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Taking on the market leader

Published on 04/05/05 at 10:50am

Launching a new product into a therapeutic area dominated by a 'gold standard' doctors' favourite is a tough task but it can be achieved. The pharma market has reached a stage of maturity where pretty much every new product is now being launched into an environment where there is an older product that is the accepted 'gold standard' and against which, however good the clinical advantages of the new product, it must measure up.

The commonly received wisdom of launching pharmaceutical products holds that it is best to be the first to market in a therapy area, of course. But equally self-evidently, there can only be one first-in-class treatment, and everybody else who follows has to challenge that market leader.

It's not easy, especially in a world where clear and differentiating clinical advantages are becoming much smaller if they exist at all. If your new product is not genuinely a clinical leap forward (and very few are), then what strategies can you use to unseat a market leader which is already firmly established in doctors' minds as the treatment of choice?

The leader's confidence

To answer that question first requires an understanding of what makes a market leader, and what strategies it uses to ensure that it stays in pole position.

Market leaders will have the largest market share, and as such will be the focal point for competitors and the benchmark against which new entrants to the market will be measured. If a new entrant has some genuinely differentiated product benefits, it may be happy to be compared in this way; where there is minimal or no functional advantage, the market leader will be confident of defending its position.

Confidence is a defining trait of market leaders, and their marketing messages reflect this. Whether it's Coca-Cola's The real thing message in the fmcg world, or Lipitor's Why choose anything else? strapline, this self-assurance is infectious in a market place, and is difficult to challenge.

At the same time, the canny market leader will not be resting on its laurels. It will look to expand total demand, whilst at the same time seeking to build its market share through continuous innovation and brand-building, as well as building profitability (and hence available investment in marketing) through increased productivity and reduced costs.

Challenge, follow or avoid?

For the new entrant, the choice is whether to challenge the market leader head-on, imitate it and follow in its wake, or seek ways of avoiding it altogether in its market.

Challenging it is the risky strategy, and can only really work if the new product has a significant functional advantage. The market leader will inevitably turn its big marketing guns on the challenger, and the newcomer will need to be prepared.

The product involved in such a full-frontal attack must match and better all the features of the market leader's product benefit, price, distribution and so on because this strategy involves attacking the market leader's strength. As such, this approach requires both strength and endurance, and is thus resource-intensive.

A lower risk strategy is to follow in the wake of the market leader, living off its success. This is a 'don't rock the boat', 'ride the wave' kind of approach, learning from the leader. This does not mean 'cloning' - simply copying the market leader. It can involve maintaining differentiation in some areas such as price, packaging or service, and even improving on it and growing slowly into the position of challenger.

Although this is a cheaper strategy because the market leader has had all the investment costs involved in developing the market, it is also not a very ambitious strategy, and arguably does not even fit into the category of 'taking on the market leader' at all.

As Tony Blair would say, there is a third way, and that is to avoid the leader within a market altogether, and to build presence to a point where a head-on challenge can be undertaken from an established position within that market.

Few market leaders are so ingrained in every corner of a market that there isn't some niche which can be used as a Trojan Horse to get a foothold in the market. By definition, market leaders are big, which means they have to be generalists, and that can leave them unable to properly service the smaller niche.  

A challenger using a targeted strategy can own that niche by knowing and serving their customers better than the generalist, by adding value to the customer that the market leader, because of its size and position, cannot provide.

As we will see, this approach cannot work in every market, and it does depend on the ability to truly segment the marketplace. That said, there are many ways of slicing it up, whether by customer size, geography, by becoming a specialist in one particular feature, or simply concentrating on service.

Achieving differentiation

How to choose which battle to fight? The answer is different in pharma than in the fmcg world, because such considerations are seldom taken into account at R&D stage.

"As an industry we don't think early enough," says Dr Paul Stuart-Kregor of The MSI Consultancy, which has advised both established market leaders and aspiring challengers.  

"At the start of the R&D process we tend not to ask whether we are going to have a product which is going to be differentiated enough to challenge the market leader, so that we can choose to take on a different market which might be easier to tackle. By the time we get to phase II or III, it's too late to turn back. So we end up with only the choice of how to fight the battles, rather than which battles to fight."

But this is a genuine choice, because the battle can be fought on a number of fronts, and the key is to know where to engage.

Whatever the choice, the weapon has to be the same - differentiation. When science was moving faster and R&D programmes were creating new and much improved treatments, which took quantum leaps over what was already in the market, this would be at product benefit level, but this is no longer the case.

So if you are trying to launch a product which in practical terms is very similar to what already exists, how do you achieve differentiation? The answer to this question is the central plank in taking on the market leader.

"The pharmaceutical industry is about saving lives and improving the quality of those lives," says Dr Stuart-Kregor. "That means that it's far more about emotion than it is about science. It goes beyond the clinical benefits of the product, into what it actually means to the patient."

And that is where a new product can differentiate itself. Even a small functional benefit can be translated into an emotional benefit which will enable a new brand to build a bigger, stronger proposition.

A very good example of finding emotional benefit is in the erectile dysfunction therapy area. The first-in-class, Viagra, quickly established itself as the overwhelming market leader, with the field initially to itself. For healthcare professionals and indeed patients, the market was really only about one product.

It was difficult to see how any newcomer could  compete without a very substantial and credible improvement in clinical performance.

Certainly, the case of Abbott's Uprima, the first challenger to Viagra's mantle, is instructive.

"It was always going to be an uphill struggle for Abbott to compete with Pfizer and, ironically, what should have been Uprima's trump card turned into something of a joker," says Mark Duckham, managing director of Grey Healthcare.

Uprima did offer some genuine patient benefits over Viagra (onset of action after only 20 minutes; could be taken with or immediately after food; could be taken with nitrates, etc) but instead of patients demanding a more patient-friendly medicine they didn't want to be fobbed off with something that wasn't Viagra; as with Coca-Cola they wanted the real thing - the little blue pill.

Life has not been quite so difficult for Cialis and Levitra because they were clearly Viagra me-toos with additional benefits and by the time of their launch both doctors and patients were more educated about some of the finer points of overcoming impotence.

With Cialis, Lilly sensibly chose not to base their challenge strategy on the product benefit. Recognising that the ED market is as imbued with emotion as practically any in the pharmaceutical sector, they chose to turn the product benefit into a lifestyle benefit, and the marketing messages were consistent with this.

They didn't concentrate on the science, or the clinical detail; instead, they focussed on what those things actually meant for the patient. Using this, they have successfully built a brand which is holding its own in the market and directly challenging as strong a market leader as you could imagine.

Building a value proposition

Too often the pharma industry tries to measure the value of a product to customers (clinicians and patients) in pure product benefit terms. Whilst what the product actually does is of course important, it can offer little to the brand value unless it is truly differentiating - as we have seen it rarely is.

So the brand value needs to be more customer focussed - in other words, what value does the product actually add to the patient's needs. But different segments of the market will have different needs, and this fact can be exploited to position a new product clearly in the doctor's mind in a way that the market leader probably cannot do.

The problem here is that GPs tend to be conservative beasts and NHS bureaucracy discourages the uptake of new drugs or medical technology. "Clearly it is unwise to generalise and there are 'innovative prescribers' as well as a marked enthusiasm gap between specialists and GPs," explains Duckham. "The facts speak for themselves: in the developed world only Japanese doctors prescribe fewer new drugs than UK medics - only 16% of UK drugs currently prescribed have been introduced in the last five years."

So to position a new product in the doctor's mind it is necessary to focus on delivering clearly defined benefits to one segment of the market. Because the market leader has to cover all the bases, it cannot hope to defend specific market segments, enabling the newcomer to gain a foothold in the market. If the market has enough potential segments, each with their own needs, then this approach can establish a strong enough position in the market to challenge the market leader head-on.  

But it does require a good knowledge of the market, which should be a given for anyone attempting to break into any market, but too often in pharma is not.

Chinks in the armour

A pharma marketer who has wide experience of taking on the leader in various markets is Martin Crisp, currently divisional manager at Ferring, working in the gastroenterology market. He was closely involved in bringing challengers Zantac and Zoton to market, for GSK and Wyeth respectively, and is currently responsible for the sales and marketing of inflammatory bowel disease (IBD) treatment Pentasa.

Although supporting a head-on offensive approach with Zantac, he agrees that increasingly a more flanking strategy is likely to yield dividends for the challenger in the future.

"The second compound in a class usually has some clinical advantages, which would offer some patient benefits. Good marketing is about focusing on your strengths and communicating them with all means at your disposal.

"For Zoton, the maintenance dose was the crucial issue. Providing clinicians and patients with an appropriate dose and at a competitive price was a win-win for the company, patients and the NHS."

Crisp also advocates the niche approach, preferring to call this strategy ''guerrilla marketing'.

"Nibbling away at chunks of the market where the leader cannot or simply doesn't want to fight is a good way of gaining a foothold. If you can give value to customers by being more focussed, or more flexible, you can achieve leadership within a niche, which might only be a small percentage share of the market, but as a smaller company, that in itself can be a significant revenue.

Common threads

Markets dominated by seemingly unassailable market leaders can and do see new entrants succeeding and challenging for pole position. There is no panacea for achieving this - like so much in our industry, a sound market knowledge  and a good understanding of customer needs  will inform the right choice of strategy.

But there are common threads. In a world where scientific advances are being made in smaller steps, and the difference between products in therapy areas is smaller than ever, giving clinicians a reason to prescribe a new entrant to the market means searching beyond mere product benefit.

Ultimately, the pharma industry is not about science, molecules and drugs - it's about people and it is at this level that the battle will be won. Knowing that, and combining it with sound market knowledge, strong brand values based on the customer needs and aspirations, and relevant marketing messages, it is possible to take on the market leader and win.

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