What Biopharma Marketing Needs to Learn About the Start-up “Pivot”

I feel like I’m having the same conversation over and over. I sit down with some smart, forward-thinking pharma or biotech marketing executive and we both agree that the health care landscape is changing radically and that it’s getting harder and harder for them to hit their numbers the way they used to. We discuss all sorts of new marketing paradigms based on experiences in other sectors — social media, paid content, location marketing, buzz marketing, whatever — and then there’s a pause … “yeah, but that’s not our core competency; we’re trying to focus on what we do best.”

Problem is, that’s not really working so well. Biopharma needs to pivot.

In 2009, Eric Reis, who wrote “The Lean Startup,” coined the term “pivot” to describe “the idea that successful start-ups change directions but stay grounded in what they've learned. They keep one foot in the past and place one foot in a new possible future.” Many companies have managed to pivot. Greg Tseng, CEO of Tagged.com and one of the Web’s most recognized successful “pivoters,” points to a few examples, “PayPal was beaming money between Palm Pilots. YouTube was a video dating site. Twitter was group SMS, which came out of a struggling Odeo. Pandora started as a B2B music recommendation service. Groupon started as The Point, serving collective political action. The list goes on.” The common theme among each example is the firm’s recognition that their business model was, at its core, flawed, and that their long-term success (or survival) depended on fundamentally rethinking how they meet their customers’ needs.

There is ample evidence that biopharma marketers face a pivot moment now. Almost half of all drug rep sales interactions with physicians last less than five minutes. Forty percent of physicians forgo free product samples in order to avoid pharmaceutical sales rep detailing. Direct-to-consumer advertising in print and on television continues to decline in effectiveness. Drug company websites barely command 10 percent of health-related Web searches. Regulatory scrutiny continues to increase.

No industry outsider could objectively examine these facts and conclude anything other than that the biopharma commercial model is, at its core, fundamentally broken. Many recognize that now is the time for marketing leadership to rethink how it meets its customers’ needs. Now is the time to pivot.

And yet despite these facts, most biopharma executives still refuse to fully embrace new marketing paradigms. Yes, there are approximately 14 percent fewer sales reps this year than there were last year, but that still leaves almost 75,000 FTEs that cost the industry some $19 billion per year still at work. Yes, pharmaceutical direct-to-consumer spending was down in 2010 by almost 9 percent, but fully 92 percent of that was still spent on television and print. Biopharma has no appreciable footprint on the Web and little, if any, presence in social media.

Why? Leaders in the space report a remarkably consistent set of answers. Sales leadership blames physicians or health care systems for limiting rep access. Corporate account leaders protest that insurers are unfairly squeezing margins or preferentially pushing generic alternatives to branded products. Everyone complains about the FDA. Marketers maintain that proving a correlation between nontraditional channels and sales is impossible — that the only thing over the long term that drives sales is a rep in front of a doc asking for the business. In the final analysis, however, all of these excuses point to a common belief that the moment to pivot is somehow still on the horizon.

I don’t believe that. I think that now is the time to move and that without bold, transformative action, the biopharma commercial model will simply fade to irrelevance. The markets in which these companies operate will evolve without their participation. In fact, that evolution may already be at hand. The challenge for pharma and biotech is to recognize what their core business actually is and rethink their business model to better meet that demand. The time to pivot is now.

Determining how and where to pivot is as simple as asking and answering a few important questions. First, are we clear on who our customer is and who it will be (they aren’t necessarily the same people)? Second, what do those customers really need — both to make a product choice and also to be more satisfied consumers in general? Third, what will those customers pay for and how will they pay? And, lastly, of the services and products that the answers to these questions describe, where can or could biopharma marketers add meaningful value?

It’s as simple as that . . . and as hard as that at the same time. The reality of hitting the numbers, managing to earnings, and the brand-oriented structure of most marketing departments, in fact, makes asking and answering these questions the hardest work to get done. No one wants to be the guy who raises his hand and says that what we’re doing isn’t working, or that the future looks totally different than where we’re headed, or that the emperor has no clothes. There’s never really money around to do major innovation. And building a case for a demonstrable (and superior) ROI on unproven methods or markets is tough.

The rub is that the conversation I’ve had so many times only ends with quiet acknowledgement of the problem and a resolution to just focus harder on the business we remember. The problem with that is, what most marketers in biopharma today claim is outside the scope of their core business is exactly where the health care market seems to be headed. You can claim it’s not your business and keep on keeping on. But unless we pivot and really shake things up, it’ll just turn into someone else’s business.

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