Shifts in Drug Marketing Spending

Drug companies had a wonderful 1980s and 1990s, and a pretty good first half of the 2000s, but the last few years have been harder, with regulatory issues, safety concerns and especially the loss of many blockbuster products.  Potential downshifts in revenue and profits have led to re-examination of both research and development and sales and marketing efforts.  Those are the two largest categories of spending for these companies, and financial pressures are leading to changes in both areas.  A recent story discusses how some companies are shifting more marketing spending to the internet.  (Pfizer Story)

Pfizer, for example, increased e-marketing from $14 million to $27 million.  While that is a pittance compared to its traditional sales and marketing spend, overall e-marketing spending has risen for nine years in a row.  Reasons driving the shift include its lower cost, the fact that more providers are refusing to talk to sales representatives and the ability to maintain tighter control over the marketing message, which among other things, helps to avoid regulatory problems.  E-marketing may allow better tailoring of messages to specific providers as well.

Regulation of e-marketing, however, is just in its infancy and the FDA has taken a strong interest in the use of the internet and similar channels to market both to patients and providers.  But assuming there are no impassable regulatory barriers, we can anticipate that spending in this channel will continue to grow and accelerate.  Cost pressures are likely to persist for health product manufacturers and they will have to become more efficient and effective with sales and marketing efforts.