Big Pharma squares up to changes
SummaryPaul Hartigan reports from the Financial Times Pharmaceutical Conference: London December 2nd and 3rd 2008
And the evidence is there that Big Pharma is imbibing some cost cutting medicine, with most of the major players reducing sales and marketing expenses, quite often through cuts in the sales force. But it could also be that the massive spend on DTC advertising (which is legal only in the USA and New Zealand will also see some diminution). According to the New England Journal of Medicine, total spending on pharmaceutical promotion grew from $11.4 billion in 1996 to $29.9 billion in 2005. Direct-to-consumer advertising increased by 330% in the same period, and although it made up only 14% of total promotional expenditures in 2005, that still comes to a staggering $4.2 billion dollars. If that figure does come down, William Burns, CEO of Roche Pharmaceuticals, will not be one to mourn the loss, commenting that DTC promotion was “the single worst decision for the industry," and adding that “when industry says we're spending all the money on R&D but actually it's spending it on TV advertising to preserve margins, it doesn't get much credibility”.
Burns did however call for a more communicative environment in Europe, where regulations demand clear blue water between pharmaceutical companies and the patient taking their products, saying, “You've got two extremes on the planet, where we are given access to the public in America, which is too much, and in Europe we're not given access to information.” He went on to comment on the way that the internet is changing that way that people find out about diseases and drugs.
And this clearly presents an opportunity to engage meaningfully with its audience in new and effective ways, and from a much lower cost base. It does however need the regulators to catch up – and whilst seasoned industry-watchers will not be holding their breath, change in this respect would seem inevitable.