Pharmaceuticals:%20The%20New%20Consumer%20Marketing%20Frontier

1
Pharmaceuticals The New Consumer Marketing
Frontier

• Len Tacconi
• Executive Director
• Consumer Marketing
• Merck Company
• May 8, 2001

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Pharmaceuticals New Frontier for Consumer
Marketing?

• Frontier. 2a Region that forms the margin of
  settled or developed territory. 2c A new field
  that offers scope for exploitative or
  developmental activity
• Why?

• Evolution Of Managed Care
• Demographic Changes in US
• Trend To Self Care
• Success of Industry RD
• Competitive Pressures

• Regulatory Changes by FDA
• PDUFA Funding
• Industry Business Model
• Limited Product Patent Life
• Because It Works!!!

3
Agenda

• Evolution of consumer prescription drug promotion
  in the U.S.
• Impact of consumer on Rx buying process
• Overview of the emerging Consumer Self Care
  movement
• Merck Challenge Singulair Case Study
• Words to the MIT Wise

4
Evolution of Consumer PromotionIn The
Pharmaceutical Industry
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DTCA Trends -- Annual Expenditure

• DTCA continues to be one of the largest and
  fastest growing categories in advertisingand
  will have exceeded the 2 Billion spending level
  in 2000.

1,500
1,309
1,187
864
364
1999
1995
1997
1998
1996
IMS Data
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DTC Spending by Advertising Type

• 85 of Category spending is driven by Branded
  messaging split between Product Claim (82) and
  Reminder activity (3)

1999 Spending by Advertising Type
26MM
254MM
48MM
1453MM
Source Nielsen AdViews
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Top 10 Spending Industries

• Drugs Remedies moved to 4 of top 10 spenders
  in 1999 from 5 in 1998, replacing Financial
  Servicesit will be 3 after 2000 data.
• Category Total 1999 (B)
• Automotive 15, 432.5
• Retail 11,450.3
• Media Entertainment 4,492.9
• Drugs Remedies 4,240.3
• Financial 4,135.9
• Telecommunications 3,718.2
• Restaurants 3,402.6
• Public Transportation/Hotels Resorts
  3,086.5
• Direct Response Companies
  2,452.1
• Merck was the 30th leading consumer advertiser in
  the US for 1999 as measured by Ad Age well be
  in the top 25 for 2000

Source CMR
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DTC Advertising at Merck

• Merck was the first pharmaceutical company to use
  DTC advertising. Mercks DTC has evolved with
  changing regulations and our growing
  understanding of how to communicate effectively
  with consumers.

Fosamax
Mevacor
Propecia
Singulair
Proscar
Zocor
Timoptic XE
Vioxx
Pneumovax
Crixivan
81-91
92
94
95
96
97
98
99
00
93
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Mercks Continued Partnership with DDMAC

• MERCK
• Increased submissions due to expanding product
  line in 2000
• Utmost attention to regulatory issues and
  DDMACs comments and feedback
• All consumer work is pre-cleared

• DDMAC
• Issued a total of 78 regulatory letters to
  pharmaceutical companies in 2000
• 74 Notice of Violation
• 4 Warning Letters
• Most letters driven by
• Lack of adequate fair balance
• Unsubstantiated efficacy
• Unsubstantiated safety
• Unsubstantiated comparative

No regulatory letters to Merck in 2000!
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Impact of Consumer Promotion On Buying Process

• Patient cannot prescribe
• 70 of patients dont pay for product above
  co-pay
• All consumer promotion is pre-cleared by DDMAC
• Probably the most regulated form of consumer
  advertising for logical reasons

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Todays Healthcare Environment

• Aging Baby Boomers are more self-reliant than
  their parents
• As many as 30-50 of patients are considered
  communication-cravers.
• Source 2000 DVC ActiveCare Quantitative
  Research

• A Self-Care movement in healthcare has resulted
  from this trend
• 94 of patients will self-treat common illnesses
• 80 use OTC medicines
• 78 or 140MM Americans take vitamin and mineral
  supplements
• 45 or almost 84MM use herbal treatments many
  without a physicians advice despite very little
  clear scientific data on safety or efficacy and
  potentially harmful consequences
• Source 2000-2001 Prevention Magazine Study in
  consultation with FDA

• Managed Care has changed health care
• 47 of Americans are worried that their health
  plan is more concerned about saving money than
  providing the best care
• Source The Prevention Study
• The physician sees 130 patients and works a
  55-hour week.
• Source AMA Socioeconomic Statistics, 2000-2002

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DTC Facts

• 169MM American adults are aware of DTC (91 of
  total)
• 54MM patients were motivated to see a doctor
  due to DTC (32 of DTC aware)
• 14MM (one in four) people asked about an
  advertised drug during an office visit
• 9.94MM were prescribed the product asked about
  (6 of DTC aware)
• 1.40MM were prescribed a different drug
• 2.66MM were not prescribed anything

Creates awareness about diseases, the
availability of diagnostic tests and
treatment options Examples BMD testing
program, cholesterol screening, HIV awareness
health fairs, and the promotion of newer pain
relief options
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Overview of the emerging Consumer Self Care
movement

• Brief Environmental Scan
• Key Drivers Of Change
• Emerging Challenges

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Evidence of Consumer Interest in Health Care
Every one of these factors is on a rising curve
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Key Drivers
Increasing Role of Consumer in Medical Choice
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Patient EconomicsCorporate America is Shifting
More Health Care Cost to Consumers
Phase
Implications for Patients
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Changing Value Proposition for Consumer

• Fair exchange approach dominates Managed Care,
  with limited attention to intrinsic worth
• Consumer will be very motivated by both concerns
  emergence of this first true hybrid customer will
  generate debate about
• Consumer price sensitivity in environment of
  material co-pay
• Appropriate messaging about price
• Potential for direct financial interaction with
  Consumers
• Role and importance of brand awareness and brand
  satisfaction

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Technology ToolsReal Time Interactivity and
Integrated Communications

• Consumer database
• Permission-based and completely integrated with
  all channels of Consumer communication
• Customization technologies (e.g., personal web
  pages)
• Streaming video
• Allows the Consumer to double click on high
  quality video presentations on any subject and
  any length
• Interactive Internet technologies
• Low speed access (e.g., email and email
  fulfillment)
• Broadband high speed access (e.g., integrated
  2-way Internet and television)
• Internet-based customer service (e.g., e-rep
  stations in call centers)
• Physician automated Rx writing systems
• Internet-based personal medical records

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Merck Challenge Singulair Case Study
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Summary Of DTC Marketing Challenges
Demonstrate the viability of DTC for the brand
Develop an effective DTC campaign
Measure the success of the DTC campaign

• Role of the consumer in the buying process
• Rationale for allocating resources to DTC Vs.
  traditional promotion to physicians
• Marketing objectives
• Branded Vs. unbranded
• Go/no go decision

• Key consumer insight from the buying process
• FDA supervised advertising standards
• Targeted messages
• Look and feel
• Media plan

• Targeting
• Messaging
• Media
• Marketing objectives
• Incremental prescribing
• Financial return
• Ideas for improvement

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Singulair Case Study of DTC Decision-Making at
Merck
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Symptoms of Asthma

• Symptoms
• Wheeze, cough, chest tightness
• Nighttime awakenings
• Recurrent attacks related to triggers
• Asthma triggers
• Allergens like pollen, mold and dust
• Irritants including smoke, perfumes, air
  pollution and latex
• Physical conditions such as exercise, weather
  changes, very cold air, medication and stress

Airway inflammation
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Impact of Asthma

• Afflicts 1 in 20 adults and 1 in 10 children
• Growing prevalence, especially in children
• Has a dramatic impact on society
• 1.9 million ER visits (in 1995) and 466,000
  hospitalizations (in 1993)
• Third-ranking cause of hospitalization in
  children lt15 years old
• 3 per 10,000 asthmatic patients die (1994)
• and the life of the sufferer
• The most common chronic illness of childhood
• 3x more school absences in asthmatic children
• 23 of adults missed work in prior year due to
  asthma

Airway inflammation
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Managing Asthma

• Avoiding and controlling asthma triggers
• Medications to relieve symptoms and keep asthma
  under control
• Quick-relief medications (rescue medications) act
  to quickly relieve bronchoconstriction and other
  asthma symptoms
• Long-term controllers are used on a regular basis
  to keep asthma under control and reduce asthma
  symptoms before they occur

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Product Overview

• SINGULAIR is a leukotriene receptor antagonist
• Leukotrienes are chemicals produced by cells
  which cause inflammation.
• SINGULAIR blocks leukotrienes and improves asthma
  symptoms.
• SINGULAIR is indicated for the prophylaxis and
  chronic treatment of asthma in adults and
  children 2 years of age and older
• SINGULAIR is always to be prescribed in addition
  to as needed rescue medication
• SINGULAIR is not indicated for the treatment of
  asthma induced by exercise

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Singulair Case Study of DTC Decision-Making at
Merck
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Product Overview

• Safety Profile
• SINGULAIR is generally well tolerated.
• In clinical studies, side effects were usually
  mild and did not stop patients from taking
  SINGULAIR.
• The most common side effects included headache,
  flu, runny nose and ear infection.
• Dosage and dosing
• SINGULAIR is available in
• 10 mg tablets for adults
• 5 mg cherry chewable tablets for children 6-14
• 4 mg cherry chewable tablets for children 2-5
• SINGULAIR is taken once-a-day in the evening.

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Key Consumer Messages for Singulair

• Adult Patients
• Help control your asthma with once-a-day
  Singulair
• Singulair is not a steroid
• Singulair helps keep airways open, making
  breathing easier
• Safety similar to a sugar pill
• Cherry chewable tablet available for children
  6-14
• Parents
• Help control your child's asthma even when you
  can't be there
• Singulair is not a steroid
• Singulair helps keep airways open, making
  breathing easier
• Safety similar to a sugar pill
• Cherry chewable tablet for children 6-14

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New DTC Campaign for Singulair

• Launch campaign was highly successful
• Brand and ad awareness
• New patient starts
• Adherence among existing patients
• Physicians becoming aware of product from
  advertising
• Yet, we needed to develop a greater understanding
  of targets mind set and the impact asthma has on
  their lives
• We incorporated research learning to refine ad
  messaging to strengthen the emotional benefits of
  using Singulair

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Print Ad - Female Patient
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Print Ad - Mothers
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Active Merck Programs
Osteoporosis Unbranded ads to motivate women over
age 60 to seek a Bone Mineral Density Test to
assess whether they have osteoporosis
Male Pattern Hair Loss Unbranded help seeking
ads educate patients about product options that
are not reimbursed
Osteoarthritis Branded ads to inform patients
about a breakthrough product that offers
excellent tolerability with efficacy comparable
to NSAIDs
Cholesterol Branded ads to promotes the use of a
cholesterol lowering medicine which is proven to
reduce death and heart attacks among patients
with elevated cholesterol and heart disease
Asthma Branded ads to inform patients about
Singulair that helps kids as young as 2 to
breathe easier.
HIV Branded ads that inform HIV positive patients
and offers a life saving treatment option that
just 4 years ago was unavailable
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Words to the MIT Wise

• Advice on company selection
• Suggested interview techniques
• One guys successful approach to Marketing
  Management

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Company Search Suggestions

• Marketing Driven Company
• Balanced Use of 4 Ps
• Commitment to building brands
• Markets products that you can believe in
• Make a difference in the world if you can
• Make certain that integrity is ingrained in the
  company culture
• Follow your passion

MERCK
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During the Interview Process

• Probe for the company attributes just described
• Prepare as employee
• Provide company specific observations,
  examples, and solutions
• Primary sales drivers should be known
• Provide an understanding of the margin structure
  of the business
• Provide ideas that generate sales, and can
  maintain margins

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As a Brand Manager

• Know thy customer and all segmentation
  differences
• that includes every shred of information you can
  get your hands on
• Share your brand vision constantly
• look at your competition in a rear view mirror
• Dont be afraid to get your hands dirty
• new parent analogy
• Learn how to implement tactics
• Leverage the many talents of those around you
• agencies, marketing services, researchers,
  telemarketers
• Use metrics for everything if they dont exist
  create them