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In my opinion, the biggest impact on the industry has been the fallout from the economic downturn. A climate of near paralysis has seized much of the industry and I don’t expect that climate to change much until well into 2003. The uncertainty of the timing of the eco nomic turnaround has resulted in companies retrenching and avoiding change — even if the prospects of change could be beneficial to their business. As a result, it has constrained oppor tunities for growth. On the plus side, it has forced us to work harder and smarter for both our current clients and in winning new clients. We’ve been fortu nate to have grown our business in this envi ronment and I attribute that to our continued focus on aggressively servicing the needs of our clients (both current and prospective) rather than following the path of retrenchment. Mark S. Perlotto EXECUTIVE VP, GENERAL MANAGER ADAIRGREENE HEALTHCARE COMMUNICATIONS M&A activity The increased pressure on the pharmaceuti cal industry due to M&A activity, as well as political and social changes have had a huge impact on our business. We have seen a surge in business development (licensing) activity as well as outsourcing of R&D work. Nailesh A. Bhatt MANAGING DIRECTOR PROXIMARE INC. Procurement policies For the year in review, the most important fact in our practice as marketing/communica tions management consultants has been the alignment of a company’s marketing team and purchasing team on how they handle the chal lenge of obtaining better marketing productiv ity and better valueformoney from their stable of advertising and other marketing services agencies. In past years, we did not see the col laboration of marketing and purchas ing that we are now beginning to see on this important issue. Arthur A. Anderson MANAGING PRINCIPAL MORGAN ANDERSON CONSULTING Marketing guidelines The new PhRMA marketing guidelines are having a profound impact on our industry — and increasing the importance of the Internet as a marketing vehicle. As the guidelines place renewed emphasis on medical education, quality CME programs will be at the top of marketers’ agendas. At the same time, cost pressures will force them to seek costeffective distribution channels for reaching target audiences. The Internet, which will continue to grow in importance as a marketing tool, answers both of these needs and more. For one thing, the Internet has enormous ability to effect behavioral change on script writing while offering greater costeffective ness than any other messaging vehicle. That’s why we are seeing greater than 100% annual growth in physician participation in online CME. More will emerge as marketers harness its proven power and efficiency. Webcasts and Webinars, of course, are now a regular part of many education programs precisely because they offer wide reach to a target audience effectively and cost efficiently with proven success. On the DTC side, tighter marketing bud gets will encourage pharmaceutical marketers to shift more marketing dollars from print and broadcast to highly targeted Websites and to use more innovative online tactics. Such efforts have been proven to increase the ROI of their overall marketing mix. Ash Nashed, M.D. PRESIDENT CHOICE MEDIA The PhRMA code The introduction last July of PhRMA’s new voluntary Code on Interactions With OPINIONS Your year in review I n the October issue of PharmaVOICE,we asked how the events of this year — from new regulations to the economy — have shaped the lifesciences industry. PharmaVOICE wanted to know what events or industry trends have had the greatest impact on your strategies, executive positions, and business. Healthcare Professionals, coupled with recent increased scrutiny by the Office of the Inspec tor General on overall medical communica tions practices, will have a major impact on our industry in 2003 and beyond. Pharma ceutical firms will be taking a closer look at not only how they develop education pro grams but also which communications part ners have the required experience and exper tise to help them steer a safe course in the current regulatory climate. The focus will likely be less on the quantity of activities and more on the quality and compliance of educa tional programs they do develop. Martin E. Cearnal PRESIDENT AND CEO THOMSON PHYSICIANS WORLD A tough year 2002 has been the toughest year since I joined this industry. While many events have played a role in the slowdown — chief among them a poor economic climate — the greatest impact, in my opinion, has come from the response to the new PhRMA guidelines on marketing. Those guidelines, which mandate that medical marketing be restricted to efforts that inform and educate the physician, have gener ated some confusion among some manufac turers. Others, faced with a turnabout in tac tics, have reduced their marketing budgets at a time when redirection should be the rule. Yet, the guidelines themselves are not nec essarily limiting. They dictate a change in strategy, but not in overall goals. The right kind of change can invigorate sales, even in the most sluggish economy. But change, while healthy, is often threat ening. It can be particularly difficult for those on the front lines — the sales representatives and product managers — who are being forced to adopt new approaches. It will take time for WHAT’S on your mind marketers to adjust, and to replace “extrane ous” bonds, such as dinners and gifts, with pro fessional ones, such as patientcare programs. As an agency with a large healthcare divi sion, we believe in professional advertising — advertising whose purpose is to “educate and inform” — and we support those publications that provide editorial content that lends cre dence to our mission. Despite cutbacks in spending that have reduced our margins, we are committed to keeping our senior staff so that we can continue to give our best to our clients. While the outlook for 2003 looks equally gloomy, I am convinced that we will see a gradual turnaround. For those who can stay the course, it will be worth waiting. Rich Levy CEO ADAIRGREENE INC. Five trends In 2002, five trends dominated our indus try and its publishing arm. Individually and collectively, all five — corporate mergers, fewer new product approvals, the new PhRMA guidelines, DTC marketing, and the economy — have wielded enormous impact on the pharmaceutical business and its allies. Mergers, in particular, have limited the playing field. Despite its promise to generate product innovations, the trend toward corpo rate consolidation has so far produced few vis ible results. The number of new products in the pipeline has shrunk, while the total actu ally launched, as a result of receiving FDA approval, has dropped from 98 in 2000 to 56 in 2001. For those of us in the publishing sector of the industry, DTC marketing also has left its mark, shifting advertising dollars away from the professional magazines and into the con sumer arena. This has put increased pressure on all of us, forcing us to be creative and nim ble, to be alert to market shifts, and to take advantage of them. Journals, for example, which not so long ago generated about a third of their total ad revenue from new product launches, have seen that income dwindle to a shadow of its former self. As a result, magazines are now looking for new revenue streams — from cus tom publishing to medical education — to generate growth. One consequence of this has been the development of crossover publications, which combine a professional pedigree with consumer distribution. MultiMedia Health care/Freedom, for example, has just begun publishing Family Health Matters, a consumer publication distributed at CVS pharmacies and bearing the endorsement of Columbia University. The new PhRMA guidelines on market ing to physicians also have refocused the industry. Money previously spent on dinner meetings and vacations is now being spent to inform and educate the doctors. Many pub lishers are seeing a striking shift in the rev enue balance, with medical education rising sharply as a percentage of total sales. At our company, much of our growth in the past year has come from Programs in Medicine, the division that produces conferences and semi nars. However, the brand names of the maga zines are highly influential as a means of attracting an audience. In the year ahead, we see a continuation of all these trends. The playing field will grow smaller, however. Fewer companies and prod ucts will emerge from the fray. And only those that can adapt to changing market con ditions — expanding their products and mar kets to meet changing needs — will succeed. Bob Preston CEO MULTIMEDIA HEALTHCARE/FREEDOM Medical education The landscape of continuing medical edu cation was substantially and permanently altered in 2002 by three powerful trends. First in sequence, if not importance, was a surging resistance to travel on the part of physicians, leading to flat and even declining attendance at many national medical confer ences. While September 11, 2001, was the catalyst for this development, it is sustained by the mounting time pressures of clinical practice and the increasing availability of top tier medical education conferences in cities across the country. At M/C Communications, we responded by rapidly expanding the availability and accessibility of PriMed conferences through out the U.S. In 2003, we will present more than 70 CME meetings in 36 cities throughout the U.S. Ready access to quality CME close to home is a condition we are leading physicians to take for granted. It’s interesting that on line CME has shown very modest potential to date to convert this trend to broadened par ticipation. The proportion of CME credits earned by physicians via the Internet remains minuscule at less than 2%. Second, the new PhRMA Code governing the interactions between pharmaceutical company representatives and physicians effec tively narrows the channels of communica tion. In this new environment, CME confer ences become increasingly important venues for clinician contact and education. The exhi bition side of the medical conference provides a critical point of interaction, in a richer con text and more positive environment. The new PhRMA Code will prove a productive force that enriches the relationships between phar maceutical manufacturers and physicians — and reinforces the recognition that both play vital roles as healthcare providers. Third, we are responding to the needs of pharmaceutical companies for detailed infor mation that will enable them to better allo cate educational grants and other CME costs. Sponsors and exhibitors want to know if they are reaching the right physician audi ences — not just numbers of clinicians, but those active in treating the specific condi tions and diseases where their research and products are focused. CME is becoming more practiceoriented and patientcare based; a path toward becoming increasingly meaningful for both physicians and pharma ceutical companies. John Mooney CEO M/C COMMUNICATIONS LLC A whole new ballgame The birth of the PhRMA code ushered in a new set of communications needs for phar maceutical firms. In a sense, firms had to reinvent, or in some cases, reinvigorate their brands in the eyes of clinicians, partners, and consumers. It is a whole new ballgame, and we have yet to see which will emerge as leaders. Mark Bouffard CEO MEDIA IMPRESSIONS Security and Sept. 11 Concern about security and bioterrorism in the wake of September 11 fueled a new level of consumer interest in the Web as a source of immediate information and self empowerment. The seriousness of this response provided the backdrop in 2002 for pharma companies increased level of sophistication about the Web in reaching and engaging consumers. Pharma companies became less tentative about incorporating the Web channel into the brand marketing mix, while also developing a better sense of the limitations of mass DTC advertising — and the importance of message differentiation and analytics to drive revenue. A FDA study lent further credence to this approach, with a new report that revealed Americans’ increased likelihood to go online following a DTC ad, as opposed to other media. The Web became a means to appeal to specific customer segments, as well as a way to get to know them even better. In this sense, we saw companies really begin to take advan tage of the Internet’s interactivity to keep PharmaVOICE WHAT’S on your mind users engaged. New Websites launched in 2002 focused less on pure brand promotion and more on relationshipbuilding by offer ing a “onestop shop” for personalized value added services like risk calculators, side effect management tools, and personal diaries. We think 2003 will be the year pharma companies truly exploit the Web, by not only leveraging its potential in the market ing mix but throughout the organization. Companies will become more savvy by com bining the Web’s interactivity and analytical capability with all of the assets in the enter prise to benefit their overall approach to CRM as well as individual brand marketing effectiveness. Karen Kuller DIRECTOR, MARKETING SOFTWATCH INC. Stretching dollars The economic downturn and fall of the stock market has had widespread implications across many facets of Palio’s business. Clients continue to try to stretch their marketing dol lars, and at times are caught between what they know is needed financially to do the job right, and what they have available in terms of marketing funding. On a similar note, pharmaceutical firms also are pushing for unique, costeffective strategies that differen tiate their products from the competition while closely adhering to the selfimposed guidelines on giftgiving and physician enter tainment. Medical education is definitely growing in importance, and we have expand ed our medical strategies staff with Ph.D.s and M.D.s to align ourselves with this trend. Despite the negative economy, we contin ue to experience greater than 30% growth in our business, we are seeing an influx of candi dates interested in moving to Saratoga Springs to join our team. Overall, we remain very positive about the future of our business and the healthcare advertising sector in gen eral. Firms that do great work and provide topnotch service will continue to prosper. Ed Mitzen PRESIDENT/OWNER PALIO COMMUNICATIONS On the West coast In the arena of the life sciences, at least on the West coast, the economy has set new directional trends for companies. Many genomic and drugdiscovery companies have felt the economic impact, and have temporar ily revisited their business models. For mar keting communications agencies, the presen tation of branding efforts are being reshaped. Instead of looking for fullservice capabilities with a full branding strategy from the outset and expensive media spends that target a general population, lifesciences companies instead have budgets that must take it one day at a time, one brochure at a time. Our change at Stratagem has been to ensure we meet these shortterm objectives, yet continue to lay the foundation for a com pany’s longterm vision. To many companies, branding is big and expensive, and some companies no longer believe they need an agency. This has given us an opportunity to reemphasize that a strong branding founda tion should start before the business plan is written, and be implemented in every indi vidual communication no matter how far apart in execution. We, as agencies, must also focus even more on that one point of differentiation, and then use cuttingedge strategies to ensure strong communication in the most cost effective ways — piece by piece instead of campaign by campaign. And how we communicate must be more creative than ever. Patricia Malone PRINCIPAL STRATAGEM HEALTHCARE COMMUNICATIONS LLC On the biotech front 2002 presented many challenges for the biotech industry, particularly when it involved trying to raise money. Thus, we were forced to continually change the way we con ducted business and shift our strategy to meet the needs of our investors and potential investors. For example, current venture capi tal firms are saving their money to finance their own struggling companies, and the public market is virtually closed to companies without a compound having a successful Phase III program in a blockbuster indica tion. The only good news for biotech financ ing in 2002 was that (on an historical basis), this wasn’t the worst it’s ever been! Despite this downturn, we at Psychiatric Genomics were able to successfully raise $17 million, through a combination of old and new investors. We attribute this success to our approach. We spent a great deal of time helping our investors understand how a genomics approach is different and advanta geous in the field of psychiatry. We also helped them understand the potential of our markets. The psychiatry space is very big, and successful compounds tend to be block busters. Our investors were convinced that developing compounds in this area could be very lucrative. We also had a current collabo rator, the Stanley Medical Research Institute, become a new investor. They work closely with us, allowing us access to their extensive collection of tissue samples from patients, and the research collaboration gave them confi dence to invest in us financially. I came on board as a new CEO in August of 2001, certainly not an easy time in the industry. Our first order of business has been to raise money for the firm. My background in business development enabled me to quickly assess where we were and where we needed to be in order to succeed in both rais ing money and keeping our R&D programs moving full steam ahead. We certainly have the right components — we have developed lead compounds in bipolar disorder, and we also have been involved in talks with poten tial R&D partners. Yes, 2002 has been a challenging year. But, Psychiatric Genomics will be a stronger company for it, and with our experienced management team and innovative approach to drug discovery, we are wellpositioned to develop smallmolecule compounds in large markets. We look forward to what promises to be a very exciting 2003. Dr. Richard Chipkin CEO PSYCHIATRIC GENOMICS INC. Regulatory completion During 2002 we’ve seen two fundamental drivers for the industry: The FDA’s comple tion of the Process Analytical Technology (PAT) Subcommittee, which is working to allow earlier release of drugs if manufacturers can prove the products were produced within predetermined parameters, and the new FDA Quality Initiative — Good Manufacturing Processes (GMPs) for the 21st century, which will help the industry improve both regulato ry compliance and overall output — an important balance to achieve. These two regulatory efforts signify the verge of a sea change in pharmaceutical and biotechnology — one that places a new importance on manufacturing to impact the bottomline. Research and development, and sales and marketing will continue to be critical areas for investment, however, we expect to see increased interest in the discovery and manu facturing environment in the coming year. Aegis can help companies capture and analyze data that will be critical for parametric release, and our software enables the desired balance between regulatory compliance and efficiency in manufacturing. So, we’re looking forward to working with our customers this year as they navigate the changes ahead. John M. Darcy CEO AEGIS ANALYTICAL CORP. PharmaVOICE