Pharmaceutical Marketing at Merck Marketing at Merck Human

Pharmaceutical Marketing at Merck

Marketing at Merck Human Health Divisions - Asia Pacific - Europe, Middle East, & Africa - The Americas (US Human Health, Canada, Latin America) - Worldwide Human Health Marketing Merck Vaccine Division - U. S. Vaccine Marketing - Merck Vaccine International

Pharmaceutical Industry Characteristics Highly Competitive but Fragmented industry Complicated business model with numerous stakeholders Very Technical/Scientific products Major R&D expenditures and High Risk product development environment Long Product-Development Timelines

Pharmaceutical Marketing Characteristics Long Marketing-Planning horizons Highly regulated industry and highly regulated marketing communications by FDA Primary targets: Healthcare Professionals and Consumers - Numerous “customers” with variety of information needs requires multiple approaches to creating marketing campaigns and communications Evolving selling environment Use of e-channel still in its infancy in our industry

STAGES OF PRODUCT DEVELOPMENT Basic Research Clinical Studies Regulatory Approval Role of Marketing • Provide • Recommend background development on market • Define product and product profile needs potential • Define comparators • Input on product labeling Product Launch • Finalize strategy Postlaunch Marketing • Monitor performance • Finalize pricing • Adjust strategy • Recommend and tactics • Finalize filing strategy promotion • Sequence • Define launch and branding promotion plan • Define Outcomes • Implement • Manage Research needs • Develop launch product positioning campaign life cycle • Develop market and branding • Finalize field • Develop strategy sales plans

Merck Marketing Principles Understand the customer’s perspective Anticipate and outmaneuver the competition Concentrate on selected audiences and behaviors Define the product’s distinctive value to selected audiences Plan for sequenced growth throughout the product’s life-cycle Shape customer’s perceptions Ensure that execution is efficient, consistent, and well integrated Track results and re-evaluate decisions

Brand Management is the HUB of pharmaceutical marketing Market Research Marketing Communications Professional Sales Brand Management Customer Marketing Medical Services Business Development Pricing Analysis

Pharmaceutical Branding

Currently: Limited penetration and use of e-channel Unclear regulatory guidance Limited e-commerce opportunity except with major wholesellers—EDI works fine Difficult ROI measurement with consumers Commitment to personal selling model with physicians Challenging privacy issues Physician role as “learned intermediary” has to be considered and respected

Consumers are increasingly being asked to take an “active role” in managing their healthcare Numerous treatment options and decisions to consider. Consumers are expected to “partner” with their physicians to consider risks and benefits and make choices. Third-party payers and employers are adopting cost-sharing models of healthcare coverage. (Spending accounts, 3 -tier co-pays, etc. )

Healthcare information is a Primary destination on the web The changing e-Health Landscape: The Web Offers: ØSpeed ØConvenience ØRobust Resources ØAnonymity BUT In 1999 there were 750 health-information web sites Majority based on “advertising revenue” model Today there are ~ 50 such brings concerns about: properties - 400 filed for bankruptcy Credibility/Accuracy - 100 were acquired and Ø ØPrivacy Protection ØRelevance then went out of business - 200 closed or disappeared with no explanation

Studies estimate between 73 M-100 M US Adults have gone online to look for health information 73 M or 62% with internet access using the Web to look at Healthcare information 68% of health seekers say the material affected their decision about treatments and care for themselves or a loved one. 61% of health seekers said the internet has improved the way they take care of themselves Top Reasons: - 93% looked for info about a particular illness or condition - 65% look for nutrition, exercise, weight control advice - 64% looked for info on prescription drugs - 55% gathered info before visiting a doctor Source: “The Online Health Care Revolution”, “Vital Decisions”; Pew Internet & American Life, 11/26/00, 05/22/02

The internet provides new Opportunities for Pharmaceutical Companies We have complex, highly technical products The empowered consumer needs information they can learn from and use in discussions with their physician Educated customers have always been our best customers and we have a significant offline commitment to education We are now bringing that commitment online to better meet our customers’ needs through the web channel This new channel requires us to evolve from a “push” to a “pull” model as consumers demand greater control and convenience in how they access online healthcare information

What has Merck Done? Create Online Websites with Merck Product Information Integrated part of our marketing campaigns that provide additional information online Can be accessed directly (www. product. com) or through links at our corporate site, 3 rd party sites, or from banners throughout the web Originated as “Brochureware” Evolving towards greater robustness, interactivity, customization and permissionbased marketing approach Primarily Consumer Focused - Developing an educational/ less advertising oriented approach to healthcare professionals

Some Examples of Websites

What else has Merck Done? Create Online Medical Education Resources for physicians and patients Ø Merck. Medicus is a health-information portal designed to support the medical-education needs of physicians Ø Merck. Source is a health-information resource for Ø patients Both sites offer objective, credible, evidenced-based resources to support the doctorpatient dialog Ø They deliver online on Merck’s commitment to support the medical-education needs of customers Ø “Merck Manuals” of the 21 st

Issues for our Industry The web promises instant access to all information, yet our regulated environment poses limits on how we can use this channel to meet customer expectations Our traditional “product-centric” approach vs the “customer-centric” web environment requires adjustments in how we create and offer information to customers Supporting and respecting the doctor-patient, payor and employer relationships while adequately serving the consumer is a challenging balancing act Privacy Protection is critical. Healthcare status impacts employment and social relationships.

Where are we headed in the future? Towards more integrated offerings Relationship Fully Integrated Information & Services Personalization High Trust High Value Customization Limited Interactivity Enriched Product and Medical Education sites Product Info Corporate Info Discrete Sets of Information Brochureware PUSH Corporate, Product Focus PULL Customer Focus