Business has been living uneasily with the internet for several years now. Through the boom and bust of the first phase of the dot.com dream, through waves of non-event e-mail virus’ and promise after promise about how the internet can and will put millions on companies’ bottom line. As yet, the results have been minimal. If anything B2B, the dream of online procurement and improved efficiencies, has been even more of a disappointment than B2C. Most internet users have bought a CD or a book online but how many people do you know that have placed a stationary order that has been accepted online with the cost integrated smoothly back into their accountancy software? Online procurement is a fantastic concept and the cost savings involved will ensure that it will become a reality, but the timescales involved in overcoming the innate conservatism of big business coupled with the huge integration and security challenges of making a host of legacy and cutting edge software talk to each other efficiently mean we shouldn’t expect online procurement to become the norm for most businesses anytime in the next few years.
Whilst e-procurement has been the principle focus for most business to business web-sites, the parallel world of the Pharmaceutical industry is waking up to a different opportunity that the web offers, Tobias Rooney, principle at Cap Gemini crystallised the idea in a PharmiWeb interview
earlier this year,
“E-procurement for example, is an activity of low risk and high reward and has been often considered as the entry point for Pharmaceutical companies in e-business. The real value however, as I see it, is in Sales & Marketing and Research & Development activities.”
E-procurement can provide valuable bottom line savings but the pharmaceutical industry has a significantly different cost structure to other industries. The huge expenditure that goes into researching and developing new drugs (between 10 and 20% of sales compared to a norm of 3.5% for most industries) and then marketing and selling them dwarves the possible savings that switching procurement online can produce. The Sales & Marketing cost is even greater than that of research, averaging at 24% of sales, an awesome amount. It is here that we will really witness the impact of the net. The inevitable rescinding of European legislation on Direct to Consumer advertising of medicines will free companies to address their marketing directly to patients. Current legislation has been rendered farcical by the mushrooming of overseas internet health sites and doctors are constantly faced with patients armed with sheaves of computer print-offs detailing every aspect of their actual or perceived condition, and all the latest drugs that address it. Faced with this level of information overload the authorities have to begin to work with the drug companies to prevent patients from getting their hands on poor quality or misleading information, produced outside the reach of the legislators. The stage is set then for an explosion in product and disease related web-sites.
Philippe Fabre, analyst with DataMonitor’s 21st Century Insight Business Unit, says
“Pharmaceutical companies should not use the internet to promote brands as consumers are mostly looking for information on diseases or treatment options. Product based web-sites, while providing information on specific conditions, largely fail to gain patients’ trust because of their lack of objectivity and limited depth of information.”
And this view is correct up to a point, and that point is the issue of pharmaceutical companies currently building sites that lack objectivity and have a limited depth of information. The information available will increase hugely as restrictions on DTC advertising are relaxed but this will have only a minimal impact. The majority of information that the Pharmaceutical companies have at their disposal relating to specific drugs is far too complex and extensive for the layman to get to grips with. The big change will come in the objectivity of the product web-sites that the pharmaceutical companies produce, or more accurately are forced to produce. Initially comprehensive first generation product sites will spring up and be designed to aid in the marketing of products, allowing the companies to leverage their superior financial muscle and marketing nouse to head off the ever increasing threat of generic competitors. But very quickly the companies will come to realise that these sites are not having the desired effect of increasing demand for specific drugs from patients. And the reason for this points back in time to the fundamental driver for the success of the internet. This fact is often lost in the rush to make money on the net but it remains the principle difference between the internet and any other communication tool. The internet frees up conversation, and not just between people who already know each other but between otherwise disparate people who have single things in common, whether that be a fascination with a woeful boyband, an unusual sexual predilection or four years on a drug that hasn’t helped them at all. In respect to the healthcare industry the internet facilitates the largest and most comfortable doctor’s waiting room in the world. It is these waiting rooms that the product web-sites of the future will most resemble. In the doctor’s waiting room, patients with similar ailments, conditions or concerns can talk easily and freely about what they are taking, how effective it has been and the standard of care that they have received. In ‘The Cluetrain Manifesto’
, the seminal book about the future of the net and business one message is constantly restated, the internet empowers the consumer to take on the big companies. Chatrooms all over the internet are rife with people who’ve never met discussing the failings in their dealings with major corporations, how Company X’s dealerships have stitched them up with an inflated servicing cost, how Company Y’s customer service is rude and shoddy. All the marketing spend in the world isn’t going to have as much power as the honest opinions of people who don’t stand to gain.
This, then, is the very real prospect drug companies have to face up to. The reality that all over the online world patients who have suffered unpleasant side-effects or no discernible results will be informing other sufferers about the failing of your product. The very product that has cost your company $10 billion in development, testing and marketing. With this in mind there is only one option open to the companies, the costs involved in policing and responding to criticism across the multiplicity of healthcare web-sites and discussion forums would be hugely prohibitive, the only way to deal with a potential onslaught of bad publicity is to bring it in house. So within www.productsite.com we’ll see all the standard promotional information, but also an uncensored forum where patients can post queries and criticisms and have them answered in depth by the makers and prescribers of the drug they are taking. It is within these forums that the manufacturers will add huge value to their drugs by suggesting changes in diet or lifestyle that might enhance effectiveness. It is within these forums that the manufacturers can clamp down on wrong or potentially harmful prescribing by rogue physicians, and, most signficantly, it is within these forums that one to one marketing will take place. The holy grail of the drug manufacturers in terms of drug development will become a reality in their most costly area of expenditure, marketing. The Product Web-site is the most effective and safest place to let people talk about your product and answer their questions or problems, the only question that remains is how long the ethical pharmaceutical companies can ignore this fact.