Pfizer Throws In the Lipitor Marketing Towel. Repercussions in Job Market Will Be Swift

Pfizer Throws In the Lipitor Marketing Towel. Repercussions in Job Market Will Be Swift

Despite Pfizer's heroic and unprecedented effort to maintain Lipitor's market share after expiry last November and after spending "more than $87 million promoting the medicine, the world's biggest drug company is quietly giving up on its once-great cash cow for good because more generic versions will soon be going on sale" (see this Wall Street Journal story: "Farewell after all, Lipitor").

As I reported here on Pharma Marketing Blog on May 2 (see here), Pfizer's Lipitor co-pay card/PBM discount plan failed to meet its goal of maintaining a 40% share of the combined market for Lipitor and its generic equivalents for at least 6 months after generic brands are launched. As reported in the WSJ (op cit), Lipitor's U.S. market share is 33% after 5 months (more generics will come on the market after May 31).

Although Pfizer will say that its program was a succes, the program has not met its sales goal and is considered a public relations failure by some people in the industry. A pharmaceutical marketing VP attending a recent conference referred to my blog posts "Occupy Pfizer! Protest It's Deal to Block Sales of Generic Lipitor! #OccupyPFE" and "Do Drug Coupons Hurt Employee Health Plans and Ultimately Employees?"

But after spending more than $87 million promoting Lipitor in recent months, Pfizer officials told The Wall Street Journal that the company is "no longer negotiating new contracts to sell Lipitor to health plans, which are signing up to sell generic versions at far lower prices. The company recently stopped sending sales representatives to promote Lipitor to doctors and halted advertising in print, on television and online, which once commanded a $271.9 million yearly budget." Here's a chart showing Lipitor's direct-to-consumer (DTC) advertising budget over the past 9 years:

[Note the minuscule proportion allocated to "Internet" ad spending. I cannot see from this chart what the $ amount is!]

The elimination of $220 or so million in Lipitor DTC advertising will, I predict, result in a 3% drop in overall DTC advertising in 2012 compared to 2011 (see "Lipitor Holds Key to DTC Ad Spending in 2012"). But that is only the tip of the Lipitor marketing budget, which totaled over $660 million in 2010. Included in that number is marketing to physicians and samples (see here).

When that much money is taken out of the Rx brand marketing equation, there are bound to be repercussions within Pfizer itself and within marketing communications companies that provide services to Pfizer. Meaning, of course, jobs will be lost. Perhaps that correction has already occurred. Or perhaps there are more layoffs to come.

As Pharma Spends More on Digital, External Digital Agencies Receive Poor Ratings from Marketing Executives

As Pharma Spends More on Digital, External Digital Agencies Receive Poor Ratings from Marketing Executives

Pharmaceutical brand teams are generally dissatisfied with their outsourced digital marketing, according to a study by Cutting Edge Information (see press release).

In surveys and interviews, executives acknowledged the challenges that their industry presents to external communication agencies, not the least being the lack of clear regulatory guidelines for pharmaceutical digital marketing. Despite that, pharmaceutical brand teams' opinions of agency performance are generally negative. Across all activity categories, only 21 percent of responses were "good" while 35 percent were "poor." No respondent ranked their experience with outsourced digital marketing as "very good." This is based on 34 responses.

It seems that familiarity breeds contempt -- the poor rating of digital agencies comes at a time when pharma marketers have increased the proportion of marketing dollars spent on digital.

Data from the summary report claims that "traditional digital marketing" (Web sites, web display ads/banners, email, search) represented 26.6% of the overall pharma marketing budget in 2011 compared to 23.7% in 2010; a 12% increase. These absolute percentages are similar to what PwC/IAB reported for all industries (see, for example, this chart). But my analysis suggests only 11% of pharma's total DTC marketing budget is devoted to "traditional digital marketing" (see "Ad Dollars Follow Eyeballs to Web").

Social and Mobile marketing are not "traditional digital marketing" according to Cutting Edge's definition. While the share of marketing dollars spent on traditional digital marketing has increased 12% from 2009 to 2011, the share for Social and Mobile digital "channels"/technologies (which is it?) have increased by 99% and 288%, respectively, according to Cutting Edge data (see chart below created from Cutting Edge data).

The report cites this caveat about the data: "this data does not suggest that actual spending by pharmaceutical companies on print media declined 26% between 2009 and 2011 but that print media is taking on a less significant role as a percentage of the total marketing mix." The same is true for the increase in share of social media and mobile: these "channels" are taking on a MORE significant role, especially since there are data suggesting that the OVERALL pharma DTC (direct-to-consumer) marketing budget decreased from 2009 to 2011 (see this chart).

China Enjoys a Burst of Pharma Marketing Spending While U.S. & Japan See a Decrease

China Enjoys a Burst of Pharma Marketing Spending While U.S. & Japan See a Decrease

Cegedim Strategic Data (CSD) reports a decline of 3.4% in worldwide audited pharmaceutical marketing investments for 2011 (see "Pharma Marketing Global Spend Dipped 3.4% in 2011"). In China, however, pharma spending on sales rep detailing physicians increased by 23% in 2011 compared to 2010. That activity represents about 81% of the total pharma marketing spend in China compared to 60% globally.

"This is typical of emerging markets," noted Christopher Wooden Vice President for CSD Global Promotion Audits.

Another type of marketing spend that is "typical" for emerging markets is meetings where physicians are invited to listen to key opinion leaders or specific promotions. In China, meeting spending was up 43% in 2011 vs. 2010. That represents 17% of the total marketing spend in China. Sampling, on the other hand, represents only 1% of the marketing spend, whereas in in the U.S. 21% of pharma's marketing spend is on samples. Note that CSD costs samples according to Average Wholesaler Cost rather than retail value.

Japan, on the other hand, saw a "surge" in pharma marketing spend in 2010 over 2009, but there was a "pull back" in 2011 with a 12.5% drop overall. Detailing was down 12% and spending on meetings, which accounts for almost 30% of the marketing mix, was down 11% to $7.4 Bn.

Using my math, that means that total pharma marketing spend in Japan in 2011 was about $24.7 Bn (7.4/.3) compared to $29.2 Bn in the US.

In the U.S., pharma marketing spend was down by about 4% overall, with detailing dipping 6% in 2011 compared to 2010 (see "2011 U.S. Pharma Company Promotion Spending" and chart below).