The Pharmaceutical Industry: Specifi city, Challenges, and What You Can Learn from this Topic - Innovation and Marketing in the Pharmaceutical Industry - page 17

summarizes insights obtained from managerial surveys and econometric models,
analyzes demand for pharmaceuticals, and then concludes with recommendations
for setting optimal marketing budgets.
With a similar focus on multiple strategic marketing variables, Wieringa,
Osinga, Ruiz-Conde, Leefl ang, and Stern address the following questions: How
do marketing variables affect the diffusion pattern of newly introduced pharmaceu-
tical innovations? How do dynamics infl uence pharmaceutical marketing effective-
ness? Focusing on aggregate demand for prescription drugs, they present an
overview of papers that investigate the effectiveness of pharmaceutical promotion,
and discuss the signifi cance and relevance of pharmaceutical promotional effects,
distinguishing between effects on product category level demand and effects on
brand level demand. They review the applications and fi ndings of studies that inves-
tigate how marketing efforts affect the diffusion of new pharmaceutical innova-
tions, and provide an overview of studies that examine how dynamics impact the
effectiveness of pharmaceutical promotion.
Liu and Gupta review the history of DTCA, claiming that expenditure on pre-
scription drugs in the USA have been growing explosively. They survey next vari-
ous methodologies designed to assess the effectiveness of such expenditures,
considering patients, physicians, and governments as audience. They conclude with
a summary of fi ndings related to the short- and long-term elasticities of these mar-
keting efforts—suggesting that these are in the lower half of the distribution of
advertising elasticities.
The direct-to-consumer advertising and direct-to-physician advertising are also
the main topics addressed by Vakratsas and Kolsarici . They provide a review of
studies addressing marketing-mix efforts directed towards patients and physicians
and discuss the relative effects of these marketing activities. Based on the evidence
they survey, they conclude that the elasticities of DTCA are smaller than those of
direct-to-physician, rendering the physician as the primary decision-making agent
in the prescription process.
Desiraju and Tran 's chapter deals with spillovers and related externalities in the
industry. A spillover may arise, for example, in the Canadian market since much of
the Canadian population lives relatively close to the US border and has access to the
US television broadcasts. Surveying the extant literature on spillover effects, they
address in particular questions such as: Does DTCA in the USA infl uence sales in
Canada due to spillover from a variation in government regulation? In case it does,
what is the magnitude of return from such spillover?
The section concludes with Singh and Jayanti who adopt an institutional theory
perspective and examine the dominant logic that underlies pharmaceutical market-
ing strategies, contrasting it with the organizing logic of the value chain partners.
Two key questions are discussed in this chapter: What specifi c marketing strategies
do pharmaceutical companies use to engage medical practitioners, and how do these
strategies relate to particular tactics? And, under what conditions, and why, do phar-
maceutical marketing strategies amplify (or diminish) the aversive (approving)
response from its value chain partners? The analysis suggests that the pharmaceuti-
cal value chain reveals dynamics that are consistent with several aspects of