The Doctor Won't See You Now - Customer Relationship Management and Networked Healthcare in the Pharmaceutical Industry

In most of the USA, traditional pharmaceutical marketing is based on having big sales forces formed in matrix structures. However, access to doctors became more difficult in recent years for many sales reps. Assistant Professor of Information Systems Theodoros Evgeniou and co-authors Gagan Bhalia and Leonard Lerer consider the fallout of the pharmaceutical companies "arms race" that had developed by the late 90s. The logical response was the move into customer relationship management (CRM) that ensued.

by Theodoros Evgeniou, Gagan Bhalia and Leonard Lerer
Last Updated: 23 Jul 2013

In most of the USA, traditional pharmaceutical marketing is based on having big sales forces. These are usually formed in matrix structures, with representatives being part of territorial sales teams. However, the number of sales reps doubled during the 1990s, while the rate of increase in practicing physicians remained flat. Needless to say, access to doctors has become all that much harder for many marketers.

Assistant Professor of Information Systems Theodoros Evgeniou and co-authors Gagan Bhalia and Leonard Lerer consider the fallout of the pharmaceutical companies "arms r ace" that had developed by the late 90s. The logical response was the move into customer relationship management (CRM) that ensued. Most American drugs-makers have adopted CRM systems to capture dispersed customer knowledge and rationalise it across all customer touch-points, thereby allowing for a better integration of marketing efforts and increased profitability across marketing-mix while also developing more cost-effective marketing channels.

Despite the fact that a lot of early CRM systems have not lived up to their users' expectations, the authors describe how the industry, especially in the USA, has begun to appreciate CRM as an effective catalyst for "collaborative strategies" for managing data collected across multiple channels such as sales forces, call centres, etc.

The authors employ a recent framework developed for understanding CRM strategies within a particular industry in an effort to better explain the recent changes within pharmaceutical companies, and to anchor them within the context of the rapidly changing customer environment that has resulted.

The framework examines the two main levers of change in the contemporary market: the increasing interactivity of companies with their customer groups, and the networking effect among the market elements, companies, and customers. The authors also consider two key levers for building CRM strategies, which they represent with a customer integration/market integration matrix. This measures both the degree of customer integration to a company's value chain, and the degree of market networking within an industry.

The article continues with a discussion of what has to date been a major oversight. Investments in the customer integration dimension of the matrix have overwhelmingly focussed on the needs of sales representatives. Physicians have long been the main focus of marketing efforts and, more recently, of CRM deployment. But they have been largely left out of direct involvement in pharmaceutical companies' values chains. The authors describe how the view of physicians as essentially passive recipients of sales and marketing overtures is rapidly changing, and what initiatives various drugs-makers are now employing to redress this oversight.

Likewise, focussing directly on patients is a fairly recent experience for most major pharmaceutical firms. The authors detail ongoing efforts to improve customer integration with patients, particularly with the big increase in Direct to Consumer (DTC) advertising of prescription drugs. They also discuss the various value-added services that companies are deploying in efforts to retain and grow patient "mind sharing", often with the support of doctors.

The study concludes with a consideration of how stakeholders within the American healthcare and pharmaceutical industry are becoming increasingly networked. Since DTC now often means that patients will request specific brands far more often, certain key functions such as prescribing are now typically subject to a "networked" input of multiple stakeholders. Moreover, as communications channels between pharmaceutical companies, physicians and patients become more extensive, the former are increasingly investing in developing value-added services to strengthen interaction between patient and physician groups.

Journal of Medical Marketing, September 2004

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