772957 pmp commercial compendium dtme

7/27/2019 772957 PMP Commercial Compendium DTME

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Pharmaceutical andmedical Products Practice

vwmarketing


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Global/Na head o pmpRoy Berggren

eu head o pmpMagnus Tyreman

vwmarketing

Chigaco Ofce

21 s ck ss 2900cg, i 60603-2900t: 1 (312) 551 3500

Los Angeles Ofce

400 s hp ss 800l ag, ca 90071t: 1 (213) 624 1414

New Jersey Ofce

600 cp dvF Pk, nJ 07932t: 1 (973) 549 6600

New York Ofce

5 e 52 s21 Fnw Yk, nY 10022t: 1 (212) 446 7000

Orange County Ofce

131 iv dvs 200iv, c 92617t: 1 (949) 737 7400

Silicon Valley Ofce

3075a h WyP a, ca 94304t: 1 (650) 494 6262

Stamord Ofce

t lk sqs 100s, ct 06901t: 1 (203) 977 6700

or more iNormatioN please coNtact [email protected]


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contents

p

02 avng mng exn

Identiying and building the capabilities

necessary to compete in an increasingly

complex environment.

dv ezng, J hf

dfn

08 c ing:

c Gw n cv m

Adopting a customer-centric mindset to help

pharmaceutical companies move beyond

conventional wisdom to unlock true motivations

and needs.

an Ggn,V s, Jn

dgn

18 bng dn bn pnng

Eectively dierentiating your brand

to maximize perormance.

dv ezng, lz rg

28 ozng sn: cngng roi GAugmenting reach and cost with a quality

assessment to make more inormed

investment decisions.

snjv agw, hn aw,

J hf

36 t pn pn

How pharmaceutical companies can help

their patients improve adherence.

J hf, r lnn, bJ tvw

48 an y tg p

on ln on

How incumbents can use a launch mindset and

approach to deend against competitive entries.

lnn d b, m kg, rj m,

a Zn


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dv

58 cng Wnnng p sg

Sharpening managed-market strategies

to address the growing inuence o payors.

lnn d. b, ov l,

rj m, m pn

dv

70 ang t b bn

n c

An ounce o prevention in the orm

o regular risk assessment and planning

can protect a brands hard-earned reputation.

e N, dv Qg

80 t cngng r it n pBalancing oten conicting needs or

IT efciency and IT innovation to drive

pharma growth.

s mw, sv Vn kn

90 bng mng exn c

How to embark on a journey to enhance

the organizations marketing skills.

cn b, agn c, dv ezng


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vmarketing

daVe elZiNGa

Jessica hopield

INTRODUCTION

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g p xvy. B g p pg xby pg b k v. m k w p py.

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n pgy, p gy yg bg kg

pb y p vy w, g v.

Defning Marketing Excellence

B xp , wv f p kg x p: 1) fg k; 2) gg b

pp kg p; 3) vg p kp. (Exhibit 1)

W p b k pb y v x. n x . t g y w pbv g p y b w y v g gp v

b p. typy, p bg pvg 2-3 k y w k.

achieving Marketing excellence |


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| Driving towarDs Marketing excellence

Accessing and Prioritizing Capabilities

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W k gf ppy p kg pb

g, b p. ogz w b wp g kp g. t pb v g p py kg b kg p.

Define

Design

Deliver

Generate actionablecustomer insightsSegment key customersand target keystakeholdersIdentifyunmet needs andsize volume opportunity.Understand current brandand competitor equityDene product/serviceopportunity and economicvalue proposition

Develop relevant, compellingand differentiated brandpositioningBuild brand plan andarticulate strategicimperatives to deliver brandincluding . . . Key brand messages and

communication strategyfor each importantstakeholder (e.g.physicians, patients,payors, pharmacists,KOLs)

Pricing and promotionsstrategy

Expressed link to clinicalplan

Develop physician/patientprograms to buildcompliance and persistencyDene brand Portfolio andArchitecture Role of individual and

corporate brands

Align organization (e.g.sales force, global/local,commercial/clinical) andoptimize communicationdelivery vehiclesCustomize interaction mixfor key customers givenbrand objectivesPartner with payors tomaximize preferred access

while minimizing discountsSet clear targets for brandsthat measure both volumeand brand equityperformance (BrandScorecard)Understand impact ofprograms on revenue (ROI)and other objectivesMonitor customersatisfaction to ensurecustomer experience isconsistent with brandpromiseBuild internal capabilitiesas needed in the areas thatmatter the most

exhibit 1


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Opportunity Areas

Defning the Market

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t c ig: c Gw cpv mk xpw g p kg pp g. By pg - ppy, g p g gp, g yv k k wkg pp g bvb q, p b g g y

gw.


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Designing the Brand Proposition

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(p iV pg) py/p pg.

dvpg b p, fg b/p bjv, g v p 50-60% g. (W w 50-60% g itams p.) oy w k 50% p 2 bx :g b b (47%) bg gb v. pg (45%).

n vy gz g gg b pp w g. cpg p pp kggp v p py p g v p vpg b p w kg g k 10-15%p g .

Bg d B Pg w p b gb pg g b b b v p.


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Delivering the Brand

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cf py g v g y g (71%) vpg - Kol p (70%).a p, vy w pp y g jb gxp v, g p, g (37% , 35%, 25% p 2 bx pvy). t gg gk xp g b kg p .

i opzg sp: cgg roi G, vv pp g kg v p qy, vk . t p pg py g v p.

o v w p p w ppy pv w g g p kg . oy - p gz g vy g jb g ,bg pp bgg kg . B k w f p (27%) p w kg (32%) p q .

t Bg mkg ex cpb b pp v gf g kg p. W pybjv b k, xpg pb pv p jb pg.

CONClUsION

W p p v pb wkg x, gg w w k py p pv gb xp w p g y

pg . W p y f b v yjy w kg x.

authors:Dave Elzinga and Jessica Hopfeld are both principals in McKinseys

Chicago ofce.

achieving Marketing excellence |


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INTRODUCTION

sp g ky p p, y vg gw pp g k k b pv y .

ex g q p p - ppy, p g gp, y v k

k wkg pp g b vb q gg g.

minsightcrucial to growth in competitive markets

auNia GroGaNVicki smithJohN orsyth

custoMer insight |


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WHAT DO WE MEAN BY CUsTOMER INsIGHT?c g vy g b ,w kg g v pvvg. a g :

B b p g k ,

, p, b v

G by xp wy b w w

bv

Bg w g b g xg b v w / xp, kg g

gz

B w kg, b g p, vv

B v ; w, g, j .

GETTING IT RIGHT CREATEs GROWTH

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IN THE PHARMACEUTICAl CONTEXT, INsIGHT MAY BE EVEN

MORE IMPORTANTW bv p v g v pg . t k x y px cPG, qgg p ppv p , g py ppy, ky p , g, py, p, p x, gv.

F y px g p, py v b bg. a v , py pv gy xg v p vb py. a ,v p gg y k, xg y

v. F xp, y w w Gy, u.K., iy 2001, 26 p q pf , p w 21 pfv y b, 24 p.3



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i u.s., vg p (dtc) vg v

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(Lack o customer understanding is) a threat to our revenues and to

our health. We need to understand customer value and do it better than

our competition Corinne Le Goo, VP CNS Marketing, Sanof Aventis5


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a pg, c b b-pg yb 2003 2004, w 25 35 p k , p p w pp3. t pg b vg y;g w pp Vg lv k x p.

WHAT DOEs IT TAKE TO ACHIEVE EXCEllENCEIN CUsTOMER INsIGHT?

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Philosophy

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I encourage marketers to invest a great deal o time observing consumers.

A ew years ago, we spent our hours a month with consumers. Its at least

triple that now.

J. Stengel, CMO Procter & Gamble6

11| Driving towarDs Marketing excellence


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Pb , b y f g g. hwg g gz kg dna p k g. igy, wg b-- pkg gpy g g ky b .

All development activities within the group are now based on research into

how consumers think, eel, and behave when they use our products, as well as

which problems they experience.7

Hans Strberg, President and CEO o the Electrolux Group

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Prioritiessg p g kg v f v. B pxy p v, p k xp b w b yw b py, Kol, g, py, p, p, gv. F pp g, py w b py yy k w py , y p b . hwv, py yb p p w y py. F xp, y w ky b p w yp py w p p xg

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custoMer insight |12


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People

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y .8

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Processeslvgg vv q, g b k y bv g x, ky g pv vg.t p y vy q b w w xp pyg vv q g p g. F xp, p p v gg b cPGp pg -b g. i, y p b g bv g (-b) g kg v.cPG p w yg qv g gp gp-b pp . W v p p fg

w pp w p py, by y wp.

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WHAT DOEs EXCEllENCE lOOK lIKE?

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Py pb jf x y

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Pp w g k p py pp.

B g, nv vp -w pg gp p w w gy gg. t p w - m2003 w , g dgg dpy pg, pg b pp g g . mggpz y by xpg p p p b. nv g p py p g p-g pp. t p u.s. by 23p 2004.9


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CONClUsION

i y k, p g py pvg b vp. c g v ppy p p. r b pp by gppy, y f p, g pp g b p.

authors:Aunia Grogan is a senior expert in McKinseys London ofce. Vicki Smith

is a senior expert in McKinseys Chicago ofce. John Forsyth is a principal in McKinseys

Stamord ofce.



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INTRODUCTION

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bf g f. cg pg, v, b pg bw bkb b k p.

tk p pp b gy xp. i gy w gby p , nx Px v gw w k aphx Pv . nx g py p w g g; Px g py w v b. Wnx Px y kg y p v kpvy, aphx1 Pv w b v ppg .

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p y y p ppp w p

pg p)?

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y g?

hw y g gz v n nng y y g g?

building a dierentiateddPositioning

daVe elZiNGa

liZ rodGers

builDing a DifferentiateD branD positioning |1

1www.aciphex .com


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o f pg p p g , yf g, g ppp , p . t p p bf b v (g b p), ppg pv bv b pb vg bf y b pp w .

DEFINING THE MARKET

sg fg k. W bv -b g

g pp bg pw b. dgp bv(.g., pp w) g x jb g y w gw, b y xp wy. a -b pp xp v

b pp bv gp (Exhibit 1) g g. ug b bv vg b yy v .

W -b g, v wy w k k: by (py p) , by p yp, by b

b (Exhibit 2). a pp gp py by b v b v pb, p, pfp . hw kwgb y b p , w -

y , w vv y w p , ., g xp b py k.uy, bjv fg w y bg b w pyp ppp y p y py.

Favorability of impression of brandPercent very/somewhat favorable

Segment 1

Segment 2

Segment 3

Segment 4

Segment 5

Segment 6

Segment 7

By age/gender By income

25-34

35-44

Women 35-54

Women 65+

Men 65+

Less than$50,000

$50,001-99,999

$100,000+

Highest variation: 15

Variation: 4

By geography

Variation: 5

By ethnicity

African American

Hispanic

Other

Caucasian

Variation: 11

Highest variation: 38%Highest variation by

demographic cut = 15 pts

Data cuts by attitudinal segmentData cuts by demographics

53

42

36

23

17

15

26

29

30

25

30

21

23

32

Northwest 30

Mid-Central 28

Southeast 25

Northeast 25

Southwest 27

35

20

28

25

50

exhibit 1


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W g f, x p g. i v pg k, w k w g b w p k q p pg. W b v g kg v, pg q g pyg. i v, v wg w g b g g b y, v p, p v. py v pxy/k w p p .

ipg g gy g b bw kg . mkg v -b pp y g, b g gg y k p. t , w k w fg g vg g, p gp f gp bv pp y.t b vy wy y gg y v pw w p (.g. g vp) g py w (.g. g vy). W - g y p v pg , p b pb. F , g g pp b. F p w p ,p g y pv p x vy y b

.

DEsIGNING THE BRAND PROPOsITION

o w g g y vpg b , x g w y w w y v. ug b qy ky yg w b y p w pp b

p yy. W w wk b qy: brand equity

diamond w p y w pp yg b y b asset-

liabilities matrixw f b y .

Understanding customerattitudes provides insight intoneeds and how those needsare fulfilled e.g. in pharma

Expertise

Willingness to experiment

Cost consciousness

Patient empathy

Dimensions are customized for each therapeutic area and brand

Best segmentation type is used

Needs are not alwaysconsistent acrosssituations e.g. in pharma,physicians treatment goalsmay differ considerably fordifferent types of patients

Severe vs. mild symptoms

Advanced vs. earlydisease stage

Motivated vs.unmotivated patient

Combination of customerattitudes and situationscreates need states thatare often the most powerfulpredictors of behavior e.g. in pharma

Prevent hospitalization

Educate and motivate

Stabilize and control

A B C D E A

1

2

3

4

5

B C D E

Situations

Customer attitudes Customer attitudes

A

1

2

3

4

5

B C D E

Situations

exhibit 2



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What do customers think and feel about the brand?

Intangibles

Tangibles

Brand presentationHow the brand looks and feels

Marketing activitiesWhat the brand says or does

EvolutionWhere can the brand go

PersonalityThe brands character

ReputationWhat the brand is known for

OriginHistory of the brandInternal

How it makes me feel

What it provides

Perceived valueDo I get what I pay for

Customer experienceHow the brand is delivered

ProcessEase of use/access

FunctionalPhysical elements

ExternalWhat it says about me

Who and what it isBrandbenefits

Emotio

nalben

efits

Intangiblebenefits

Ration

albenefits

Prese

nce

Brandidentity

exhibit 3

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B vg y q b v

(Exhibit 4). ap g xp p vy p b py gv b g y y p.ap v k p p p gy. i , o-ev b . r p bf, o-ev p b py p b v p (k b

y ).

Asset-liabilities Matrix

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b gy w y b pp. t gy b vy vp v b wp.


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pressureyour

pA good brand positioning species a clear target, denes what the product is and does, and provides adistinctive reason to believe the benet is true. Beyond this, you should consider the ollowing questions:

Is it relevant to target customers? Will customers care? Could you have a conversation with

the customer on the subject that they would fnd interesting?

Is it credible or the brand? Would a customer agree that the brand can say this today or be able

to gather the proo to say it in the uture?

Is it distinctive rom competitors? A customer must not be able to replace your brand name

with a competitors in the statement and fnd it equally true.

Does it leverage brand strengths and address weaknesses (e.g., side eect)?

Does it provides clear direction or all brand-related activities including communications, sales

orce activities, product development, and pricing?

Is the positioning aspirational enough that it will take 3 to 5 years to ully achieve and enable

the brand to achieve its growth objectives?

Is it consistent with the organizations core competencies and can it be eectively executed?

Reassurance of more thansymptom control healing

Addresses the two sourcesof cholesterol

Pioneer in treatment ofthe elderly

Provides bone densitymeasurement to drivediagnosis

Intangibles

Tangibles

Presentation

Activities

Evolution

Personality

Reputation

OriginPersonal

What it provides

Perceived value

Loyalty

Process

Functional

Social

Who and what it isBrand

benefits

Emotio

nalb

enefits

Intangiblebenefits

Ratio

nalb

enefits

Pres

ence

Brand

identity

Source: McKinsey marketing practice, brand websites

exhibit 4



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How is the brand perceived vs. competition on relevant parameters?

high

high

low

low

Antes: Required for consideration.Elements where all competitorsperform well

Maintain only or nd a way toraise the stakes

Current drivers: Elements that driveloyalty for your brand, where thatbrand outperforms the competition

Protect and continue to own

Competitor Advantages: Elementsdriving loyalty for competitors.Attributes that limit your ability togrow (liabilities)

Improve performance relative tocompetitors to make selectitems antes; minimize liabilities

Opportunities: Unmet categoryneeds. Elements that may becomedrivers if effectively leveraged

Selectively develop and investto drive ownership

Strength

ofyourbrand

Strength of competitors brand

exhibit 5

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B qy . ov b qy g g

kp (.g., w , g p) k by b . B b -b x pw kg g g p y kg vg pg y b qy.

t pp w vp b pg b ypp w p w p.i g g, g b pg, p kv v pg p:

sng n: o k p

b p gy, p, b

g v p. W b . t q p py xp y p

. ty y, b f v b .

aphx pv g xp p w pg

g . t ky bf gg x

p kp b y pg vy

b pp y p pp b. i y p y b y

p pg v b , y g .


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ng : ov , b bf b gy, p xp w py k.

B gy k w b ( )

kp y g pg .

F xp, w J & J (J&J) y p v

(otc) g gy , Zy, y gz

b / pg w g q w. J&J

vv pg p p --

g bf. i , wk w k

pw v gg bk y.

lng w : i gy pv k,pg k y f p f b

. By g y b , p y p vby

j wy. F xp, app cp vg pg

-- s wy y v m-- py Pc gky,

wy p , y, y g app.

DElIVERING THE BRAND POsITIONING

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gz x pp pg p y g ? sy xg b pgq v gz. W g w b b yg g, x by wg y k vg w qy b pg,wg g w y pp w wg.

cp v b xg b pg v v g w g v gz gy. t ky p vg b pg g : gg gz,bg gb pg, g, kg jg.

agnng ognzn: F b pg b b x, b y k v p, b p v v gz. Vyg g gzg y k , py kg p v, b bg gz g. e ky b , qg k b xy w gz g pp g.

bnng l n G pnng: a y x bw gb g k y gg f g b bw gb y g. o b pg ppp k py , g q, , . o

, vg p b g b g gy b y (.g. f , g, .). t v ,p w b pg (b bf by) b k w b g pf k .



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fneopQ.Does it ever make sense to have more than

one positioning or a Brand?

Across markets?

Across indications?

Across customer types (HCP, Consumer)?

A. A brand should have positioning:

Maks: Markets may dier in how that

positioning is communicated, but the

positioning should be the same across

markets to prevent customer conusion.A brand may be more developed in some

markets than in others, which aects what is

communicated to customers and how/when

it is communicated, but the positioning that

all markets aspire to achieve (the positioning

journey) should be the same.

Iicais: A brand may span indications

(e.g., asthma and COPD, or schizophrenia

and bipolar disorder), but the positioning

should not dier by indication it should be

broad enough to encompass both indications.Dierent elements may be emphasized

to support the positioning or dierent

indications, but the overarching positioning

should be the same. For example, i the

positioning promises that the brand helps you

maximize your patients progress, this may

mean maintaining productive work and amily

relationships or a bipolar patient, whereas or

a schizophrenia patient, progress may mean

reducing hospitalizations thus, the reasons

to believe the promise may dier by indication,but the positioning does not. I the new

indication is extremely unrelated to the current

indication, a new brand name should be

considered (e.g., Zyban or smoking cessation

vs. Wellbutrin or depression).

Csms: A brands positioning should

be consistent or both healthcare providers

and consumers, since a brand cannot

eectively stand or two dierent things.

The articulation o the positioning (messaging)

and the reasons to believe may dier or

providers and consumers, but they should

not be in confict with each other.

Q. What signals indicate it is time to change

(or at least examine) brand positioning?

A. A brand positioning generally has a shel

lie o three to ve years. By that time,

changes in the marketplace have reduced the

eectiveness o the current positioning or

example, competitors have entered or let the

market, brands have gone generic, activities

by you and your competitors have changed

the way physicians view the competitive

landscape, etc. In very mature categories,where change occurs slowly, a positioning

may be eective somewhat longer than

ve years. In newer categories, changes may

occur rapidly and the positioning may need

to be rereshed more requently than every

three years.

Events that may trigger a reworking o the

positioning include:

New indication

Entry o a new competitor (branded

and generic)

Treatment advances that prompt physicians

to change the way they think about the

disease/condition and/or their treatment

approach

Physician or patient eedback that suggests

lack o dierentiation

Internal conusion about the uture direction

o a brand (across geographies or unctions)

Inconsistent activities that are sending

conficting messages to target customers

Inability o all associated with a brand

to state main reasons why the target should

choose the brand.


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mng, tng n ajng: a mKy ig a kg vygg, p p v py by p. Y g p g w w gz vg b pg. i kg b p, k b y w gb g b gb bf . tkg gb b v pw y w b p g pg.

CONClUsION

Bg b pg y gypv kp. dg q f g w y bg b b bf w v b . W q w, k vg b g yy.

authors:Dave Elzinga is a principal in McKinseys Chicago ofce. Liz Rodgers is a

knowledge expert in McKinseys New Jersey ofce.



32/108


33/108

INTRODUCTION

r v, roi, b- v y g yp py xv. ty . W w k

300 kg f j , pzg b p w p ( f bg vg b gw). ig p, py g kg p, gy y -f v y f v p. hwv, roi pvg b f vvg v. ty by by p p v p p, v by by -p p. i , g wk k g py. a v p -p p w k , roi b gy f.Fy, gf g yz roi bg w gz

pv g p, w bg b - pzg p.

msPendchanging the ROI game

saNJeeV aGarWalhemaNt ahlaWatJessica hopield

optiMizing spenD |2


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i , w g b- yy b pp pzgp b b bk bx. t xp pp p xv pzg b p, w k wg :

roi v b g b p.

i, Qy (Q), f by p

b bjv gfy b wy v py p .

cbg Q w q y

pb r-c-Qy (rcQ)

p xv k w v.

P xv , p , b-

p, j kg, g bg g w

g.

P p v ppy y b p

by y, p-- pp pyz y gz.

1.

2.

3.

4.


35/108

optiMizing spenD |30

Quality as a measure o a customer interactioni xp, y b v kg p v roi, p v, p-v vy, g y b p. t pv g p b v . t f fy . roi v w , vz. o , p-v vy ypy y b pv g g b qv g b v . t vv -pby. B , pb xv k - v . Fy py, vy k b gy bjv. Gv

v vg b gy, p gy x y y, roi gy, g b g p .

W gg p xv k v p g : qy Q, f by p bjv. a wy f Q g q:hw w pp ( ) pp f b bjvp p? F xp, w g b yp g g g? W p b v b b w p?

Qy pf - : gg, bv. egg qy by gg . F xp, g w b g bg , y g? a Q g x p. i by g ppw bjv. Bv qy f p, w xp y.

W f k wg py bv g. hwv, gg g pv p. F xp, wgg, k bv g vy w. a, ppg b g g g p py

bv g. a b gv b p Q . t b p ,pg - b v.

mg Q b - x. W x b g g ppy vy vp p Q, v g q k gp y, g xg b y. o g y p g by py p p v p.

ov, g Q . dg w q g b, b jg vy b, z pp

pf b ggpy.

Assessing all spend related to the brand

my p xv vw b p py , kg, bg. t p v by gz gy p g b .

hwv, kg b p g b-p, py (b y) bw kg bg. i , bg vw y p g p fy .


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W gg xv vw bg b py , b gy p . t b p b bk g: p , , fpg, w bjv.

P p w pf bjv vgk g p xp b bf.e g g , pwy p g g py. t f pg bjv g b p xp p.

i xp, pp b p vw bg w b. i , bv bjv , Q b w v g pf b bjv. o pf pp g vwg Q v b gy p bjv.

Combining Q with Reach and Cost to understand Reach-Cost-Quality

cg Q p, b f kg b p jg.tw b : .

t n nn b p w gk. r y b w Q v v . a , p - x .

P xv ypy vy gy p g, b . i , g pf g p- g v b. F v (.g., g /f v), vy v .

W v bv v, y g , b g k .. w p g g bg g p w v p. i , v p,

p j v v /- . t b p g - -- (100 p , .g.,g), --y (80 p -, .g. g w pk) (60 p -, .g. g) . F , w pb y b ppp g v g p g, g p v. - p.

cg q g y pv xv v , b f ky v v pf .

t n nn y pg. t v v. W

b k vy, - qv (Fte), b v , w b p by ky v . s y y pp b by-pg.

Allocation decisions based on comparison o Reach-Cost and Quality

a pv g p g (c/r) qy (Q) p p xv k p.ig w w c/r g Q p v

v p x.


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39/108

hwv, ggg g p, w gg xv rcQ p b v -b v g p. ex byfg x v v g v :pv v, vg qy k, gy , , .

Potential impact o spend optimization

o xp p gg gf ppy p p pv x qy b p. a g

rcQ pp v 30 45 p b p g qy w . i b p bp p ggp, v w k kg . W v - pp 15 24 p wg p- gw. Vy vg w v v bgw b f bjv.

************

authors:Hemant Ahlawat is an associate principal in McKinseys Brussels ofce.

Jessica Hopfeld is a principal in McKinseys Chigaco ofce. Sangeev Agarwal is a principalin McKinseys London ofce.

optiMizing spenD |34


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41/108

INTRODUCTION

i y, p v xy v . t bf y , wv, p k y, v. uy, p g p vxg pb . avg , xp, p y 200-250 y py g y k .1 a p g w p f v fpp1, y 30 60 p ypv p p y

g py (Exhibit 1).2 ev gy p g.

a y pp p b , g g pg.

Jessica hopieldrob liNdeNbJ teVeloW

the persistence predicament |36

Persistence

dm


42/108

t p - vy. P w v bf y g k, , q y p xpy xp. i u.s. y, p 11 20 p pz p v, 125,000 $100 b .3,4 s py pvv b y v gv p yg pv . Fy,p p .

t p w. sk y, g ,p p, g p, py, v . t , wv, v b w bw. o xp b nv BP s Z, w ky b dv vg gp vy. t vg py p p pg pv p w , p, BP p p k pg. W bv p p kyv .5 a vy xp Pfz ms l pg,w pv v g p kg rb. i ,t av Pj w bf w g p py pg p pv .6my v p - pg v v.

a w w w , v y b p g p , y g p b pvg , y vg p k w p, v pg k p w gg v. i , w w ppy mKy ( ypv p) g wy p g, pv vw w wk g pg w y k vg p .

Source: Academic literature; National Pharma Council; Pharmaceutical Executive

3060

1020

1020

2030

100

All patients

Percent

Prescriptionnever filled

Prescriptionnot refilled

Took


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MUlTIPlE CAUsEs, MUlTIPlE sOlUTIONsmvg by b b b pw pfbgw. i gy pv c Pkg G (cPG) , p g kpg p w p g pv b p. hg-pg cPG p bv g b . i vy, 100 p cPG g p g w , ig , wkg pp, g--kgy gz. i vw w w 40 c mkg of(cmo) gb, pg vgg b g w qy g kg, b vg gkg v.

F py gg pb b, k , y . n g w wk. i p g k k g , xp, v y p. B yp kg b y g- q, w v .

mKy & cpy b v p p. W yp pv , yp w bgg g. t g kg w p xg wk, w p w Gbg oggb, m.d., m.P.h.,m.s., a P m cb uvy, w xp

ypv a-a. o pp w w:rvw xng : W p qy

pb xp p bv, w gf qv

yg p .

Qv : o qv gp, v,

gp, y y p

b .7

Qnv : W qv vy 810

ypv p pv ky b v -

, y z g ypv p,

g v g, w w pp g.

o pb p qp . W yp p vy g fvj :

t p vv v

Kwg

c b g b p

B g

t qy w py.

1.

2.

3.

1.

2.

3.

4.

5.



44/108


B , w f x g, w bv v p vy by g (see Exhibit 2). W p y g bw, b p b sp P c (g ky , gp, , .).

Proactive p g, k g p w py, k , g g .

Confdent p (g w Pv p) , b ky bv w . t vf z vy ,g p Pv p.

Concerned p v , bb y b y p b p , y gy p g w x . t p kg py.

Conused p v p g , p , v py . ty b g- g v p py p. t vy w .

Resigned p v g , by y . ty w b g b p b b g w. ty v -b, p. ty vg , g k , g vy p .

Skeptical p b y g. sy bv y w , wy b g- k, y ky k y .

Source: Survey of hypertensive patients on persistency/compliance, Fall 2005; McKinsey analysis

Percent

24

12

22

10

17

15

Resigned

13-45% compliant

Afraid of consequences

of HBP but not active in

management of health

Too much trouble to live as

healthily as they should

Have no routine and often

careless about taking meds

Skeptical

5-24% compliant

Dont trust physicians

View meds negatively and veryconcerned with long-term risks

Dont think HBP is serious

Proactive

76-91% compliant

Very active in management

of health

Meds critical to controlling HBP

Excellent relationship with

physician

Confident

69-82% compliant

Condent in ability to control

their HBP and overall health

Minimise/deny severity of

condition/riskLess reliant on physicians

Meds important and have no

concerns about taking them

Concerned

47-64% compliant

Very concerned about risks of having HBP

Meds important, but concerned about long-

term health risks and would rather change

lifestyle

Confused37-56% compliant

Have little control over their health

Lots of unanswered questions about HBP

Bad experiences with doctors and dont

understand their instructions

Most compliant

Moderately compliant

Least compliant

exhibit 2


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Segment AverAgeAge

gender educAtion compliAnce % 90 dAypreScription

deiningAttitudeS

pa 56.4 54% F 46% M

Some HS/HSGrad: 25%

Somecollege: 39%

College grad:36%

76-91% 60% Have a lot o control over how healthy I am

Made a point o educatingsel about HBP

Doctor plays a critical rolein management o HBP

Taking meds is most eective

way to treat HBP

cf 54.3 61% F 39% M

Some HS/HSGrad: 15%

Somecollege: 34%

College grad:51%

69-82% 66% Have a lot o control over health

Believe that HBP is undercontrol

Clearly understand doctorsinstructions about HBP medsand how to take them

Rarely think about HBP andrisks associated with it

c 51.0 53% F 47% M

Some HS/HSGrad: 20%

Somecollege: 47%

College grad:33%

47-64% 44% Araid o the consequenceso not controlling HBP

Have a lot o control overhealth

Not taking my BP meds isa threat to my health

Would rather change myliestyle than take meds

cs 47.8 42% F 58% M

Some HS/HSGrad: 30%

Somecollege: 41%

College grad:29%

37-56% 35% Lots o unanswered questionsabout HBP

Dont understand doctorsinstructions about taking meds

Bad experiences with doctors

Have little control over health

rs 49.1 50% F 50% M

Some HS/HSGrad: 26%

Somecollege: 44%

College grad:30%

13-45% 26% Too much trouble to live ashealthily as I should

Really dont do very muchabout my health until I get sick

Careless about taking my meds

Have not made a point ocreating a routine

Ska 49.3 45% F 55% M

Some HS/HSGrad: 26%

Somecollege: 42%

College grad:32%

5-24% 52% HBP is not very serious

Not araid o consequencesand do not oten think o risks

Dont trust doctors

Can control HBP withoutmeds

SnApShotofpAtIentChArACterIStICS


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NEEDED: MUlTI-DIMENsIONAl, HOlIsTIC sOlUTIONd pxy g, kg w q v vv k y. W bv pp v vy p py yzg pv, b pv . t , y pp bg wp, g p w pf . aw , p p pp w k py, , p, p, py, v p.

F v vpg pp gv p:1) gg g b p p, vp g ; 2) pzg b p gb z by g; 3) vpg p pg w xk pv ; 4) yg gz v ppy. t p q gf , b w bv y y vb .

1. Gaining insights on the barriers to adherence

o yp pv w g p b .i w, b g y, b w b xpv -g. Fy, v y vb xg , vy , py PBm

qy g p g . i , g pp , bg xg p g, pvp g.

o fg b g g p . W vy g b f yp b p

(Exhibit 3). o fg w g p w yp vy w b, g ky g b .

Q22: In general, how often do you skip, forget, or simply not take your medications as prescribed by your doctor?Source: Survey of hypertensive patients on persistency/compliance, Fall 2005; McKinsey analysis

Compliance rates by segmentPercent

High blood pressure

High cholesterol

Type II diabetes

81

69

47

37

13

5

84 84

71

42

24 25

85

95

66

73

4036

Compliance higher for high cholesterolmedications likely due to increased awarenessand understanding of condition

Compliance higher across the board for Type IIdiabetes as condition is more top of mind andpatients are more concerned about it

Proactive Confident Concerned Confused Resigned Skeptical

exhibit 3



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W bv w g z y vy by , v vf, b g- y, k g , p py p w ppy, w b, g ,g .

2. Prioritizing the barriers and patient segments o ocus

t xz p y pg w pvg ,p w b w p g g.F p pv, k g , g wb gy. a b-b w b py g,

g w w v p, .g., p g (crm) g.

F xp, w pp pzg p yp y g, b ky v v:

o p p w b Concerned Conused g b

y v gf p pv, ky v b

. t c gg b

b g p pv

. t c gf v w

k, b v yg k

b v

o py w b Confdent Resigned g. W

Confdent b , y b v, w

ppy pv. t rg y b wg

g, b yg -b pv pp

k f

W w Proactive Skeptical p b

Proactives v pv Skepticals

g y y.

3. Partnering with external stakeholders to develop programsand improve adherence

P p v w pp y w p, by vy w. a y pp b -, p p w b k v pv .

pn: s py py py p , y b y gy. uy, y xy by v p .8 mv, vy py p w b p p. ig py

:

cg b-b g cg m

e p g p, z

pb bf 90-y pp.9 dg v,

p y py w -p

p


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Pvg pv py w g p-pf g. i p p p py py

g p . r, y g

g y wy py y

j gy. dvg

g p p v g g , g

, w p p, pg py

, , . Exhibit 4 p pp.

What patients might say/do What doctors should do

Do I need to take medicine?Are there other choices for me?Are these safe?Look worried

Recognise concernShare materialsTalk about long-term safety dataand importance of usingmedications for long-term health(use clinical data if possible)

Respond quietlyDo not show understandingAsk basic questions

Take few extra minutes to explaincondition, importance ofmedicines, and safety of medicinesAsk nurse to come in to answermore questions

Additional research would be needed to build physician-friendly education materials

In addition, physicianscould add segmentation questions to initial patient questionnaire

Concerned

Confused

Act casual/nonchalantBut doctor, this is early stageonlyIts not that serious, right?

Carefully explain risks of diseaseIf needed, mildly scare patient

Confident

Act passiveUsually have trouble withcompliance

Ask if they feel they can manageconditionEmphasise patient control/abilityto take chargeShare anecdotesLeverage fear of stroke

Resigned

exhibit 4

P p pv py gg, p gfy b v w pp. cpw w pyw p g.

N n : r w p gfypv .6, 10 ty b g , v . cg p b py vb p wv p p w py, c g.

t b , p p p pg w k. m wk b py, p by . B w bv p f pp -- w b , xp, f p, y wk py. s pv v p py , pvg b . n p w v v g, b w, v b p w g w p.


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pn: P, , g , b f y. op- pg , b p w b g- g. cp p gg pv z pg by g k v. d-- , vg, b b f. t pv gg, p b p g w y f pw g.

p: Py py , y f w p py p. ty v p p yw p py.

uy, p p py w g.P g py qy, py wy fy w vy y p , vv w ky by p

W w py pp p p b w py.t f g p by g b pyg v pf v, g, f , . t ppy p. P p p py pv g pg.

Gvnn: l, , g v k z.P w g g, xp, y v xpy y by

vg yg xpv . a g, b, p w p y pg, pb wbg j a .

my pb v vg bg byw ky , g pv. P p p w ky g f pv w gwg p. t pp x pb gg , vgg pb gy by.

i , m m, w g g py w v p g p py, b v wg g b py.

cng n: P p pv g k. t p py gp, py, v p p. t yp b w vy pg w vv, b pp g w g p py b . c b py pf pp, g w cme pg, gy, db cc. t y gg b, py y, b w bv b p y gy.

4. Rallying the organization around the opportunity

i bg b g x pp, p w k. ay py w p s. rg w q kg b p v. o py g , g gy p, ky p py , gv g p b w x k.



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Getting Startedt bg, p p f pb, qyg , k b p b w y -p. ty y w v -p p kg gf -y v. ty y xp vb p .

o g , py y gz, gg ky k g pb gvg xp k k.

cp g py v gy. ty p , , g. a y by g, gz

b b p y vg p.

CONClUsION

n- j pb g b y. W xp pg w g , bgg g p v f p. cp p pypv p p-by-p b. B y . t g p, p py, j

gg. cp g p y v wk w p , -g pp. s y qky, p k g- w gf v b -v.

authors:Jessica Hopfeld, Rob Linden and BJ Tevelow are principals in McKinseys

Chicago, Silicon Valley and New Jersey ofces, respectively.


1 upb .2 W h ogz,Adherence to long-term therapies: evidence or action, Gv, swz, 2003.3 a P a, i., Medication Digest: Compliance-Adherence-Persistence, 2003.4 n P c tk F cp, Noncompliance with Medications: An Economic Tragedy

with Important Implications or Health Care Reorm, B, md, 1994.5 d pg b - g BP s Z Wb. i mKy vy

ypv p, dv dv hctZ p p 65% v. vy vg 53%.6 mp Journal o the American Pharmacists Association, m/ap 2003.7 Qv fv -p p vw ( w w by p p),

fv gp w p 5-y w 15 p.8 P, up d. dv, mw m., Py a P rgg a m rg by

P w c i, Clinical Pediatrics, J 2006.9 ay PBm g xp w vy 4 pg p 90-y

pp, p by 1 pg p.10 K, h-sg o, Jg-a, a b : p p ,Journal o Advanced Nursing, nvb 2003.


52/108



53/108

INTRODUCTION

P p x g w b. cp k bv v y y k pp, vp pgkg g, pz py .t v v g b v p v v.

hwv, gv z k v, pg py v y g p by p. nw b , g k py vg . Fw b y q gwk b p p w p.

W bv b v gf ppy py , , y pp p . tg pb pv ggg, b v b vby w p w , gvgp vb k . By vpg v, gg y v pv , b xp pv pp wy y p v, b v. F xp, g b g p f vp

w g gy k . t gy w vy xp p b, gg pvy xp - ppy.

a pv gy b gg, gpy p wk ky w v.a pv gy, , b ypy z v py p b p, pg , py . a pv y q gz , py vpvy w g- .

t b bv w y vp x pv gy. W b b wk gz

pv gy, v ky , g ppv b.

uu

dllu

oncelyNN dorsey bleil

mark kleGerraJit malhotraalia ZaharudiN

and You thought a product onlY launches once |4


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A BAsIC FRAMEWORK TO ORGANIZE A COMPETITIVEOFFENsE sTRATEGY

cp gz pv gy y wy. Bw vvw pp w v v.

Using a diagnostic tool

i vp x pv gy, b w kg k . a g pv gy pv y. o w b b y

wk w x j p [Exhibit 1]:

cpv g

t p pf p

V pp g

Ky op l (Kol) g kg

og p (f py)

c v b.

Instituting a cross-unctional management team

o py f, g . o - g pj g f pp by - b-. t 1-2 pj, v p g gz w v sgc. t b pp by b- gz ky p g wk.

1.

2.

3.

4.

5.

6.

Keylevers*

Optimal competitivedifferentiationstrategy (productpositioning,messaging)

Quality/strength ofclinical evidence

Range ofapproved/on labelindications and/ordosing requirements

Phase IV strategy

Physiciansegmentation andprioritisation

Value proposition

by segment forphysicians (andother membersof practice)

Patient valueproposition (brandand corporateimage, patienteducation, PR/advocacy group/media strategy)

Access andreimbursementsupport programs,and persistenceprograms

KOL outreachstrategy and plan

Publication strategy

Scientic/medical

event planMedical liaisoneffectiveness

Professional training

CME

Overall sales forcesize and coverage

Rep skills andcapabilities

Sales aids and toolsKey accountapproach andmanagement

Targeting, call planand territorymodeling

Sales forcecompensation/incentive

Sales supportsystems

Supply chain anddistribution

Processes, systemsand technology to

ensure service thatmeets customerneeds

Sales processes Finance/terms Other

* Not exhaustive

Competitive intelligence

Based on strategies from several pharmaceutical companies across the U.S.

Bolster clinicalproduct proleand positioning

Strengthen thevalue propositionto keystakeholders

PhysiciansPatientsPayors

Bolster KOLmanagement,publicationplanning, andmedicalmarketing

Outsell thecompetition

Ensure superiordistribution andcustomer service

exhibit 1



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A COMPETITIVE ENTRY DIAGNOsTIC

Competitive intelligence

t f b pp pv g v b gy, g wk; w w , g p kg b p. tw b vp gy p p g.a w g x yz pv g fg g p p.

cpv g gg q w b

p gy p g . tb vg b k g pby k b . F xp, q g p w w wb b xp.

Gg y vy q gg gzv. cpv g b - v, b b b b b p w g b. t b b p f--k b v vp p pv g pb.

Product positioning

a f--k b k z g k gw.i pv k, k k g b bw kgw pv pg p k . c b g ( ) pg p v ,pby, p p p.

i g w xp y w b kg pv pvpg , p g . a pg xpyp b b b (.g., g X g g Y), py k p (.g., g X pv g g). exp p y b pb y b. hwv, w v b g by bk p pv . t bw p g y vb pby vb . t b g (..,w gy pp g) by (.., w b ).

cpv pg pz b k. F :

a g y kp p b gb ,

b qy b gg.

a b bf g p

(py w p- g).

Fy, g b w b

v b q pg.

1.

2.

3.



56/108

ib w vp / p iV gy bpp g. F g, b y vp pp kp. By g p pbv , b g w b vb b k.i , y b pby b b.t k , g gg, b . W pp gy vp

vg v p b p, gy ypy -y .

Value proposition

P g px p k b v g p: py, p, p, GPo, pg g . F , b vp pg v pp. cp py fv v .

sgn n g n ( n ). cp w p ypy g py b p. hwv,

pv k, g pp b v g , w b v. t p j w b g v yy.

t nn n ngng fn. a y pp b yy k , b y b p k; vpg k q b . a gy fg yy b vg bpy p p ( b, mvg wy p yy b yy).hwv, p p pv v p pv y q xv ky b.

dv v n n gn. o f g,

b vp g-pf v pp; y pg/g, gg, gz . F xp, p pv v- v g g, pv kgpg, p pg, p yy pg. a w bvb y b y w bf p p v- v. a w vb b y y p p p g g v p pg, b / p py. a w vb b y w py p g p p, p yy pg, w v .



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vwf

yybll

dv ng n v n. i g b py v pp g, b w f p-g g p . t v pp p b g pp; p vy, , yy pg; p pp. P w g pp py.

en n n . my p, py g py g, pv gf pp py p p w v g. P z, k g - g b p . a g pg b, g -py , g, g, ,

pg. i xpv , py w p p w p pg b wk w b py w p b b .

A pharmaceutical company was acing pending competition or a core product, Product X. Historically,

while the company sold other products to the same accounts, it segmented its customers purely on

Product X sales volume. Marketing programs targeted high-volume physicians based on Product X

volume, and it based its sales orce incentives primarily on sales o Product X.

As part o a shit to brand loyalty, the companys customer base was analyzed using a 2x2 matrix based

on value (the vertical axis) and cross-portolio leverage (the horizontal axis), as a proxy or loyalty and

dened as ollows:

Consider customer A, 90 percent o whose business with the company is with Product X

and 10 percent with Product Y. In this case, Product X has very lit tle cross-portolio leverage.

Consider customer B, 30 percent o whose business with the company is with Product X

and 70 percent with Product Y. This incumbent has signifcant cross-portolio leverage here.

Through this assessment, it became clear that many high-volume customers had very low leverage

that is, they did not buy much (or any) o the companys other products and many low-volume

customers were very loyal to the overall portolio. The company soon realized that ocusing on raising

the penetration o other products would turn into a key strength when the competitor entered the market(not to mention the near-term cross-sell upside).

1.

2.



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Key Opinion Leader management and medical marketingo b b y f pv p p vpp g, b vp gy g g py, p k. sv p b p v Kol kg gy, g:

a kol n. ig ppg w w b

ky p . a Kol ppg x b

a n g. eg pb gy w

p gg pg g k bw

pb

tnng n n. cg pg

p g pg p py b

b w b p bg p p

p w v wk v

cnn n . Wkg y w gz

pk vp w pv gg.

t Kol v ky g

pv g

m n. m b b

pv g.

Outsell the competition

eg p w g x v , p, pvk q w-b pp . P pv , y b -pz v g g pp g p v.

o py g pz , b gz x pz pv gy. a g x ky ypy p.a b w q p vgb g pz . t g y gg g p w k . i , p v g g, p, g y p p pv y. mkg jy b p w y p ; p y pz g b, b.

Fy, vk gg, yzg, yg pvg p p p f. W g-p, b k p pp.


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Customer service, distribution, and back-ofce systemst f p g bk-f y pp ppy-g. i pv v, p v by b ky kpg ( g) , w k vk p gv b v. Ky p w:

sppy- g, g b g, g

f, qy , g wk pz

c-v pp, g - g, y g,

pv

a b pp, g b

pg p py p vg b p.

KEY sUCCEss FACTORs IN IMPlEMENTING A COMPETITIVEOFFENsE sTRATEGY

dy--y g qy g - pj v g . hw p v vy pp gg p vy? t b ky g pg pv gy pp p v .

Primary challenges to implementing a competitive oense strategy

mk v g pg pv gy. tg - pp b bv p y wy g b k gz p. W v bv w ky g.

l gnzn n n. W v pg g 12 18 b p k w ppp k v b. F xp, b p pv g b p b p w p, wg k z b g. dp y v, p v pv g w by qy . Gg p pv gy v f b y b pjpv .

i p v, py f gg g pv pj g p. s f pv y--y wk, w -

b p, , v. o v g , xv b g pv b wk, b gy yb .

e n n . o, v w g b, wy wk g. F xp, py w kg b wkg vpg pp vy g. i , b wk jy w . Fxp, p gg g vpg p gg, gg b pp pg, vpg kg .



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Mitigating strategies to manage challengesa pv gy b vw k g g p.t v pv w q j gz g p. i xv gy g p, bg v . s g gz by- :

cnng gn n nng . ug

b pp gg ky gp pv pp p

b by- g gz b g. t

g p gg gp vy gz,g w j wg xv bg

bk w w.

bng ng n gnzng n g. a pv

gy ky gp f g. i p

vp wkg p g , w

y f - b. t

bk w by

j vy.

pzng n qnng. B g fg, p

y g-py v b p gy.

t q v y b pppy

. a g , p x y p

g b p. F xp, pv pg

g b vp b v pp f b

kg gy vp.

innzng nn n n fn. Pvg

g (.g., y) -gz p g vb

wy pg gg b, g

p, b b. t p

b b - - b. rg p p by wkg b g

v w y. s gz v vp w v

v p b wkg .

c gw nv, . a b pv g p w

y wy p b, w wy gw b

p py p. By ggg gw v,

pv g v by

gz g pp.

a vy py w g, w pp xg by b-. t j b w bg p , b w fg g p kyv. By , b pw wy py p y bw p b p, py vg w kp wy pp .

1.

2.

3.

4.

5.


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63/108

INTRODUCTION

P v g w qg vg gb pz p. hwv, vgg z gy gg pb pv k p g p v g p. t v by pv py gg gw b g p py(py g ), gg vg y , v -g . t b pv gg g gg w, p y py g-k pp pz vg p, b y p f pp gv v-vvg py p. Gv g ypy g f

g v yp p (Exhibit 1) v b fy v pp.

wystrategy

lyNN dorsey bleiloliVier leclercraJit malhotra

mike payNe

creating a Winning paYor strategY |5


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GROWING INCENTIVEs FOR PAYORs TO MANAGE DRUG sPEND

Py v y g v ggvy g p p v xp. rg v gg py, py p y. sy, p gv py, pvy m hp i t w 15 y m bg gy p. ay, u.s. py pg v-g by pg p py b by g b

g by g p. a py k p v py k, p gw ggvy x vy, g py py p v g.

F 2000 2003, py w b w pg p . F p3 y, wv, py v b by p w gw y 6 7 p. F g py, gf gw (mlr), v pv py p pg p v. i , b p (trs) y, pvg g v py

b v ggv gg g .

Total = 100% of gross sales*

Profit

MC spend**

G&A

R&D

S&M

COGS

* For U.S. market, assumes COGS, S&M, R&D, G&A, and profit represent 20%, 25%, 15%, 10%, and 30% of netsales, respectively. Rebates assumed to represent 15%-20% of total gross sales

** Includes rebates, discounts, nominal pricing, etc.Note: Savings estimate excludes other potential benefits (e.g., increase in market share, increase in revenues from

improved access, etc.)Source: Team analysis

17

13

8

17

25

20

exhibit 1


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c v pvk by py.h bf v b -gwg gy py-b bf 1999, g vg 9.2 p p y. F vg F 500 py, bf xp w b g -x pf w x 2 3 y.epy pg w vy p py. F xp, bf by py wp p: 2005 ppxy 266,000 w u.s. f bf 2000, 13 p . s gg b py byv f -x py vg by 50 p.

epy w pv py g w ggv

pp py, g b g(g- p) g (pp p w w - g y v g- p).t vb , wv, py v w p gg b py, g -py, -, b, p. c-v p (cdhP) k f hra hsa v b gy pp w py: cdhP vyb y 2004 2006.

a py p ky p , pyp g-py g. ag y by gp py p-b-p- (PmPm) , bg g

(gy g py yy w py p) g gwg (Exhibit 2). t gw v gy by g w pg gy, , -v, y , k p.

Source: Milliman USA Late Survey; Milliman USA Trend Model; payor interviews

9

6

5

IncreaseDollars2001

PMPM spend

Dollars

2008

52

27

18

23

4

71

40

32

49

13

124 205

CAGRPercent

7

17

13

14

11

9

Professional

Inpatient

Outpatient

Drug (excludingbiologics)

Biologics

Total

exhibit 2


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INCREAsING PAYOR INFlUENCE OVER MARKET sTAKEHOlDERst by py py g p y v k y. i p v y, w p v py . hz g py gg pw w b pv. aw pw v f vg py v p v g gv v v g v .

a b py p k , py bgg vb, py, .Py v gg vg g yp . t p x py w 54 p qv

g v (Exhibit 3). t w g , u Wp, pv vg 30 .

W py v g, gvg py vg g, g g gf vg pykg g w pv. t g fv py 70 85 p v py pp i (85 p), tx (81p), c (73 p) nw Yk (72 p).

t w z g py p by gg w v w g py pfy py w py bf g (PBm) py py pv

(sPP). V w PBm sPP w py y gg z. exp pv PBm (w/p by py) WpPy mg, u Pp s, ciGna Py sv.my py bgg py py -.

* Top 6 plans include Wellpoint, United, CIGNA, Aetna, Humana and Kaiser. Also included within the Top 6is the recently announced acquisition of Sierra by United (Sierra has ~260,000 Part D lives)

Source: Interstudy; McKinsey analysis

July 2006Percent

Top 6*

2006 commerciallyinsured lives alllives counted equally

2006 commerciallyinsured lives adjustedto equivalent druglives (senior life =~5x


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TRENDs IN PAYOR TACTICs WITH KEY MARKET sTAKEHOlDERsTO MANAGE sPECIAlTY DRUG sPEND

ag py g p w yp kk (, p, p), y v b ggv

. Exhibit 4 w p py g z .

Source: Payor interviews; McKinsey analysis

Benet designs featuring higherpatient out-of-pocket burden(e.g., higher deductibles,co-pays, co-insurance)

Disease managementprograms (i.e., ensureappropriate use and increasechronic-therapy compliance)

Primary focus ofefforts is to manage

Utilization Cost Predominant tactics

More restrictive medical policy(e.g., prior authorisations,denials, step-edits, quantity

limits)Drug acquisition requirements(e.g., specialty pharmacyversus buy-and-bill)

Reduced reimbursement fordrug and/or administration

Discount/rebate-basedcontracts for access and/orpreferred position (onpharmacy and/or medicalbenet)

Patients

Providers

Manufacturers

Payors

exhibit 4

Patient-ocused tactics

ty, p w q py - py p, g w py xpv ( $1,000 v py), p g w q k, kg py pywg bj g --pk . hwv, w, xpvg , py py g g v p b g g b - p --pk x ( $5,000 p y). t g b bjv gy vvg p f p py b bw g f b p v q

( p by g ).By , 8 p y- p pb 70p . my - p (.g., ,b, jv b , ) w p g g g py g - . t w p, py v g v -g pg, b xy v pv k m hwy, yg v g. ag x p pg bj wp b, v v w gf bf.


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Provider-ocused tacticsc py pv g vby py p pp, jpv f v b pp (gy wg xp by m mz a 2003).

Py y v vby py

p by pv. p zn (Pa) qg -g-y ppwk pv , w yw z

ppxy 75 p v qg Pa. s- q v p b p xpv/ky

pv, k p w gg bf --y p. Qn , b Viii p , w 40 p py g p py . Fy, -

q - py ng ng vg .

F py py f , pv v g y by qg g bg bby py g ( kw by--b). t b wy b avg W P (aWP). i bg b p , p by y 30 35 p g vg g p (asP). hwv, pv

b ypy v aWP ppxy 10 p,g v g pv. m w f j py k b , v m mz a(mma) 2003 w pf by 2005 py- w bb asP p 6 p. c py w mma xp wk , vy y, k p pp. a y 2006, ppxy 25 p p w bgpy- g asP+ b ( ); ppxy 45 p p x 1 3 y.

s py v g py v f v pv by kg pby b byg bg pv,

qg py p y . a y py y , ppxy 30 p py q py p xp pv by by--b. r v gg b f v pv by by--b v pg py p .


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Manuacturer-ocused tacticsW py xp pv ppp v y fy, vw w py gg , b py p v b . hwv, gvpy g vg v pv, g w gy pvkp py p, py w b v ggv g - gy xpg p b g.

IMPlICATIONs FOR PHARMACEUTICAl MANUFACTURERs

igy, py bg by ky , v pv p. t w p py vg b g-k g, v g-kgz, g p gp w v gz. i x , v ppy gfyp pp pz vg p, by g j p v pv.

1. Sharpening payor strategies

t g p fg py gy g py,

PBm, py p w py z w ky g. t g pv b fg b py g. a g g-k gz y wpy, g py f , p, kg p, , y py g g-pf g bjv v p pv pf vpy. t g z, , v py f-gz p f p (.g., wkg v v y v ky g v, w y b ).ay, g v wk v pp g w py pzg v

b p py (Exhibit 5).sg g g g py p pz b / . i g ypy py py, p, pv b bf p w b py p, g w v py pv . F xp, v y py b p z bf g g - py.


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Source: McKinsey analysis

-25

-20

-15

-10

-5

0

5

10

15

20

25

0 1 2 3 4 5 6 7 8 9 10

payor 4

payor 5

payor 6

payor 3

payor 8

payor 7

payor 2payor 1

payor 9

Rebate

Percent of sales

exhibit 5

2. Developing comprehensive access strategies or patients and providers

t ppy pg p py gy px b v, p. F p, b pp g pg -py w qyg pf. F pv, b pp b q b, g p bg p, gpp g py k p z , vb g py p g py b, . i gy

pv py p k, bgg k b-pp v p pv .

rb pp p pv pv b v gb v, k wb by gxp, f-b v pv f py q.t v v gf pk p , (pp ) p w -g / -py pg. ay, y pv g -f j g w y by--b v, pp gf p v p .


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3. Enhancing analytic capabilities and internal coordinationt b-g w g bv, p w pv qy g k, w b . sgg q y pb v pby vb (py b pyp) w pp py g v p p-kg g-k gz.

a ppy v bw g-k gp k (.g., b , gv , , p , p ). a g-k gp wk w b g v g bjv; wv, g p py b vp pxy py g pg. F , by py w g -w gy bw g-k, , gz.

CONClUsION

dvpg p pp g k p w g

bp . a kp vv gg w g py, p w gyp vpg g g-k gz pb.o xp w w b y p vvg-k g b bf pv b- , b pz pv .

authors:Lynn Dorsey Bleil is a director in McKinseys Orange County ofce. Olivier

LeClerc is a principal and Rajit Malhotra is an associate principal in the Los Angeles ofce.

Mike Payne is a McKinsey alumnus.


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INTRODUCTION

cp xp bg b p gykg b p. W , wv, y b k q p . i gy kp, g ggv pb v, g bp g w vy . t , gp, wf, gy pb g, . b gg b w p .

P b v v gy k ggv

p. lw gv g v py p f b g . mw, p y y , v gw kp g bf v , p Fda g g y ppv f.

B xp w b b, w v bp, g w w p g, k y bp g vy .

ev pvy ppg gg p ggg g y b p . i , b gg g b v b g v p g pv v g q. lvgg

w g x kwg pb vpg pyg v gy p b p.

addressing threats Before a Brand is in crisis |70

erica NemserdaVid QuiGley

adressing

beore a brand is in

crisis


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sEEING THE sIGNsmy b v p g p w g y g. cg b v p k bg y (.g.Pb cz g Fda p g k), xpp , gv w j , cg qy.

t p w p g xv coX-2 b (c ); ( xy); adhd p (pb b by v ); o pv (g p pp. t g gwg y p bb pb v vg b.

W p b, f g y b gvp . rg kg b qy v y gg . i py p g bv y bgpg , qky pg p w gw . l-g z by g g

-g p b (Exhibit 1).

Source: IMS Health

0

100

200

300

400

500

NRxThousands

Reactive approach

Reputationmanagement program

implemented

Pace of uptake slows as skepticismabout product value pervades, with

cumulative effects

Proactive approach

MajorConference

Negative editorial inacademic publication

Public activistgroup challengesproduct value

Additional clinicaltrials providepositive news

Mentioned inCongressionaltestimony

Popular pressruns negativestory

exhibit 1


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uy, b y v k b pg pb . ty ypy jy kg ,k, gy py . a v v kgg, pg, g, x q w w .

t p f py b . Py p w q : s y p w pkg b g y y p g. W i ?,, i w J X g y p b p k.W y p? B k k g pb . t p w b v wy w

b ky v pvg g. t b y b b w p (.g., , vy, Pr, gv gv gp) p, b g kggz g w b g.

DEVElOPING A BRAND REPUTATION sTRATEGY

a by g, v jy b g wbf pg b p k pg g b pg. s p b g ( gv by Fda, xp) pb g g b v. a v pg

v g bf qk , p, y, p.

W pf p z, b p qky w g y g. i , y b v v g, pv gg, g k. n y g v jf by g y k, y b q w b p b, vp b pg.

o xp w b v b g pb v b q :

cg b pg p p

v b gy, pg, pz p

Wk w w g k p pb b

c gg pf g

mg v, w, pvy ppy

tk by b b p .



78/108


Change the brand planning process to ensure reputation issues areincluded in overall brand strategy, planning, and prioritization processes

B p y yz p k g k p p b p. i y p, g g y pp p k y . i v by p -b kg, b p p vpb kg v :

tgy p :

m ky x zmp p p v vp g pp

.

h v p g v y g

yp :

m b p xg p x v

Pz x g x b b bjv.

W g b p k p k, p g g p p g v b gy, g p. dg vpg g pp k j b v g. rpby g x w b p pb v x(.g., p, ) pp ppy p k (k b v pj p-p.) s g ( bw) b vp -y w gp.

Fy, p p k g , , g b pg p. t b pg g p g xg k (.g., g, w k y, y

p). rp k b g . dg g k qky b py b .

Work with a wide range o stakeholders to shape the public debatein areas o common interest

By f py, b p kyk , wk w x p pp, g pw gz v. t pp x g -gz p w ky x v.

t k g b ky p (w bypy k), w gv g, p, p vy gp, /v. t p v, ppv, k. t g w p b pz k pv pg v gg.


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80/108


81/108

Crat consistent messaging to address specifc challengesW vpg g p , b g w g py k gp w v b pg. t, g y p w , g, xp, pb , pb (.g., v y), v g, . t g g g w g y b v b g pg.

t v gy g yp b b-b gg v p x xp.

W y bk pp vg , kg, gy, pb /, g, g, gv pv (g ) yg wk gg g, v wy p y gyp. u bjv gv , gp vp gy vb gy v gg. i p, y vp g g ppv p,w b y vb b py w .

Manage events, news, and media proactively and opportunistically

cp f w g pb vpgy p. B gy pg , vpg pv gy pby g p g w v

(Exhibit 2). t by v w p p w v bvv kg x.

s p v pv p, w , gg, , pb f b . ty wk w v v v , vg g kp pvy py.


Map complete stakeholder environmentand conduct root cause analysis: allies,ambivalents, active critics

Understand specic inuence of publicdebate on prescribed usage

Activate a carefully constructedinuence network Develop key messages and effective

means of inuencing key stakeholders

(e.g., KOLs, Congress, media) Develop external champions andsupporters (e.g. patient advocacygroups, Congressional supporters,media)

Create forum for developing andexecuting cross-functional messagingand tactical tools (e.g., salesforce aids,letters to Congress, advocacymessages, basic media responsetoolkit)

Proactive prevention and management

Comprehensive mapping of all upcomingevents (e.g., meetings, publications,public forums) to identify opportunitiesand threats

Proactive event management andmessaging, including

Complete cross-functional full-timeevent and crisis management teams Regular strategy, tactical and

coordination sessionsBroader and more intensive interactionswith allied organizations and individuals(e.g. coordinating multi-organizationresponse to news and key externalevents)

Repositioning brand Realistic target perception Supportive clinical strategy

Reactive situation management control

Conduct all of the proactive activitiesPLUS move to total situationmanagement:

exhibit 2


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xplfb

ffu

wwl

reSpondIMMedIAtely,flAwleSSly,AndreSponSIbly:

Notiy aected individuals (i appropriate)

Prevent any increase in the liability e.g., ensure that additional usage is stopped immediately

Develop a program or handling aected individuals

Proactively reach out to any agencies/associations who will be commenting on the situation

and/or making public recommendations or product users (e.g., FDA and AMA)

Consider all constituencies throughout your business system, e.g., develop generous recall/rebateprograms to maintain goodwill with distribution chain

putInplACeApproprIAtelegAlCounSelfroMoutSIdeASpArtoftheteAM

putInplACepublICrelAtIonSCounSelfroMoutSIdeASpArtoftheteAM

underStAndtheMAgnItudeoftheexpoSure:

Understand who was aected (e.g., all users, those with certain characteristics, those who

used the product in cer tain ways) and how (is the problem now or in the uture?, can uture

problems be predicted?)

Understand the potential impact on the companys nancial viability

reSpondtotherootCAuSeoftheprobleM:

Assess whether an underlying problem needs to be addressed

Consider whether any corrective action needs to be taken

ConSIdergoodwIllgeStureS,e.g.:

Show a sincere eort to understand the issue with the product, and how it impacts

the aected individuals

Create a panel o global experts to advise on the problem caused by the product; this group

can provide the company credibility in trying to do the right thing, and become excellent advisors

and even expert witnesses

orgAnIzeInternAllyforthelonghAul:

Choose the very best people rom each area

Make it okay that individuals outside o this group not be inormed every step o the way

Remove all bureaucracy or this group

Ensure the team is properly supported (e.g., develop a war room, provide generous logistical/

administrative support, condential computer drives, ling system/library)

Ensure that there is a lead contact within each relevant skill area (e.g., legal, research/science/

medical, investor relations, PR, project management)

Create internal ground rules and control communications to absolutely everyone outside o the

project teamCreate standard processes (e.g., standing weekly meetings, group calendars, group action-item

lists, regular reports o critical inormation)



83/108

dvpg yp gy q gy g v gv z (.g., , cg v, p ,p g). c v g p b p p j v v gv p. t v w pv pv gg, pp k vg pp.

ivvg gz gy pg y, g g , v by g . F xp, g y v vy , v, p gg, w b w v pp bg, pg, pp, g w b, pv, p gg. i w v p gz

w g . P k-g Pr f p xg , p y w py p p b p.

Think broadly about brand perormance metrics

B b g (.g., p , g b qy) ggg (.g., k g) p g.P g b gp vg v,pg vy .

t k w g p y , y

b , v p. t g w xg pg b pyg g. o p pg kw pv, w b v by g g bg v gz (g ). lgy, pgg g vy q w ( w pb) gz g xg p( pb w).

CONClUsION

t p pg b p gy y b , b p wy p. t p q gf b x . W v by y p v yb , b py bg b v. ug by- p , gv gz k x y, g pp v wy.

By pg gy g g, b qky g x p g p gv v.

authors:Erica Nemser is manager o programs in McKinseys Philadelphia ofce.

David Quigley is a principal in McKinseys New York ofce.



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INTRODUCTION

a n:This McKinsey classic on The Changing Role o IT in Pharma is even morerelevant today than it was when frst published in 2005. The urgency o the twin imperatives -- IT

efciency and IT driven innovation -- within the commercial unction has only increased in the

ace o looming growth challenges. In addition, external disruptions like the emergence o on-

line physician communities, clinical decision support and the increased transparency o clinical

data and outcomes are changing how products compete. Those companies that successully

translate the experimentation currently on the periphery to the core o their commercial model

will gain a signifcant competitive advantage.

P w p it pv fy v.

cio p y v ppy b p. t g w b w. W b g p ,p p kg it w g : y pv

fy it v b v. nv b v cio yy g qky.

lfitPharma

sam marWahasteVe VaN kuikeN

the changing role of it in pharma |0


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t b g vg . t py b by pby p , g g-vp pvy(g , w g), gy y, p gwg b - g b. t by pg f p y py, j wk ; g p p

v by 25 p 2002 (Exhibit 1). mw, p k b p ( g vp z) k w wy y pvy.

it g b g. Bg p p g zg p, g p g w bk-f f, , . s

w q it . eqy it pp b v. Pp xp it pv , p p gy pg, g pg pj, pv gg py kgpg. F, b y w y y bkb g $5 v.

t w g, p cio w v it gz.ov p , it pg p p gw

v (Exhibit 2), py b b y b it v v gy z. i yp p py, fy w-f v k w it . tg b z y p pg (erP), f, b g, g, g w jb yg . ly y g y k pb p g it p fy g pp v. ify y: 85 p yit pg g w g ppg p . i , it b p b b b p.

Declining margins

29.6

2002

26.0

2003

21.7

2004

Worldwide margins for pharmaceutical industr y, EBIT,1%

1 Earnings before interest, taxes; weighted average of top 10 companies by margin for which data were available.

Source: Bloomberg

exhibit 1



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Spending more on IT

2003

2002

2001199719951993 1999

5.0

8.0

8.5

12.7

16.6 17.318.9

236 280 296 333 386 421 490

2004

19.5

2.1 2.9 2.9 3.8 4.3 4.1 3.9 3.6

545

Worldwide IT spending in pharmaceutical industry,

$ billion

IT spending as % of revenues

Total revenues, $ billion

Source: Gartner; IMS Global Learning Consortium; Rubin Systems; McKinsey analysis

exhibit 2

t p cio k gg it fy p b b , it p b bjv w v p py by p v x . t wg w p pg; g w p p. cio b y pv b fy it pp b v, wgg by g p g p gy pb.

i y xv p pv wg p. a py, cio p p pvg it

fy b g bk pyv pv pg by 18 . a py, cio ppyp it fy b-b pj, b pp qky g , x g, w it gz w .

cio k g y y g pv pvb: kg w g , p, g g.ty gz bf, g, - p b f py b gy it gz by v.


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THE IT lEADERsHIP CHAllENGE

ipvg fy pg b v k it . t fy, cio py , gg b v p. sppg b v

q pp w b wg b g. mv, fy k y by g v-v , g p p, fg w b v .Pg b v, by , q it w g b p pv v. W , b v wg g by p v g. t y g p j . t cio y gg f b , w, y xp , g b.

a py. lg pg it fy b v p it gz. Fw p pv g k it pj g v g py, w vby . t pv k p w.

t g, p p p: kg itfy f g it-v b v, kg b v p w w , gg fy by g bit p it v. e pp vg wbk. i xp, p p vg w b kg wg p, pg vg b, gppg w vg it pb v, b.W, p p.

t pb k y b w p vv. l k y .


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Streamlining IT

IT cost reduction through improved efciency; disguised example of pharma company

30.7% savings over

18 months

100

69.3

Total IT costs; index:costs at startof transformation program = 100

Start of

program

18 months

later

7.0

1 Rationalization = evaluation of applications/infrastructure portfolio with respect to consolidation, redundancy,

retirement of elements.

Breakout of savings

Reduction in capital expenditures

Rationalization of software

applications1

Vendor management

Rationalization of infrastructure1

Streamlining of support services

(shared services, offshoring)7.4

5.3

4.7

6.3

exhibit 3


The serial approachP p k pp by g gbzg it fy. o it , y it-v b p v. t pp k g 18 24 fy p , vg b ky b b g , wy.

i f p, cio it , b itp, vy g ppvp w b, k fy by it. a yp p py, , g, r&d w gp it pp, pp , p k, .a , p w , p, y g. t py p it gz, bk y, b v it .c-vg pg bk pp p, g w v vp pp, g p k pp. i wy, py it by 30 p 18

(Exhibit 3).


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a g py p- w gbz it p, it wg v w . t py w, gb itgz w w z bg g cio itp b g f wy. c gbz it-b p, w py g w.

a zg gbzg it, p p wg pp bg g , gb p ky b p f, , ppy , bf w-, zpp. t v v g pb g. W z, gb p, b y w pp g p v

r&d.

t pp p bf. B g k vv gg v, k pg -ppg, p g fyp f gbz v. t pp gv itgz b y g-g pb v y it fy xy b v b.Fy, y w g pxy p b by w b, by g wy p w. t b w b ky p p k w y kw it gz y .

The parallel approach

W p p w v it gz b p it-v bv , y k b p. W pp, pp pb bw w w xp pb v fy, w b p pp it-v v. cp b by vw pp xp it . o p py, xp, gv pby pg b v xv w bkg b gy pg. h w v v b , r&d, ppy pp g.

B pg p p , p g -g p pg p wy g g w gp gy g w y--y p w p. cp p p wk b w y y 10 15 pp p yp pp z pp pvg yp. Fy, pp q -g p pp vp. t ppp w-v v pxy fy, y w pb it-v b v v ggvy byg pf pb v.

t p pp b ky, wv. W p -gp pg p, w p pw y k w v , w g w. t p pp w pb: w p v fy v , it bg b fy pv kk .


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Driving TowarDs MarkeTing excellence |8

The outsourcing approach

a pp g it g fy p py. Byg it b gy pp,p pz py p v it b v. og , wv, p; p ypy p x pg b g y it v. t pg v yg pp fy , g pybk b p, g w p it b p pp, gg fy g.

og bg pv p y. ag g-,y q w p it

w, y v p, p k kppp. i , v v w y pv pf v ( xp, g pp v Ww lxp) g ypv- -y g .

og gy y it b g.mv, pp vv - -gz p . i y, g pp by . t bf xp xby, wv. a cio w z, g g p gw y q pg gy gv. og

g g p, g p pg by g v p.


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CHOOsING THE RIGHT PATHag j p p vg it p g b fy v, w v g b b wy g w w xby b p v.

a b v . cp v g k yp y g w-p pp. a y bp py: p pp w gy v pp w wy k. cp f pp y v bk p g pp. i , g, b p p gy py v b gy.

Staying in the game

F fy b p w b gy y g bygg , b p b p vg w k. F p, pvg fy p p pg b v . t w pp, wv, p b fy g g vg y xp. mv, b y v w it gz . oy b-b pj b p g f p.

sg it fy b-b p y q g itp. t w p p it gz z g, w gz kw-w it gz, g gv, vp w, p. By , b-b p b p w p kwg b it pp, by b p, p v w pp g w, g. oy y v p b pb.

cio p f k w b pg

pp. mgg p it gz, b pv vg b g by pg b v y.a py, xv j cio p pppy w fy ggg vy p p gpv py. i p, vb w .

Winning within the rules

t g pp b k p. i y py wb gy b w , y p y vqky b w . s py k p pp , w pxy gz ppp. mv, g v b xb g byb p wy y p, g, g , p . cp g p , wv, yz ppy vp g gp v b gg . tyw g k p gg p. a x q yz g ppy, p bg b v .


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F p ppv, p cio w g v-g xp wk vy w b pv p. t g pp b it fy bb, b

772957 pmp commercial compendium dtme

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