Marketing Mix (for Pharmaceuticals)

DecisionPath's Competitive Drug Marketing Strategy Decision Support System (CompeteRx) solution helps pharmaceutical companies optimize their Return on Investments (ROI) on marketing and sales for FDA-approved drugs.

Problem: Optimizing Marketing Strategies in Changing and Competitive Markets.

The pharmaceutical industry faces mounting challenges in discovering and developing potent new drugs to maintain historical growth levels. Executives must balance a daunting array of factors - economic, regulatory, and technological - in managing their drug development pipelines. After developing their drugs and gain FDA approval, companies face equally critical decisions about how to market and sell their drugs effectively. Key commercial issues in include:

  • Declining marginal return on investment for direct physician marketing (Detailing and Sampling)
  • Poor understanding of the efficacy of Direct-to-Consumer advertising (DTC)
  • Critical public and political attention to high drug prices and large budgets for promoting drugs
  • Escalating pressure for manufacturers to do "more with less" while pipelines replenish
  • Increasing involvement of consumers in healthcare decisions
  • Growing complexity in drug prescription and purchasing behaviors, due to trends such as formularies, Internet pharmacies, DTC-driven consumer demand)

Numerous techniques exist for "optimizing" marketing mixes. Unfortunately, most assume a static world, in which key factors remain constant while you execute your strategy. In reality, if your strategy works, competitors soon detect your success. They can be relied upon to do their best to respond to your strategy. You, in turn, need to anticipate their responses and adapt your strategies to counter their moves, and so on. Any methodology that ignores this basic fact exposes you to serious risk.

Our Solution Approach: Practice Your Strategies and Anticipated Competitor Responses
CompeteRx helps drug companies decide how to allocate investment across marketing and sales channels to grow a drug's market share, net sales, profit, and overall value (NPV). CompeteRx incorporates dynamic factors including competitive responses, as well the actions of other key players such as physicians, third-party payers, and consumers, into a robust analytical framework. CompeteRx scenarios depict:

  • Your target market's characteristics, along with current economic conditions
  • The drug companies competing in a particular market (or that may enter that market in the future)
  • The drugs that you and your competitors either sell or intend to sell in the future
  • Your candidate marketing mix strategies, and those that you believe your competitors to be executing
  • Your expectations of how competitors will alter strategies if their market positions change
  • Other key environmental uncertainties, such as changes in regulation or reimbursement policy

Given such scenarios, CompeteRx projects changes over time in overall market growth, and the market shares, sales, and profits of your drugs and those of your competitors. You apply ForeTell's analytic tools to explore and compare these projected outcomes, with the goal of identifying a "robust" mix strategy that performs well across alternate futures.


Uniquely Realistic Models Backed by Pharmaceutical Experts
The CompeteRx simulator projects market evolution using a model published by researchers at MIT's Sloan School of Management. However, we have extended their market-level analysis with game theory technology: CompeteRx is unique in its ability to model and project adaptive behaviors - namely, the anticipated responses of competitors to changes in their relative market positions. With CompeteRx, you can define and validate "optimal" strategies that reflect the known dynamics of competitive drug markets.

DecisionPath developed CompeteRx in collaboration with Strategic Decisions Group (SDG), a management consulting firm with recognized expertise in Life Sciences (now IMS Health SDG Life Sciences. We offer this decision support solution to clients as a consulting service.