Marketing Spending Models - Innovation and Marketing in the Pharmaceutical Industry - page 574

level of knowledge, I see several lines of potentially fruitful future research activities.
This choice is, of course, subjective, and I do not claim to be exhaustive.
Descriptive research on budgeting behavior . The industry facts demonstrate in an
impressive way how marketing-intensive the pharmaceutical business is.
Expenditures are high and cover a broad range of activities. In addition, the business
is truly global and competition is fierce in many markets. Research has focused so
far on describing market response to marketing activities and on normative models
that improve budget setting. It is, however, striking that we know almost nothing
about the real behavior of pharmaceutical managers. The study by Wagner and
Fischer ( 2011 ) is a first step in this direction, but we need more research to under-
stand the drivers and conditions under which marketing budgets are set. Which role
do geographic regions play in this process? How do firms use the rich supply of
brand-level and physician-level data provided by leading commercial vendors for
their budget decisions? What are the key objectives: profits, market share, or sales
growth? How is the budgeting process organized in multinational, multiproduct
firms? These questions may be addressed with different research approaches, among
them survey studies, econometric models, and experimental studies.
Model building . Extant research has produced a variety of models to describe vari-
ous pharmaceutical marketing phenomena. Several interesting questions have not
been addressed and probably require new modeling approaches. For example, the
diabetes care market offers specific features that are different from other pharma-
ceutical markets. Since diabetes is one of the greatest challenges to the healthcare
systems of developed countries in the future, it is important to understand that mar-
ket. Patients require a blood sugar meter and the corresponding test stripes for con-
trolling blood sugar levels. Meters and stripes cannot be substituted across
manufacturers. It is common practice to heavily promote and subsidize the meters
in order to gain and retain patients. In promoting these devices, practice nurses and
pharmacists increasingly take a gatekeeper role. We need new model approaches to
describe this complex, multi-agent market and derive recommendations about
spending decisions.
Another promising avenue for model building is the business for generics. Do the
existing response models appropriately capture the demand and supply processes
after patent expiry? By definition, the generic business model is centered on cost
leadership and discount pricing. How do generic firms compete with each other and
with innovating firms? Are there differences? Which role does the price really play?
Given the strong focus on price, does that mean detailing and other communication
activities are irrelevant? How does that resonate with the observation that the world
largest generic manufacturer Teva spends 18 % of its revenues or US $ 3 billion,
respectively, on marketing (see Sect. 19.1.3 again)?
Effectiveness of new marketing instruments . Empirical results show that DTCA is not
very effective compared with detailing and even produces negative ROIs. An explana-
tion for the high investments in DTCA is their relevance for brand building. We do not
know much about brand building in pharmaceutical markets. What does it mean to be