Pharma Insights Survey Whitepaper June 2010

2010 Pharma Insights A White Paper on Current Trends & Challenges of the Pharmaceutical Industry
Results of an Industry Survey
Published by Cegedim Relationship Management Authors: Angela Miccoli & Drew Bustos
June 2010
Table of Contents Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Methodology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Detailed Summary of Findings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Top Objectives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Primary and Secondary Customers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Drivers of Technology and Business Model Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Changes to Business Model . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Social Media . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 What is Keeping You Up at Night? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Future Issues of Importance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 SaaS / Cloud Computing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 Vendor Selection Criteria . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Most Strategically Important BRIC Country . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Emerging Market Strategy Direction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 Sample Demographics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 Recommended Reading . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
2 www.cegedim.com/rm..............................................................................................................................
Introduction Cegedem Relationship Management recently conducted an opinion survey among decision makers in the pharmaceutical industry in the Americas regarding current trends and issues. The survey covered the following topics: Corporate Objectives for 2010 Prioritization of Customers and Markets Drivers of Business Model Changes and Technology Anticipated Changes to Current Business Models Usage of Social Media Areas of Concern
Methodology The study was conducted via an online survey sent to pharmaceutical executives in North and South America. Respondents completed a web-based questionnaire and submitted their responses to Cegedim Relationship Management in May 2010. A total of 211 completed questionnaires were received. Responses were analyzed by GreyHome Marketing and Research Consulting. Percentages are subject to a 6.7 point margin of error and were tested for significance at the proven 95% confidence level using Decision Analysts STATS tool. Significant differences between attributes are indicated in almost all instances by changes in color on the bar charts presented in this report. Bars of the same color in the charts represent response levels which are not statistically different from each other.
Executive Summary The Life Sciences business model is rapidly evolving, driven by extreme competitive pressures as well as economic and political trends. Doctors are less receptive to sales calls; costs associated with a traditional large primary-care sales force are skyrocketing; new regulations require meticulous tracking of marketing spend; and securing global market access requires buy-in from a complex matrix of stakeholders ranging from prescribers to managed care organizations to government officials. As such, it comes as little surprise that the No. 1 most pressing issue keeping pharmaceutical executives up at night is the changing commercial business model, according to Cegedim Relationship Managements 2010 Pharma Insights survey. In May 2010, 211 executives from leading pharmaceutical companies completed Cegedim Relationship Managements online survey to provide a glimpse into the evolution of todays Life Sciences companies and the future of global pharma. Here are some highlights of the results: New product innovation and profitability growth are the most important business objectives for respondents in 2010. Most respondents view prescribers and patients as their most important primary and secondary customer groups. Executive management is the key driver of technology decision-making. The strategic/business planning team is the most common driver of business model and process change. The three biggest changes to the current business model that respondents reported seeing are increased focus in market access strategies, primary sales force realignment and increased focus on managed care. Respondents are aware of and use social media, but it generally does not receive a large appropriation of their marketing budgets. Social media is primarily used for external applications like marketing and PR, but is also used to a lesser extent for internal communications and human resources. Changing business models, pipeline growth and the consequences of government regulation are key matters of concern. SaaS/cloud computing only seems to be relevant to a relatively small number of respondents, and many respondents do not appear to understand the topic. When selecting vendors, experience trumps all other factors, including price, customer service and technological flexibility.
Detailed Summary of Findings Top Objectives Respondents were first asked to select their top three business objectives for 2010. Two-thirds (67%) of the respondents chose New Product Innovation as one of their top three objectives. One-half of the respondents (51%) selected profitability growth as a top objective. Growth in expanding markets, market share and shareholder value are relatively even (and relatively even in importance) at 38%, 29% and 25% selection respectively. It is clear from these results that pharmaceutical company executives remain focused on research and development with a critical investment in how the products are brought to market and advertised therein.
Top 3 Objectives for 2010

New product innovation and successful launch Profitability growth Operations excellence Growth in emerging markets Market share against competitors Shareholder value Ability to produce life-saving and affordable medicines and therapies Positive public perception and reputation for ethical operations Other 5% 16% 11% 29% 25% 44% 38% 51% 67%
Primary and Secondary Customers Respondents were asked to select which two groups they consider to be primary customers, and two groups they consider to be secondary customers. Most respondents are in agreement that prescribers are their most important customer group. Eight out of ten respondents (78%) chose prescribers as one of the two top primary customer groups. This is more than double the number who chose patients, the next most frequently picked choice. Virtually all respondents (96%) chose prescribers as either their primary or secondary customer group.
Patients was the next most frequently cited group with a combined primary/ secondary choice score of 81%. Managed care organizations and government are equal with a combined primary/ secondary choice score of 71% and 70%.
Primary & Secondary Customers

Primary Secondary
Prescribers
78%
18%
Patients
36%
45%
Managed Care Organizations
27%
44%
Government
24%
46%
Other
11%
14%
Drivers of Technology and Business Model Change Executive management is the primary driver of technological decisions at the respondents companies, followed by IT. The scores of 40% and 32% may seem relatively close, but the percentage of respondents who chose Executive Management is still significantly higher than those who chose IT. It is interesting to note the 12% significance of who is making the technology purchasing decisions. This indicates that IT is researching and providing insight to executive management, but the purchasing decisions are made further up the chain of command, adding a layer of review.
Primary Drivers of Technology

Who primarily drives technology decisions at your company? Executive Management IT Business (Sales or Marketing) Regulatory / Compliance Other 3% 2% 23% 32% 40%
The strategic/business planning group, as might be expected, is the primary driver of business model and process change, followed by the marketing/brand and commercial operations teams.
Drivers of Business Model and Process Change

What team primarily drives your companys main business model and process changes? Strategic / Business Planning Marketing / Brand Teams Commercial Operations Sales Regulatory / Compliance Executive Management / Team 5% 5% 10% 18% 21% 40%
Changes to Business Model In assessing the biggest change to the current business model, respondents were most likely to indicate increased focus in market access strategies, followed by primary sales force realignment and increased focus on managed care. As Cegedim Relationship Management has learned in Europe, Market Access has become a critical issue for success in the EU. However, from this survey, it is shown that Market Access is becoming more of an issue for the Americas as well.
Biggest Change to Business Model

What is the biggest change to your companys commercial business model that is currently being implemented? Increased focus in market access strategies Primary sales force re-alignment Increased focus on managed care Increased focus on key opinion leaders (KOLs) Increased use of e-detailing channels Other 6% 6% 11% 17% 20% 40%
Social Media Respondents personal involvement in social media sites is high. Virtually all respondents (97%) indicate that they use at least one social media site on a daily basis, although it is not clear whether they are using the sites for personal and/or professional purposes or both. One-half of respondents (53%) indicate that they use LinkedIn, which is not surprising given the professional nature of the sample. One in four respondents (39%) use Facebook. Social media is becoming an important communication tool for pharmaceutical companies. It is unclear; however, how many resources companies are willing to dedicate to make this a real tool for vital marketing communication purposes.
Daily Personal Usage of Social Media Sites

Which social medium do you personally use on a daily basis? LinkedIn Facebook Twitter MySpace Other None 1% 4% 3% 11% 39% 53%
Social Media (continued) Virtually all respondents companies (97%) are using social media to some extent. The most common uses of social media are directed externally; marketing (59%) and public relations (34%); but there are also some internal uses, such as internal communications (27%) and human resources (11%).
Usage of Social Media

How is your company using social media to its advantage? Marketing PR Internal Communications CRM Human Resources Other Not Using 2% 3% 14% 11% 27% 34% 59%
While social media use at respondent companies is high, the percentage of companies sales/marketing budget devoted to social media is small.
Investment in Social Media

What percentage of the sales/marketing budget is your company investing in social media channels to reach your target audience (e.g., patients, prescribers, managed care, decision makers)?
Less than 5% 5% - 10% 11% - 20% More than 20% Dont Know 2% 16% 9% 22%
51%
What is Keeping You Up at Night? Issues such as changing business models, pipeline growth, regulatory reform and generic competition dominate respondents concerns. Cost/capital/funding issues and patient involvement are low concerns at 3% and 2%. The ever-changing commercial business model is the biggest pain point. Because pharmaceutical companies have to remain flexible regarding sales forces and changing business models, they have sought help from outside vendors to help manage data, sales force support, compliance and customer relationship management. The pain point from changing business models can be seen in how companies are operating today and what they are looking for in partner companies. Without a successful business model, pharmaceutical sales forces are left confused and unfocused.
Pain Points
What is the one big issue keeping you up at night? Changing Commercial Business Model Pipeline Growth Impact of Impending Regulatory Reform Generic Competition Cost / Capital / Funding Issues Patient Involvement Other 3% 2% 4% 16% 16% 24% 35%
Future Issues of Importance About one-half of the respondents answered an open-ended question regarding the most important issue facing the pharmaceutical industry in the next five years. Responses ranged from Government/Regulatory issues to Cost-Cutting with no clear consensus of importance. Clearly, pharmaceutical companies around the globe are watching government change. With reform in the UK, China and the U.S. respectively, companies must begin to immediately adapt to regulatory changes.
Future Issues of Importance

What do you see as the one most important issue facing pharmaceutical companies in the next five years? Government / Regulatory Changing Market Generics / Patent Expiration New Products Pipeline Cost-Cutting Other 3% 5% 4% 7% 8% 11% 13%
SaaS / Cloud Computing SaaS or Cloud Computing seems relatively unimportant to the respondents. Less than one in ten respondents (7%) indicated that it was very important. Less than one-quarter of those surveyed (22%) indicated that it was either very important or important. Almost one-half of respondents (45%) couldnt rate the importance of SaaS/ Cloud Computing.
Importance of SaaS / Cloud Computing

How important is SaaS or cloud computing in your sales and marketing initiatives? Very Important Important Marginally Important Not Important Dont Know 7% 15% 14% 19% 45%
About twenty percent of respondents are not considering SaaS/Cloud Computing at this time. Among those who have been implementing or considering SaaS, data security is the biggest concern.
Concerns about SaaS / Cloud Computing

What is your companys biggest concern about implementing SaaS or cloud computing in your sales or marketing initiatives? Data Security Learning Curve Regulatory Uncertainty Existing Vendor Agreements Other Dont Know My company is not considering SaaS or cloud computing at this time 20% 1% 3% 49% 7% 5% 15%
Vendor Selection Criteria Experience trumps all as a criterion for selecting a vendor in the eyes of the respondents. Four out of ten respondents (41%) selected experience as the top criterion when selecting an external sales, marketing or regulatory compliance vendor. Price, customer service and technological flexibility were ranked roughly evenly as the second-most common vendor criterion.
Vendor Selection Criteria

What is your companys top criterion for selecting external sales, marketing or regulatory vendors? Experience Price Customer Service Technological Flexibility Value Other 1% 5% 14% 20% 18% 41%
Most Strategically Important BRIC Country China is, according to the respondents, the most strategically important BRIC country. Three in ten respondents (30%) chose China. About three in ten respondents (27%) said they did not know which country was most strategically important for their company. With current health care reform in China, the market for Multinational Companies is expected to grow exponentially as the government begins to review and choose drugs for the Essential Drug List. Furthermore, even though China has a renewed dedication to developing drugs locally, Western medicine is still considered superior regarding proven research and development.
Most Strategically Important BRIC Country (continued)
Most Important BRIC Country

Which BRIC country is the most strategic for your company? China India Brazil Russia N/A/None Other Dont Know 2% 7% 27% 8% 12% 14% 30%
Emerging Market Strategy Direction Strategic execution is most commonly handled led from corporate headquarters (43%) or a mix of locations (30%). A smaller percentage of respondents (17%) handle strategic execution locally.
Emerging Market Strategic Direction

From where is your emerging market strategy being executed? Headquarters Mix of Locations Locally Dont Know Other 2% 9% 17% 30% 43%
Sample Demographics Respondents were fairly evenly divided by company size, with approximately one-third (35%) coming from companies with fewer than 500 employees, one third (34%) coming from companies with 501-10,000 employees and a little less than one-third (30%) coming from companies with 10,000 or more employees.
Demographics
Size of Company 0-500 501-2,000 2,001-5,000 5,001-10,000 10,001 and above N/A 1% 9% 9% 30% 16% 35%
Six in ten respondents (62%) held positions in either general/executive management or marketing. Two in ten respondents (19%) held sales positions.
Demographics
Job Function General / Executive Management Marketing Sales IT Regulatory / Compliance Medical Market Research Finance Other 1% 1% 7% 4% 3% 3% 19% 28% 34%
The sample was divided fairly evenly in terms of respondents title. A little more than one-third of those surveyed(36%) were at the C-Level/ Executive,VP, or Senior Director level. Three in ten (30%) were at the Director level. Three in ten (28%) were at the Manager level.
Sample Demographics (continued)
Demographics
Position Director Manager Executive Vice President / C-Level Senior Director Vice President Consultant Other 2% 3% 11% 10% 15% 30% 28%
More than one-half of the respondents (55%) were located in the United States. Almost three-quarters of those surveyed (73%) were from North America. Almost two in ten respondents (17%) were from South/Central America. One in ten respondents (11%) were located in countries outside of the Americas (3% from India, 8% from Europe).
Demographics
Country Where Respondent is Based United States Mexico Brazil Canada Venezuela India Columbia Ecuador Argentina Dominican Republic Other 5% 3% 3% 3% 2% 1% 1% 8% 7% 13% 55%
Conclusion To manage big picture issues ranging from market access to realigning global sales forces, it is critical that todays pharmaceutical industry executives have access to a flexible solution which can positively impact their businesses. Experience shows those companies that embrace flexible and innovative marketing technology solutions will be best equipped to manage the dramatic changes to todays commercial business model. As the survey indicates, the next six months of 2010 will most likely show pharmaceutical companies remaining focused on changing business models and product innovations. As market growth in China and the other BRIC countries becomes more impactful on the industry, it is likely we will see pharmaceutical companies making changes to become more global-minded. Additionally, we will most likely see an increased impetus and study on market access in the Americas, while looking to the EU market as a guide. Furthermore, pharmaceutical executives stated health care reform and government regulation is a concern for the future and therefore, pharmaceutical companies are beginning to prepare for more changes regarding reporting and transparency. Finally, social media is an enigma at this point for pharmaceutical companies. Although according to the survey it is evident that companies see the value in it for marketing purposes, it is clear they are not willing to make major investments to further develop this communication tool. The verdict is still out on how this tool will be developed to greatly benefit the industry. Cegedim Relationship Management helps pharmaceutical companies address the issues identified in this industry survey. The leading global provider of Pharmaceutical Customer Relationship Management (CRM) solutions, with a 35% share of the worldwide market, Cegedim Relationship Management provides the most comprehensively packaged offering, enabling Life Sciences companies to achieve rewarding and lasting relationships with their customers, and to meet their present and future business objectives and requirements. Solutions include: Customer Relationship Management Global Services Data Optimization Marketing Solutions Regulatory Compliance
Contact Cegedim Relationship Management today for more information on this and other studies. Cegedim Relationship Management Americas Corporate Headquarters 1405 U.S. Highway 206 Bedminster, NJ 07921 USA Tel: 908.443.4308 OR 888.336.3748 Email: info@cegedim.com
Recommended Reading Trends in Aggregate Spend and Disclosure Reporting Compliance (Feb 2010)
http://crm.cegedim.com/Docs_Whitepaper/Compliance/Aggregate_Spend_Industry_Survey_Whitepaper_Feb2010.pdf
The Cegedim Relationship Management Market Access Industry Report (June 2010)
http://crm.cegedim.com/Docs_Whitepaper/Data/EU_Market_Access_Survey_Whitepaper_June_2010.pdf
2010 Direct-To-Consumer Industry Check-Up (June 2010)

http://crm.cegedim.com/Docs_Whitepaper/Marketing/DTC_Survey_Whitepaper_June_2010.pdf
Authors Angela Miccoli President, Americas Cegedim Relationship Management angela.miccoli@cegedim.com Drew Bustos Sr. Director, Global Communications Cegedim Relationship Management drew.bustos@cegedim.com

Pharma Insights Survey Whitepaper June 2010

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Pharma Insights Survey Whitepaper June 2010

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2010 Pharma Insights A White Paper on Current Trends & Challenges of the Pharmaceutical Industry

Results of an Industry Survey

Top 3 Objectives for 2010

Primary & Secondary Customers

Managed Care Organizations

Primary Drivers of Technology

Drivers of Business Model and Process Change

Biggest Change to Business Model

Daily Personal Usage of Social Media Sites

Usage of Social Media

Investment in Social Media

Future Issues of Importance

Importance of SaaS / Cloud Computing

Concerns about SaaS / Cloud Computing

Vendor Selection Criteria

Most Strategically Important BRIC Country (continued)

Most Important BRIC Country

Emerging Market Strategic Direction

Sample Demographics (continued)

2010 Direct-To-Consumer Industry Check-Up (June 2010)

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