Pharmaceutical Promotion: A Literature Review and Research Agenda

Introduction

Sales promotion helps increase the sales of products or services. In the pharmaceutical industry, sales promotion is quite different from that in consumer product industries as a majority of the promotional efforts are not directed to end-users but at physicians. Owing to the gatekeeper role of the physicians, pharmaceutical companies concentrate on physicians, promote their products and dispense promotional inputs to them

Studies have found that there is a strong positive link between exposure of products to a physician and their prescribing behavior (e.g. Kremer, Bijmolt, Leeflang, & Wieringa, 2008; Tsakiridou, Boutsouki, Zotos, & Mattas, 2008) and consequently, promotion becomes crucial for pharma firms. There are other reasons too for a higher level of promotions: fewer number of blockbuster drugs (brands whose sales potential in excess of $1 billion) in the firm’s new product pipeline, pharma firms find it difficult to find new drugs that can sustain growth and to balance the lost revenue, and finally, new products have greater compressed product life cycles (Spiller & Wymer, 2001). Additionally, the systematic literature review performed by Stros and Lee (2015) indicated that in pharmaceutical marketing, the promotion “p” is very important, perhaps more important vis-à-vis the other Ps (such as price, product and physical distribution) of marketing. Not just review studies, empirical studies too have concluded that promotion is vital in pharma. For instance, the study performed by Hurwitz and Caves (1988) states that “the pharmaceuticals industry promotes its products heavily” (p.302) and these promotion efforts can help differentiate products, enhance brand loyalty, and check price competition (Rizzo, 1999). Thus, an important role of promotional inputs is to help to build brand equity (Osinga, Leeflang, Srinivasan, & Wieringa, 2011).

Building the brand is vital to a firm’s success, due to a large number of drugs available for prescriptions. Hence, branding can play a leading role in product differentiation (Moss, 2016). Branding is critical in the pharmaceutical industry as it creates and enhances the awareness of the brand and further helps in generating a competitive advantage. The development of brand name is primarily of two types; either originating the name from the generic name (e.g. the brand name “Amoxil” from Amoxicillin) or with no association with the generic name (e.g. Zantac is the brand name of Ranitidine) (Sudovar, 1992). Branding coupled with the marketing process can provide information about products that helps create a distinction for the brand among the competitors of that product category. However, the product positioning of a drug will depend on its characteristics such as indications for which the drug is used, safety, efficacy and tolerability (Schuiling & Moss, 2004). Pharma companies need to find methods to communicate the benefits of the drug to the customers and this can be usually accomplished by a mix of promotional inputs such as detailing, advertisement in the medical journal, conference participation, continuing medical education (CME), symposium, drug sample, etc. (Nath Sanyal, Datta Saroj, & Banerjee Asok, 2013). Thus an assortment of promotional inputs dispensed to a salesperson can help build the brand. In general, in other industries, brands can be built with a combination of advertising and sales promotion. Further, in almost every industry, advertising is targeted at the consumer and sales promotion at both the consumers and the trade. However, a unique feature of the pharma industry is that advertising targeting the consumer is banned with the exception of 1-2 countries. The physician plays a very powerful role, much more than say the role of a plumber in choosing a brand of bathroom equipment. Hence, promotions too are targeted almost exclusively at the physician. Additionally, firms spend billions of dollars developing a drug. Hence, its brand needs to be built and reinforced. The only way of building the brand (apart from its performance) is by giving promotional inputs to physicians.