Authored by Cello Health, now part of Lumanity
It goes without saying that strategic planning is an important determinant of the success of any asset, brand or portfolio. Done well it can set direction, shape performance, provide focus for the organization and enable thoughtful allocation of resources. But add in the reality of project management, team alignment, coordination across geographies, review meetings, slide development, rehearsals and often the sheer length of the process, and it can sometimes start to feel like an obstacle to implementation or getting on with the day job.
But it’s useful to remind ourselves that on one level, strategy isn’t that complex, or at least there aren’t that many options. As Philip Kotler put it with admirable brevity, “there is only one winning strategy. It is to carefully define the target market and direct a superior offering to that target market.”
Not many people would argue with that as a fundamental principle but, from a broader perspective, there are other routes to success. I’m going to argue that there are 10 commercial strategies in pharma. I invite readers to dispute this. Whatever the final number, I suspect it will be finite and manageable. Understanding the range of options helps in several ways.
Firstly, it can help in determining the strategic challenge, and hence focus the team’s effort in the right areas. Importantly, it also enables clear choices to be made between options – the essence of strategy itself. Lastly, for those new to planning, knowing that there aren’t that many possibilities can demystify what is sometimes seen as an arcane art.
So what are my 10?
Let’s start with the idea that there are three ways to drive the revenue of a drug or other intervention – increasing market size, increasing market share and increasing value per patient:
1. Increase market size: helping more patients
We can increase the size of the market in three ways. Working our way down the patient flow, we can’t do much about epidemiology, but we can increase presentation rate- the numbers of people seeking a solution for their condition. Thereafter we can improve the speed or accuracy of diagnosis, including through more effective referral pathways. We can also seek to increase the rate of treatment – the number of people who receive any treatment. Each of these three strategies can increase the numbers of patients who end up on a company’s drug. The challenge is that the scale of effort and investment required to make significant in-roads can be considerable. So each option needs to be evaluated carefully and with a sense of realism about what can be achieved. Nonetheless there are examples of successful initiatives that have clearly benefited patients, healthcare systems and manufacturers, e.g. public policy initiatives (HIV), screening (raised cholesterol) and direct to consumer communication (HPV).
2. Increase market share: increasing the number of patients receiving a specific treatment
Porter’s Generic Strategies (1980) describes three ways to ensure competitor advantage and thereby increase market share: differentiation, cost leadership and focus. And I might hesitantly suggest a fourth. Differentiation tends to mean the perception of a superior asset (or class) but we may also achieve differentiation through company association with a particular therapy area or by providing more valuable services than competitors. Regarding cost leadership, we can use price to drive share, although in practice this is largely confined to pricing at launch, and is of course subject to other considerations. In addition we should probably expand ‘price’ into overall access strategy – encompassing access and reimbursement, given its huge importance. Considering Porter’s third strategy – focus – we can seek to be the first treatment option in a disease area, or the favored therapy in a niche or segment. So that’s three ways to drive share but I wonder if there is another: communication – simply conveying your message more effectively than competitors.
3. Increase value per patient: improving the outcomes of each patient on treatment
Lastly, there are three ways to drive value per patient. Firstly, improving adherence (persistence or compliance) with treatment, although I suspect there are way more
unsuccessful programs that had this objective than successful ones. Secondly, we can achieve a higher margin per patient, either through price increases, or cost of goods reductions for individual SKUs. Thirdly, we can optimize the mix of different
doses or formulations so as to improve overall margin, while also improving patient
10. Dose mix
There, that’s 10
Or maybe 9. And maybe I missed a couple, but the point is, it’s not 50. And if we have a relatively short list of strategic options, we should be able to start planning with a good idea of where we are going and maybe simplify the process.
To quote Robert Kiyosaki:
“Always start at the end before you begin.”Robert Kiyosaki
An understanding of the strategic challenge – or likely strategies – from a finite list can focus planning efforts in the right places. In many cases review of a well-constructed patient flow or experience journey, combined with knowledge of the competitor landscape, will allow teams to quickly discard the majority of strategic
options and focus insight gathering, ingenuity and the energy of the cross-functional team on those that will make the difference.
As a crude example, the third product to launch in a well-developed market is probably going to pay most attention to driving share through differentiation, focus or cost.
However to come back to Kotler:
“The good news is that Marketing takes an hour to learn. The bad news is that it takes a lifetime to master.”Philip Kotler
The apparent simplicity of the strategic options is more than matched by the complexity and unpredictability of the environment, the uncertainty over competitor actions, and the depth of thinking required to determine, for example, whether to increase diagnosis, how to differentiate or when to put a patient support program in place and what the impact might be.