Biomedical Engineering Reference
In-Depth Information
detailing and other forms of DTP promotion in the future. Indeed, our results in
Table
18.4
panel A indicate a mean current-period detailing elasticity for late stage
pharma products in the USA of 0.101 that is already much lower than the mean
advertising elasticity benchmark of 0.12 for all products reported by Sethuraman
et al. (
2011
). Correspondingly, we determine that the optimal detailing spending to
sales ratio for late stage pharmaceutical products in the USA is only about 3.6 %
compared to the Sethuraman et al. (
2011
) estimate of 4.6 % for the optimal ad spend
to sales ratio across all product categories.
Summary of key takeaways
. The key managerial takeaways from the above analyses
are:
1. As detailing elasticity has drastically diminished compared to personal selling
effectiveness in general, pharma marketing managers are well-advised to aim for
average detailing spending to sales ratios in the region of 6-7 % over pharma
product life cycles.
2. However, average detailing elasticity is time-varying, noticeably higher for early
stage than late stage products, implying that managers have to be more adept at
formulating dynamically optimal detailing strategies involving judicious shifts
from higher to lower detailing emphasis as products age (see, e.g., Fischer et al.
2011
; Raman et al.
2011
).
3. Moreover, average detailing elasticity in Europe over PLCs is higher than in the
USA but drops much more sharply as products age. This implies that companies
operating in both regions should allocate more resources to detailing (as a per-
centage of their sales) over a product's life cycle in Europe than in the USA.
However, considering the differences in detailing elasticity in the early and late
stages between the two regions, the shape of the dynamically optimal detailing
policy over the PLC in Europe will not be the same as that in the USA.
4. As detailing loses its effectiveness, especially for late stage products in the
USA, pharma marketing managers should fi nd a more balanced allocation
between detailing and other forms of DTP advertising, perhaps enabled by new
technologies, more rewarding than in the past.
18.5.2
Conclusion
Despite the apparently “gloomy for traditional detailing” takeaways from our
research, we are far from suggesting that the end of detailing in the pharma industry
is near. Consider that advertising as a marketing variable has thrived despite empiri-
cal generalizations of the mean advertising elasticity falling between 0.1 and 0.2
since the fi rst study by Assmus et al. (
1984
) nearly 30 years ago. In comparison, our
fi nding is that average detailing elasticity is only about 0.178 today (compared to
the all-industry mean personal selling elasticity of 0.304 reported by AMS 2101)
but is still signifi cantly high for early stage products and in Europe. Thus, while we
expect lower albeit more optimal detailing spending (sales force sizes) than the
levels around 2005, detailing remains the most potent marketing instrument for
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