|
|
Just What The Pharmaceutical Company Ordered
By: Carly L. Price
Issue: 2007may
Promotional consultants must think outside the tissue box to break into the competitive pharmaceutical market.
To an outsider, it may seem as if the “pharma” industry, as insiders call it, could provide a magic pill for profits. Indeed, this mammoth industry is on a seemingly endless growth curve, fueled by new advances in biotechnology. Nearly half of all Americans use at least one prescription drug, and $113 billion in pharmaceutical preparations were shipped in 2004.
Although promotional products are heavily used within the pharma industry, they have not necessarily followed the same upward trend as drug manufacturing and sales, partly due to the Pharmaceutical Research and Manufacturers of America (PhRMA) ethics code, which was enacted in 2002. This code limits the dollar amount ($100 or less) and type of gifts and promotional items that can be handed out to healthcare professionals. Recent Health Insurance Portability and Accountability Act (HIPPA) legislation that limits access to certain patient information has also made direct-to-consumer marketing slightly more challenging, and the government is considering even more stringent restrictions on direct-to-consumer advertising.
But this isn’t all bad news. The new restrictions have also led to a marketing environment that embraces innovation, creativity and strategy, and there are still plenty of promotional products opportunities that are unregulated.
A Hard Pill To Swallow
Even though they still allow for a reasonable amount of promotional activity, the PhRMA guidelines weren’t an easy pill to swallow in an industry where high-priced gifts, meals and even free trips were once the norm.
“It has narrowed the field. We used to be able to do a broad range of creative products to grab the attention of the medical field, and now it’s primarily glorified office supplies,” says Michael Propst, sales manager for The Vernon Company (UPIC: VERNON), a Newton, Iowa-based distributor.
PhRMA guidelines and restrictions are the reason nearly every doctor’s office is filled with inexpensive logoed items such as pens, Post-it Notes® and tissue boxes. They are allowed because they serve a legitimate function in a medical office setting. Generally, these are leave-behind items brought into the office by pharmaceutical sales reps, although similar items may also be used as handouts at tradeshows, seminars or training events. Pharmacists may also be targeted with pharmacy tools as the rules also allow promotional items that are primarily for the benefit of patients, including medical instruments and educational materials.
“Items such as stethoscopes, blood pressure cuffs, instrument trays and medical textbooks are okay,” says Jerry Mauder, senior marketing executive with Custom Promotions (UPIC: CUST0024), a North Brunswick, New Jersey-based distributor, which works with more than 20 different pharmaceutical companies. “We do many anatomical models and teaching models,” he says. For instance, one is a model of a brain that is healthy on one side and in a severe state of Alzheimer’s on the other. It is hinged so doctors and patients can open it take out different brain parts. Mauder also provides other types of educational materials, such as wall charts for exam rooms that inform patients about different disease states.
Many promotional consultants have great success providing these types of products, although high volume with low margins is usually the name of the game. Items costing more than $100 are sometimes permitted but are strictly regulated. And some specific items, such as golf balls and sports bags, are forbidden regardless of cost.
Although they may seem limiting, the PhRMA guidelines apply only to gifts given to healthcare professionals—they do not apply to consumer-focused or internal company promotions.
An External Diagnosis
Physician-focused promotions may be the most visible part of drug companies’ promotional efforts, yet they only represent a fraction of total promotional products use.
Pharmaceutical companies also conduct direct-to-consumer promotions. Over-the-counter (OTC) medications and nutritional supplements represent a special pharmaceutical niche that tends to be more customer-focused than physician-focused. Propst’s company often concentrates on this area. “We can do floor graphics [in pharmacies and grocery stores] and things that are more subtle signage like rack displays,” he explains.
Consumer-oriented promotional products are also used to improve brand awareness for prescription medications. But as direct-to-consumer TV, radio and magazine advertising comes under attack and ad rates continue to climb, most companies are cutting ad spending and doing more targeted consumer programs. “Many of them are doing direct mail with a coupon and [the consumer] can mail it in for a free gift,” Mauder says. “For example, we did a custom-designed pill dispenser that can be loaded up weekly, and users press a button to dispense the particular medication.”
Some pharma companies may sponsor community events where branded promotional products are given away. Others may provide kits to patients in hospitals, nursing homes or other medical facilities, or through charity organizations that provide support for people suffering from certain conditions. A typical example is a package containing prenatal vitamins, bottles and diaper samples given to expectant mothers at OB/GYN visits.
Some promotional products can also be geared toward both doctors and patients. For instance, Mauder is working on a journal that will be distributed through doctors’ offices to caregivers of Alzheimer’s patients. Caregivers can keep a record while observing the patient and report to the doctor.
An Internal Examination
So much attention is focused on pharmaceutical companies’ outward promotional efforts that it’s easy to forget they also have a wide range of internal promotional needs, too, such as sales, training and employee education. These uses fall below the PhRMA radar and can be a great opportunity for distributors.
“A company can conduct training however they wish,” Propst says. “If they want to take their sales force to Hawaii, it’s their business. They are still putting pretty good money into training and awareness for their sales and marketing people. This has been my personal niche more than the external marketing because it hasn’t been affected as much.”
Most pharmaceutical companies employ their own sales force, and keeping those folks trained and educated is a top priority. Typical activities include training luncheons, seminars and workshops. Many of the items used for these activities support training efforts, and they are limited only by the distributor’s creativity.
“One time we created a deck of cards with 52 different aspects of a new product they were releasing,” Propst says, adding that he’s seen a high demand for logo-imprinted flash drives as an alternative to printed training manuals. These inexpensive portable drives can be loaded with information so salespeople attending an event can just plug them into their laptops and follow along with the presentation.
In addition to items used at meetings, pharma firms need name tags and apparel for their employees. “Almost all of the companies issue a name tag to their people in the field,” Mauder adds. “And almost all of the companies give some sort of branded apparel to their employees, but not to wear on sales calls.”
Because professional business attire is the typical working dress code, apparel is generally given to employees for personal use outside of work or for members of the company softball team, for instance, so apparel demand may not be as high as it is in other industries.
“I would say whereas the rest of my market I’m probably doing 40-plus percent wearables, in pharmaceuticals it’s maybe five percent,” Propst reports.
Pharma companies also have the same, basic promotional products needs of all corporations, including internal staff support. They, too, have human resources departments that offer employee service awards and manufacturing facilities that need safety-awareness programs. “These are things we don’t generally think about within a pharmaceutical company,” Propst says.
Brock Foster, an independent sales rep for Lewiston, Maine-based distributor Geiger (UPIC: geiger), reports that about 60 percent of the work he does for a major pharmaceutical company is designed to serve an external promotional purpose, and about 15 percent of that is gifts for doctors, ranging from day-to-day office supplies to leather portfolios and prescription pads or even picture frames. But the other 40 percent of his clients’ orders are for internal promotions, including items for employee-recognition, incentives, sales motivation, recognition, attendance, safety and new product launches, Foster says.
Side Effects
Despite the wide scope of promotional activity in the pharma industry, getting your hands on that first dose of pharmaceutical business can be difficult. Many of the companies, especially the larger ones, only work with preferred vendors.
A rare exception is if you’re presenting a custom product that the company can’t get through another distributor. But for run-of-the-mill products, you have to be a preferred vendor, Mauder says. “Now at the medium- and smaller-sized companies, that doesn’t exist. We try to strike a balance between those,” he adds.
Getting on a preferred vendor list typically requires a lengthy, elaborate screening process—some distributors report that it can even take a full year. “And even when you’re on the approved vendor list, they don’t have to buy from you,” Foster points out. Pharma companies often bid out individual jobs to multiple approved vendors, and every idea presented undergoes intense scrutiny by the pharmaceutical company’s legal department to ensure it meets all guidelines.
“There’s a major approval process,” Foster says. “We’ll present ideas or they’ll come to me with an idea, and we’ll send numerous samples of that idea. And they’ll get weeded out until maybe one of them gets approved. And of course by the time you’ve gone through all the approvals, the date when they need it is on top of you.”
Although deadline pressure can be stressful and orders for smaller, day-to-day items tend to be high volume with low margins, once promotional consultants get through the door, they tend to enjoy working with pharmaceutical companies because the orders are frequent and challenging.
“For the custom items, usually there are better margins because not everybody is doing the same thing,” Propst says. “But it’s still not as high as margins in other market segments. Those expecting 40-percent margins will be disappointed, except when you’re dealing with extremely creative projects.”
The stricter limits have actually led many pharmaceutical companies to approach doctor-geared promotions with fresh creative zeal in order the make the most out of even low-dollar items such as pens and clipboards—and this can make for challenging and exciting projects.
“It’s actually more important to be creative than it was before,” Propst says. “How can we package those items in a very creative way? What can I do to reach out and grab a concept that hasn’t been developed for this industry? What can I do that’s different? I love the fact that they’re always looking for creativity, and now we have the fences moving in even more as far as what we can do. The question is: Do you see that fence as a barrier or do you see it as an opportunity?”
Carly L. Price is a Dallas-based freelance writer and editor. She has written for Southern Living, Cooking Light and other consumer and trade magazines.
FastFact: Pharmaceuticals rank No. 21 on PPAI’s list of the top industries that use promotional products.
|
|
|
|