Winning in Emerging Markets

Last Post Review

A LONG time ago I posted my last blog feed about one of my favorite topics: Evidence-Based Marketing; or the use of Marketing Strategies reinforced by evidence and data. Another way to describe it (and which may sound more familiar) is Value-Based Strategies. In both cases, it means emphasizing the value offered by a certain health care product, and not only its benefits. After all, not all benefits turn into value, right?

Now, after a few months away from my blog I decided to resume my activities putting some thoughts on emerging markets, under the perspective of Health Care business.

BRIC Power!

The first time I heard about the BRICs was in the 90s when still in high school; and frankly, much before Jim O’Neill from Goldman Sachs “created” the term. Brazil, Russia, India and China, although far from what they represent now, were expected to have such a fast development that they would become major players in the global Economy. At that time, few would believe it, and I wasn’t one of them despite my Brazilian heart.

Nowadays it is very easy to find numbers and analyses justifying the importance of the BRICs to the world economy, but this is just the tip of the iceberg. Emerging markets have dominated the scene for quite some time now, and the BRICs is on top of that given the market size and potential of these four countries.

This is not a blog about Economy, but my point is that emerging markets represent countries experiencing fast industrialization process, with people increasing their income and, therefore, consumption. When you combine an emerging economy with a huge population the effects are geometric: imagine if just 10% of China’s 1.3 Billion people start to relocate from rural to urban areas, earn more money and spend more in clothing, food, entertainment, health care…Imagine what this would represent in terms of market potential for new products and companies. Now stop imagining because this is happening every year, and at a faster rate of about 15.3% (source: The World Factbook, CIA).

The comparison is clear: where would you market your products: a) in a highly-competitive, saturated market, or b) somewhere else with just a few (if any) competitors and with a market that is eager to spend what it hasn’t spent for the past years?

According to the World Bank, on average the world is expected to grow its GDP at 2.7% and 3.0% in 2008 and 2009, respectively. The U.S. GDP is expected to grow at 1.1% and 1.9% in the same period. Now, what about the BRICs?

Brazil: (2008) 4.6%; (2009): 4.4%

Russia: (2008) 7.1%; (2009): 6.3%

India: (2008) 7.0%; (2009): 7.5%

China: (2008) 9.4%; (2009): 9.2%

Together, the BRIC countries represent almost 41% of the world’s population, and in a simple average is growing at 7%, or more than twice the average global growth rate. (For Math fans, the weighted BRICs growth average is even higher: 8%).

Implications for Health Care

As my returning post after a few months “in silence”, I just wanted to call your attention to a logical equation: should we invest where we can obtain higher returns? Let’s analyze the significance and implications of BRICs to Health Care.

The Health Care market, most noticeably Pharma industry, is experiencing a tough period. With blockbuster drugs losing patents and generics entering the market each day, the average product price has been falling steadily, and so are margins.

Well, a broken patent in Germany is also a broken patent in Brazil, so there is no safe place for old blockbuster drugs. However, these blockbuster formulas were initially created for individuals living in developed countries and with a very specific epidemiology. The list goes on diabetes, high cholesterol, obesity, stress, depression, cancer…with this last therapy area being very difficult and expensive to be replicated by generics.

Now, what about unexplored and untapped areas such as vaccines, infections, tropical diseases and severe digestive illnesses? Of course you’re thinking “well, there are a lot of vaccines out there” and that’s right! Out there, in the developed markets, there are a lot of vaccines for sure. And, by the way, one single disease may have different virus strains depending on the world’s region – U.S., Latin America, Africa, Asia etc. Now guess which regions are usually considered for vaccine development?

I’m not talking about “orphan” drugs or diseases, but about creating emerging market plans for health care products. It doesn’t help to say “well, China will grow about 9% this year, so we should be able to increase sales for our Bariatric surgery equipment there”. (Bariatric surgery is the procedure indicated for people with a certain minimum degree of excess body fat).

Mistake 1: Assume that China would be like anywhere else. Fact: obesity is not an issue there.

Mistake 2: Initially, GDP growth has nothing to do with health care sales increase, unless you create a plan for that.

I remember entering a director’s office in my company to report a project’s conclusion. He was sitting on his chair, reading the newspaper with a very serious expression on his face.

- “What happened?” I said.

- “Well, it says here that Brazil’s economy will be the 5^th in the world by 2030 and is growing at a very fast pace as compared to other emerging markets.”

- “And what’s the matter with that?”

- “Well…” and the director looked at me with very disturbed expression. “…headquarters are questioning why our sales are not growing at the same rate.”

(And this director’s region already had the highest sales growth in the world for his division.)

Ernesto M. Nogueira

Evidence-Based Marketing

Last Post Review

In my last post I described what Evidence-Based Medicine (EBM) is, but didn’t mention much of its impact to the business. Coming back to my summary of EBM:

Evidence Based-Medicine is a systematic approach that attempts to answer a medical question by considering the best available clinical evidence and applying strong medical expertise to maximize the value for the patient.

One can easily start inferring implications to the business, and I believe nothing is more correct than it. There are several ways in which EBM impact the Health Care market but I will focus on what I consider the most strategic aspect: Evidence-Based Marketing.

Have you heard of it? No? Great! You’re in the right place, then.

Evidence-Based Marketing

I assume you know what Marketing is and how it works in Health Care. Just in case you need more background, read my post “Creating a Multi-Stakeholder Approach” to understand the new Health Care market arena. You may also be interested in my post “The (New) Health Care Market Professional”. Enjoy it.

If you have enough expertise in Health Care Marketing, or not enough time to go over two others posts, let’s focus on Evidence-Based Marketing.

I have already mentioned that the Health Care market is used to target physicians and patients with their products. Therefore, the product/brand message is prepared in such a way to speak either the physician or patient’s language. Nothing wrong with this, but the issue remains in the fact that we have more stakeholders (a.k.a. Targets) to our Health Care Marketing Strategy. And I find it difficult to argue that Health Plans are one of the most relevant (if not THE most relevant) of all stakeholders, simply because they pay the bill.

If you believe money is power, than you should immediately start considering Health Plans as your clients. Yes, clients! Not payers, partners or anything else. After all, clients pay for our products.

Actually, you should not invest much time thinking if Health Plans are clients or not; it is the same as thinking if the Sun will rise tomorrow. Some people won’t like it, but regardless of what they think, Health Plans are already considering themselves as clients and want to participate more than simply paying the bill. If you don’t accept it, maybe you should visit Monster.com and look for good opportunities in other industries.

Health Plans are not primarily interested in clinical benefits, quality of life, coupons, relationship or many of other aspects that we use to target physicians and payers. Our new clients react differently: they want to 1) save money; 2) make sure the money they invest generate results. And, to demonstrate results you need evidence.

When you base your Marketing Strategy on evidence, you bring measurable results to the market. Health Plans will then have a perfect tool to compare your product/brand with others and take a decision based on the best ROI ratio.

But, if you don’t bring any evidence to the table and compete against other brands chances are Health Plans will probably be skeptical about paying for your products. Imagine it:

a) Company X has a product that costs $300 a dose and has demonstrated clinical results in 90% of the cases with strong and real-world data. The results are expected to decrease other costs.

b) Company Y has a similar product that costs $250 a dose. Physicians recommend it and patient associations support it.

Well, it takes one second to see that Company Y product is cheaper than Company X’s. After a second look, what makes us sure that Company Y really works? That turns the situation in:

a) Pay $300 and be 90% sure certain costs will decrease.

b) Pay $250 and expect to have good results based on the market’s opinion.

Correct me if I’m wrong, but these are very unbiased statements. Now put your Health Plan’s hat on and answer: honestly, which one would you choose?

Evidence-Based Marketing is Marketing Strategy clearly based on strong evidence. To base your Marketing on Evidence is very different from using evidence to support your strategy.

Small Word, Big Difference

I hear people proudly saying they “support their strategies with evidence”. Then I ask how they do it and get the same answer 90% of the time:

1) Focus on physicians and patients
2) After the message is in the market, use evidence to support the message

This is the main difference: Evidence-Based Marketing uses evidence to create the message. This is very different from creating the strategy and then seek ways to fit evidence in.

Evidence comes before Marketing. Remember it and you’ll get a huge portion what I’m trying to say in this blog.

If you cannot generate evidence (again, strong and measurable evidence) you cannot and shouldn’t market your product. On the other hand, once you have the evidence, then you may start planning your strategy.

Implementing Evidence-Based Marketing

Let’s say you have a vaccine that has a 80% effectiveness ratio in the first dose (that’s why we get several doses of the same vaccine, BTW). With this information in hand you realize:

1) Your vaccine may be useful for difficult-to-reach individuals.
2) These difficult-to-reach may simply mean the largest (untapped) portion of the market.
3) There are several competitors, but none is using the effectiveness ratio, or even targeting the untapped segment.

This is the same situation I found in 2005 when I was having my MBA internship with a major global pharmaceutical company. In three months, I was able to create a whole new Marketing Strategy that after implemented generated an ROI of above 2,000%. Several months later, after I had concluded my MBA, my manager at that time wrote me an e-mail saying that they had won a Global Marketing Excellence Award based on my recommended strategy.

This is the best real-world example I could think of to demonstrate the benefits of starting the development of your Marketing strategy with the available evidence. Had I started the Marketing strategy looking at something else, results would be completely different.

Final Words

Evidence-Based Marketing is a new concept within the Marketing framework. We have heard of Green Marketing, Guerrilla Marketing, Defensive Marketing and now Evidence-Based Marketing. Everything relates to a basic understanding: how to differentiate yourself in the eyes of the client.

I am a Marketing professional currently working in Health Economics. Marketing professionals should always be cross-functional, and this means having the opportunity to work in other areas such as Health Economics, R&D, Sales and others. Had I not have had the exposure to Health Economics, I would have been developing Marketing Strategies only for physicians and patients.

There is still much to be explored and discovered about Evidence-Based Marketing until it becomes so natural that we call it part of the overall Health Care Marketing Strategy. Until then, keep your eyes and ears open to the market, attend events (such as ISPOR and HTAi) to understand the latest clinical trends and challenge yourself to create a comprehensive strategy to the market.

See you next time!

Ernesto M. Nogueira

Evidence-Based Medicine

Last Post Review

Last time (actually, a long time ago) I related a few points of what I consider a strong Health Care Marketing professional. The market has changed; or, even better, it has evolved and thus requires a different kind of professional. As Health Care develops into a more result-oriented business, the more we’ll see the demand for a new type of strategic and commercial approach.

Finally, I received a few feedbacks describing this blog as interesting and fun. Although fun is not my focus here, as a former colleague used to say: “It is better be fun and correct than no fun at all and completely accurate”.

Thank you all for your feedback. Feel free to use this blog, as well as my personal e-mail (click the “Send me an e-mail” link located at the side column).

Evidence-Based Medicine

I’ve seen many colleagues afraid of the EBM concept, “what is this thing?” and “how does it impact my business?”. Well, let’s try to analyze the concept and how to translate it into Evidence-Based Marketing. After all, Marketing is something we can control, while Medicine is not.

But before I start my text, I just want to reemphasize the fact that this blog is focused on the business aspects and implications of Health Care. Therefore, I’ll approach EBM as a Marketing professional and not as a researcher. For more information, I recommend you ask your local Medical Board to understand their perceptions around the theme.

The concept

EBM is, first of all, a methodology created to answer a medical question. This question may represent a problem (i.e. how to reduce the complications associated with a certain surgery) or not (i.e. to determine the best approach to treat a certain condition in a specific type of patient).

The concept was created to bundle three main aspects: 1) Clinical Evidence, 2) Medical Expertise; 3) Value for the Patient. In other words, with EBM we are not only trusting a physician’s individual decision nor saying that everything published is the true.

Clinical Evidence

The main sources of clinical evidences are studies that, once finished, are usually modeled into articles and then made available in renowned publications and databases such as JAMA, Cochrane and BMJ. However the problem is that the vast majority of articles have methodological flaws, placing serious questions around the conclusions and results. The implication: never, NEVER trust an article just because it is published!

How to assess the accuracy and value of an article? How to identify clinical evidence from biased or erroneous statements? Well, first we need to understand that nowadays the part that describes how the study was developed (methods, methodology etc) is much more important than the results part. To illustrate this better, according to a famous Clinical Publication it is estimated that thousands of articles are published every day globally, but just around 10% of them have no basic methodological mistakes. By all means, I’m not saying articles are useless; on the contrary, we need to filter the ones we can apply.

Another step is to classify the article according to its Level of Evidence. Basically, the more sources generate data and the less the researcher intervenes on the results, the better the study. Classifications such as “double-blinded”, “multi-centered” and “randomized” signal strength of a study. But again, it doesn’t mean it is 100% good, we need to first apply a methodological filter
(above paragraph) and then classify it according to its level of evidence, such as the one below.

Medical Expertise

Physicians, Nurses and other Medical professionals have studied for several years and are constantly updating their knowledge in the field. An approach that ignores the academic and professional expertise of these medical professionals cannot be considered a serious method. On the flipside, those days when the doctor’s opinion should be respected and never questioned are gone.

The idea is simple: Health Care is strongly based on technology, and since technical advancements are happening everyday, we cannot apply judgments from 5 years ago into current situations. Or should we use large cassette walkman radios when there are MP3 players available? The problem is when certain professionals feel themselves as more important than the comments they make.

Careful if your KOLs are too much confident to change ideas or to even consider other options. Chances are, you are getting an ego statement rather than a medical opinion.

Also, theory without practice turns into nothing. Ideally, medical professionals apply their existing knowledge to evaluate new evidence and make their decisions. But there is still one last pillar, and the most important one.

Value for the Patients

OK, we have theory (Clinical Evidence) and practice (Medical Expertise), but why are we making a decision? What do we want to accomplish?

This is, by far, the most important aspect of Evidence Based-Medicine. The main goal is always the value for the patient; simple as that. If you don’t know what I mean with the term “value”, then check one of my previous posts.

Note that the patient word is in singular, not plural. Although the current guidelines may demonstrate that the gold standard for Diabetes treatment is XYZ, EBM may focus on specific patients (i.e. Type I Diabetes patients) to reach a different conclusion. Value for patient is not value for all.

In one sentence: Evidence Based-Medicine is a systematic approach that attempts to answer a medical question by considering the best available clinical evidence and applying strong medical expertise to maximize value for the patient.

Final Words

“But aren’t you going to discuss how EBM applies to business, and what Evidence-Based Marketing is?”

Absolutely, and I’ll do that in my next post. Actually, I hope to make you curious about how this methodology can turn a simple statement into a clinically supported Marketing strategy.

Overall, I urge you to understand and recognize the importance of EBM to business. EBM is a trend that recently gained much strength and will impact the way we do business and promote medical technologies.

See you next week with Evidence-Based Marketing!

Ernesto M. Nogueira