Print Reference This Reddit This

The dynamic vitality in Pharmaceutical Industries

The pharmaceutical industry is one of the most dynamic and vital division of the worldwide wealth with is expected to touch global sales of $ 825 billion by the end of 2010 with an anticipated growth rate of 4-7% (IMS, 2009). Indeed in the UK alone, market size during the year 2009 was valued at 28.4 billion dollars (Prlog, 2010) where as Pakistani pharmaceutical market is valued as an approximate 1.6 billion $ with a growth rate of 16.1% (IMS, 2010).

To control this market, enormous amount are spent on sales and marketing. Doctors both at hospitals and community setting are the key customers of pharmaceutical industry (Berbatis, Blackbourn & Smith, 1981). Hence having the understanding about the decision making process and how they use information, are the focal point in pharmaceutical marketing management, planning and its implementation. In Pharmaceutical industry, consumer decision making is a complex process since both customer and consumers have to be satisfied and their needs and expectations should be met. The decision making in pharmaceutical industry was in the hands of doctors whereas patients (the final consumers) and payers (governments or insurance companies) had little knowledge or influence (Holland & Batiz, 2004) with a consideration of rational attribute of the product rather than emotional.

As marketing atmosphere is changing due to cost challenges, competitive pressures, and change expectation of customers that are driving organization to improve the way they develop and introduce products to the market that meet the changed needs of its customers and remain profitable and competitive. It is an integrated process through which companies create value for customers, deliver product or service to customers in exchange for some return. All marketing activities are used to create and retain customers, to keep the customers and to satisfy the customers by providing desired products and/or services. In this way, customers are the main focus of all the marketing activities.

Pharmaceutical products are mainly divided into two group, namely the ethical products and OTC (over the counter) products. Ethical products are those that can be sold only against the doctors’ prescription but the OTC products can be purchased by consumer (patient) with out any prescription. In ethical pharmaceutical products, there are two therapeutic options available, one for acute disease treatment and other for chronic disease treatment and or management.

The demand of innovative medicine grows as the number of medicine’s alternative flourish thus identification and launch of new product become critical for company’s success and is probably the most important activity for many organizations. New product provides organization a new way of meeting the expectation rather exceeding the expectation of the customers.

The development of new product in Pharmaceutical industry is expensive and time consuming as well. On average, new product development in pharmaceutical takes about twelve years with an average cost of $800 million. R&D spending for each new product has grown significantly during recent years because of failure of clinical trials, a shift in new product development from acute therapy to chronic therapy (CBO, 2006). There is only about one out of 60,000 compounds synthesized in laboratories can be regarded as highly successful (Schweitzer 1997). Huge development has been made throughout the past decades in understanding sickness, mounting new diagnostic technologies and medicines that resulted in better treatment and prevention of diseases. Indeed, in the period 1952–1992, over one half of the gains in health were due to access to better technology and application of new knowledge (WHO 1999). Pharma drugs are an integral component of modern health care and hold the promise to treat more effectively various debilitating health problems. The business modus operandi of Pharmaceutical is complex and the sales of drugs are dependent on the acceptability on the customer end (treating physician) for the particular treatment and also on the satisfaction level of consumer (patients). Customer (treating physician) judge the drug on the basis of its efficacy, tolerability, safety, convenience and the affordability by its patients.

Technological advances and development of new medicines are achieved on the basis of fundamental research carried out in universities and institutes of research, while virtually all end products and medicines are developed and produced by the pharmaceutical and related industries Innovation is at the heart of all advances and has the capacity to solve problems facing humanity. Societies which have turned away from innovation and technological development have failed in their ability to support their populations. Understanding the nature of innovation in the life sciences and in particular health care how it operates, what enables and hinders it is therefore of great importance to meeting the challenges ahead. However over the period of time a very few products have got the acceptability in the market. The graph of new product development in Pharmaceutical industry has also gone down over the last few decades.

The rate of pharmaceutical innovation, however, has declined since the 1980s. As per Business wire 2006), cited by Holland (2004), "Business as usual is no longer an option when it comes to developing new prescription drugs. Pharmaceutical and biopharmaceutical companies are spending more on R&D than ever before, yet the number of new drug approvals has declined steadily. As a result, many drug firms are focusing on ways to improve the efficiency and productivity of their R&D programs." Since the early 1990s the pharmaceutical industry has gone through a process of significant consolidation through mergers and acquisitions. There has been argument if this merger and acquisition activity may have harmed innovation. Over the past decade, a growing share of the industry’s research and development outputs has consisted on incremental improvements to existing drugs rather than new molecular entities. The new products launched during the period however could not gain a reputation that could make them a best available choice over existing brands. However, pharmaceutical industry is the sixth most effective industry in generating innovation (Business insight, 2010). The aim of medical research is to ensure that people do not simply live longer, but that they remain healthy and independent for as long as possible so they are not dependent on care. That is also the goal for the development of innovative drugs. “Today, most people in most parts of the world can expect to live considerably longer than their parents, and live healthier lives, contributing more to their families, friends and economies. This is the result of significant progress in living standards and health care made over the course of more than a century. New and improved medicines and vaccines have played a major role in this process. Pharmaceutical innovation is based on improving Price reduction, efficacy of drug, tolerability, evidence and compliance of patients, as a whole or at individual attribute level. Pharmaceutical organizations are striving hard in developing products that are better than their existing products as well as from competitors. Although the positive perception of doctors about the drug newness its superiority over available options is critical for the success of new product introduction.

Multiple interacting factors influence the uptake and diffusion of new knowledge and technologies which are needed to improve health. Over a period of time, very few new products however were able to establish as brand and replaced the old available options, in other words not a good number of products had been ranked as golden standard in their therapeutic class. The control of pharmaceutical expenditure was structured to compensate true progress. Price and reimbursement are based on perceived innovativeness and superiority, punishing “me too” medicines. This ignited a race to market with each innovative drug class, because only the first to market would benefit. Resulting, taking competition ferociously at the level of therapeutic class and being not on time to market with an undifferentiated attribute in the product was a punch of failure (Holland & Batiz, 2004).

In Pharmaceutical industry, customer behavior could be observed on the basis of the diagnosis of the disease and selection of the treatment regime while considering the patient ages, family history and life style. Products that are chosen by the customers to be prescribed are based on the key consideration of efficacy(the ability of a product to prevent, treat or manage the disease), safety(The ability of the product to provide safety to the patients over the long term usage of the product (having no negative effects), tolerability (The short term effect of the product on the quality of life of the patients no side effects means better tolerability of the product & good quality of life), cost (The price of product on per tablet/capsule, per day treatment cost, per month), convenience(The number of tablets as a single dose and number of times to be taken in a day), evidence (The availability of data from different clinical trial that supports the product).

During the previous few years, business situation for pharmaceutical organizations have been changing rigorously, the model that was successful in the past is not able to keep its pace and therefore making industry a hostage of its past triumphs. The current strategies shall only delay the inevitable and its is estimated that only one out of six new products shall likely to deliver returns above their cost of capital which is an unpleasant view for investors (Gilbert, Henske & Singh, 2003).

Diffusion of innovation and its adoption is the core amongst the strategy within the pharmaceutical organizations. The company’s Medical representative has been the key marketing tool in the bag having at the back the people who formulate the campaign to be delivered as well as conducting the activities of building opinion leaders, arranging dinner debate, conducting round table discussion meetings to develop and shaping the perception of targeted doctors in favour of specific product by using both pull and push strategy.

Marketing problems associated with the introduction of new products are often amenable to analysis and solution through the use of behavioural principles. Studies of innovation diffusion can therefore provide excellent case illustration of the analytical power of associated consumer behaviour theory and of the contribution of this theory to marketing decision making (Ryan & Murray, 1977). “The power of diffusion of innovation is in the detail, and these details describe perfectly how and why some pharma brands succeed with prescribers and others fail” (Rowley, 2008).

Literature Review

Professed uniqueness of an innovation, its diffusion, and adoption are the core hub of curiosity in this research. A growing body of research reveals the significance of positive perceived innovation characteristics as strong predictors of adoption rate (Black et al, 2001). An innovation is an idea, practice, or object that is perceived as new by individual or some other unit of adoption (Rogers, 1995). There is correlation amongst technology, newness, uniqueness, ergonomics, design, market size, market growth rate, competition, relative price, customer loyalty, customer familiarity with the product class and frequency of purchase (Veryzer, 1998). Innovation can be evaluated on four characteristics, relative advantage of the product, compatibility, its Trialability, Observability and complexity (Rogers, 1962). Diffusion deals in the process of spreading of something (Robertson, 1970). It is a concern amongst the marketers by which way adoption of the new product or service spreads in the marketplace. Diffusion is the process by which an innovation is communicated through certain channels over time among the members of social system (Rogers, 1995). Mittman & Cain (2002) explained ten stages of the diffusion of innovation as, relative advantages, Trialability, Observability, communication channels, homophilous group, Pace of innovation, Social network, Opinion leaders, compatibility and infrastructure. Once a clinician decides to use a new device or a piece of technology, the clinician must often see the impact of product on the patient (Mittman & Cain, 2002). The adoption of a new product or idea does not happen all at once in marketing system. Ryan & Murray (1977) explain two ways of illustrating the process; the generalized cumulative diffusion pattern and the generalized noncumulative diffusion pattern and both end up with the 100% adoption. A substantial number of studies provide evidence that the timing of acceptance can be represented by a normal distribution (Rogers, 1962). Robertson (1970) suggested that the process of innovation diffusion can be conceptualized as; the adoption of the new product overtime by consumers within a social system that is encouraged by the marketing. The nature of product has affects on the type of consumers that are adopting, the rate of adoption over the time and so on.

There could be many definition and classification of in innovation or new product, however Robertson (1967) classified innovation between; a continuous innovation that involve in alteration of a product rather than the creation of entirely new product, a dynamically continuous innovation that involved in creation of a new product on the alteration of an existing one and a discontinuous innovation that involved in establishing a new product and new related behavioural pattern.

Developing, manufacturing and marketing innovative new pharmaceutical drug is highly complex and involves significant investment. Market access must be maximized at the highest possible price to generate sufficient sales revenue an acceptable return on investment. A large body of evidence strongly links innovation to economic growth (Schumpeter, 1934; Baumol, 2002). Health innovation covers a wide range of scientific, medical, economic and social issues. On average, it takes about 10-15 years, and millions of dollars to develop a new medicine. Average prices of new drug products have been rising much faster than the rate of inflation, and annual R&D spending has grown faster still Nevertheless, introductions of innovative new drugs have slowed, the average cost of developing an innovative new drug at more than $800 million, including expenditures on failed projects and the value of forgone alternative investments (CBO 2006).

Title

The innovation, diffusion and adoption process in pharmaceutical industry

Research Objective:

To gain a deeper understanding of how customers (doctors) perceive product innovation.

To explore, how perceived innovation affects the market success of product introduction.

To understand how innovative product adopted by customers (clinicians).

To understand the innovation diffusion process in Pharmaceutical industry.

Research Questions:

What is Concept of innovation and how it is utilized in Pharmaceutical industry?

What is diffusion and how it happens in pharmaceutical industry?

What are the factors of innovation diffusion in the pharmaceutical industry?

Is the innovation models in Pharmaceutical industry used are similar to the model presented by the gurus?

Hypothesis

There is strong association of pharmaceutical’s customer in the product innovation; however there is a gap in customers (doctors) understanding and innovation.

Products are fail due to lack of perceived innovation

Products diffusion and adoption methods are not either properly understood or used by pharma firms

Research Gap

Pharmaceutical industry is being discussed by various authors and in various literatures in particular to its performance. There is huge amount of literature available that has focused on the various aspects that is affecting the industry as a whole and specifically the impact on the innovation/new product development. A number of research has already been conducted that has focused on the patent issue in relation to innovation, generics launches in relation to innovation, huge cost involvement and possible failure of molecule during discover, lack of implementation of patent laws. However, there is a few researches done on understanding and exploring innovation, diffusion and adoption on new products.

The proposed research would be unique since it shall be carried out in cross countries involving Pakistan and UK.

Research Method

The function of research design is to attach the questions to data. Design to be seated amongst the two; firstly, presentation how the research questions are to be connected to the data, secondly, the tools and measures to are used in getting them answered. Research design is to be followed from the questions and match them with data. The research design is the fundamental plan for a piece of observational research, and includes key thoughts like as strategy, sample, tools and measures to be used for collecting and analyzing experimental data (Punch, 2000).

Exploratory method of research would be use to carry out the conceive project because exploratory research provide an opportunity to utilized both qualitative and quantitative methods including a document review, structured telephone survey, and focus groups to gather data. The use of multiple methodologies would permit researcher in triangulation of the data to improve the validity of the findings, and enabled greater inferences from the results.

The research method that is being used is the mixed-model which combines quantitative and qualitative that collection techniques and analysis procedures. Additionally, qualitative and quantitative approaches will be used for the generation of questions for questionnaires. Particularly, for this research, the qualitative data collected will be quantified converting it into numerical codes that can be analyzed statistically. In this study analytic surveys specifically acknowledge their intermediate position and their connection with the logic of deductive inquiry by their emphasis on reliability in data collection and statistical control of variable achieved with the use of statistical techniques (Robson, 2002). On the other hand, interviews would help to obtain feedback from respondents to improve the pilot survey for the final questionnaire. It is very important to mention how triangulation or multimethods where different data recollection methods will be used in order to validate data collected through cross verification from two or more sources, for this research, interviews, survey, and case study will increase the research credibility of this project research validating the results and conclusions obtained.

Data collection methods in this research fall under 2 groups; quantitative that would cover the structured surveys from companies and customers and qualitative research from focus individual from pharmaceutical companies and prescribing doctors. Qualitative and quantitative market research methods each provide different insights into the topic. Research results would be more useful when the two methods would be combined, although they are often conducted separately.

Qualitative research aim is gain an understanding of how or why things are as they are. This discussion shall cover how the individual think and visualize the scenario of the topic and what is their understanding. This method would help researcher in gaining:

Systematically uses a predefined set of procedures to answer the question

Collects evidence

Produces findings that were not determined in advance

Produces findings that are applicable beyond the immediate boundaries of the study

In qualitative research the discussion between the researcher and the respondent would largely be determined by the respondent’s own thoughts and feelings. The interview tends to be longer and in depth than a quantitative interview and fewer interviews is conducted.

Quantitative Information. Typified by...

Qualitative Information. Typified by...

Larger samples

Smaller samples

Statistically valid

Directional findings

Analyses numbers – how many think what?

Analyses thoughts and concepts

Closed questioning techniques (less opportunity to ask „why?‟)

Open questioning techniques

Who thinks what? (Measuring)

Explanation of their thoughts and concepts

Analyzed in aggregate

Allows to provide anecdotal type information with permission of the respondent, we can highlight case study examples for „interesting‟ companies to demonstrate certain points

Qualitative research would be done by face to face meetings or conducting focus group discussion.

It is because of the strength of qualitative research, it would provide complex textural descriptions of how individual experience a given research issue

Limitations of research and reliability

Some issues regarding the survey are being considered in this research. The answers to the quantitative research are an important factor for success and reliability of this research. People from different experience, organizational practice, backgrounds and position are being considered to be part of the research. Moreover, the answers of the sample could be biased due to organization practice and the experience within the organization. The researcher is acting just an observer avoiding any possibility of influencing or bias respondents‟ answers due to his previous knowledge and experience working within the same industry. Even when the researcher is experienced to the topic in analysis, he will not try to influence respondents to obtained specific results or a specific behaviour from any of them. Finally, the number of questions and its accuracy must be present in the survey in order to reduce any risk of unreliability in this study. The numbers of question will be designed to obtain all the information required within the minimum amount of time. All these barriers or issues will be considered during the survey´s design process mitigating the collection of unreliable data that could lead to wrong or biased results for this research.

Research Limitation & Reliability

Some issues regarding the survey are being considered in this research. The answers to the quantitative research are an important factor for success and reliability of this research. People from different experience, organizational practice, backgrounds and position are being considered to be part of the research. Moreover, the answers of the sample could be biased due to organization practice and the experience within the organization. The researcher is acting just an observer avoiding any possibility of influencing or bias respondents‟ answers due to his previous knowledge and experience working within the same industry. Even when the researcher is experienced to the topic in analysis, he will not try to influence respondents to obtained specific results or a specific behaviour from any of them. Finally, the number of questions and its accuracy must be present in the survey in order to reduce any risk of unreliability in this study. The numbers of question will be designed to obtain all the information required within the minimum amount of time. All these barriers or issues will be considered during the survey´s design process mitigating the collection of unreliable data that could lead to wrong or biased results for this research.

Structure of the Thesis

Chapter 1 gives the introduction about the research document and set the base for literature review while giving the flavor of the document.

Chapter 2 would be a comprehensive chapter comprises on the extensive literature review on the topic and hence discovering the answers of research questions.

Chapter 3 would present the methodological perspectives of this research. The strategies adopted in this research are discussed in greater detail. The issue of developing the research questionnaire, structured interviews and conduct the interviews.

Chapter 4 presents the assessment of depth tool on the basis of tools used for obtaining information from Customers, Pharmaceutical executives, the chapter would present the finding of researchers on the basis of literature review as well.

Chapter 5 presents a brief summary of the research and the main conclusions with respect to the new knowledge derived from this research, the limitations of the research and issues.

Timeline & Execution

Need help with your literature review?

Our qualified researchers are here to help. Click on the button below to find out more:

Literature Review Service

Related Content

In addition to the example literature review above we also have a range of free study materials to help you with your own dissertation: