From Paul Johnson, SVP, Account Services, Palio

“To attack or defend” is a question our pharmaceutical clients seem to deliberate over incessantly when facing substantial competition within their categories. They utilize war game research, physician IDI (in-depth interviews), and many other tools to help guide their strategic decisions. Often times, these primary research tools tell a hyper-inflated, depressing story that the new competitor will replace the incumbent product in just a matter of time. To further compound the brand manager’s decision, marketing budgets of the incumbent brand are often tight, forcing them to make tough decisions about their marketing dollars when facing a competitor with a launch budget.

We recently evaluated this strategic issue for a client from a purely objective perspective, and found surprising results. To guide our comparison, we sought to find product analogs facing new competition with a similar efficacy profile but some substantial advantage in a tangible asset (less frequent dosing, lower side effect burden, etc.). We limited our search to products facing competition from 2005 through 2009 so that we could evaluate the number of tactics initiated, the media channels utilized, and the total spends within channels. We sought to understand how companies allocated sales details, professional tactics, direct-to-physician tactics (non-field related), journal advertising, and professional education resources. To caveat our findings, we were only able to find substantial data in a handful of categories, so more research in this area is warranted to provide conclusive results.

Our results were surprisingly consistent. When facing a single competitor or multiple competitors with a better profile, many brands assume a defensive posture and contract resources. In multiple instances, including muscle relaxants, osteoporosis, and acne, when companies retracted resources in the face of launch competition in multiple media channels, they lost substantial market share in the first 12 months of the competitor’s launch.  We also observed a “Johnny Come Lately” phenomenon in the analogs we evaluated, where several of the brands we evaluated increased their marketing spends in the year following the launch of competition, seemingly in an effort to regain lost territory. Conversely, when a product increased spends in multiple media channels in anticipation for a competitive launch and maintained resources through the initial launch period, the impact of the competitive launch on the incumbent brand was blunted. We observed that brands which maintained or increased resources in professional tactics, sales force details, journal advertising, direct-to-physician tactics, and professional education offerings either lost less than expected market share or actually continued to grow their market share.

Our evaluation of this issue would support that, indeed, the best defense is a good offense. In our limited observations, brands that maintain positive momentum in the face of competition were better served than brands that took their foot off the accelerator. Many brand managers will struggle with this strategic decision at some point in their careers. Instead of spending thousands of dollars on primary research, urge them to examine brand analogs with similar attributes for insight. The results may surprise them, too.

*The origin of this adage is unknown.  It has been attributed to prizefighter Jack Dempsey, the late PRC Chairman Mao Zedong, Machiavelli and Sun Tzu.  If you don’t believe me, go to Wikipedia. When is that ever wrong?