70

How US Patients Would Like to Interact with their Physicians Online 71

Ways in Which US Consumers Would Like the Internet to Have a Role in theDoctor-Patient Relationship 71

Reasons US Physicians Visit Pharmaceutical Company Websites 72

Health Care Providers’ Course of Action After Having Visited a PharmaceuticalBrand’s Website 72

Percent of US Physicians Using Handheld Devices 73

How US Physicians Use Their PDA’s 73

Functions Physicians Worldwide Would Like to Have on Their PDAs 74

Total US E-Commerce B2C Revenues 75


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Index of ChartsUS B2C E-Commerce Revenues 75

Breakdown of Projected US Retail Prescription Drug Sales, by Channel 76

Internet Capabilities of Independent Pharmacies in the US 77

Service Capabilities of Online Pharmacies 78

Number of Drugs Sold by Online Pharmacies 78

E-Business Profile: Net Sales via Drugstore.com 79


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Also Available from eMarketer

Asia Online: Demographics, Infrastructure, Usage Patternsand eCommerce Trends

■ Economy & infrastructure■ Internet users & demographics■ eCommerce, E-Finance & E-Advertising■ Country profiles

ASPs■ Market size & growth■ Industry leaders■ Usage patterns■ Customer satisfaction

Brazil Online: Demographics, Usage Patterns and E-CommerceTrends

■ Economy & infrastructure■ Internet users & demographics■ E-Commerce, E-Finance & E-Advertising

Broadband■ Users by access method (dial-up, fiber, DSL, cable, satellite,

wireless)■ Residential and business usage■ Access revenues■ User demographics■ Country profiles

CRM■ Market size & growth■ Leading vendors■ Budgeting & implementation

eBanking■ Online banking around the world (US, Europe, Asia)■ Mobile banking■ Electronic bill presentment and payment

eCanada■ Economy & infrastructure■ Internet users & demographics■ E-Commerce, E-Finance & E-Advertising

eCommerce: B2B■ E-Commerce: B2B revenues around the world, country by

country■ E-Commerce: B2B by industry■ Internet penetration among businesses■ Online marketplaces, auctions and exchanges

eCommerce: B2C■ E-Commerce: B2C revenues worldwide■ Top B2C categories■ Online shoppers, buying frequency and size of transactions■ E-Consumer attitudes and behaviors


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North America Online■ User demographics worldwide■ Age, gender and race■ Income, education and occupation■ Usage patterns

eGlobal■ Internet infrastructure, by region■ Users and usage, by region■ E-Demographics, by region■ E-Commerce, by region

eHealth■ Consumer demographics and attitudes■ Healthcare personnel, demographics and usage■ B2C spending■ B2B spending

eInvesting■ Online brokerages■ Online mutual funds■ Online asset management■ Online investment advice

eMail Marketing■ E-Mail marketing revenues worldwide■ E-Mail users and user demographics■ Permission, opt-in and opt-out■ E-Mail marketing techniques and strategies

ePoland■ Economy & infrastructure■ Internet users & demographics■ E-Commerce, E-Finance & E-Advertising

ePrivacy & Security■ Consumer attitudes & behavior toward online privacy■ Online fraud■ Credit card security■ Corporate security (hacking and denial-of-service attacks)■ Virus attacks

Europe Online■ Economy & infrastructure■ Internet users & demographics■ E-Commerce, E-Finance & E-Advertising■ Country profiles

eWireless■ Mobile Internet use around the world, country by country■ M-Commerce■ M-Finance■ M-Advertising


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Interactive Television■ User forecast■ Revenue forecast■ Business attitudes & behavior■ User attitudes & behavior

Japan Online: Demographics, Usage Patterns and E-CommerceTrends

■ Economy & infrastructure■ Internet users & demographics■ E-Commerce, E-Finance & E-Advertising

Latin America Online: Demographics, Infrastructure, UsagePatterns and E-Commerce Trends

■ Economy & infrastructure■ Internet users & demographics■ E-Commerce, E-Finance & E-Advertising■ Country profiles

Marketing Online to Kids & Teens■ Demographics■ Advertising & marketing■ E-Commerce■ Special considerations

Online Advertising: Statistics, Strategies, Tools and Trends■ eAdvertising revenues worldwide■ Spending by ad format (banner ads, sponsorships, e-mail, etc.)■ Spending by industry category■ Measurements and standards (click-through rates, CPMs, ROI)

Online Marketing■ Viral marketing■ Direct marketing vs. Branding■ Search engine optimization■ Affiliate programs■ Classifieds■ Coupons

For more information, or to order a copy, contact eMarketer at:

Phone: 212.677.6300 Fax: 212.777.1172

eMail: [email protected] Web: www.emarketer.com

For media inquiries:Terry Chabrowe, [email protected]

For inquiries about this report or other eMarketer reports:Nick Fainelli, New Business Development, [email protected]


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