A return to pre-pandemic levels of in-person promotional activity looks increasingly uncertain in H2 2020.
Given this uncertainty, pharmaceutical manufacturers, from diversified, multinational firms to more focused, growth-stage companies are navigating the complexities of pursuing a hybrid engagement model with customers where the majority of interactions continue to take place through virtual channels.
During their Q2 2020 earnings calls, many pharmaceutical companies took the opportunity to provide insight into how they have been navigating this uncertain promotional landscape and the progress they have made so far in adapting to the circumstances.
A number of companies reported on steps taken to resume in-person promotional activity, citing an abundance of caution.
Around 90% of the 6,400+ oncology-focused brand interactions between physicians and manufacturers that ZoomRx tracked over the last 2 months took place virtually.
However despite the majority of interactions still taking place virtually, a majority of companies reported investigating the feasibility of in-person promotion with careful evaluations (such as on a region by region basis) and consideration of appropriately allocating staff and resources.
Among these industry players are Novartis, Pfizer, and Eli Lilly who reported exploring the return of sales reps to healthcare professionals’ offices/hospitals in-person, typically citing the same abundance of caution as well as strategies to maintain safety protocols.
Pfizer cited a gradual improvement and increase in the quantity of their in-person interactions (with April marking the low point). In the meantime, the company has also launched a fully digital salesforce to maintain its market presence.
Eli Lilly indicated a slow resumption of its in-person engagement effort, while supplementing these interactions with continued virtual engagements.
Product launches during COVID-19 presented a particularly acute challenge for brands and have pressure tested the effectiveness of virtual details.
Despite the challenges barring traditional introductions, Q2 saw a healthy cadence of FDA approvals (~15) and key launches across the industry.
A number of companies spoke directly to their experience launching products within the current environment (e.g., Lundbeck, Alnylam, Epizyme). While some noted the benefits associated with taking a hybrid (virtual/in-person) approach, others reported mixed results and highlighted some of the associated challenges.
Among the companies which highlighted the benefits was Seattle Genetics, indicating that strong virtual communication had led to growing awareness of Tukysa among physicians. Blueprint, meanwhile, launched Ayvakit and spoke to significant successful in-person efforts in the community setting.
Deciphera, on the other hand, was one company which spoke to the challenges faced (despite a successful launch of Qinlock), stating, “Our early experience is that while virtual details can be effective, accessing and coordinating the activities of physicians, pharmacists and other critical stakeholders, within large complex healthcare institutions can be quite challenging and can take longer than usual when required to do so remotely.”
Pandemic-related reductions in costs related to brand promotions have been a silver lining for some facing increased R&D expenditures and/or decreased revenues.
A number of companies cited that reductions of in-person promotional efforts and SG&A expenses have offset some of the loss in revenue associated with the effects of the pandemic — this was primarily driven by reductions in travel expenses, overhead costs (including administrative), conference attendance, and marketing.
Astellas, Sunovion, and Biogen specifically indicated decreases in their revenue forecasts, but also cited that reduction in COGs and SG&A will offset a drastic reduction in revenue. On the other end, companies like Alnylam increased their revenue forecast for Onpattro given reduced spending, while Takeda indicated a ~1.5% margin improvement for the quarter driven by decreases in travel and meeting/event expenses. Novartis, notably, even indicated seeing cost-savings and productivity increases as a result of the current situation.
COVID-19 also affected major organizational restructuring, with companies like Mylan having to delay their company restructuring, and in combination with decreased SG&A expenditure, were consequently able to predict a smaller range in revenue forecast.
Although pharma has been directly impacted by COVID-19, the industry has adapted quickly and there is reason to be optimistic looking ahead.
While the market dynamics driven by the ongoing COVID-19 pandemics have had a negative impact on some business fundamentals, they have also opened up opportunities for innovation in HCP promotion that could persist long-term.
Pharma has been able to successfully launch new products completely virtually, something unthought and unheard of prior to the pandemic. Successes in this arena clears a path for a hybrid of in-person and virtual promotional models in the future.
Additionally, the cost-savings (reduced in-person promotional efforts and SG&A) that have kept pharma companies in a strong financial position contribute to the case that companies may take a truly hybrid approach to promotions going forward.
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