Lecture 1

How to approach different sectors?

1. Private sectors
- Doctors/hospitals: sales force and marketing with medical services support,
MCM
- Pharmacies: trade deals, on-side promotion, discounts, posters
2. Public sectors
- Government hospitals and clinics – multi-level: sales and marketing, medical
services/clinical trials, logistic support, cost benefit analysis
- General public: advertising, internet, social media, celebrities
Value of medicine: save life, improve life expectancy, improve quality of life, reduce total
health costs(less expensive drug vs more expensive labour), contribute to economy

History of drug development:

1. Started in 19th century in Switzerland, Germany and America
2. 1900, aspirin by Bayer
3. 20’ and 30’, penicillin and insulin
4. Next waves in 50’ and 60’ (30’ to 60’ Golden Age)
5. 70’ – tighten regulations on clinical trials
6. 80’ – biotech emerges (often work with or acquired by big pharma)
7. 90’ and 2000’ – a lot of merges and acquisitions take place
8. 21st century – recombinant technology, monoclonal antibodies(cancer
immunotherapy), antisense therapy

Drug discovery and development(R&D) – ~ 15% to 20% of total revenue; usually takes 8 to
10 years, mostly in development stage
The Discovery Process
1. Pre-discovery - To understand the disease and the underlying cause.
2. Target Identification - To choose a ‘target’ a gene or protein involved in a particular
disease and can potentially affected by a drug molecule.
3. Target validation - To test target and confirm its role in the disease.
4. Drug Discovery - To find a promising molecule (lead compound) that could act on the
target to change the disease course. If successful, can become a new drug.
- Early Stage - To perform initial pharmacokinetic test and toxicology test on Lead
compounds in animals, living cells, computational models.
- Lead Optimization - To optimize, or change structure of lead compounds to
improve properties.
- Preclinical Testing - To test extensively if the drug is safe enough for human
testing thru extensive lab and animal testing.

The Development Process

1. Phase I clinical trial:
- Safety: PK, PD, sides effects etc.
- Test drug on 20 to 100 healthy volunteers
- Usually conducted in hospitals with close monitoring
2. Phase II clinical trial:
- Evaluate the therapeutic efficacy of drug(proof of concept)
 - Examine the safety, possible side-effects and potentials risks.
- To analysis the optimal dose and schedule of using the drug. (find dose and
dosage)
- Usually around 100 to 500 patients with investigating medical conditions(the
cohort is much larger nowadays ~ thousands)
3. Phase III clinical trial:
- To show safety and efficacy of the drug.
- Patient no. about 1000 to 5000 from multiple sites with many investigators.
- Comparing with existing treatments or placebo.
- Provide primary basis for benefit-risk assessment and core information.
4. Registration:
 submit to Health Authorities(HA) for marketing approval => HA can give
approval, or ask for additional data, or deny approval
 HA in different regions:
 In USA – US Food and Drug Administration(USFDA), emergency – EUA(no
efficacy guaranteed)
 In Europe - European Medicines Agency (EMA), emergency – CMA
 In China –National Medical Products Administration (NMPA).
 In Hong Kong – The Department of Health (DoH).
5. Phase IV clinical trial:
- Post marketing studies – to collect additional information of the drug about
benefits, optimal dose or possible risk.
- If harmful side effects observed then product need withdrawal from
market(clinical trials usually have inclusion criteria, but in market, drug is used by
wider patient population and is often cross-used with other drugs)

Global trends in R&D:

- More investments in biopharma e.g. biologics, gene and cell therapy
- Collaborate with outside partners e.g. research centres, academic institutions
and biotech
- focus on profitable drugs and drugs that are easily approved

Manufacturing Process
- ～ 25% of total revenue
- Operation fragmented
- Manufacturers work under GMP: developing countries – WHO GMP; developed
countries: ICH-GMPs, EU GMPs, FDA GMPs
o Aims to reduce risks inherent in pharmaceutical production so patients
will not be at risk due to inadequate safety and quality of the drugs. Such
as: Cross contamination / mixed ups, False / wrong labelling
- Government roles: initial verification and subsequent audits
- Guiding principles:
 Hygiene of the manufacturing facilities.
 Prevention of cross contamination of drugs.
 Manufacturing process clearly defined and controlled.
 Records well kept during manufacturing.
 Well trained workers.
  Records of distribution from batch to batch ( batch number or serial numbers
)
 Recall system in place.

Supply chain management(Distribution Channel)

- Highly demanding : stringent storage condition, cold chain shipment and delivery
etc.
- Often Indirect distribution
o Goods supplied to agents / retailers, through them the goods finally reach
the end users.
- Most BioPharmaceutical Companies use exclusive or several agents/distributors
to supply products to the marketplace and end users
o Core competences of Agencies / distributors
 Good services to customers.
 Speedy / timely delivery. Accuracy, politeness.
 Good Warehousing facilities, cold chain management (drugs and
vaccines).
 Good marketing / Sales team.
 IT support for principals (manufacturers).
- Difference between agents and distributors:
o Agents: usually carry out marketing and selling function for
manufacturers, also responsible for warehousing, invoicing, delivery of
goods to retailors/end consumers.
o Distributors: similar to agent except no need for marketing and selling
function. Only offers supports.
- Distribution Channels in Hong Kong
o First level: Manufacturers to Agents / Distributors
o Second level: Agent / Distributor to:
➢ Hospitals/clinics and doctors (government and private)
➢ Pharmacies / Key Chain Pharmacies
➢ Wholesalers > supply to small drug stores
o Third Level: Patients / users get pharma products from above outlets
- Cost of Distribution (Distributor)
o Personnel and logistic costs
o Inventory and warehousing costs
o IT costs
o Damaged goods and goods return
o Credit cost (shorter payment term to principles and longer payment term
from customsers)

Sales and Marketing stage

- ～ 25% of total revenue
- Employed different approaches in private and institutionalized segments.
o GP/Private Hospitals : one-on-one most of the time/doctor group
meetings, samples, clinical papers / promotion leaflets. Now with digital
channels to augment in-person sales calls
 o Hospitals (government Institutions): multi-level approach
 Specialists conduct local clinical trials (initial phase). Sampling,
clinical papers. Company Medical doctor visits.
 Hospital manager & pharmacists – pharmaco-economic data
included. Focus on cost effectiveness.

Pharmacovigilance(Drug Safety)
- Definition: science and activities relating to the detection, assessment,
understanding and prevention of adverse effects of marketed drugs or those
under trial
- Aims:
o Improve patient care and safety
o Improve public health and safety
o Detect drug-associated problems and communicate to stakeholders
timely
- Tasks:
o Collecting and managing data -> analysing the data -> evaluating data and
making decisions with regard to safety issues -> acting to protect public
health
o Communicate with stakeholders
- People involved:
o Patients
o Doctors, pharmacists, nurses and other health professionals
o Government bodies who responsible for drug safety monitoring
o Pharma, importers, agencies and distributors
- Authorities directives:
o Adverse drug reaction reports
o Recall procedure

Strategic Business options

Why M&A ?
- Sustain/expand business through M&A activities.
- Generic/biosimilar competition especially for blockbuster products.
- Economic of scales for business operations. Cost reduction.
- Facilitate pipeline - R&D?

Definition of merger:
The combination of two companies into one larger company. Usually voluntary between the
two companies involving stock swap or cash payment.

Definition of acquisition or takeover: buying of one company by another.

- Friendly takeover – cooperate in negotiation.
- Hostile takeover – the takeover company (target) is unwilling to be bought.

Drawbacks of M&A:
- huge job loss due to restructuring.
 - stressful experience especially to the company being acquired (job security,
pending unknown changes).
- conflicts of company culture (participative type vs top-down management).
- reduction / slash R&D spending (also headcount) due to perceived “less
interesting“ products.

Definition of strategic alliance: A formal relationship formed between 2 companies to

pursue agreed upon goals while remaining independent companies. It is aimed to create
synergy through the alliance. In areas of research, manufacturing, marketing and sales.
- Strategic partners may provide resources such as products, R&D facilities,
manufacturing facilities, knowledge, expertise, intellectual property.
- Agree upon Costs and Profit sharing, Sales allocation between the partners.

Definition of Joint Ventures:

- A business entity created by two parties or more, with shared ownership, shared
risks and shared management.
- Gain scale efficiencies by combining assets, products and operations.

SWAP:
- Two companies to swap their underperforming business units with the objective
that both companies with benefit due to strategic fit.

STREAMLINING:
- A company sells off its non-core business to another company with a profit.

LICENSING IN AND OUT:

- One company offers another company to market / sell its product(s)

Challenges and opportunities of biopharmaceutical industry:

Challenges:
- Patent expiry and Generic competition
o Combat by developing more innovative breakthrough drugs, second-
generation version with improved safety and efficacy
- Pricing pressures from government - More stringent government funding on drug
reimbursement
o Combat by developing truly innovative drugs to obtain optimal price to
secure reasonable return on investment.
o To be more cost-conscious, focus on cost-saving in all aspects (R&D, Sales
and Marketing, Manufacturing).
o Jump on the band wagon of biosimilars
Threats:
1. R&D cost ever increasing
- Major biopharma companies spend huge amount of money on R&D (15% to 20% of
sales).
- Solutions:
o Thus urgent need to develop new products quickly to obtain sufficient benefit
from a limited patent life.
 Time-compression R&D strategy using advance technology.
 Managing regulatory compliance -> try to get faster approval?
o Strategic alliance, jont ventures and partnering
 R& D need to be more productive and establish partnering
arrangements such as strategic alliance.
 Co-R&D agreements.
 Joint venture with innovative biotech companies.
 R&D with major academic institutions and universities.
 Licensing-in and licensing-out arrangements.
2. Reputation Management
- Bad image of the Pharma Industry (profiteering) and its scandals
- Solutions:
o Government may impose stricter regulations
o Restore reputation thru Compliance and Governance (Marketing Code,
GMP, GCP compliances) self governing.
o Good Corporate Citizens - Corporate Social Responsibility. Drug donation
to developing countries and the poor etc.

Opportunities:
1. Specialist markets - such as anti-cancer, Preventive drugs, Drugs for rare diseases,
Drugs for chronic diseases, Drugs for aging population, Novel and effective
antibiotics / anitviral drugs
2. Great opportunities in Pharma-emerging big markets like China, India, indonesia
and Brazil with huge population and high sales growth potential.
3. Biopharma and Technology companies and academic institutions to work together
to drive breakthrough advancement like Covid vaccines and drugs.

Intellectual property protection

Why important?
- Most of the value of new drugs lies in the amount of invention, innovation, research
and development.
- Research-based pharma companies need to give the right to prevent others from
using or copying their inventions -“Intellectual property rights’’.
- Provide motivation for continuous R&D investment.

Basic Patent Rights:

- Patents provide the patent owner with the legal means to prevent others from
making, using or selling the new invention for a limited period of time.
- A Patent is not a permit to put a product on the market.
Patent Application of New Chemical Entity( NCE) and NEW Biological entity (NBE)
➢ Need to apply for patent protection from home country and extend to other
countries.
o Patent of Product (novel chemical/ biological products).
o Patent of Production Process.
o Patent of formulation.
➢ Confidential information - Data file submitted to obtain new drug approval also be
protected.

The WTO’s Agreement on Trade – Related Aspects of Intellectual Property Rights (TRIPS)
- Due to extent of protection and enforcement vary around the world, The
TRIPS Agreement establishes agreed levels of protection that each
government has to give to the IP of fellow WTO members.
- Special situation in poor countries (Compulsory Licensing)
o TRIPS Agreement made special arrangement for flexibilities in 2001 (Doha
Round) to allow drug access for poor countries by extending exemption
on patent protection.
o Further agreement on 2003, for the least – developed countries which
cannot produce domestically, can import patent drugs made under
compulsory licensing.

Access to medicine
- Major obstacles: high price and supply chain
- Key Strategies to increases access to medicine:
 Reduction of tax, tariffs, distribution mark-ups.
 Generic medicines and automatic generic substitution.
 Differential pricing: different price for different buyers.
 Compulsory licensing
 Donation from the industry / charitable organization
 Parallel imports – import drugs from other countries where the price is
much lower, but have transport and import costs and products may not
be original and quality may not be as good
Lecture 2.1 Pharmaceutical marketing management
Definition of marketing: Marketing is the science and art of exploring, creating and
delivering value to satisfy the needs of a target market at a profit.
Marketing Mix – 4P’s

Brand Equity: Brand equity is customers’ perceived value of and experiences with a
brand/company.
- Positive brand equity can generate more sales, charge higher, create customer
loyalty and have competitive edge

Difference between selling and marketing:

- The selling concept: A common business orientation/practice. It holds that
companies need to aggressively sell and promotion their products to stimulate
more buying. ie To sell what they make rather than what market wants.
- The marketing concept: To find the right customers and fill their needs with the
right products/services.
 Four pillars of marketing:
1. Target Market
- Choose the target market for your product(s) and prepare tailored
marketing programs.
2. Customer needs
- Understand the needs of the customers (real/hidden) and satisfy
these needs with products/services.
- Need-satisfaction process: to maintain current customers with your
products/services and attract new customers.
3. Integrated marketing
- Utilize all the company’s departmental resources to serve the
customers needs – team work amongst all departments.
- 2 Levels:
o sales force and marketing (advertising, marketing research,
product management, etc) must work together to develop
integrated marketing plan to serve the customers.
o Marketing and sales department need to be embraced by
other departments – they should also be customer oriented.
4. Profitability
- To achieve organisational objectives (Sales/profits) as a result of
creating superior customer value: Customer satisfaction.
- Making profit by satisfying customers’ needs better than the
competitors (added value to your customers to improve satisfaction).

Segmentation, Target markets and positioning (STP model)

- a company must look at the segment’s attractiveness and company’s objectives and
resources.
1. Segmentation
- Can segment according to:
o Demographic: age, family size, gender, income, education, religion etc.
o Geographic: Nations, States, regions, population, language, climate etc.
o Psychographic: Personality traits, lifestyles, values
o Behavioral: specific behavior of customers: The pattern of their purchasing
behaviour like frequency of buying , occasion, money consciousness etc.
- In Pharma market segmentation
o Demographic: eg. age, disease prevalence, income of targeted patients.
o Medical specialties: geriatric, psychiatry, oncology, gynaecology etc.
o Government sector / private sector
o High potential/heavy user vs low potential/light users
o Innovators (KOL) vs followers (early adopters/later adopters).
2. Target markets
-  After identifying and segmenting the market, marketers need to select one or more
market segments to enter (Target markets).
3. Positioning
- For each target segment, establish, communicate and deliver the right and distinct
benefits of the products/services the company will offer (Positioning).
- Differentiate from other products
Corporate strategic planning
1. In-depth analysis of the internal and external environment(assessing individual
business strength)
2. Determine investment decisions(define its strategic direction and making decision)
and resource allocation
3. Formulation and implementation of business strategies for their core business.

For biopharma company

- Establish strategic business unit(SBUs) and assigning resources to each SBU
- SBU planning - focus on strategies and subsequent implementation for key product
franchises.

Marketing planning - Product planning

 the situation about the target market -> how to reach its marketing objectives
 It provides direction and focus for a product. It contains the tactical guidelines for
the marketing programs and financial allocations over the planned period.
 Marketing plan structure

Market research
- Timely and accurate information about the market to make decisions
- Focus on: target market, customers, competition
- Define research objectives -> develop research plan(primary data, secondary data, or
external research companies) -> collection -> analysis -> findings(identify
opportunities and problems)-> weigh the evidence to make business or marketing
decisions or conduct further research

How did all these things connect to each other?

Segmentations -> identify target markets -> investigate the market/ customer needs with
market research or information from sales department? -> make market plan/product
plan(involves strategic planning)

After developed a product -> product life cycle management

- Rationales: Products require different marketing, financial, manufacturing and HR
strategies in different stages.
- Introduction stage
o Slow sales growth, heavy promotional expenses, high initial distribution cost,
profit nonexistent/negative.
o Strategies:
 Rapid-skimming strategy
 High price and high promotional expenses (lots of noise in
introduction to create high awareness).
 Employed by most of the new pharma products with high
sales expectations
 Slow-skimming strategy
 High price and low promotional expenses.
 For a niche market / limited market like rare diseases
 Niche market can generate substantial sales
  Rapid-penetration strategy
 Competitive pricing, heavy promotion to get fast market
penetration and market share.
 Employed by an improved formulation pharma product + the
market demand is large
o It can also be regarded as market cannibalization if the
new product is introduced by the same company to
capture more market share despite existing product
loses sales due to the new product introduction
(cannibalization).
 Slow-penetration strategy
 low price, low promotion expenses
 Limited market size, generic companies often employ this
strategy for low price / low volume products to realise more
profit
- Growth stage
o Rapid increase in sales with more customers if product proven to be a
success.
o High promotional expenses
o Increase in distribution network
o Profit increases due to more sales
o Strategies:
 Improves product quality / add new features(i.e new indications)
 Enter new market segments (from specialists to GPs).
 Changes in advertising / promotion campaigns. (Different promotion
themes for new segments or new indications.)
- Maturity stage – to maintain market share.
o Sales growth rate slows down.
o Flat promotional expenses/reduced.
o Profit stabilize/falls because of increased competition.
o Strategies:
 Product modifications
 Quality and feature improvements also (pharmaceuticals -
new formulations.)
 Marketing mix modifications
 Prices - Probably reduce slightly but avoid price war with
competitors.
 Sales promotion and advertising promotion aimed to maintain
customers. Flat or slightly reduced expenses.
- Decline stage
o Sales goes down
o Reduction in promotional expenses.
o Profit goes down.
o Strategies:
 Harvesting (milking): no more promotional expenses while
maintaining same price.
  Tactics for mega products: legal action against competitors
introduction.
 Discount / price reduction
 Divesting the product: delete the product of sales too small or sell the
patent expired products to another company.

Direct to customer marketing(DTC marketing)

- Usually Pull marketing to generate more customer awareness and demand.
- Work together with Push marketing (promotion to medical professionals) to
optimize marketing effects.
- DTCAdvertising - Mass media advertising, billboards, internet, social media. Disease
and product websites etc.
o Work with patient advocacy groups. Form Patient Clubs
- Patient Education to generate disease awareness and product / brand awareness.
- Becomes an important marketing tool as now patients demand for better healthcare
and actively seek for disease and treatment information.

Multi-Channel Marketing (MCM) for Pharma Industry

- MCM is the use of integrated communications to reach and influence customer.
- Using digital communication, eg e-detailing, email, zoom meetings, product website,
webinar etc. in addition to traditional sales rep calls.
- Reinforce a consistent message, both digital and non-digital so as to increase impact
and efficiency.

OmniChannel Marketing – personalised version

- Start from taking customer – centric view and understand/anticipate their needs.
- To engage customers across a combination of channels which are the customers
choices of communication (online/offline) to fulfill customers’ needs and thus
generate loyalty on your products.
- Channels are interconnected to work together. Content in one channel is connected
to content in another.
- Cross-functional collaboration: sales team, marketing team and medical affairs teams
to work together.
HCP - HCPs stand for healthcare professionals, providers, or practitioners. HCPs can be
individuals like physicians, dentists, nurses, pharmacists, or institutions like hospitals, clinics,
and nursing homes.

Marketing and sales alignment

- Marketing and sales force working together as a team with in-depth understanding
of the needs of the target market and to deliver value-added services/goods (with
feedback from market). => provide appropriate support for the sales force to do
their jobs effectively.
- Result: More customer satisfaction, company goal achievement.

Lecture 2.2 Pharmaceutical sales management

Definition of sales management: Achieving company sales goals through effective planning
and efficient execution of company’s business plans

Sales Force Management

- Recruiting right/good scientific background sales people. Provide training and
coaching. Provide leadership.
o Training:
 Product knowledge about own products and competitors.
 Know what is happening in their specific therapeutic area.
 Sales skill training and communication skills(face to face and virtual)
Role plays often used in training.
 Integrity (compliance to code of Pharma marketing practice) and
credibility.
o Coaching:
 Practice with new reps indoor to make sure they satisfy company’s
needs
 Re-visit customer with reps to observe their performance(if they meet
company’s standards and objective, to rectify mistakes if any)
 Give feedback to reps, monitor reps’ performances and
improvements
o New approaches:
 Traditional in-person selling promotion and Lean and effective sales
force (drugs for specialists)
 Implementation of Multichannel marketing/OMC (digital promotion)
 In HK, Medical professionals getting more in favor of e-
medical info.
 More Application of Key Account Management (KAM) and Key
opinion Leaders(KOL)due to introduction of specialty drugs

Territory management – segmentation and targeting.

- Segment to optimise cost and efficiency
- Internal customer value – what customer can bring to company
o Potential, market share, bottom line(profit?)
- External customer value – what company can bring to customer
o Knowledge of reps + services(relevant support materials and solutions) =>
Customer satisfaction, appreciation, relationship
- Class A/B/C/D doctors
o Class A: “Gold customer”, high potential, high prescription share -> most
values customers -> spend time on them to maintain relationship
o Class B: “New potential”, high potential, low prescription share -> need a long
time to develop them into class A doctors
o Class C: “Loyal customer”, low potential, high prescription share -> keep them
at low cost -> establish the optimal level of calls to maintain a customer
o Class D: “Low value customer”, low potential, low prescription share -> no
calls, mailings only
o Territory growth opportunities -> Class A and B

Customer Relationship management

Personal contact cycle
1. pre-contact activity
o prepare promotion materials and questions(contact tactical plan)
2. execute activity
o engage doctors and ask for feedbacks
3. post-contact activity
o keep a record of questions and answers; respond all unanswered questions
to doctors
o increased knowledge of doctors
- Aims:
o Continuously optimizing the impact of medical sales people on customer
buying behavior
o To continuously improve knowledge of our customers behaviour and their
needs and further create value to generate customer satisfaction and thus
their loyalty
o M&S alignment to fully support Personal contact cycle
Key Opinion Leader(KOL) management
 KOL: A medical expert in a specific medical field who has a high reputation, well
respected and can influence their peers’ medical practice.
 Pharma companies actively engage KOLs in research and clinical trials, writing
medical articles, as speakers for clinical presentations and as company advisory
board members.
 Ethical issues in KOL management – Compliance of Code of pharma marketing
practices.
 Actively build and foster productive relationship with KOLs
o Identification of KOLs and build-up of KOL network
o Understand and manage KOLs expectations( e.g. peer to peer interaction ,
enhance their expert standing etc)
o Maintaining good and sustainable relationship with KOLs
o Measurement of results
o Useful link: https://www.aptitudehealth.com/oncology-news/tips-
strengthening-kol-engagement/

Key Account Management(KAM)

Definition of an account: An account is a group of customers which are
• formally related to each other,
• in the form of roles and responsibilities,
• making decisions which have huge impact on company business.
Definition of KAM: building and managing of long-term collaborations and relationships
with key accounts which have strategic importance for the company
- Generally applies when:
o A small concentration of customers which generates a substantial amount of
sales in the market (high sale/profit potential)
o Products are specialized and offered by a small selection of suppliers;
( Specialized products, fierce competition)
o Account has a Decision-Making Unit that makes decisions according to formal
procedures
- Key activities:
o Identify and understand the decision making process
o Understand individual behavioral styles and their needs, develop plans to
build long term relationship with people in the key accounts.
o Consultative selling – high performance team of Marketing, sales, medical to
work with customers to achieve optimal objectives (eg, better clinical
outcome, improve efficiency, patient satisfaction )
- KA manager:
o needs to be highly knowledgeable in that particular field who can develop
valuable propositions to customers
o has deep understanding of customer needs.
o Possesses vast interpersonal skill to communicate with various persons of key
accounts
o Get trust from Key Accounts
 o A Team Player: needs to work with internal stakeholders company like
medical affairs team and sales team
o Needs to be highly empowered by the company with certain authority to
make decisions

Sales force effectiveness

What are the factors contributing to sales force effectiveness ?
1. Hiring and training of talent staff:
- Recruit SUITABLE candidate.
- Provide training, coaching and leadership.
- Company culture such as integrity.
- Business ethnics
2. Sales force design: structure and roles, sales force size , territory planning and target
doctors
- Clear roles and objectives for sales people
3. Know the customers:
- Customer research
- Segmentation and targeting
- Customer relationship management eg, KAM and KOL
4. Motivation:
- leadership and motivation.
- Fairness in workplace.
- Compensation and incentives, meaningful work.
5. Performance management and measurement:
- Aggressive but realistic goal setting.
- Communication and feedback from sales manager on performances.
- Measuring results and take corrective actions if necessary.

Ethical promotion of medicine governed by:

- local health authorities regulations
- IFMPA
- Code of local association
- Company codes