Trust—Biotech’s Hidden Advantage

Biotech companies are rightly focused on developing novel treatments to meet society’s unmet medical needs, working nimbly to bring those treatments from molecule to market. The list of must-do’s is long, the stakeholders wide-ranging, and the pace unrelenting: attract investment dollars and talent; compete for clinical trial investigators and patients; spark interest in publications and literature; and negotiate pricing and access with payors and policymakers. With this much in play, and often all at once, it is not surprising that the very thing that could help biotech companies, both with and without marketed products, achieve their business goals is often the last thing they are thinking about: cultivating a trusted corporate reputation. Yet a biotech company’s reputation is a bona fide business asset that can be assiduously and strategically cultivated to improve business performance-right from the start.

For stakeholders to support and want to do business with a biotech company, they have to trust that the company will be fair and just, do what it says it will do, and be able to deliver on its promises. Today when people buy products from, take jobs with, and make investments in companies, they are doing so largely based on how much they trust and admire the companies that stand behind those products, jobs, and investment opportunities. Even for a biotech company that does not yet have products on the market, having a trusted reputation can improve stakeholders’ faith that they eventually will be able to commercialize those products-successfully. A trusted reputation will differentiate biotech companies in good times and create insulation to help them weather the inevitable storms of disappointments that come with the terrain. And besides building goodwill, the link between reputation and financial success is undeniable: For the average healthcare company, a trusted reputation contributes about 20% to its overall valuation.[1] Companies with trusted reputations have been proven to outperform on every financial measure over a 5-year period.[2] And companies with strong reputations have been shown to generate 31% more return to shareholders than the Morgan Stanley Capital International (MSCI) average.[3]

Developing a trusted corporate reputation does not happen overnight, but the good news is that simply by being in the biotech industry, companies have a leg up.

Biotech has trust advantage over pharma

According to the 2018 Edelman Trust Barometer, biotech has a 17-point trust edge over the pharmaceutical sector in the United States, with 55% of people saying they trust businesses in biotech to do what’s right. By contrast, only 38% said the same about pharmaceutical companies.

Biotech is health’s bright spot across the 28 markets studied in the Edelman Trust Barometer, topping the list of five health sub-sectors for its leadership in delivering advances. Thirty-five percent said biotech is most likely to deliver important new treatments that cure diseases or improve human health. Only 13% said the same about pharmaceutical companies (See Figure 1). When asked specifically about the differences between the two sectors, 50% said biotech is more focused on innovative science and medicine, and 40% said it is more focused on R&D than marketing.

When the study looked at how the five health sub-sectors have fared trust-wise in the U.S. over the past four years, biotech gained three percentage points. The pharmaceutical sub-sector, however, tumbled by 11 points, dragged down by the perception that it is most responsible for the high cost of healthcare.

Biotech, with its focus on innovative science and medicine, clearly has a trust edge. Not one market assigned it blame for healthcare’s high cost. But herein lies the trust paradox: the more commercially successful biotech becomes, the higher the likelihood it will be viewed in the same mistrusted light as pharma-as the culprit behind the spiraling cost of care. 

What then should a biotech company do as it tackles the work entailed in building a trusted corporate reputation? 

Six ways biotechs can build on their trust advantage

1. Clarify your identity. Who are you and what do you stand for? How are you truly different from the competition, and why does that difference matter? Companies need to be able to fully articulate why they are an attractive business or research partner, investment opportunity, or employer. Just by clarifying what it stands for, a company can lift its reputation by 12.6 points.[4]

2. Create your own distinguishing narrative. A powerful corporate narrative can enhance reputation and make it easier to drive corporate value, engage employees, and partner with other companies. A strong narrative is a promise to stakeholders about a company’s integrity, dependability, and competence-the cornerstones of trust.

3. Activate the chorus to tell your story. CEOs set a company’s vision and are, with senior management, responsible for generating trust that their company will be able to deliver on its promise. While CEOs need to be front and center, so too do a company’s technical experts-they garnered the highest level of credibility across the countries surveyed in the 2018 Edelman Trust Barometer. For biotech, this means enlisting people like lead clinical trial investigators, chief scientific officers, and even the heads of commercialization to speak on the company’s behalf.

4. Be your own publisher. For the first time in the 18-year history of the Edelman Trust Barometer, media was the least trusted institution. In fact, only 56% of people said they trust health news reported by the media. By contrast, 65% said they find information provided by health companies to be credible. This gives biotech companies a clear opportunity to take advantage of their own media channels to share stories that spotlight innovative science and its impact on human health.

5. Treat the whole person. Patients are looking to health companies to build and create solutions beyond the products they sell. In the Trust Barometer, 68% agreed they would trust a pharmaceutical or biotech company more if it also provided information, tools, and support to help them manage their diseases. For biotech companies, this means having a deeper understanding of what patients endure throughout their journey and developing resources that complement therapy.

6. Be the lab, not the sales force. Biotech has a distinct advantage over other sectors of the health industry to dramatize the impact of promising innovations like immuno-oncology agents and gene therapies. Biotech companies can take people into their labs to humanize what happens there. And they can double down on messaging about the benefits of their innovations to society. This will help them withstand the inevitable backlash against pricing that has diminished trust in their pharmaceutical counterparts-and it will help ensure that biotechnology does not fall prey to its own commercial success. 

References

[1] Reputation Dividend. The 2017 US Reputation Dividend Report.

[2] Fombrun and Van Riel, 2004.

[3] McKinsey & Company, 2013.

[4] Reputation Institute. Global RepTrack®100. March 15, 2018.

Bruce Hayes is Managing Director, Health, for Edelman New York. He can be reached at bruce.hayes@edelman.com.