December 1, 2006 (Vol. 26, No. 21)
Like Pharma, the Life Science Supply Industry Needs to Understand its Customers
In the current life science business environment, new product development is swift, competition is fierce, and the marketplace is fragmented with multiple distribution channels. There is less room than ever for missteps.
To capture a market leadership position and keep it over the long term, life science supply companies need reliable information about their markets. They need to understand life science researchers, monitor the activity of competitors, and quantify the impact of business decisions and goals. Consequently, suppliers are turning to many of the same market research tools used successfully by leading pharmaceutical companies.
Yet, while life science suppliers share many of the same business issues as pharmaceutical manufacturers, they have unique market circumstances and information needs. For instance, life science product marketing and market research budgets tend to be much tighter than other healthcare businesses. This is often due to the compressed development period and lower-than-average revenue of their products. For these reasons and more, it can be challenging to conduct meaningful market research.
Cutting Costs in Market Research
There are, however, many ways for life science suppliers to meet their information needs by leveraging pharma’s market research investments. By addressing recruiting, data collection, and data sourcing in creative ways, life science companies can stretch their market research budgets to gain valuable insights.
A significant percentage of a pharma market research project’s budget involves honoraria for participating physicians. Amounts typically range from $75 to $500 for each respondent, depending on the physician specialty and the time and information being requested of them. Life science researchers, however, are typically willing to participate in market research for a lower honorarium, assuming that the time and level of information requested is reasonable.
Since life science researchers are usually very comfortable with Internet-based tools, surveys conducted online are acceptable in this industry. While such surveys have some limitations, they are a relatively inexpensive data collection option and they can generate valuable information about a business situation.
Research data can be generated from a variety of sources. Depending on a company’s information needs and business objectives, primary data may not be necessary. Existing information may be available to provide the insights needed to make stronger business decisions. Among the sources that are potentially most applicable to life science suppliers are subscriber-based research and publicly available information.
Subscriber-based research includes syndicated reports or database access that is available to all who subscribe. This information is generally less costly than custom research because providers sell it to more than one customer. However, since data is not gathered specifically for any one client, it may not fully address a company’s business issue. Results usually need to be filtered and interpreted to extract appropriate information.
A prime example of publicly available information is the CRISP database, which lists all NIH-supported research grants. While the data is available online, translating it into actionable intelligence requires internal resources to capture, track, analyze, and disseminate the information.
By employing these approaches, life science suppliers can realistically embark on necessary investments in market research and business intelligence as business issues arise. It is becoming increasingly important that they do so, as competition is intensifying and acquisitions are leading suppliers into new, unfamiliar markets. Moreover, life science product lifecycles are short, so it’s critical that companies extract as much value from their products as possible.
By identifying how life scientists choose products, these companies can better understand how to impact that process. Among pharma’s staple market research areas are sales force effectiveness and opinion leader forums. Both apply easily to the life science research industry.
Sales Force Effectiveness
There are more than 90,000 sales reps in the pharmaceutical and biotech industries promoting therapeutic products. It is one of pharma’s most expensive assets and it is quickly becoming so for the life science marketplace as well. Technical sales representatives for life sciences have become an increasingly valuable and costly component of research suppliers’ promotional efforts.
Yet, developing effective organizational sales structures in this marketplace is a challenge due in large part to the number of products promoted and the volume of new products that enter the market every year.
A methodology that has been used successfully by pharma to identify critical success factors for sales reps focuses on the relationship between reps and customers. By identifying specific behaviors and attitudes that define a sales leadership position, researchers are able to assess leadership drivers and quantitatively link them to sales success. Companies use this insight to refine the sales force structure and training protocols.
Life science suppliers who apply this approach should consider ongoing monitoring of key drivers of product choice over time. This will help assess progress toward business and sales goals and validate links to quantifiable sales force effectiveness factors.
Opinion Leader Forums
Technology acquisition and product development are more critical than ever to life science suppliers. Yet, accurately predicting which technologies are most viable for development and marketing is challenging. If wrongly identified, this kind of investment can lead to a significant waste of time and resources and can badly injure a company’s position in the marketplace.
To help avoid such a costly misstep, suppliers can make a concerted effort to establish productive relationships with national and regional leaders in the research community. These relationships alert a company to scientific trends and establish brand loyalty with this influential group. Companies can gain valuable insight and competitive intelligence by simply understanding how researchers view the product landscape and make choices.
Surprisingly, many life science suppliers rely on ad hoc contacts and research collaborations alone. These can build individual relationships but have questionable lasting strategic value.
Pharmaceutical companies, in contrast, have a long history of building strategic relationships. Most sponsor continuing education programs for physicians and other healthcare professionals that are designed to bring together leaders in a particular therapeutic category or disease state to exchange information and socialize.
A popular format for these events is to invite experts and respected colleagues of the attending physicians to speak on treatments and best practices, for example. A third-party market research firm collects and analyzes the insights provided by participants as they interact. In this way, the sponsoring organization is able to quantify and track opinions and perceptions of key market influencers.
The life science marketplace is a fertile ground for establishing such relationships, and supplier companies can enjoy considerable payoff for developing a formal information-exchange program.
As the life science research supply market grows more complex, business leaders must aggressively seek a greater understanding of their customers and how to impact product adoption and loyalty. They will demand and rely on accountability from market intelligence efforts to impact and optimize their bottom line. This reality can be realized affordably by wisely applying proven market research techniques to provide the insight and intelligence needed for this fast-paced marketplace.
Mark S. Walker is vp at G & S Discovery. Web: www.gs-discovery.com. Phone: (317) 819-4346. E-mail: [email protected].