Wednesday, June 30, 2010

The Strategic Value of Pharmacy: Part 2

A few weeks ago, I brought you a guest post on the strategic value of pharmacy to manufacturers.

I am now pleased to bring you a follow-up article from Josh Halpern, VP and co-founder of IntegriChain, a Drug Channels blog sponsor. In the article below, Josh provides best practices from IntegriChain’s work with leading pharmaceutical manufacturers. He also cites "sales increases of 10% or more from a well-designed pharmacy detailing program that targets the right products and right pharmacies." Very intriguing!

Please contact Josh with any questions or comments about the article.

P.S. Today is your last opportunity to take advantage of the special introductory pricing on The 2010-11 Economic Report on Pharmaceutical Wholesalers!

The Strategic Value of Pharmacy: Part 2
by Joshua I. Halpern, Co-founder & Vice President, Products, IntegriChain

In The Strategic Value of Pharmacy, I explain why manufacturers will get value from relationship-building programs in the pharmacy. I now want to share best practices from IntegriChain’s work with leading pharmaceutical companies.

The bottom line: We can document sales increases of 10% or more from a well-designed pharmacy detailing program that targets the right products and right pharmacies.

Based on our experience, pharmacy detailing is right for some brands and not for others. If your brand is highly differentiated, widely stocked in retail, and universally tier 2, the business case for pharmacy promotion is limited. On the other hand, if the managed care landscape is mixed or stocking is limited, a sales team can develop and deliver a high impact pharmacy message.

These conclusions come from real-world projects with four leading brand-name drug manufacturers. One of our customers uses a sales team specifically aligned with the pharmacy. Two other manufacturers launched pilots that made pharmacy calls a priority in specific regions. A fourth customer took a more sophisticated approach by developing cohorts of called-upon pharmacies, tracking call reach and frequency, and measuring the specific ROI attributable to pharmacy promotion.

Here are three key lessons from these programs:

  • Focus on Pharmacist. One pilot brand was seeing a growing number of its patients switch to a generic product with lower out-of-pocket costs. They developed a message tailored to a pharmacist, explaining the medical differences between the brand therapy and generic therapies. This message was piloted in three sales regions. The three piloted regions grew 10 percent faster in one year than other regions.
  • Focus on Stocking. According to wholesaler shipment records, between 30 – 50 percent of HIV anti-virals, oral oncalytics, and deep vein thrombosis therapies (DVTs) are distributed to patients through brick-and-mortar retail pharmacies. Stocking of these products is incredibly limited. To reduce the risk of therapeutic interchange, several DVT, controlled substance, and ATP manufacturers implemented programs in which their sales teams call on high decile pharmacies (those with the highest patient volumes in the therapeutic category) to encourage proactive stocking. Results have been highly encouraging, with a visible shift in inventory toward pharmacies with higher traffic after initiation of pharmacy promotion.
  • Focus on Cohort Analysis. One manufacturer was concerned about therapeutic interchange resulting from generic launches within the therapeutic class. After nine months of tracking call impact, called-upon cohorts outperformed non-called-upon cohorts by 5 percent. More interestingly, the manufacturer found that much of that improvement came from chain and mass merchant pharmacies—the very locations that brands believed they could not influence due to the role of chain headquarters.
These four manufacturers committed to their pharmacy pilots once they determined they could use data, in particular their EDI 867 data and market-specific pharmacy deciles, to target pharmacy promotional activity and measure its impact. Each has proven that they can quantify the positive impact of pharmacy promotion, and their programs have gained momentum, with a growing range of brand and sales team leaders becoming engaged stakeholders.

Pharmacy as a marketing channel is still evolving. According to ZS Associates latest AccessMonitor™ report, doctor access fell nearly 20 percent in 2009, with just over half of prescribers now rep accessible. As doctor access declines and managed care influence steadily grows, pharmaceutical manufacturers can now grow sales by reevaluating the role of pharmacy in brand strategy.

Please feel free to contact me by email or phone (609-806-5005) if you would like to discuss how to build a program for your company.


  1. AnonymousJune 30, 2010

    The methodology of targeting pharmacists-in-charge and the mode of contact materials will be critical to success. Certainly incentives will play a role.

  2. AnonymousJuly 04, 2010

    Thanks Josh for the post.

    As a former pharmacy owner, I can share that we would not stock new products unless there indeed was a big incentive. Not terms/dating, but instead either a free initial fill (which is the norm in the generic industry) or another discount format.

    Of course we lost some first scripts to others, while often we performed therapeutic subbing (approved of course). Ultimately though as the demand grew, we caved and stocked the new me too brand.

    This usually would take up to 60 days for the demand to be great enough.