By Arjan Singh
Pharma and biotech companies are under constant competitive pressures from firms with competing drugs both in-market and in development. Branded drugs generally have only a limited in-market lifetime; therefore, the firms that are marketing them need to develop and execute highly effective sales and marketing strategies, especially since individual drugs can be turned into multibillion-dollar blockbusters. This means that they have to understand in detail the constantly shifting external competitive environment.
Since there are nearly always other drugs competing for market share in a specific disease state, it is essential that firms understand how their competitors are selling and marketing to prescribers, educating patients about the benefits of their drugs, persuading health plans to give their drugs the best position on their drug formularies, or trying to develop new therapies.
These forces impacting specific drug markets can be highly complex and vary from disease state to disease state. For instance, markets such as rare diseases are small, highly specialized, potentially highly profitable, and covered by a few very expensive biologics, which only can be prescribed by specialists and closely monitored due to potential serious side effects. For companies competing for a slice of these markets, it is imperative that they understand how these drugs are being prescribed, how plans or governments are paying for them, and whether there are major discounts or special contracting arrangements with doctors and hospitals in specific segments of the market around the world.
It is therefore essential for drug companies wishing to effectively compete in any disease state to have some understanding of their competitors’ tactics and strategies. Some of this knowledge can be obtained through the firm’s field force or sales representatives, medical science liaisons, managed market experts, and from the press and industry databases on competitors’ sales and prescriptions filled for specific drugs. However, to gain a deep understanding of competitors’ strategies and tactics, as well as issues key competitors may be experiencing, a drug’s brand team needs to consider developing a customized competitive intelligence (CI) program to monitor key competitors or undertake specific one-off projects to clarify issues and opportunities in order to better compete.
Similarly, pharma and biotech companies need to closely monitor their competitors’ drug development pipelines. They need to watch how well new compounds are doing in clinical trials: How successfully patients are being recruited, whether there are unexpected issues with adverse events in specific patient segments of the trial, whether endpoints of the trial are being met, and when these compounds are likely to be filed and approved by various regulatory bodies around the world. With the growth of biologics, it also can be essential to understand the manufacturing processes a competitor is using and whether it is experiencing issues getting these approved by the FDA and EMA for a new drug. Major advances have been made in biologic manufacturing processes over the past decade, resulting in major cost differences for competing drugs. These cost differences easily can be translated into aggressive competitive price strategies if too many drugs start to compete in a given disease state, so having a good understanding of a competitor’s manufacturing cost base and the potential for an attack with a low-ball pricing strategy can be valuable.
WHAT IS COMPETITIVE INTELLIGENCE?
Competitive intelligence is about understanding the external environment and the current competitive dynamics to be able to predict likely future changes. Competitive intelligence assesses the degree to which organizations and their members understand why and how their strategic interactions affect their competitive environment and what external factors affect their own competitiveness.
An effective CI program is a core foundation upon which competitive strategies and execution tactics are developed, assessed, and modified. The traditional view of CI in any firm is the institutionalization of gathering, analyzing, and managing external information on the firm’s external environment.
The biopharma industry is flooded with information today. One of the critical issues that CI functions have in any firm is how to manage this deluge of data. The answer is prioritization; for CI, that should mean focusing on the data that can have the greatest impact on the competiveness of the firm.
HOW TO GET STARTED IN CI
Focus your effort: Successful CI is about generating focused insights on the competition. The key competitive questions (KCQs) process is a very effective way to stay focused on what really matters. KCQs are strategic and tactical business concerns upon which management must take action. KCQs provide direction to CI projects and help in breaking down complex issues into manageable topics or questions. The highlight here is action. If there is no action to be taken using the results of a CI project, then do you really need to be spending resources on it?
By aligning your KCQs to corporate assumptions you can ensure the CI produced is actionable. A very effective way to do this is to understand your short- and long-term planning assumptions for your business, therapeutic area, or brand. Once you have understood and articulated these, your KCQs can be aligned and you can proactively inform management if the unexpected is likely to happen.
Develop legal/ethical guidelines: One of the key enablers for CI is to have clearly articulated policies on what the legal and ethical guidelines for CI are in your company. These provide internal employees comfort in what they should and should not do to collect CI. Generally speaking, all guidelines should refer back to applicable law and ensure that no information is stolen and that there is no misrepresentation or lying to collect CI.
Use internal teams for collecting CI: Sales force/medical teams are a wealth of knowledge about the competition due the nature of their work — they interact with the external environment daily. However, it can be difficult to tap into the knowledge of field force staff as they might assume that the CI they are getting is already known internally or might not know who to communicate it to. To make this work, internal teams need to know what to collect, be incentivized to share intelligence they have picked up, and be given simple mechanisms to communicate and share what they have gathered internally.
Integrate war games into brand planning: The most widely used CI workshop is a war game. The tool allows internal teams to simulate the moves and countermoves of key companies and influencers in the marketplace to anticipate what they are likely to do when there are changes in the market dynamics. (See “Using War Games To Predict Competitors’ Moves” in our July issue.)
Collect CI at a conference: Conferences and trade shows provide a huge opportunity to collect ample intelligence in a relatively short period of time. If properly planned, a few days at a trade show can garner more information than a year of research using other sources and techniques. (See “Collecting Competitive Intelligence At Conferences” in our November issue.)
Develop a systematic CI monitoring process: With a systematic CI monitoring process, you can proactively identify potential events that could lead to critical changes in your business. These events can then be followed up through additional and targeted research.
Companies that invest time and resources to establish a CI infrastructure will have a better understanding of their competitive environment and, consequently, will make decisions based on incremental datasets that their competition might not have access to. Those companies that do have CI understand the value of ensuring decisions are made on data points on the competition versus mere guessing.
ARJAN SINGH is president of ASI/Pharma War Games.com and is a lecturer of strategy at the University of California, Irvine.