Advances in pharmaceutical marketing: exploring the underpinnings of competitive advantage

Citation

Mukherjee, A. (2014), "Advances in pharmaceutical marketing: exploring the underpinnings of competitive advantage", International Journal of Pharmaceutical and Healthcare Marketing, Vol. 8 No. 2. https://doi.org/10.1108/IJPHM-04-2014-0019

Advances in pharmaceutical marketing: exploring the underpinnings of competitive advantage

Article Type: Editorial From: International Journal of Pharmaceutical and Healthcare Marketing, Volume 8, Issue 2

This second issue of 2014 contains six interesting articles from authors in different parts of the world. These articles expand our understanding of how pharmaceutical companies can achieve different types of competitive advantages through adopting state-of-the-art marketing strategies. Some of these competitive advantages discussed in the articles are embedded in pioneering entry, comparative effectiveness, direct-to-consumer advertising, celebrity endorsement, social media marketing and pharmacy service quality.

The first article of this issue is a research paper by Yu Yu and Sachin Gupta on a study of generic drug marketing titled“Pioneering advantage in generic drug competition”. Pharmaceutical markets experience the entry of numerous generic firms upon expiration of the brand firm’s patent. In this paper, the authors take a close look at competition among the generic entrants during the first three years after patent expiration and examine whether there is a first mover advantage. To examine this, the authors specify a random effect nested logit model of competition that allows for competition between the brand drug and generics, and among multiple generic drugs. The model accommodates the effects of prices, detailing, sampling, journal advertising, time-in-market and molecule-specific characteristics. The model is estimated on cross-sectional time-series data for 49 molecules in which the brand drug lost patent exclusivity between 1992 and 2000. The study results show strong evidence that the early generic entrant enjoys a substantial market share and profit advantage over the second and the third entrants, after controlling for differences in marketing activities. The authors also uncover evidence suggesting that the advantage is due to the response of the retail pharmacy channel, and due to differential effectiveness of advertising and pricing between earlier versus later entrants. This paper is the first to empirically model the first mover advantage among undifferentiated products and makes an important contribution. The findings are especially useful for regulators in pharmaceutical and healthcare industries. They can also shed light on other industries where there is little or no quality differentiation, such as commodity trading, open source software distribution and online banking.

The second article of this issue is a conceptual paper by Sarah Jeffers, Mark Slomiany, Rema Bitar, Sarah Kruse and Mahmud Hassan titled “Comparative effectiveness research and the rise of orphan indications”. In this paper, the authors propose a framework which can help to model drug development at the intersection of rare disease legislation and increasing comparative effectiveness research standards for orphan drugs. For this purpose, the authors review the American Recovery and Reinvestment Act of 2009 that allocated $1.1 billion for comparative effectiveness research (CER). Complementing this act, 2010 saw the establishment of the Patient-Centered Outcomes Research Institute (PCORI), to manage the funding and conduct of CER. Designed more for large patient populations, PCORI’s proposed funding criteria of cost-effective research has drawn concern from the rare disease community that fears the erosion of progress made over the past 30 years in public policy and funding of therapies for rare diseases. In this article, the authors show how the CER can be utilized in orphan drug developments. With the smaller patient populations, lower budget impact and few therapeutic alternatives, drugs that treat orphan diseases face far fewer CER requirements than drugs that treat broad patient populations and face numerous therapeutic alternatives. Notably, interest in orphan disease research has grown quickly over the last 30 years and has been forecast to outshine that of the non-orphan control drugs over the next 30 years. As patients and insurers have become increasingly aware of the growing number, multiple indications and rising cost of orphan drugs, PCORI has recently assembled an Advisory Panel on Rare Diseases to explore the relation of orphan disease indications to CER. This paper offers significant policy and strategy implications.

The third article titled “Impact of celebrity endorsements in disease-specific direct-to-consumer (DTC) advertisements: an elaboration likelihood model approach” is a research paper authored by Brent L. Rollins and Nilesh S. Bhutada. In this research, the authors aim at analyzing the differential effects on consumer response between disease-specific advertising containing a celebrity and that with a non-celebrity endorser. A randomized, cross-sectional two (endorser type) by two (levels of disease state involvement) factorial design is used. Respondents (aged > 18 years) are randomly shown one of the advertisement types and then asked to respond to an online survey questionnaire containing scaled items measuring disease state involvement, endorser credibility, attitude toward the advertisement and company, attention to the ad, behavioural intentions and information search behaviour. The disease-specific ad stimulus is modelled on the form of current print direct-to-consumer (DTC) ads and is created following recent Food and Drug Administration (FDA) guidelines, with the only difference being the specific pictorial used (celebrity versus non-celebrity). While the endorser type is not found to significantly affect consumer attitudes, behavioural intentions and information search behaviour, the level of disease state involvement does. More highly involved consumers have more positive attitudes, behavioural intentions and greater information search behaviour. While consumers are found to pay significantly more attention to the celebrity-containing ads and view them as more credible, this does not translate into significant effects on the outcome variables of consumer attitudes towards the advertisement and company, behavioural intentions and information search behaviour. Thus, the level of disease state involvement is a significant predictor of respondent outcomes. Overall, pharmaceutical manufacturers might want to re-evaluate using a celebrity endorser in disease-specific ads, as this research shows the benefits/outcomes may not justify the cost.

The fourth article of this issue titled “Relationship between direct-to-consumer advertising and consumers’ decision making” is authored by Hamzeh Salim Khraim, Abdel-Aziz Ahmad Sharabati and Rami Atta Khateeb. The purpose of this study is to investigate the influence of direct-to-consumer advertising (DTCA) on consumer decision making (CDM), through examining the consumers’ perceptions regarding DTCA indicators. Survey data used in this empirical analysis are collected from 484 consumers using a questionnaire. Statistical techniques such as descriptive statistics, correlation, simple and multiple regressions are used. Cronbach’s alpha is used to confirm the suitability of data collection instrument. The results of the study indicate a positive significant relationship between DTCA and CDM. The results also indicate that there is significant impact of healthcare awareness on CDM, but there are no significant impact of drug – drug interactions, medical information source and consumer economical situation on CDM. The data are limited to the Jordanian market; therefore, generalizing results of a Jordanian setting to other countries may be questionable. Extending the analyses to other settings would present future research opportunities. The research results might help both academics and practitioners to be more ready to understand the components of DTCA and provide insight into developing and using them within their organizations. The current research may be considered as the first study that highlights the effect of DTCA on CDM in Jordan and in the Arab world. The results can provide useful insights for future research about the relationship between DTCA and CDM in emerging pharmaceutical markets.

The next paper of this issue is a research study by Scott Rader, Zahed Subhan, Clinton D. Lanier, Roger Brooksbank, Sandra Yankah and Kristin Spears titled “‘CyberRx’: Emerging Social Media Marketing Strategy for Pharmaceuticals”. Proliferation of social media has significantly changed traditional one-way, marketing-controlled communications. Balance of power has shifted to consumers, who use social networking sites, blogs and forums to obtain extensive brand and product information, often from each other. This prompts companies to adopt more intimate, transparent and constant two-way consumer engagement. Pharmaceutical marketing and DTCA are not immune to this pervasive, disruptive cultural/technological phenomenon, which poses particular challenges given regulatory, legal and ethical constraints on their marketing. This research assesses the state of the art in social media and pharmaceutical marketing through empirical analysis of online consumer conversations. The research uses ‘netnographic’ data collection of online conversations occurring in social media and develops an explanatory framework using grounded theory analytical methods. The research findings show that significantly impactful and pervasive bonding among consumers, bloggers and unofficial “experts” about pharmaceutical offerings is widespread, and occurs regardless (and perhaps in spite of) pharmaceutical companies’ involvement. Considering the structure and nature of online consumer bonding, a strategy is proposed for pharmaceutical companies to implement social media as part of their marketing and DTCA efforts through an interactive online presence arising from disease and healthcare education.

The final article of this issue is a research paper by Jason Perepelkin and David Di Zhang titled “Quality alone is not enough to be trustworthy: the mediating role of sincerity perception”. Community (retail) pharmacy is an increasingly competitive industry. Service quality has been considered one of the key factors for pharmacies to differentiate and develop competitive advantage. This paper seeks to identify the mediating factor that facilitates the relationship between service quality and customer trust. It is hypothesized that customers’ perception of the sincerity of the pharmacies mediates the relationship between quality and trust. Accordingly, the authors argue that quality alone is not enough; pharmacies need to develop rapport with their customers and convey sincerity. Through consumer intercept, the authors collect survey data from 150 customers in a western Canadian city who had filled a prescription at the pharmacy in the previous six months. The data are analysed using structure equation modelling (SEM). The data reveal that while overall service quality has a positive influence on customer trust, perception of sincerity has a more immediate impact. The relationship between quality and trust is completely mediated through sincerity perception. Service quality has been found to be important for pharmacy management and has produced many good results. However, the measurement of service quality has historically emphasized on physical evidences. The element of human interaction and subjective affective perceptions has been largely ignored because it is difficult to measure, hence difficult to reward and implement. This study highlights the importance of personal interactions in the context of pharmacy quality management.

I hope you will enjoy reading these insightful articles and use them in your teaching, learning, research and practice. The issues in these articles are contemporary, the methods rigorous, the findings interesting and the applications international.

Avinandan Mukherjee