Global issues in Pharmaceutical marketing

Global issues in pharmaceutical marketing:

Marketing literally means promoting. It is the process of identifying the consumers' wants and needs and making the product to satisfy these. The term includes advertising, distribution and selling of a product or service. It is also concerned with anticipating the customers' future needs and wants, often through market research.Any thing that is produced by a company needs to be put forward to the consumers and customers. Both consumers and customers are different with respect to pharmaceutical marketing. A customer is the one who for example is purchasing an OTC whereas a consumer can be classified as the one purchasing the drugs using a prescription from a doctor. A costumer differs from the consumer because he/she may go for medication of choice whereas a consumer’ purchase is largely predetermined by the physician. In brief, marketing is a tool to make the consumer group aware of the presence of the product in the best possible way in order to increase the sale and step up in a competitive world.

The marketing of medicine dates all the way back to the selling of miracle cures. Marketing of legitimate non-prescription medications, such as pain relievers or allergy medicine, has also long been practiced. Gradual evolution from the domestic infant stage to a multinational global stage at which the pharmaceutical marketing now stands is truly commendable. Thanks to the developed countries, support from the developing countries and the major rationale – CONSUMERS.

GLOBAL MARKETING:

The Oxford University Press defines global marketing as “marketing on a worldwide scale reconciling or taking commercial advantage of global operational differences, similarities and opportunities in order to meet global objectives.”

When a company wishes to launch it’s product at an international level then a company gets into what is called global marketing of its product. The method of marketing, strategies, purpose and the class at which the product is aimed can either be same as the home country or depending on the country of market it may vary largely. The company will have to adapt to the method of sale and marketing as to the trends of the local scenario which may be altogether different mostly relying on the demographic, cutlural and financial status of the country. Thus if a company/pharmaceutical firm wants to establish its market in a different country it has to face the above said parameters and act or setup its market accordingly. But the question that arises is why do the companies wish to undergo this transition and establish a global market??

It can be summarized in three main reasons:

1) Saturation of domestic market: The rise of more and more companies in the pharma-sector in a particular region in turn leads to competetion and ultimately reduction of the market share of a company which is unable to sustain itself. The only solution left for such a company is either to venture in a less dense market or come up with unrivaled marketing strategies to occupy the consumer base. For an example, industrialized nations have, in many product and service categories, saturated their domestic markets and have turned to other countries for new marketing opportunities. Companies in some developing economies have found profitability by exporting products that are too expensive for locals but are considered inexpensive in wealthier countries.

2) World competition: In today's cost competitive environment, organizations are working overtime to maximize efficiencies worldwide. As a result, firms are focusing more on their core competencies and relying on outsourcing non-core activities to cost efficient locations such as India and China that provide low cost pharmaceutical services due to economies of scale.1

The issues and hindrance in global marketing: Now the company has to establish itself and mould into the regulations of the new region where it has to set up its base. There are a few parameters to be taken in consideration to be planned by the company ...

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Demographic features.
Language/communication barriers.
Regulations to be followed.
Cultural inhibitions.
Pre-Recognition of the company and its products.
Pre existing market of similar companies and its products if any.
State of the economy.
The acceptance criteria of the general consumer base & their demands.
And lastly the TARGETED sector.

DEMOGRAPHIC FEATURES:

The demographic features of the region where the company wishes to settle is necessary to be evaluated as it has to first make sure whether or not it will be able to cater the needs of the demands of the consumers. If it’s a small firm dwelling in a region larger than it can cater its need to, then it would eventually lead to either increase in consumer demand which the company will not be able to suffice or it would even lead to unanimous rejection from the consumer sector because of insufficiency of the firm in meeting the goals and their interests. So the demographic criteria should be fulfilled.

LANGUAGE/COMMUNICATION BARRIERS:

Furthermore settling in a new country/region apart from the home region leads to a new set of communication barriers that may arise. Issues may come up regarding communication with the consumer sector as it may be different from the home country. The management practice employed and the labor force required will have to be sorted out. In certain cases the consumer may not be expressive of its demands but would in turn expect the provider to understand their requirements and full fill them. The language becomes the major issue with such new transitions. It becomes necessary to employ a translator or an interpreter who can mediate between the company and the media of the region to deliver its message to the consumer sector. Sometimes companies buy firms in the foreign countries to take advantage of relationships, storefronts, factories, and personnel already in place. These offices still report to headquarters in the home market but most of the marketing mix decisions are made in the individual countries since that staff is the most knowledgeable about the target markets. Local product development is based on the needs of local customers best understood by local people.

REGULATIONS TO BE FOLLOWED:

Regulations implemented in the new region have to be followed strictly. The tax and duty applicable on goods manufactured, specific manufacturing practices, (does not include binding to the process, the process of mfg. remains as it was in the home country), pricing of the products, its channels of distribution, marketing scenario have to be studied and pre determined. Marketing factors in the pharma sector are at present industry self-regulated.2

As an example, there are basically two categories of drugs: OTC and PRESCRIPTION drugs. What is classified as OTC differs from country to country depending on the legislative framework. For example in united state some anti-histamine are prescription only which is not the case in some developing countries.2 Again it is also noted that 14 of 15 top pharmacy companies have their base in Ireland, not because it’s a diseased region, but because of its favorable market environment. The corporate tax is 12.5%which is lowest in EU. Duties on copyrighted goods is considerably low and the pricing is not controlled. Well the problem that arises eventually from such a system is that the MNC’s get severely affected and there is cut throat competition between the manufacturers. Another example that can be stated is that of Novartis AG which was warned by U.S. regulators that promotional material overstated the effectiveness and approved uses of Exelon, the drug maker’s treatment for dementia caused by Alzheimer's disease. A professional file card promoting Exelon gave ``misleading'' information about how well the drug works and its potential side effects, the Food and Drug Administration told Basel, Switzerland-based Novartis in a letter posted today on the agency's Web site. The FDA asked that Novartis to immediately stop using the promotional materials and to respond to the agency. Novartis shares fell 90 centimes, or 1.4 percent, to close at 64.25 francs in Zurich today. They have dropped 8.5 percent this year.3
CULTURAL INHIBITIONS:

Cultural tradition and beliefs is one more aspect that the company has to embrace and compete against if it can or else just follow it without any choice as it happens in South Africa. Although the percentage of such occurrence is quite less, but it sure affects the pharma company freshly setting its foot in. Many people visit South Africa's 2,000 traditional healers, and there is a growing recognition of their value to society. Traditional healers, or “SANGOMAS”, use a combination of plant and animal products for their medicinal potions, known as “muti”. They also incorporate a spiritual element into the healing process and perform a variety of functions for those who visit them, including doctor, counselor, priest and psychiatrist. Attempts are now being made to create more harmony between Western and traditional medicinal practices, which have tended to view each other with suspicion. Research is being conducted on the use of traditional medicines in curing malaria and tuberculosis. But in the process it hinders the market of allopathic medicine.4

PRE-RECOGNITION OF THE COMPANY & ITS PRODUCTS:

The company’s image is what is challenged when it enters new grounds. If the company is an established MNC then its fame will precede it, else it will have to prove its mark as it did in its home country. If the company is a known name then the acceptance rate of its product would be higher. The time required to settle ultimately depends upon how fast it is able to capture the market share, which is inturn decided by the consumers. So, a pre-launch of the company’s products through samples or advertisements into the market through local firms is always beneficial to the company when it actually enters the market.

PRE-EXISITNG MARKET OF SIMILAR PRODUCT:

Now this accounts for a head on competition between the products of one company with that of the other. Usually the local company is in favor whereas the fresh entrant has to prove its mettle by incorporating marketing strategies and the growth of the new entrée is marked by the speed as to how fast it is able to mould itself to suit the requirement of the consumer class. After all, popularity amongst the consumers decides the growth. Marketing skills are put to test at this level.

STATE OF THE ECONOMY:

Due to lowering of trade barriers and acceptance TRIPS by developing countries like India, the Intl. market enters the country and manufactures its drug under “in-license” alliance and market patented drug produced by overseas company. In return, the foreign partner gets a cut from the drug's turnover in India. Now due to the implication of patent act, the overseas company’s product will have minimal threat from the local companies which would thus enable it to enter in the market at a premium price resulting in greater margins as compared to the home country. Thus a developing economy provides lucrative Indian market without risking a high investment.5

THE TARGET:

The targeted community is one of the most important evaluations that is to be done. For example a product designed for adults with a pictorial representation of an infant on its packing can confuse the consumer of its real purpose and the age at which it is to be used!

Corstjens (1991) identifies four main buying parties for prescription drugs:

1. Prescriber – prescribing rights vary internationally and this category may include doctors, dentists, pharmacists, nurses and optometrists

2. Influencer – hospitals, nurses, professors, reimbursement agencies

3. Consumer – patient

4. Financier – partly patient, partly government or third party (varies by country), managed health care organization (hospitals, Health Maintenance Organisations etc.)

The majority of Big Pharma’s marketing budget is targeted at doctors and others with prescribing power, who are effectively the gatekeepers to drug sales. In 2002 the Canadian Medical Association Journal estimated some US$19 billion is spent by Big Pharma annually in promoting drugs to doctors in the United States alone.

In the European Union only OTC drugs are promoted directly to consumers. Examples include analgesic preparations and some ailment-specific drugs such as the Schering Plough blockbuster Clarityn - a hayfever remedy. In 1998 Schering Plough spent $186 million promoting Clarityn, and as a result saw a half a billion dollar increase in sales year on year to achieve annual sales of $1.9 billion, (Maguire 1999). In the United States all drugs may be promoted to consumers, but in practice direct to consumer advertising focuses on OTC and common-ailment targeted prescription drugs.2

Elements of the Global Pharma Marketing

The “three P’s” of marketing: product, price, and promotion are all affected as a company transit to become a global company. At the global marketing level, a company is faced with many challenges when creating a worldwide marketing plan which differs in the terms of its implication in the base country.

Product

When the company becomes global it manufactures the same product with same parameters as it did in its home country. The manufacturing process is not compromised with the transition of the company.

Price

This parameter largely remains unfixed and is mostly variable on the region where the company moves to, its drug pricing policy is applicable and not the home country’s policy. It may either be higher or lower as compared to prices back home.

Promotion

How the product is distributed is also a country-by-country decision influenced by how the competition is being offered to the target market and what is the sector to be targeted primarily. It depends upon the company how to assess its strategies to advertise its product and launch it in the market with the existing competition. This is the largest cost share holding parameter for a global marketing company and is mostly aimed to reduced cost to create benefits.

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