How pharmaceutical companies stay competitive

Two basic strategic trends are discernible in the pharmaceutical sector. While companies such as Novartis continue to concentrate on mass markets, companies such as Roche tend to specialise in smaller indications (market niche/segment strategy), especially in the field of oncology (Fibig & Hutt, 2003). In pharmaceutical companies, an average duration of seven years is calculated for the development of a pharmaceutical product. There then remains an active marketing period of a further seven years until patent protection finally expires and generic products enter the market (Gehrig, 1992). Indeed, companies must first invest immense financial resources in development over a period of years before the products can be marketed and break-even is reached (Danielowski, 2003). This represents a high risk for the companies concerned.

Despite their comfortable profit situation, pharmaceutical companies are in a rather difficult situation (Bruch, 2003). According to Ansell, a pharmaceutical company can only survive if it doubles the number of new products every year (Ansell, 2001). Since the

As health insurance companies and the insured are no longer prepared to accept maximum price increases for minimal therapeutic advances, the price leeway for many companies has become smaller, while on the other hand the development costs for new products are constantly increasing. This leads to lower sales and forces companies to reduce costs, e.g. by reducing advertising expenses, in order to improve their margins. However, the possibilities of cost reduction are limited. Consequently, new ways to increase revenues have to be found. This can be done by means of measures to increase the efficiency of marketing (Gehrig, 1998; Gillis, 1992).

Strategies in pharmaceutical marketing
The design of the marketing strategy in the pharmaceutical industry is based on the overriding corporate mission statement, known as the vision. This defines the fundamental philosophy of the pharmaceutical company. The corporate mission statement based on this determines how the company is to be perceived by the public, e.g. as a sustainable, environmentally conscious and socially active company.

The corporate strategy is subordinate to the corporate mission statement. It specifies the operational goals of the company. The marketing strategy - which in turn is subordinate to the corporate strategy - specifies the implementation of these operational goals and determines the operational planning and the resulting budget.

The marketing strategy determines the type and manner of the planned market presence. It primarily specifies which market segments are to be served with which products. Secondarily, the marketing strategy also makes statements regarding the positioning of the various products in the market. In practice, the successful marketing of pharmaceutical products often requires several strategies that are mixed together (Thommen, 2012).

Most pharmaceutical companies specialize primarily in the research and development of drugs. In most cases, these companies develop therapeutic substances, sell or trade drugs, conduct contract research, sell licenses for their active ingredients or generate their revenues through private and public subsidies (Drews, 2003; Flechter, 1989).

Operational implementation of the marketing strategy
The marketing strategy is implemented by means of marketing instruments. These include the product, price, distribution and communication policies relevant to product marketing. Adequate market strategies must now be defined (cf. Fig.), which enable pharmaceutical companies to achieve their market objectives (cf. Bögel, 2003; Kühn & Fuhrer 2017; Thommen, 2012).

The timing of the market entry represents an overriding strategic decision. In addition to the actual sales and marketing strength, the correctly chosen time of the product launch is a decisive criterion. An early and rapid market launch of a new product (or-der of market entry) leads to a significantly higher market share and has a positive influence on sales development (cf. Gehrig, 1992; Gillis, 1992; Thommen, 2012).

A) Product/assortment market strategy - This strategic approach focuses mainly on product-related measures for market penetration. By means of a product policy tailored to the needs of the market participants, the business result can be significantly influenced. A new clientele can be developed by means of innovative products, and the company can differentiate itself from the competition by means of a corresponding product range policy (orientation towards the niche, specialisation or broad range), quality (quality differences: e.g. burning in the case of vaccines) and service.

• Branded product strategy (corporate brands versus product brands): Skilful marketing of products leads to customer identification with the corresponding product (branded article) (Unger, 2003). Another possible strategy is the deliberate focus on non-branded products (an example are generic companies, which have low development expenses).
• Market niche or segment strategy: The company deliberately restricts its business activities to a specific product, segment or geographical location (Fibig & Hutt, 2003). In this area, the company is often the sole supplier.
• Product innovation strategy: By introducing new or improved products, existing or newly created needs can be satisfied. Product innovation is of great importance in the pharmaceutical sector (Von Bohlen, 2003).

B) Price/conditions Market strategy -This strategy approach focuses on the price-related measures of market penetration. By setting the price, the company can position itself on the market either as a discounter or as an exclusive brand. It should be noted that in the pharmaceutical sector, prices and conditions are often set by the state.

• Competitive pricing strategy: Additional market share can be gained by undercutting the prices of competitors. A typical example are generic companies which undercut the prices of products with expired patent protection with imitation products, e.g. Mepha Pharma, Stada, Biogen.

C) Distribution market strategy - This strategic approach focuses mainly on sales-related measures for market penetration. Based on an appropriate design of the distribution, the market can be worked on. A company can differentiate itself from the competition through special sales channels (e.g. Internet pharmacy) (Kuhlmann, 2003), its distribution method [direct or indirect (e.g. Galexis)/own or third-party distribution].

• Geographical strategy: By entering new countries and regions, access to a new customer base is created, this can be done through a cooperation with a distribution partner, e.g. the former company Icos, through a cooperation with Eli Lilly for the distribution of Cialis.
• Service strategy: In the pharmaceutical sector, service marketing could be the key to success. One solution could be to offer complete service systems, e.g. support for medical practices in business matters (practice marketing, practice management, business seminars, etc.) as well as a service offer for the sale of drugs and the integration of diagnostics as an additional service for customer loyalty.
• Distribution channel strategy: By opening up new distribution channels (e.g. the Internet), new customer groups are approached.

D) Diversification strategy - Young pharmaceutical companies are entering a market with strong competition. For this reason, these companies are forced to differentiate themselves significantly from their competitors. This can be done by taking appropriate measures in product design, quality, brand, customer orientation, product range, patent, service, technical lead or distribution. The smaller companies therefore often develop a preparation or process that is intended for a rare application and is therefore not of interest to the large pharmaceutical companies, e.g. Eisai, which discovered a class of novel drugs.

The sales force is of great importance
The sales force is of central importance for successful strategy implementation. Since potential customers are very well addressed by advertisements of life-saving or life-prolonging drugs, the pharmaceutical industry has steadily increased the number of its sales representatives in recent years, while the amount of drugs advertised and the number of physicians in private practice has increased less (Geller, 2003). Saxe and Weitz (Saxe & Weitz, 1982) examined the most important criteria that characterize a successful relationship with the customer and can be used to qualify sales representatives. Personal motivation, ability, personality, and organizational conditions were identified as the most important factors. In practice, special attention must be paid to the factors listed. Very often this requires training of the sales force (Weeks, 1997).

Conclusion
Basically, sales and marketing strength as well as a fast market introduction can be identified as two important success factors. Another component is high market penetration (order of market entry) achieved at an early stage, which has a significant influence on total product sales. This is particularly important since the entire pharmaceutical industry is operating in a tough economic environment due to increasing price and competitive pressure. This development inevitably forces companies to reduce their own costs. In addition, sales must be increased through the creation of new products demanded by consumers, and measures must be taken to increase efficiency and improve branding. The development of a marketing strategy is based on the prevailing market conditions and the given corporate strategy. Also in the pharmaceutical industry there is no universal strategy approach. Nevertheless, there are some factors that must be followed in order to achieve corporate success.