Engage, But Gently: More Top Line Thoughts on 2014

Two weeks in and the New Year already seems old.  Yet members of our Pharm Exec Editorial Advisory Board are still eager to share their top of line predictions on trends that will shape the industry’s business and reputational assets – forward and backward – over the busy months ahead.   Here, another of our best external-facing experts, Elys Roberts, President of Ipsos Healthcare North America, weighs in.

Elys Roberts

According to Roberts, the industry’s all-important reputational scorecard is finally rebounding after years of declining confidence among a variety of stakeholders. A leader in global survey and market research, Ipsos is finding that the slow return to NDA pipeline productivity is reviving the image of an industry that was suffering.  Although 2013 FDA approvals failed to surpass the record (this century) harvest of 2012, the quality of many of these new drugs have won accolades from patients and providers alike; many are recipients of first-in-class “breakthrough” designation.But the effects of this so-called innovation premium are highly variable and will continue to be so.  Says Roberts:  “We are seeing a gradual reputational divide, where there will be losers as well as winners.  How companies end up will depend on the strength of their leadership, the ability to identify and execute on the right opportunities in an increasingly complex and unforgiving marketplace, and documented evidence that new products are contributing directly to advances in the standard of care in a cost-effective manner. ”

Roberts also touts the virtues of retrenchment.  Companies like NovoNordisk have shown that there’s a benefit to recognizing the categories and areas where you are world-class and putting all your energy into competing effectively there. Some of the best positioned companies in 2014 will be those that have acknowledged the need to admit errors, shift course and withdraw from businesses that pose unanticipated competitive challenges. “Finding your core and then eliminating segments that do not play to your strengths is risky, particularly if in doing so you leave revenue on the table.  But Wall Street this year is going to be rewarding points to CEOs who have very clear plans and act on them with conviction.”

Another trend cited by Ipsos is the adjustment that companies need to make in managing expectations around drug approval.  For one thing, registration no longer connotes acceptance by payers, nor does it guarantee market  uptake and a predictable, steady rise in revenue.  Every inch of market turf is going to be contested, but companies are no longer relying on the old-style “brute force” promotional tactics.   “There is a new definition at hand on what is meant by being ‘customer-centric’,” Roberts explains. “For years, companies talked about it but their operations and priorities never changed fundamentally. Now several are embracing a different way – not by incentivizing the sales force to push up gross revenues but rather by creating a new metric of success based on the value perceived in each interaction or transaction.  And for the first time, that value is being defined by the customer.”

Finally, one skill that will earn a premium return in 2014 is understanding your demand and delivery infrastructure – for big Pharma, the tectonics of the health care ecosystem are more fluid and dynamic than at any time in the last 50 years.  Just one example cited by Roberts:  the rise of a new cadre of influencers in drug prescribing and distribution.  The American Academy of Family Physicians [AAFP] is forecasting a shortage of 40,000 primary care physicians in this country by 2020. The inevitable consequence is that nurse practitioners, physician assistants, community health workers, and pharmacists are going to emerge as an increasingly important interface between patients and their drugs.

The pregnant question – is pharma prepped and ready to engage with this new customer class?  Or are they still chasing after the lost inhabitants of a Norman Rockwell world?