J O I N U S I N B U I L D I N G A H E A L T H I E R W O R L DJ O I N U S I N B U I L D I N G A H E A L T H I E R W O R L D

Pharmaceutical Marketing at Merck

Marketing at Merck

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

Role of Marketing

• Recommend development

• Define product profile needs

• Define comparators

• Define Outcomes Research needs

• Develop market

• Develop strategy

• Input on product labeling

• Recommend filing strategy

• Define launch plan

• Develop positioning and branding

• Finalize strategy

• Finalize pricing

• Finalize promotion and branding

• Implement launch campaign

• Finalize field sales plans

• Monitor performance

• Adjust strategy and tactics

• Sequence promotion

• Manage product life cycle

• Provide background on market and product potential

STAGES OF PRODUCT DEVELOPMENT

PostlaunchMarketing

Product Launch

Regulatory Approval

Clinical Studies

Basic Research

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

MarketResearchMarket

Research

MarketingCommunications

MarketingCommunications

CustomerMarketingCustomerMarketing Pricing

AnalysisPricing

Analysis

BusinessDevelopment

BusinessDevelopment

ProfessionalSales

ProfessionalSales

Brand Management is the HUB of pharmaceutical marketing

BrandManagement

BrandManagement

Medical Medical ServicesServices

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

BUT brings concerns about:Credibility/AccuracyPrivacy ProtectionRelevance

The Web Offers:SpeedConvenienceRobust ResourcesAnonymity

The changing The changing ee-Health -Health Landscape:Landscape:

In 1999 there were 750 health-information web sites

Majority based on “advertising revenue” model

Today there are ~ 50 such properties 400 filed for

bankruptcy 100 were acquired and

then went out of business

200 closed or disappeared with no explanation

Studies estimate between 73M-100M US Adults have gone online to look for health information

73M 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, 3rd party sites, or from banners throughout the web

Originated as “Brochureware”

Evolving towards greater robustness, interactivity, customization and permission-based marketing approach

Primarily Consumer Focused Developing an educational/ less advertising oriented

approach to healthcare professionals

Some Examples of Websites

MerckMedicus is a health-information portal designed to support the medical-education needs of physicians

MerckSource is a health-information resource for patients

Both sites offer objective, credible, evidenced-based resources to support the doctor-patient dialog

They deliver online on Merck’s commitment to support the medical-education needs of customers

“Merck Manuals” of the 21st Century

What else has Merck Done? Create Online Medical Education Resources for physicians and patients

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.

Corporate Info

Customer Focus

Fully Integrated Information & Services

Corporate, Product Focus

Discrete Sets of Information

Where are we headed in the future? Towards more integrated offerings

Product Info

Limited Interactivity

Customization

Personalization High TrustHigh Value

Relationship

Brochureware

Enriched Product and Medical

Education sites

PULLPUSH