5. What is the role of marketing within various Health Care companies, and how is it evolving?
6. How confident are marketers with regards to their budget and activities?
7. How is the environment and stakeholder influence changing?This document identifies KEY CHALLENGES linked to the implementation of marketing strategies in the Health Care industry. It provides a deeper understanding of the top issues and barriers that European Health Care marketers are facing, and gives new insights to support their growth agenda. Moreover, the results of the Health Care marketers are compared to those of last year’s Health Care Marketing Survey and to those of the general marketing community that participated to the “Yearly Marketing Survey” over the past six years. Trends and evolutions in Health Care have been compared to other industries such as telecom, media, consumer goods, etc. 4
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9. More than 180 respondents participated to the survey, 93 completed the whole survey36% Number of respondents (%) 30% 31,8% 20% 9% 5% Position RX Total sample Medical equipment OTC Others Biotech Marketing Manager Scope of responsibilities Other 44% Number of respondents (%) Product/Brand Manager Managing Director 35% Business Unit Manager 16% Sales Manager 5% Communication Manager Total sample National scope European scope Worldwide scope Other 5
12. In general, the Health Care marketers confidence index is very low which will have a negative impact on their media spending and their marketing organization.
13. The Health Care industry is expected to be put under greater price pressure by the governments, patients and pharmacists.Health Care marketers expect a shift in their MarCom spending from traditional media towards online and interactive communication channels. As in the YMS, Health Care marketers believe that competitive advantage would be much stronger if marketing processes were more customer oriented. Health Care marketers understand the importance of accurate customer data but often lack the tools to optimize their customer intelligence. The largest increase in influence and power in 2010 is expected to occur at governmental parties. Note: YMS = Yearly Marketing Survey
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15. Marketing challenges in the Health Care industryMarketing budget Promotional mix Customer intelligence Stakeholder influence 8
16. Today, the Health Care marketer has to take into account the influences of multiple stakeholders Q: In your opinion, what will be the greatest Health Care related challenges of your division in 2009 -2010? Combination of high average and high frequency of occurrence results in 4 main challenges Ranking of challenges by importance Dealing with growth of generics/alternatives Dealing with the decrease of reimbursement amounts from social security Dealing with increased pressure from group purchasing organizations Dealing with extended TTM from R&D to launch due to regulatory approvals Rationalizing brand portfolio Dealing with increasing innovation costs and higher requirements from regulators Improve relationships with hospitals Improve relationships with pharmacists Dealing with stricter code of conduct towards prescribers Improve relationships with specialists + 1 3 2 4 6 Size/stretch of the challenge today (score) 7 8 10 5 9 + - Frequency of occurrence (%) N=93 9 9
17. Compared to 2008, the importance of building relationships with hospitals and pharmacists has increased Ranking of the 10 biggest challenges 2009 versus 2008 LEGEND: Respondents (%) 2009 results 2008 results N2008= 89 N2009= 93 10
18. Some challenges are sector relatedImproving relationships with pharmacists, for example, is the biggest challenge in the OTC sector, whereas it is the lowest challenge of the 10 in the ME and RX sector 11 Ranking of the 10 biggest challenges 2009 by sector RX sector OTC sector ME sector OTC: N= 8 RX: N= 30 Med Eq: N= 28 Note: TTM= Time to market ME= Medical equipment Respondents (%) LEGEND: Top challenges 2009
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20. Marketing challenges in the Health Care industryMarketing budget Promotional mix Customer intelligence Stakeholder influence 12
21. Differentiating from competition and innovation are overall and by far the biggest marketing challenges 13 Q: In your opinion, what will be the greatest marketing challenges of your division in 2009-2010? Ranking of marketing challenges by importance Combination of high average and high frequency of occurrence results in 5 main marketing challenges Differentiating from competition on target segments Innovation, product development, R&D Measuring ROI Optimizing pricing to increase margins Segmenting the market & consumers more efficiently Building loyalty and trust Building a strong brand Knowing customers moment of truth Increasing efficiency of marketing processes Optimizing communication mix Implementing a centrally constructed marketing initiative at local level Rationalizing brand portfolio + 11 2 5 1 12 4 3 Size/stretch of the challenge today (score) 7 6 8 9 10 - + Frequency of occurrence (%) N=89
22. Compared to 2008, the three fastest growing marketing challenges are innovation, measuring ROI and optimizing pricing Ranking of the 5 biggest marketing challenges 2009 versus 2008 LEGEND: Respondents (%) 2009 results 2008 results N2008= 89 N2009= 90 14
23. Compared with RX, ME focuses also on price management and ROI, whilst OTC is challenged more by customer loyalty, innovation and MarCom mix Ranking of the 6 biggest marketing challenges 2009 - 2010 by sector RX sector OTC sector ME sector OTC: N= 8 RX: N= 30 ME: N= 28 Note: ME = Medical Equipment LEGEND: Respondents (%) Top challenges 09-10 15
25. 17 Health Care marketing budgets in 2008-2009 were lower than previously stated and expectations for 2010 are even lowerHealth care budgets were higher in 2008-2009 than in other industries, but marketers are more pessimistic about their budget for 2010 than in other industries Q: In 2008 - 2009, how did the total marketing budget available within your marketing department change and what are the expectations for 2010? Marketing budgets Net Adjusted Index (%) LEGEND: NAI of marketers from other industries for future budget NAI of marketers from other industries for actual budget 2006 2007 2008 2009 2010 NAI of Health Care marketers for future budget NAI of Health Care marketer for actual budget N2006= 282 N2007= 514 N2008= 567 N2009= 1028 HC N2008= 89 HC N2009= 93 Net Adjusted Index (NAI) =weighted rating of positive versus negative respondents on survey 2009. The percentage reflects a balance between the positive, neutral and negative views. It can vary from -100% to +100% depending on the amount of confidence. The degree of “outspokenness” of a direction; a positive NAI indicates an increase of importance , the number reveals how relevant or outspoken this increase is.
26. General Managers, Rx Marketers and those with European responsibilities are the most pessimistic about marketing budgets for the near future Expectations on Marketing budgets for 2010 Net Adjusted Index (%) 51% LEGEND: 41% NAI (%) of last year 33% 26% 20% 8% 17% 6% 2% Brand/product: N=15 Marketing: N=25 General: N=19 Brand/product managers General managers (YME) National responsibilities Worldwide responsibilities RX Med Equip OTC National: N=38 European: N=25 World wide: N=15 European responsibilities Marketing managers OTC: N=8 RX: N=30 Med Eq: N=28 18
27. 19 Both marketers from Health Care and other industries are quite optimistic on the number of marketing projects for 2010 Q: In 2008 - 2009, how did the amount of realized marketing projects within your marketing department change and what are the expectations for 2010? Marketing projects Net Adjusted Index (%) LEGEND: NAI of marketers from other industries for future budget NAI of marketers from other industries for actual budget NAI of Health Care marketers for future budget NAI of Health Care marketer for actual budget N2006= 282 N2007= 514 N2008= 567 N2009= 1028 HC N2008= 89 HC N2009= 93 Year 2006 2007 2008 2009 2010
28. 20 Health Care marketers think the size of the marketing team will decrease severely for 2010The index for marketers from other industries is more stable Q: In 2008 - 2009, how did the size of your marketing team change and what are the expectations for 2010? Size of the marketing team LEGEND: Net Adjusted Index (%) NAI of marketers from other industries for future budget NAI of marketers from other industries for actual budget NAI of Health Care marketers for future budget NAI of Health Care marketer for actual budget Year 2010 2007 2008 2009 N2006= 282 N2007= 514 N2008= 567 N2009= 1028 HC N2007= 86 HC N2008= 89 HC N2009= 93
29. 21 Health Care marketers think that outsourcing of marketing activities will increase, whilst marketers from other industries think it will decrease Q: In 2008-2009, how did outsourcing of marketing activities within your marketing department change and what are the expectations for 2009-2010? Outsourcing marketing activities Net Adjusted Index (%) LEGEND: NAI of marketers from other industries for future budget NAI of marketers from other industries for actual budget NAI of Health Care marketers for future budget NAI of Health Care marketer for actual budget Year 2007 2008 2009 2010 N2006= 282 N2007= 514 N2008= 567 N2009= 1028 HC N2007= 86 HC N2008= 89 HC N2009= 93
30. 22 In summary, the general marketers’ confidence index is on a historically low levelHealth Care marketers are even less confident than marketers from other industries General marketers’ confidence index Net Adjusted Index(%) LEGEND: Year 2006 2007 2008 2009 2010 N2009=1028 N2008=567 N2007=514 N2006=282 N2005=315 HC N2009=93 HC N2008= 89 Note: The general marketers confidence index is an average of marketers’ expectations about their budget, projects, outsourcing of marketing activities and staff headcount. The percentage reflects a balance between the positive, neutral and negative views. It can vary from -100% to +100% depending on the amount of confidence. 22
31. 23 HC marketers expect more budget reviews but feel confident defending their budgets Q: To which degree you agree with the following statements on your marketing budget? Net Adjusted Index (%) I feel confident defending my marketing budgets when the board would question them tomorrow 80% I expect more budget reviews in 2009 -2010 caused by potential worsening of the economic climate 78% I have experienced additional/more challenging budget reviews as a result of the international financial crisis 44% LEGEND: Slightly agree Slightly disagree Neutral Fully agree Totally disagree N=89 23
32. 24 Health Care marketers strongly believe that a decrease of their marketing budget will result in a decrease of media expenditures and a modified marketing organization Q: How would a decrease or diminishing growth of the marketing budget compared to previous years influence the marketing operations in 2010? Net Adjusted Index (%) It would impact our media expenditures negatively We would modify our marketing strategy and objectives We would modify our marketing organization or processes We would reduce the use of external suppliers and consultants We would reduce the number of promotional actions We would plan a shift in use of our current distribution channels We would focus on targeting less/other market segments It would considerably shift our communication mix toward more online channels We would reduce the sales force Our marketing team would probably be reduced in headcount We would adapt product launches planned for 2009-2010 It would not affect our marketing operations at all 88% 49% 50% 52% 45% 12% 15% 31% -19% -54% -32% -88% LEGEND: Slightly agree Slightly disagree Neutral Fully agree Totally disagree N=70 24
34. As in 2008, field teams visiting physicians still represented the largest part of the marketing budget in 2009 Q: What percentage did the following components of the marketing and sales budget in your department represent in 2009? Average spend (%) of promotional budget Sales reps visits of specialists Sales reps visits of general practitioners Congresses and trainings for physicians Events and trade fairs Market research POS communication materials Above the line media Public relations On-line marketing Direct marketing Sampling Sponsoring Newspapers and magazines Patient support groups Price promotions 30% 20% 16% 14% 13% 12% 11% 10% 9% 9% 9% 8% 8% 6% 5% N=58 26
35. Online communication channels and lobbying are expected to replace traditional channels especially in this crisis periodSponsoring and print are the biggest losers in the expected budget shift Q: How will the following components of the marketing and sales budget in your department evolve in 2010? Expected evolution of Promotional mix spending Lobbying towards government or insurance companies 32% Online marketing 31% 19% Direct marketing Price promotions 18% Sales reps visits of specialists 12% -35% Sponsoring -26% Newspapers and magazines -18% Events and trade fairs -14% Sales reps visits of general practitioners Net Adjusted Index (%) -7% Congresses & trainings N=87 27
37. 29 Marketers understand the value they offer to customers but lack the tools to efficiently communicate with them Q: To what extent do you agree with the following statements? Net Adjusted Index (%) Opinion on customer intelligence We have a good understanding of the unique value we provide to customers 82% 67% 59% 58% 47% 27% 36% 26% 0% Our competitive advantage would be much stronger if our commercial processes would be more customer focused We could possibly capture more value by improving our pricing strategy & policy We can effectively communicate our value We have the capabilities to obtain such data Management decisions at my company are based on the most recent customer & market data My company is measuring ROMI more than last year My company has a detailed marketing and sales dashboard to track evolution of KPI’s My company leverages the data captured by our CRM system LEGEND: Slightly agree Slightly disagree Neutral Fully agree Totally disagree N=90 29
39. 31 Marketers believe their pricing will be put under great pressure by governments, patients and pharmacists Q: How do you expect customers to react on the current economical crisis? Net Adjusted Index (%) Government will push cheaper alternatives Pharmacists will protect their margins Patients will become more price sensitive Patients will ask for generic / alternative products Patients will be more critical/pro-actively compare treatments Physicians will change prescription behavior towards cheaper products Loyalty of patients towards a product will decrease Volume of medicines purchased by patients will decrease 89% 88% 83% 63% 74% 37% 33% 26% LEGEND: Slightly agree Slightly disagree Neutral Fully agree Totally disagree N=87 31
40. The largest increase in influence and power in 2010 is expected to occur at governmental partiesOnly GP’s are expected to decrease in influence Q: How do you evaluate the influence of the following “decision makers” on your business in the near future? Evolution of influence/power of different decision makers 66% Legal and regulatory institutions 61% Social security Insurance companies 49% 47% Patients 44% Hospitals 41% Patient associations Pharmacists 16% 43,8% 12% Wholesalers & distributors 43% Specialists 10% Research organisations 8% Net Adjusted Index (%) laboratories 6% -14,4% General practitioners -4% N=89 32 32 32
(184 participants, 51% completed the whole survey)28% of the participants are Marketing Managers Other= Pricing manager, market researcher, business analyst36% work in the RX-business, 30% in the Medical equipment RX: medication requiring prescriptions OTC: “over the counter” 15% of total turnover of 5 biggest European healthcare companies Others: research, hospitals Spread of answers: RX= 57 answered only profile questions, about 33 answered the whole survey ME= 47 – 28 Others= 48 - 18 OTC= 18 - 8 Biotech= 14 - 6 44% have a national scope, 51% an international scope of responsibilities
On the other hand, dealing with decrease of reimbursement, increasing innovation cost and higher regulatory requirements have decreased in importance
Differentiating from competition remains the top marketing challenge
