Market researchers speak out on cut back trend
June 23, 2009 – 12:53 pm by Steven NilesAs referenced in an earlier post, the pharmaceutical industry appears to have let its market data go stale in recent months, neglecting to update its market research as a way to cut costs. Of course, it’s never just that simple. Marketers basically do two types of research. One is regular tracking and updating of the marketplace, taking the pulse of the market by asking questions like, “How are our products doing? What are consumers thinking? What are doctors thinking?” The other form is more focused diagnostics. A company may have a new product in development and needs to explore its positioning, its pricing, or who it’s intended for.
While both types of research efforts appear to have been scaled back, only the former could truly be said to be a cost-cutting initiative. Scaling back on the latter is more about avoiding committing funds. If a product isn’t launching until 2010, for example, a company might choose to put off a segmentation study until later this year.
“Pretty much the entire pharmaceutical market research industry did go through a fairly substantial dip that started in the third quarter last year and continued through the first quarter this year,” says James C. Kirk, VP, Eidetics, the market intelligence and data analytics division of Quintiles. “The cost-cutting reflects the tracking studies, the Awareness, Trial, and Usage, or ATU, studies, or marketplace audits. These kinds of standardized major studies are done on a regular basis. Putting off the other kind of work, the diagnostic and launch support stuff … I’m not convinced that’s so much cost cutting as it is preserving options. There are two different dynamics going on. It’s more complicated than simply putting off collecting data.”
Looking back at the history of the pharmaceutical industry, for years the industry did relatively little market research in comparison to consumer products, financial services, or technology. As the market became more competitive and drug companies found themselves in more crowded markets, they felt that they needed better intelligence from the marketplace.
“A lot of these syndicated studies and regular tracking studies became standard fair for good marketers in the spirit of helping them have a full view of the marketplace,” Mr. Kirk says. “It’s in a sense not that draconian an issue. It’s more like returning back to the old days when they got by with less data.”
The business impact
Whether or not marketers are buying data, the dynamic industry is always on the move as the competitive landscape evolves or managed care formularies change. Allowing data to go stale can have a serious negative effect on pharmaceutical marketers. Whether the research is for measuring the effectiveness of patient persistency programs, sample distribution, a physician’s brand advocacy and loyalty, or discovering new stakeholders, accurate and recent data is the lifeblood of such initiatives.
“Pharma companies are trying to integrate information from all of these touch points to understand and create insights in these challenging times,” says Vikram Prabhakar, senior product manager, OneKey, Cegedim Dendrite. “The rate of change of information about stakeholders relevant to pharma companies is always evolving. Keeping up to date with basic attributes about where healthcare providers work, their affiliations, are not enough to define recency. Regulatory and compliance initiatives in the industry also play a big role on what data you can use, how and when. All these factors contribute to the ‘aging’ of data and affect its use in deriving insights.”
According to Mr. Prabhakar, stale research can result in marketers failing to honor physician opt outs, using DEA numbers in a system for purposes other than designed, submitting claims or making calls to a location of a dead, moved, or retired doctor, aligning call plans based on the wrong specialty, not following the preferred time or by-appointment policy, etc. All these errors lead to cost inefficiencies as well as brand image and compliance issues. Data also comes into play in terms of tactical internal support and sales incentives.
Accurate prescriber data is essential in making strategic business decisions, in supporting critical business processes and in planning sales, sampling and marketing efforts. However, with nearly 15% of prescriber information changing each year, your database could be 40% inaccurate within two years. In addition, without regular data cleansing and practitioner validation, your company may be non-compliant with Prescription Drug Marketing Act requirements.
Spend optimization
Rather than withholding research spending, many marketers could find cost savings simply by conducting a spend optimization analysis.
“Typically data is the biggest expense in a sales operation’s budget, and that’s probably where most companies need to start focusing on making sure they have optimized their data acquisition strategy,” says Prashant Kohli, VP, strategic planning and development, Archi-Tech Systems.
A spend optimization analysis should start off by taking an inventory of the data assets that the company is purchasing. “It’s not atypical for a pharma company that has been around for a while to, over a period of time, start buying a lot of data that might be redundant,” Mr. Kohli says. “You might have some low hanging fruit by eliminating some of the redundant data you might be purchasing.”
The next step is to assess who are the primary users of those data assets. From a strategic standpoint, determine at what frequency the company should purchase data. “Maybe you don’t need to buy something on a weekly basis if your market or the product lifecycle doesn’t warrant it,” Mr. Kohli says.
According to Mr. Kohli, Archi-Tech Systems helps its clients conduct such an analysis on a regular basis, and most clients are routinely surprised with how much savings can be found.
“A lot of it has to do with the technology platform that they use to put together all of this data,” Mr. Kohli says. “The data vendors have done a good job with making sure there’s integrity amongst all of the different data assets they sell, and in some instances, roll up together. If you have a prescriber level data asset and a managed care prescriber level data asset, most of the vendors out there make sure your managed care would roll up to prescriber level view.”
Cost savings through a single source
When asked what marketers can do to maintain the freshness of their market research without breaking the bank, Mr. Prabhakar cites the cost efficiencies to be found in Cegedim Dendrite’s OneKey solution. The company touts the ability of OneKey’s fully integrated and controlled single-partner data management process to control multi-vendor costs and eliminate wasteful spending. OneKey offers a standardized customer information “hub” that uses phone-verified data to act as a one-stop shop for all of a user’s customer data management and integration needs. OneKey encompasses all professionals, organizations, and stakeholders within the healthcare industry in a pharma-dedicated data model.
“If a client comes to us, they don’t have to go through the hassles of integrating these multiple channels of information just so that they can create that most active record that they can use,” Mr. Prabhakar says.
On the upswing
The downward trend in market research spend may already be turning around. Mr. Kirk has seen evidence that in the second quarter companies are beginning to release some of their funds for data collection and market research. He believes that ultimately, the big economic crunch has an upside for the industry, likening it to an asteroid for the dinosaurs.
“It’s one of the those major events that separates out companies who are nimble and can adapt from those who can’t,” Mr. Kirk says. “We are seeing a big difference in how smart companies are in deploying their market research budgets. The requests for proposals that we’re seeing in the second quarter and late second quarter are, in a sense, more intelligent. They’re asking smarter questions. They’re focused more on supporting real decisions than on just simply checking off a box on somebody’s list of things to do before launch.”
According to Mr. Prabhakar, marketers have come to realize that in order to gain the most bang for the buck for their campaigns, they have to invest in data.
“What we’re seeing is they’re starting from the technology aspect, so they’re actually enabling integrations in their organizations first,” Mr. Prabhakar says. “Now they’re thinking, okay, I have built a system that can integrate the data I have, but now what is keeping it alive?”
When marketers implement integration systems into their companies, they have to appoint data storage or data governance councils in their organizations that are going to maintain control of the recency and the shape of data that the organization is using.
“Towards the end of this year and probably starting next year, there’s going to be a huge trend of hooking on to a master service like OneKey, which can provide these approval services and which can provide this oversight of their data as it’s changing within their organization,” Mr. Prabhakar says. “Their realization that they now have to capitalize on the data assets that they have in these challenging times is the silver lining. People are starting to think out of the box and say, ‘What can we do with what we have first. Then we go out and do more procurement.’”
Tags: market research
