Posted: 25 Jul. 2019 4 min. read

Back to the future: With increased scrutiny over price increases, the fundamentals of organic growth in biopharma are more important than ever

By Cameron McClearn, principal, and Tom Yang, principal, Deloitte Consulting LLP

Price increases. This is arguably the most discussed topic in the biopharmaceutical industry today. In January, biopharmaceutical manufacturers raised list prices on more than 250 products.1 In July, 20 companies increased the list prices for more than 40 prescription drugs by an average of 13 percent.2 But are annual price increases a sustainable mechanism for driving future growth in biopharma?

“Eighty percent of the growth in profits in 2015 among the 20 largest drug companies resulted from price increases, rather than from the addition of new products,” according to Robin Feldman, director of the Institute for Innovation Law at UC Hastings.3 However, certain changes in the payer and policy landscape could limit the utility of (or interest in) this once powerful driver of revenue growth.

It has been more than a year since the White House introduced its Blueprint to lower drug prices. Although the administration recently dropped its efforts to eliminate rebates, increasing price transparency will remain a priority for the administration. With more and more scrutiny and push back on price increases, strategic marketing will likely be more important than ever for driving growth in biopharma. Drug manufacturers might need to return to their core fundamentals and determine more effective ways of identifying and acquiring while increasing patient persistence.

Three strategic marketing pillars biopharma should consider

We have identified three pillars that we believe are core to helping ensure marketing excellence in the biopharma industry.

Pillar #1: Generate unique customer and ecosystem insights: In today’s cost-sensitive environment, biopharma manufacturers should ensure their products are accessible to customers and are priced at a point that helps ensure profitability. If pharmaceutical companies understand the needs and values of their customers, they can be better positioned to help ensure those patients adhere to their treatment. That can lead to better clinical outcomes and higher patient satisfaction. The US Department of Veterans Affairs is one example of how detailed customer insights led to better outcomes. Prior to the formation of the Veterans Experience Office (VEO), the VA faced public scrutiny and a loss in veteran confidence. Returning to the VA’s basic principles, the VEO mapped all veteran interactions through journey maps, and defined the needs and wants of veterans through interviews and ethnographic research. This comprehensive understanding of its customers formed the basis of the VEO’s strategy development, experience modeling, and plan execution. It is through this pillar that the VEO was able to identify and categorize the different personas of the veterans they serve. Developing such deep insight helped the office construct a prioritized set of initiatives that allowed it to make impactful changes for veterans.

Pillar #2: Define the core customer and create a compelling value proposition: Biopharma companies should make strategic choices that are focused on the core customer. These choices should be made by defining stakeholder-specific, differentiated, and defensible value propositions. Luxturna, a gene therapy developed by Spark Therapeutics to treat a mutation associated with retinal dystrophy, was approved by the US Food and Drug Administration (FDA) in December 2017. Spark defined its indication to target an ultra-rare orphan condition, with prevalence estimates of less than 2,500 individuals.4 Luxturna has an annual one-time price tag of $850,000, which is nearly double the price of other gene therapies. The Institute for Clinical and Economic Review (ICER) initially rejected the therapy as not cost-effective and determined an acceptable price tag would be less than half the company’s price.5 Spark stepped back and refined and focused its value-proposition on a subset of the patients who have the condition. The company revisited their data and narrowed the focus to the benefits of Luxturna among 15-year-old patients. As an ultra-rare disease, ICER gave special weighting to contextual factors, including “patient benefits not captured in the QALY (quality-adjusted life year), reduced caregiver burden, significant impact on productivity, and the novel approach to treatment.”6 ICER agreed that Luxturna provided both a net health benefit and intermediate long-term value for money. If Spark hadn’t made strategic choices based on its core customer, the ICER vote would likely have been different.

Pillar #3: Consider new digital tools, but don’t ignore the value of strategic marketing: Pharma company leaders should recognize that new channels and vehicles (e.g., digital engagement and social media) are only enablers. They should not be seen as a substitute for a thoughtful marketing strategy. The launch of Celgene’s psoriasis treatment Otezla is an example of a biopharma company that successfully embraced this pillar. Prior to launching Otezla in 2014, the industry assumed the oral therapy would appeal only to patients who were unable to tolerate, or who had failed on, biologics. Shifting this perception—and capturing a different position in the market—required a focused marketing strategy. Celgene was able to define who to influence, where in the decision process to intervene, and how to convince stakeholders. Celgene avoided the so-called “Waterloo strategy” of taking on all competitors across multiple segments by targeting on an earlier stage of psoriasis. The company focused on core marketing strategies and communicating value to specific customer segments. Otezla has since become a first-option post-topical treatment for psoriasis.

With the 2020 elections on the horizon, efforts to hold down drug prices are likely to gain momentum. In this ever-changing market, biopharmaceutical manufacturers should be prepared for a world without price increases. They should improve their understanding of potential customers, and reinvigorate their organic growth through thoughtful, old-school marketing strategies.

1. Center for Biosimilars,
2. Drugmakers Push Their Prices Higher, Wall Street Journal, July 17, 2019 (
3. Pharma companies fight behind-the-scenes wars over generic drugs ,STAT, June 16 2017, (
4. Blue Cross and Blue Shield of North Carolina Medical Policy Update, February 23, 2018 (


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