The era of long tail

The Indian pharmaceutical retail market has about Rs. 48,000 crore sales MAT (Moving Annual Total). The market is agog with action. There are a plethora of brands of each molecule. Market fragmentation is rife. And to compound the challenges in the pharma marketing arena, regulatory agencies are becoming proactive. For instance, the recent TV infomercials of NPPA (National Pharmaceutical Pricing Authority) educating prospective patients to ask doctors to prescribe economical brands of good quality is a paradigm shift in favour of the patient. This is a challenge to pharmaceutical marketers too!. It signals the start of a new era of patient empowerment. This trend is yet another marketing factor for pharma marketers to contend with.

The editorial of March 23rd, 2011 in Chronicle Pharmabiz portal has pointed out the bitter truth for pharma biggies: era of blockbuster brands in pharma is a thing of past. It is not easy for pharma marketers to bring out patented brands that can rake in at least 500 million USD per annum sales turnover in today’s world. R&D productivity is a key challenge area.  So which way forwards?

MNCs are now slowly but surely warming to the idea of manufacturing and marketing ‘me-too brands’ a la Indian pharma companies. The idea of pharma marketers is to deepen the marketing reach. This can be done by offering value-for-money brands and as per market requirements. It is no more a battle based on marketing of patented brands or exclusive molecules. Value differentiation will come from quality and quantity of communication, retail availability or distribution muscle, pricing and perceived sense of quality of brands.

Long tail in prescription markets
The long tail refers to a selling strategy where a large number of unique items are sold in small quantities (along with major brands). The long tail strategy is used as it is not possible to address mass markets, since product concepts are not scalable and markets are highly fragmented.  In the past, patented brands were launched to address large markets and they were scalable product concepts. Today, products address market fragments. These may be specific diseases (like say oral cancer), or specific population types or particular geographies. This is what personalized medicine will do in the coming years. Thus, the trends point to development of a long tail of products for key prescription market segments by pharmaceutical companies.

Benchmarking & the long tail
The benchmarking is about understanding current business practices of one's firm, and understanding the business practices of other successful or above par companies. This learning of other companies’ is then incorporated for enhancing performance and reducing performance gaps. Today, in this wired and increasingly inter-dependent world, benchmarking is a natural outcome. This practice is increasingly adopted to remain contemporary and gain a sustained competitive advantage. One need not benchmark processes of one’s industry alone; company processes of other industries can also be studied and adapted for improving a pharma company’s practices.

Today, MNCs and non-MNCs are benchmarking from each other, learning successful practices and incorporating them - this has led to the long tail selling strategy.  The long tail is yet one more business model to survive in the rigorous Indian pharma market.

Brand differentiation & the long tail
Small differentiation innovations, like using a new formulation additive that enhances bioavailability of vitamin B complex, or adding prebiotic and probiotic to multivitamin capsules, or packaging a product differently to improve patient acceptance or reduce breakages during transport, these approaches help build differentiation in brands, although the brands contain the same generic. This brand differentiation approach helps build a long tail of brands that have a cachet and at the same time improve chances of marketing success.  

Importance of brand touch points
The main touch point or medium between the marketers' brand(s) and the ‘prospect or prescribing doctors’ is the medical representative (MR). The in-clinic activities of the MR  continues to be the mainstay avenue between the pharma brand and the target prescriber. In the modern era, brand touch points can be improved through other elements of the communication mix. This includes database marketing techniques like direct marketing, advertisements in medical journals, stall or booth activities at doctor conferences, and web 2.0 plus mobile based communication strategies. These complement the mainstay MR based approach and will provide impetus to sales outcomes. In marketing a long tail of brands, using more brand touch points will provide the necessary emphasis for furthering sales outcomes.

Pharma enterprises need to be profitable. The cash surpluses of pharma firms are inevitably used for improving current products and providing better new products. Cash is the oxygen of innovation. Pharma firms need to navigate touchy issues like pricing, regulatory guidelines and marketing ethics to sell their brands profitably. It is not an easy cup of tea!  Nevertheless, the attractiveness lies in the fact that pharma business is essentially recession proof, and is need-based. Pharma marketers in India have toiled hard to make products available in every nook and corner of the country.  Further improvement of market penetration is possible. This requires good marketing acumen, strategies like the long tail, and a facilitative regulatory environment that balances social commitments, patient interests, and encourages pharma marketers.

As has been rightly observed by seasoned pharma professionals, the era of blockbusters is coming to an end. It is now the start of ‘era of long tail’.