Market Watch - Pharmaceuticals

Finding Opportunity In A Complicated Sector

Market Watch - PharmaceuticalsFor distributors, it can often seem like winning new sales from pharmaceutical clients is like navigating through an obstacle course. There are always nets to crawl under, walls to climb over and hoops to jump through. But, experts say, if you're willing to brave the challenging landscape, you can earn quite the reward.

Some Background
First, here's a quick history refresher to explain why things are so tricky. In 2009, the trade association Pharmaceutical Research and Manufacturers of America (PhRMA) put in place some strongly-worded voluntary marketing guidelines. The suggestions – which operate more like rules – prohibit pharma companies from providing "non-educational" promotional items to health-care professionals.

"With those new guidelines, the whole world changed," says Jennifer Sander, national account executive for Capital Ideas (asi/157004). "Doors did close – I had clients we did a million dollars in business with per year, and they literally shut the door on promotional items."

Adding to the PhRMA guidelines were new transparency regulations written into the Sunshine Act, which Congress passed as part of sweeping health-care reform. The Sunshine provisions require pharma companies to report every item of $10 or more in value (or total items that add up to $100 in a year) that they give to medical personnel, like doctors. This has created a serious administrative burden for pharma companies that use promotional products.

"The devil is in the details," says John Mack, the publisher of Pharma Marketing News. "You can give gifts to physicians, but they have to be limited in dollar value."

A Path to Success
While PhRMA's educational requirement cuts down on traditional pens and mugs, it does allow for a wide range of informational and specialized items. Genuity Concepts (asi/199861) has kept up steady business in the pharma sector by developing in-office education products, ranging from brochure dispensers and prescription stampers to detailed anatomical models that let doctors demonstrate the effects of a drug.

"Anything that can be shown to help in the promotion of a patient and health-care provider interface is compliant, though still subject to the regulatory bodies in the industry," says John Delaney, president of Genuity Concepts.

In addition to these instructional aids for physicians, Genuity has successfully pitched items for patients who are using the drugs. These can include patient kits as well as healthy living products, like logoed pedometers and basic exercise equipment.

But, a word of caution: To remain PhRMA-compliant, these products must be tied to medications that have a direct connection to the treatment. "You can't offer a pedometer for every drug," says Delaney. "But if it's a heart-healthy drug and part of the regimen is to remain active, then it makes sense."

Events & Recognition
Jacqueline Beaulieu, executive vice president of Healthcare Convention and Exhibitors Association (HCEA), has seen a great shift in how pharmaceutical companies are able to make their pitches to physicians at trade shows and conferences. Beaulieu believes distributors can incorporate specialty products into these events. "HCEA conducted a recent study, and it showed that physicians want to be educated and appreciate hands-on demonstrations right in the booth," she says. "Keeping promotional efforts in the booth focused on educating the physician is invaluable."

While pharma companies are restricted in providing products to doctors, they have fewer limits on what they can give to their own reps as incentives for selling the company's products. Distributor LinJen (asi/254382) has taken advantage of this fact, working often with smaller pharmaceutical companies and generating a greater share of its business by selling internal reward and recognition items.

"We sell plaques, jewelry, years-of-service awards, and other things that go to the sales reps," says Linda Heyse-Highland, president and founder of LinJen. "Now it's usually got nothing to do with doctors, clinics, nurses or trade shows."

Alternative Ideas
Many pharma companies market non-prescription drugs as well, targeting consumers with varying ad campaigns. Distributors can achieve real results in this space. Why? Over-the-counter treatments, like allergy medications or suntan lotions, aren't included in the PhRMA guidelines. Similarly, Delaney points to "cosmeceutical" products – cosmetic products that offer medical benefits – as potential paths to sales for distributors.

International events present a sales avenue for distributors as well. Sander of Capital Ideas has found, for example, that pharma companies are more willing to include promotional items at international congresses, particularly in Europe. "There are still regulations – it's not a free-for-all," says Sander. "But they have a little more leeway with something like pens or anything that can be used for business." She gives the example of a laptop or messenger bag, which can be offered because a doctor can transport his or her work materials in it.

Similarly, smaller or newer pharmaceutical companies may be more aggressive with their marketing and promotional products. Experts say that's because these firms are either looking to make a splash or aren't beholden to the same scrutiny as more established corporations. In fact, Sander says she tends to get more positive responses to educational pieces during pharma brand launches. "That's when they're willing to take a little more risk and put some money behind it," she says.

A Case-By-Case Basis
Because there's such a gray area for gifting, distributors should expect varying degrees of product acceptance. "I'll have one pharmaceutical company spend $100 on a rep gift and not think twice about it, where others put a $25 limit," says Sander. "These guidelines are not clear."

She points to the rules on USB drives as an example. While some companies say USBs are PhRMA-compliant only if the data on the drive is locked and there is no additional memory, others say it can be unlocked with plenty of free space. Sander has run into differences of opinion even within the same company. A patient kit she developed for a client was embraced by one brand team, but a legal department decided not to allow it.

A key point, though, is this: Many pharmaceutical companies are open to using promotional products again, and they're counting on distributors to help them through the compliance process. When presenting ideas to prospective pharma companies, Sander tries to be very frank about products that have been considered compliant by other firms. She offers prototypes that demonstrate a product's educational value, speaking directly to any concerns.

"You definitely have to be creative in working within those guidelines while still offering some brand presence," Sander says.

Pitching Patient Kits