Biggest Benefits Yet to Come for e-Pharma

Conservatism has served the pharmaceutical industry well in the early stages of the Internet revolution, but it now needs to furiously innovate and even sometimes "fail" to harness the potential of new technology.

While many other industries were swept along by the hype and early promise of e-commerce the pharmaceutical industry largely took a more measured approach and avoided the worst of the pain of the crash that has left the telecoms and technology sectors reeling.

Less than two years ago a new era was announced, but the promised exponential growth in online healthcare revenues has largely failed to materialise.

“The reality has fallen short of the hype,” Stephen Philips, head of life sciences, Cap Gemini Ernst and Young, told delegates at the e-sales and marketing conference in Amsterdam. "In pharma what we saw is more of a quantum shuffle than a quantum leap".

He argued that the current more cautious environment, in which pharma firms closely scrutinise what their return on e-business investments will be, was far more pragmatic. "It’s a more tenable platform to move forward on founded on stronger business foundations."

Although not in the very van of the e-business boom the pharmaceutical industry has nevertheless invested massively in new communications technologies. According to estimates by Cap Gemini Ernst and Young the industry is now investing between 0.5-1% of sales and marketing spend on e-ventures, which extrapolates to an investment of $2-4 billion globally.

Not all e-investments have yet delivered but others, particularly in clinical trials and R&D, have been impressive, stressed Philips. "Some firms have seen a compression of the time from clinical trials to submission by 40%. And 100% of firms are using or planning to use electronic data capture."

But he told delegates that the greatest benefits were yet to come as firms focus e-investments in sales and marketing through integrated e-detailing and e-CRM developments.

In July 2001 Cap Gemini Ernst and Young and analysts Gartner Group carried out an e-CRM survey that asked 20 pharma firms to identify what drove sales revenues. The results were revealing: while 32% of respondents identified product as key, some 49% attributed sales revenues principally to sales and marketing activities.

The clear implication is that investments targeted at developing sophisticated sales and marketing channels when integrated with a far clearer picture of the customer will potentially have the greatest impact on pharma firms’ bottom line.

Rowena Track, Bayer Pharmaceutical’s vice-president Global e-business, argued the technology now available offered entirely new opportunities. “We can now process, transmit and store data with unprecedented efficiency,” said Track. "…this creates significant opportunities for pharmaceutical companies to innovate."

For Theo Nieuwenhuis, Bristol Myers Squibb’s vice president of e-business, the key to making e-business work is making sure it is a core part of the core business strategy. “An e-business strategy will fail unless it is tightly aligned with business strategy.” Other keys to success he argued are "clear leadership support and sponsors".

Dr Tilman Binder, head of the pharmaceutical industry unit at SAP, told the conference that even failure can be positive, as long as you learn from it. “With e-detailing it’s important to do something just to get experience to see if it works.” He offered some simple advice to the audience: "Start more projects and kill more projects earlier".