Saturday, February 16, 2008

Pens Put Brands in Docs' Brains and Profit in Pharma's Pockets

Those pens that pharmaceutical sales reps hand out to physicians are often cited as examples of gifts to physicians that are meant to increase physician loyalty to the drug brand that made the gift.

Defenders of free gifts to physicians bristle at the notion that such gifts could influence the prescribing habits of physicians. Nevertheless, there is a big industry that caters to the needs of gift giving pharma companies as illustrated in this full-page ad that appeared in the February 2008 issue of Pharmaceutical Executive (PE) Magazine:



Obviously, Senator Pen, which produced and paid for this ad, must think
  1. pens can influence physicians and
  2. this ad will return a positive ROI.
The ad effectively ties together "Put(ting) your brand in their hands" and "Put(ting) your brand in their heads." If the ad imagery and tagline aren't enough, the ad copy is even more explicit: "These award-winning designs provide an elegant, yet useful way to keep your brand in their hands, and on their minds."

The graphic image of the doc holding the pen with the message "If you want your brand here. Start by putting it here." (I don't know why there's a period after the first "here;" it should have been an ellipsis ... or a comma. Poor copy editing.) That kind of puts to rest the notion that pens do not influence doctors, wouldn't you think?

The ad clearly conveys the notion that pens can influence physicians, but is it economical to place a full-page ad for pens in a major pharmaceutical trade publication? It all depends if the ad results in sales -- and only one sale would be required to return a pretty good return on investment (ROI) in my opinion.

Let's say it costs $5,000 to run a full-page ad in PE. I calculate that just one pharmaceutical company order of the new, award-winning "NewSpring" pen will more than cover the expense of this ad.

Here's my math:

A pharmaceutical company with 2,000 reps working a brand would order at least 150,000 pens -- about 75 pens per rep. If each pen cost $0.10 to the pharma company, that's a $15,000 order. I am sure the margin on these pens is very high, say 50%? Therefore, just one pharma order could bring in a profit of $7,500 and the ROI for this full-page ad would be at least 150%, which isn't bad -- about the same as the ROI for a decent DTC campaign.

It's much more difficult, however, to estimate the ROI on the pharma company's investment. If the pens were handed out to 50 docs per rep or 100,000 docs, then each doc would have to bring in a mere $0.15 worth of new scripts to cover the cost. Say, however, that only 2% or 2,000 docs that were given pens are subject to gift influence peddling -- the other 98% of docs threw their pens in the waste basket. These easily-influenced docs would have to write $2.00 more scripts for the drug than they normally would to make the pen project break even for the pharma company. That seems like a realistic scenario.

In other words, free pens like this pay off even if only 2% of docs that receive them are influenced to prescribe a tiny bit more of the drug brand emblazoned on the pen.

Now you know why the drug industry is unlikely to eliminate free gifts to docs -- gifts work and easily provide a positive ROI. Why else would any sane capitalist enterprise do it?

8 comments:

  1. I always thought that it was nonsensical that a pen could influence physician prescribing. However, a lot of very good senior docs that i work with refuse to take anything from drug reps, as do I. There's apprently a decent body of evidence to show that this type of marketing does work.

    Interesting, before medical school, I worked as a security guard in a hospital. I often used pens given by drug reps that werelying aroud. Then, when at medical school, I knew all these brands off by heart when I cam across them in hospitals.

    Interesting stuff.

    Dr. Thunder
    www.twoweeksonatrolley.blogspot.com

    ReplyDelete
  2. As an SVP at a large pharma ad agency, I've been researching Gift ROI forever. Most branded junk ends up in the circular file. BUT SOME DO SUCCEED...

    Gifts are meant to be enjoyed by the recipient, and perhaps shared with staff. It should be a constant reminder of you. Gifts that work(believe it or not): massage rollers (high end wooden ones), tastefully branded boxed stress balls and especially the brandable honey tasting gift sets from beeraw.com.

    These gifts are sophisticated and make a statement about you and your relationship to the Physician.

    ReplyDelete
  3. Thanks for that comment and stealth promo! Maybe you'd like to work with me to promote your bee honey gifts to my subscriber base? Call me at 215-504-4164 or email me at sales@pharma-mkting.com

    Email marketing works, especially my sweet opt-in email blasts!!

    ReplyDelete
  4. Can you please post which issue of PhramaExec the ad ran in?

    Thanks

    ReplyDelete
  5. A great post. Oh! Yes!! Pens in the age of the mouse do work the magic. In fact, it is said, that at Dr. Reddys Labs, a huge annual order is given to the best bidder of provider of pens. The branding, delivery, and amounts and packing is decided later on. In fact, pens are great relationship building tools particularly with the junior doctors, GPs, PGs, and interns (if there is any special promotion to them). Power of the pen is mightier than the sword (or scalpel?)! Morepen a Pharma company had come out with great launch strategy for a particular brand based on the pen as a strategic gifting tool. Pens are often (as I have done in the past as a practicing Pharma marketing guy) linked physically with special leave behind literatures and they can work in gaining incremental prescriptions for brands. Pens are good tools for brand marketing rather than concept marketing. Nice post penned by you! Thnks.

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  6. i agree with gift ROI, "Most branded junk ends up in the circular file. BUT SOME DO SUCCEED..." Some really do succeed, and i think this is an incredibly interesting post. Pens are excellent tools, especially for those of us who use them constantly.

    Cheers,
    Billy

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  7. I believe at all that Gift is not everything for pharmaceutical marketing. Relationship with doctors is everything for pharmaceutical business. For continuing relationship - sometimes something exchange happen. At that time we offer gift from the side of pharma company.

    Masum Chowdhury
    BPharm, MBA
    masum_pha@yahoo.com
    01717642874

    ReplyDelete