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Why do Pharmaceutical Companies Continually Fail to Recognize the Importance of Market Research?

The first thing to consider when discussing the role of market research within the pharmaceutical industry is the time from a new drug being developed to when it gets into the local pharmacy.This is quite different from other consumer lead industries. In these industries, market research forms the basis for everything from product development to marketing. In the pharmaceutical industry, market research is important, but some executives might treat it as an afterthought. They are wrong to do this as it market research is critical with the long research pipelines that some work is done to determine what direction that initial research takes.

If we look at a new-product today it would make sense to forecast out 7 to 10 years to determine what diseases or medical problems or even advances may require a new product. So rather than leave it to serendipity, solid market research could determine where the research and development budget is best spent. Pharmaceutical products rarely sell themselves and pharmaceutical companies are a business that are maximizing these investments. The need for quality research is slowly being driven by poor pipelines and is against the backdrop of increasing pressure to perform while research budgets are squeezed.

Now around 20 years ago, pharmaceutical companies brought many products with tremendous value to the public. That is because they were research centred businesses, for example Glaxo 20 or so years ago, it was referred to as the only university on the stock exchange. This has now changed and most of these companies from Novartis to Pfizer and beyond are run by accountants where it is about the bottom line.

Consequently, that has caused a loss of focus in research and development groups and the rise in clinical research organizations taking up that slack. Also many of the older products are now out of patent and going generic. This is because of lack of focus when it comes to developing products with improved benefits and better outcomes than cheaper generic products.. Some companies are starting to place a high value on market research, but others have a “tick the box” mentality. Some individuals at these companies wonder if market research has any value at all. The best commercial organizations understands that market research leads to a competitive advantage. Certainly, when market research is done well it will drive better and informed decision making.

That means in the long term research can be the foundation that ensures a commercially relevant product to the market at the optimal time. That circles back to companies looking out 7 to 10 years and adjusting accordingly rather than leaving things to serendipity. Alternatively, it helps avoid the need for buying businesses to fill a pipeline gap due to lack of understanding of the market. It requires key decisions at key times to develop products, and well-structured research results in the right input and information helps make those decisions.

Many companies now have outbound focused marketing departments, who do not consider how research can help them make fundamental decisions. They do not always utilize the resources they have and then determine the direction and scope of research that is needed. The tick-the-box approach does not deliver substantial value. By staying in a tick-the-box mentality, companies are not able to fully deliver the type of customer insight nor target research and development needed to drive their business forward.

However, in a world of declining resources more can be achieved with fewer resources by focusing on market research. The case has been proven not just in pharmaceuticals, but in other businesses where products have a long gestation period. Companies should be taking what they have and pairing it with a good understanding of market research. This would make it help companies focus their business in a different way, more a laser guided missile approach rather than carpet bombing and hoping you hit the target.

The hallmark of good-quality market research falls into different areas, firstly, the research is purposeful and targeted. Any good researcher will have taken the time to think about and understand the business issues in the pharmacology areas the company operates within. That will naturally lead to a better understanding of what research is necessary to address those business issues. Another good idea is to do high-value research and collaborate on market research if possible.

In summary, the pharmaceutical industry struggles in comparison to other industries in this vein. Other industries that do market research the best, like consumer packaged goods, have set the standard and established their market research organization as king. Their market research is applied and used contributing a tremendous amount of momentum for these businesses. However, in pharmaceuticals, the structure is very different as is the culture and the view of marketing in general. A marketer does not always consider customer insight as the first step in the marketing process because there is often a disconnect with the end user, the patient.  There are solutions to this that are in being worked on throughout the industry. That will bring the patient closer to the pharmaceutical businesses but whether that works is not down to the technology but totally related to how marketing and market research is seen by the companies themselves.


This is a guest blog feature from Ewart Richardson, Global Head of Pharmaceutical, Science and Engineering Partnerships at Search Digital. He is also a regular speaker at international conferences in the USA, Germany, Spain, Switzerland, China, UK, and beyond.