The Serendipity of Unintended Experiments

Any promotional increase--including short term ones--that a company makes in one therapeutic category to respond to a marketplace event reverberates through other classes. Contrary to conventional wisdom, even slight and brief shifts in promotional activity can result in significant changes in market share, including in chronic care markets. Companies should observe and bank data from these changes so they can better allocate sales resources when anticipating or reacting to a triggering market event.

by Terry Overton, PhD

Observation: Since a pharmaceutical company's capacity for sales rep promotion is fixed in the short term, it must cut back in one area in order to increase detailing activity in another. Thus, any promotional increase a company makes in one therapeutic category to respond to a market event reverberates through other classes and ultimately affects many companies. Contrary to conventional wisdom, even slight and brief shifts in promotional activity can result in significant changes in market share—including in chronic care markets.

Take Away: While the market's attention is focused on a triggering event in one class, consequent changes in other classes are worthy of attention. There are likely to be few changes taking place in those other classes, aside from a reduction in promotional levels as resources are shifted to the category in which the event is taking place. The result is an "unintended experiment" on the promotional responsiveness of products in those classes: for which classes does a short-term drop in promotion make a difference? Companies should bank such data. Prepared with an understanding of how various products respond to short-term promotional changes, companies can better allocate their sales resources when anticipating, or reacting to, a triggering market event.

The sales forces of major pharmaceutical companies are often thought of as large battleships unable to quickly change direction. However, there's ample evidence to the contrary. In the face of major market events, such as a product introduction, new therapeutic information, a patent expiration, or a product withdrawal, pharmaceutical companies are remarkably nimble in shifting their selling resources—often with far reaching consequences.

This was clear, for example, when Bayer AG officially withdrew cerivastatin, (Baycol), from the market on August 8, 2001. Bayer and GlaxoSmithKline PLC , which was co-promoting Baycol, were immediately able to direct resources elsewhere. Meanwhile Baycol's competitors—Bristol-Myers Squibb Co. (BMS), Merck & Co. Inc. , and Pfizer Inc. —all stepped up detailing on their statins within 24 hours and sustained their efforts for the next two-four weeks.

But in order to accommodate a short-term increase in statin details, each of Baycol's competitors was forced to reduce its efforts somewhere else in its portfolio. Thus they cut promotional activities for, among other agents, oral anti-diabetics, hypertension drugs, anti-infectives, antidepressants, and anti-arthritics.

As promotional shifts generated by Baycol's withdrawal cascaded into multiple therapeutic classes, they produced some "unintended experiments" on promotion response in the month following the recall. Let's look at just two.

To support added detailing for Baycol competitor atorvastatin (Lipitor), Pfizer temporarily reduced support for a number of its products. Perhaps most notable was amlodipine (Norvasc), whose absolute detailing support fell by 15% within two weeks of the recall. This shift led to a drop of 23% in its share of attention within its class. The sales response to this diminution of effort? Its market share of intended prescriptions dropped 7% during the period. (See Figure 1).

Meanwhile, BMS sales reps responded to Baycol's withdrawal by focusing on pravastatin (Pravachol). They found the resources for this move largely by cutting support for extended-release metformin (Glucophage XR), an oral diabetic product, which lost about 25% of its personal promotion within two weeks of the recall. The product's share of attention dropped 30%. Intended prescriptions dropped, too, for a 7% loss in market share. (See Figure 2).

From these two observations alone, we cannot build a convincing case for the relative sensitivity of these two products and markets to promotion level changes, but we can conclude that short-term response does exist and can be readily observed, even in chronic markets for well-known products in which physician prescribing habits have been well established.

Clearly, a company astute enough to monitor such unintended experiments could learn a great deal about the promotional responsiveness of its markets—"if I remove 1000 details from this market for two weeks, how many dollars of product sales will I lose?"— even without complex statistical models. That knowledge, then, could be a valuable guide in determining how best to respond to short-term opportunities and threats as they ripple through the industry. A company can make decisions about its own promotional levels in the context of what others are likely to do (or, indeed, have just done) and the likely market responses.

When faced with a competitive threat or opportunity, companies can plan an informed tactical response. If the competition is temporarily diverting resources elsewhere, is it worthwhile to exploit the competitive weakness and boost ones own promotional levels? Or is it better to hold firm? Or even to match the competitor's drop, maintaining relative promotional share, to permit increased levels in another market which is perhaps more promotionally responsive?

Pharmaceutical companies that have the ability to monitor and respond to the ripples of short-term promotional changes are in the best position to improve the efficiency of their overall promotional efforts.

Terry Overton is Senior Scientist/Co-Founder of ImpactRx Inc., located in Mt. Laurel and which provided the data for this column. ImpactRx maintains a network of the nation's highest-prescribing physicians who submit daily feedback on every encounter they have with a pharmaceutical sales representative.