Survey of U.S. and E.U. Pharmaceutical Executives Reveals Widespread View That "the Business Model Is Broken"

Survey of U.S. and E.U. Pharmaceutical Executives Reveals Widespread View That "the Business Model Is Broken"

Most companies plan to fix the problem by increasing
marketing spending and redeploying resources in new ways

New York, NY; Philadelphia, PA – March 21, 2012:  Confirming pessimism about the state of the pharmaceutical industry, a recent survey of U.S.- and E.U.-based pharmaceutical sales and marketing executives reveals that 68 percent believe "the current business model is broken." The survey, conducted jointly by Booz & Company and National Analysts Worldwide, was designed to take the temperature of the industry on current challenges and help analysts understand how industry leaders plan to overcome those challenges in the next several years. It builds on surveys Booz & Company has conducted of E.U. pharma executives over the past several years.

"Those of us who work with pharma companies to develop and implement commercialization strategies know very well the challenges of maximizing asset value in this new environment, where both key customers and customer expectations are being redefined," observes Susan McDonald, CEO of National Analysts Worldwide and leader of the firm's healthcare practice. "We're not surprised to hear people acknowledge that they can't count on doing 'business as usual' and that they're looking for new ways to gain traction."

The greatest challenges identified by survey respondents are the growing healthcare system price/budget pressures and an increasing need to demonstrate cost-effectiveness and outcomes. In response to these challenges, more than half of the respondents expect to invest more heavily in marketing to key provider accounts and payors. Among the strategies seen as most important are new approaches to pricing, new service models, and new collaborations with payors.

Those convinced that the model is broken are reacting by making significant changes in how they spend marketing dollars and time. They are shifting their spending dramatically from community physicians to new stakeholders. In particular, they are disproportionately investing in key accounts, payors, and hospital stakeholders. By contrast, those who are not convinced the model is broken are making few adjustments to their spending.

"The pharmaceutical industry is the eye of a hurricane of change. The sales and marketing model is being forced to move to one that is much more complex. And this is happening in an uncertain market with incredible pressure to reduce budgets. The only clear path out of the storm is for companies to identify and focus on building the few critical capabilities they will need to succeed," says Danielle Rollmann, a partner in Booz & Company's global health practice.
The survey provides insights into the capabilities and strategies that will be most important moving forward, including:
• Organizing sales and marketing activities around diverse stakeholders, especially hospitals and insurers
• Taking a more creative approach to customer collaboration, including new pricing strategies, innovative service models, and novel partnerships
• Doing a more effective job of demonstrating value through outcomes
• Continuing to emphasize direct-to-consumer (DTC) marketing, in recognition that patients hold the other end of the purse strings
• More effectively using innovative digital media channels
"Virtually everything is changing in the model and the market. In response, most respondents say they plan to spend more on all their target marketing activities. Yet this is not aligned with what pharma is doing and needs to do at a company level. The companies that focus, prioritize, and follow a coherent strategy will be the winners," says Rolf Fricker, a Munich-based partner at Booz & Company.
As noted above, the survey also signals plans to do more direct-to-consumer marketing. "This is one of many areas where we are helping pharmaceutical companies think differently. The power base in the industry is fundamentally shifting toward insurance companies, integrated providers, and patients. Influencing a sale is getting increasingly complicated and requires more innovative approaches to reach multiple audiences, so expect to see more innovative digital and social media in this space," says David Levy, a partner at Booz & Company serving clients in the life sciences.
The survey, which was completed in late fall 2011, is based on a sample of 156 sales and marketing leaders, most with global responsibilities, at pharmaceutical companies in the U.S. and E.U. Survey participants were primarily vice presidents and directors. For a link to the key findings of the survey, visit:

About National Analysts Worldwide
National Analysts Worldwide, now celebrating its centennial year as the world's first business intelligence organization, provides market research in support of commercialization strategy and life-cycle management to the pharmaceutical industry.

About Booz & Company
Booz & Company ( is a leading global consulting firm, helping the world's top businesses, governments, and organizations. With more than 3,300 people in 60 offices around the world, Booz works closely with its clients to create and deliver essential advantage.

National Analysts Worldwide Contact: Booz & Company Contact:
Gregory Matusky Margaret Kashmir
Gregory FCA Booz & Company
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