Ad Technology

Goodbye, Blockbuster.  Hello, Franchise Approach.

Amanda HeadshotBy: Amanda Fiore

As the healthcare industry changes year over year, pharmaceutical companies must adapt to the ebb and flow. We have said goodbye to the “Age of the Blockbuster,” when high revenue-generating drugs took priority, bringing in at least $1 billion annually singlehandedly.

Pharmaceutical companies typically launched one to two of these blockbuster drugs each year, relying heavily on their projected success in market with the hopes of driving sales. Due to threatening patent expirations and ever-present generic competitors on the horizon, the Age of the Blockbuster has come to an end and with that pharmaceutical companies must adapt to new ways to maximize revenue. Enter the franchise marketing approach.

Instead of putting all their eggs in one basket, pharmaceutical companies must now evenly distribute their ad budgets among all of their products in an effort to cut costs and increase efficiency. Instead of pooling all advertising dollars to support the launch of one big product, pharma companies should be pooling funds from individual brands, to support multiple products within the same therapeutic area or those that share the same indication.

It is no surprise that the more brands that pool resources together, the more marketing power the franchise has as a whole. A centralized approach has the ability to position the brands effectively in a holistic fashion, in a way that can’t be achieved with individual budgets, cutting overall promotional costs while increasing efficiencies.

However, with a centralized advertising budget comes centralized ideas of how the money should be spent, which can be a source of conflict among brands. Because each brand contributes to the fund, they have their own perception of how the dollars should be spent, whether it be for the production of advertising materials, the media where the advertising materials will be placed, or the resources devoted to the franchise’s advertising campaign. Although there is the potential for franchisees to be sensitive about how pooled monies are allocated and conflicts to arise, the pros of a franchise marketing approach outweigh the cons.

Primarily, promoting multiple products within a pharmaceutical franchise at the same time reduces overall costs to maintain the sales force. The size of the sales force and training costs associated with the force are reduced. Sales teams across brands are consolidated and will leverage shared resources, which drives costs down. However, the consolidation of the sales force under one franchise umbrella can lead to confusion among the sales reps. It may be hard for reps to differentiate between the multiple products, but with successful training this can be combatted.

Secondly, promoting multiple products of a pharmaceutical franchise can increase media plan efficiencies. This means that there will be less redundancies in targeting and less overlap between individual plan strategies. Instead of individual products competing against one another for media inventory, pooling together brand budgets will allow for more successful negotiations when booking media.  On the other side, if the franchise’s media plan is executed poorly all products within the suite can compete with one another for opportunities, which can be problematic and inefficient. However, with proper planning, the execution of the media plan should be relatively smooth.

Lastly, promoting multiple products of the same indication under a franchise marketing approach allows the parent company to be designated as a leader in that specific therapeutic area. Take Gilead for example. They have established themselves as a global leader in the HIV space, providing treatment to eight out of every ten HIV patients in the US, who have never used an HIV medication previously.  Gilead’s HIV franchise brought in 42% of its total revenue in 2015. With the launch of its first drug in its HIV franchise in 2001, Viread is now the foundation for all other HIV drugs within the product portfolio. This is an example of how a franchise approach to pharma marketing allowed Gilead to establish itself as a condition leader in the space.

While there are a few initial hurdles that may tempt a pharmaceutical company to bypass the franchise marketing approach, if executed correctly this type of advertising can be what moves the needle and increases the bottom line.