Why pharmaceutical market research is different from consumer goods research?

It is important to understand the clinical development of pharmaceutical products and how they are marketed when considering market research in this industry. There are perceptions by market research agencies not working in the pharmaceutical and healthcare industries that these industries utilise different market research techniques and methodologies. This perception is mainly because of the market dynamic complexities, and the high science nature and cost of market research projects (mainly driven by cost associated with respondent incentives) specific to the pharmaceutical industry.

In Australia, there are only a handful of major market research companies that specialise in primary market research for the pharmaceutical and healthcare industry, as evidenced in the current 2006 AMSRS Directory and Yearbook. There is also one dominant provider of secondary market audit data (IMS Australia). However, in recent years a number of international and home grown agencies have been setting up their own healthcare / pharmaceutical divisions in the Australian market. In addition, there is also a growing number of boutique-type pharmaceutical and healthcare agencies.

What are the factors that make pharmaceutical market research different to consumer goods research?

The Clinical Testing Process

In the new drug discovery and development process in the United States and Europe - where most of major drug discoveries occur - only five in 5,000 compounds that enter preclinical trials make it to Phase 1 clinical trials. Preclinical trials usually involve three to four years of laboratory trials including animal studies to assess safety. Once this is complete, an Investigational New Drug Application (IND) is filed with the Food and Drug Administration (FDA) in order to begin Phase 1 clinical trials, testing the new drug with 20 to 80 healthy human volunteers to determine its safety and dosing regimen for a period of one year. The number of patient volunteers increases as the clinical trials move to Phase II clinical trials, (two years with 100 to 300 volunteers to evaluate effectiveness and side effects) and Phase III clinical trials (three years with 1,000 to 3,000 patient volunteers to monitor adverse reactions from long term usage and further verify effectiveness). Newer, more complex drugs require additional studies (Phase IV) to evaluate their long term safety and side-effects.

When the drug has successfully demonstrated its safety and effectiveness during Phase III, a New Drug Application (NDA) is filed with the FDA, which on the average takes six to 12 months to be reviewed. Once the NDA has been approved, the new drug is ready to be prescribed to patients by appropriate medical practitioners. However, the drug manufacturer is still required to submit additional reports to the FDA on any adverse reactions encountered by patients. The Australian pharmaceutical product approval process is similar in many ways to that of the US.

After this long developmental phase, a pharmaceutical product's life cycle is relatively short. It generally lasts around 15 years, with a possible extension to 20 years before the product's patent life expires and generic equivalents come on to the market. In some cases generics move into the market even before the official patent expires. The short pharmaceutical product life cycle creates a strong sense of urgency amongst pharmaceutical marketers to optimise both their top and bottom lines.

In terms of revenue, the Australian pharmaceutical market is highly developed but very small, representing approximately one percent of the world pharmaceutical market and dominated by multinational companies. The Therapeutic Goods Administration (TGA) is the main Australian government body responsible for the introduction and regulation of medicines in Australia. Most early phase pre-launch market research work is commissioned and staged by global marketing teams at headquarters in the USA or Europe on a multi-country scale. In some cases, local country market research surveys are conducted with minor or no input by local subsidiary companies - all in the name of global strategy implementations.

Marketing Pharmaceutical Products

With consumer goods, the buyer's decision process takes into account the aesthetic and sensual characteristics of the product, such as taste, feel, colour, smell, and appearance. In pharmaceutical products, such sensual characteristics are often not a consideration in the buying decision process - not all good medicine tastes good! The main factors driving pharmaceutical product usage include objective clinical trial studies and evidence-based clinical claims.

In the main, pharmaceutical product usage is driven by hierarchical groups of medical and licensed professionals, such as medical specialists, primary care physicians, general practitioners and pharmacists. In the hospital system, the use of pharmaceutical products is mainly decided by formulary or drug committees after government tendering processes.

For prescription drugs covered by the Pharmaceutical Benefit Scheme (PBS), price is often not a major factor in product use from the prescribers' perspective. The buying decision process in prescription pharmaceutical products is different, as the end users of the product - patients - are not the main decision makers in its usage. The decision about which product is to be used by the consumer is made by the medical practitioner.

While price is not always a major factor driving product use by prescribers, the federal government's push to contain the cost of PBS drugs through the use of generic equivalents (normally priced lower than branded medicines) is strongly encouraged and promoted by both the government and generic pharmaceutical product manufacturers.

In more recent times, promotional activities such as the selling processes used by pharmaceutical sales representatives and product claims made by pharmaceutical marketers on their products are highly vetted - either within the companies themselves, by industry peak bodies, such as Medicines Australia or by the government through the Therapeutic Goods Administration.

Pharmaceutical Market Research

There are a number of issues that market researchers and research buyers should take into account when commissioning or conducting research into pharmaceutical products and their users and prescribers.

When researching medical practitioners, the level of incentives paid to participants varies according to the type and population size of the medical specialty or practitioner (for example, oncologists are paid more due to their smaller population size); the perceived value of their time relevant to consultation fee charged to patients; the length and duration of the market research interviews or engagement; and the level of urgency required to conduct the project.

Because of the small population sizes of some medical specialist groups plus their demanding work and patient loads, they tend to be ‘over researched' and may therefore command premium incentive for their time and effort. On the other hand, some medical specialties are easier to approach, recruit and interview. Also, given the small population of some medical specialities, consideration should be given to sample size versus having full census approach. Some medical specialists are highly analytical and willing to impart their knowledge and experiences even beyond the scope of the research project, particularly if the research is considered interesting and relevant to their medical specialty.

Like any other area of market research, careful recruiting of participants is important, with consideration being given to the nature of specific medical practices during the respondent recruitment process. I once attended a focus group on cardiovascular products amongst general practitioners and found during the participants' introduction that one respondent's predominant patient base was in paediatrics and another was a medical practitioner with a major state correctional service. A classic case of sampling error.

Despite often having a detailed understanding of the industry, not all pharmaceutical market researchers can claim detailed knowledge of diseases, therapeutic areas, product choices or treatment choices (medical and non-medical). Pharmaceutical market researchers - particularly interviewers and moderators - should at least be familiar with the meaning, correct pronunciation and spelling of medical terms such as diseases and generic names, particularly when conducting telephone, face-to-face or direct contact interviews and focus group discussions.

For quantitative research, researchers should assess the need for conducting pilot tests for questionnaire clarity, sequence and length, prior to full blown field work and for qualitative work, researchers may also encourage the clients to participate actively through observation (in focus groups) and debriefing made prior to the conclusion of the focus group to ensure that all key objectives of the research project have all been addressed.

By Frank Domantay, QPMR, senior manager market research, Bristol-Myers Squibb Pharmaceuticals; chairperson, professional training and development sub-committee and chairperson, industry surveys, Australian Pharmaceutical Marketing and Research Group (APMRG).

October 2006.