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Marketing Combination Products

As the worlds of devices and drugs collide, manufacturers must prepare for a new era of medical marketing.

ADVERTISING, DISTRIBUTION, & SALES

Marketing efforts take vastly different shapes in the pharmaceutical and medical device industries. In pharmaceutical marketing, product brands reign supreme, as demonstrated by household names such as Tylenol, Ritalin, and Viagra. The person on the street knows these brand names but probably could not identify their respective manufacturers. In contrast, the name of a device company is often the lead brand in device marketing, as relatively short product life cycles and physicians' desire for new technologies drive the constant introduction of new devices and refinements.

This key difference is of increasing importance as drugs and devices join together in this new era of combination products, a burgeoning sector projected to grow to an $11.5 billion market by 2010.1 This article will look at how drug marketing and device marketing differ and how medtech companies can overcome such differences to successfully market combination products.

Old Differences, New Era

Historically, drug and device marketing differ because they have each been shaped by distinct influences and respond to their own market requirements. From a broad perspective, drugs have much wider market utility than devices—it's simpler to prescribe a pill than to perform a procedure—and there are no reimbursement issues associated with pharmaceuticals. Additionally, drugs are more systemic in nature, while devices are generally local in mechanism of action.

Differences such as these have resulted in larger markets—and larger returns—for drugs versus devices. For example, a cholesterol-lowering drug such as Lipitor (atorvastatin) may be suitable for a much larger population than would an angioplasty device designed to clear blood vessels of plaque. Angioplasty might be contraindicated in a subset of that Lipitor population due to vessel size or complexity, comorbidities, or other factors specific to the patient.

But the pharmaceutical market is changing. The research and development burden for drugs is increasing, and conservative estimates indicate that currently an average of $800 million and 10-plus years of development are expended per drug.2 In addition, fewer blockbuster drugs are emerging, competition from generic companies is increasing, and the market is continuing to shift toward personalized medicine. Consequently, pharmaceutical makers are looking outside of traditional drug-delivery systems. They are exploring how they might partner with other medical companies to create new, more-targeted ways to deliver therapeutics. In a recent survey of pharmaceutical executives by consulting firm Capgemini (New York City), 28% of respondents said combination products are becoming increasingly important for maintaining the optimal lifespan of a product.

Likewise, device manufacturers are looking for ways to add value to their products by combining with pharmaceuticals, as evidenced by recent entries into the combination product market by Becton Dickinson (Franklin Lakes, NJ), Boston Scientific Corp. (Natick, MA), Cordis Corp. (Miami Lakes, FL), and Medtronic Sofamor Danek (Memphis, TN). Devices have traditionally developed incrementally, being refined or reengineered according to suggestions by the medical practitioners who use them. Adding a drug's mechanism of action to a device allows manufacturers to offer their markets breakthrough technologies—something truly new (see Table I).

Product
Company
Year
Transdermal patch for attention deficit
     hyperactive disorder
Noven Shire US Inc.
2006
Transdermal patch for depression Somerset Pharmaceuticals Inc.
2006
Inhaled insulin product for diabetes Pfizer Inc.
2006
Surgical mesh with antibiotic coating American Medical Systems
2004
Paclitaxel-eluting coronary stent system Boston Scientific Corp.
2004
Sirolimus-eluting coronary stent Cordis Corp., a Johnson &
     Johnson company
2003
Glucose monitor and insulin pump Medtronic MiniMed Inc. and
     Becton Dickinson
2003
Intranasal influenza virus vaccine MedImmune Vaccines Inc.
2003
Lumbar-tapered fusion device with
     genetically engineered human
     protein
Medtronic Sofamor Danek
2002
Table I. Recent examples of combination product approvals. Source: FDA.

FDA defines a combination product as "a product comprised of any combination of a drug and device; a biological product and a device; a drug and a biological product; or a drug, device, and a biological product." Products can range from the simple, such as a syringe prefilled with a drug or biologic, to the more complex, such as a drug-coated stent. Other categories include antimicrobial catheters, biologic wound-care products, bone-graft substitutes and bone cements, and products for conducting photodynamic therapy.

Perhaps the most visible example to date is the drug-eluting stent, in which tiny wire-mesh tubes are coated with pharmaceutical agents known to inhibit intimal vessel growth. The stent props open coronary arteries for better blood flow; the drug prevents the arteries from reclogging and results in fewer repeat procedures. That market, currently shared by Cordis, a Johnson & Johnson company, and Boston Scientific, has an estimated worldwide value of $5.5 billion and is growing rapidly.3

Thus the medtech world has entered the era of combination products. This convergence poses special challenges that promise to disrupt previous practices in many areas, including intellectual property relationships, management responsibility, regulatory review, product ownership, and physician referral patterns. The disruption will also extend to the arena of product marketing. Understanding key differences between current drug and device marketing practices will enable manufacturers to better communicate the combined benefit when a drug and device meet.

Distinctly Different

Over the years, several key factors have caused drug and device marketing to take different paths. First, device product life cycles tend to be much shorter than drug life cycles—generally two to three years for a device versus anywhere from eight years to several decades for a typical drug. In advanced medical technology sectors such as interventional subspecialties, the expected life cycle of a balloon catheter or stent may be even less, perhaps only 18 months. This is due in part to the fact that with 510(k) clearance, devices can be brought to market much faster than pharmaceuticals. This allows device competitors to launch parity technologies or technology improvements that effectively end the patent exclusivity of a device, much like a generic ends the patent exclusivity of a drug.

In the device world, products may come and go, but the name behind them often remains the same. So in device marketing, the company brand is what the customer is repeatedly exposed to over time. It can provide a much greater promise than features and benefits, price discounts, or the latest and greatest technological advance. Customer support and satisfaction can be just as important.

Secondly, depending on the likelihood of potential side effects, a new drug may require an alteration in how a patient is monitored, but it does not require physicians to change their essential practice of prescribing drugs to patients. On the other hand, device marketing often asks healthcare professionals to change their practice pattern. Device adoption might involve a change in procedural revenue for a hospital (more or less, depending on reimbursement or lack thereof), more technique training for physicians, or patients being referred to different specialists to perform adjunct diagnostic or treatment procedures.

The device marketer has to effectively convince customers to accept short-term pain in exchange for the long-term gain of improved patient outcomes, procedural efficiencies, or macroeconomic benefits. Customers need to trust whoever is asking them to undergo such changes. The required trust extends beyond the product; customers must also trust the company behind the product.

Finally, marketing budgets for devices tend to be smaller—often much smaller—than pharmaceutical marketing budgets. Yet device companies are still challenged to develop new markets, reach multiple audiences, and overcome barriers to trialing the product right out of the starting gate. It's more complicated than getting a doctor to write prescriptions or leaving free samples, yet device companies have fewer resources at their disposal to achieve these goals. Keeping these differences in mind, there are marketing approaches medtech companies can take to build strong combination product brands.

Managing Options

Thus far, the typical model for developing a combination product has been one in which either the drug or device company takes the lead and licenses technology from the other, ultimately launching and marketing the product by itself or farming it out to distributors. Whether the drug or device company is responsible for marketing, however, certain principles apply.

Brand the Relationship. As the drug and device worlds merge, product parity and shorter product life cycles will make branding and customer relationships of utmost importance. Competing products can emerge much more quickly than they did in the pharmaceutical world. Therefore, marketers will need to sell their company's brand, not just product features. They'll need to focus more attention on maintaining relationships with the market over the long term, not just leading up to a product launch. One way for marketers to do this is to brand the sales call by ensuring all sales tools carry company branding. By doing this, sales reps will be closely identified with the company's service and support, not just with a key product.

Such an approach is most relevant when the device's technology is advanced and requires special skills on behalf of a physician-operator. When the combination product involves a simple device designed for consumer use, such as the FluMist intranasal influenza virus vaccine by MedImmune Vaccines Inc. (Mountain View, CA), leading with the product brand as in the traditional pharma model may still be appropriate.

Tell All Sides of the Story. The physician using a combination product can be in the dual role of both prescribing and delivering a medication through use of a device. To ensure a strong launch, both the efficacy of the drug as well as the reproducible performance of the device should be promoted. When Boston Scientific launched its paclitaxel-eluting coronary stent system, interventionalists wanted assurance that the delivered paclitaxel dose was safe and effective and that the stent delivery system performed reliably. Therefore, its marketing agency devised key messages around efficacy, safety, and performance. As a result, the Taxus Express2 stent had a strong launch, gaining 70% of the U.S. market share within 60 days.

Another example in which marketing both aspects of a combination product was required is the Calaxo osteoconductive interference screw from Smith & Nephew Endoscopy (Andover, MA), a device used to repair the anterior cruciate ligament. Marketing messages spoke to both screw design and the biological properties of its construction material, polylactide carbonate (PLC). In terms of design, arthroscopic surgeons look for certain mechanical properties in an interference screw, such as tapering and wall thickness. As for construction material, PLC contains calcium carbonate, allowing Calaxo to act as a source of calcium for the formation of new bone, resulting in the screw's complete resorption and ossification within 12 months.

Close the Sales-Marketing Gap. A key question for partner companies in a combination product relationship is how to bridge the gap between sales and marketing. Whether direct or through a distributor, the sales force will need to learn a new way to sell. Sales reps will need to demonstrate both performance and drug or biologic efficacy, not just one or the other. Reps frequently will be targeting multiple call points in the hospital, including clinicians, administrators, and purchasing departments, rather than selling directly to a prescribing physician. Brand training sessions, branding field guides on CD, and audience-specific talk tracks can help sales reps work outside of their comfort zones.

As to which company's sales force takes the lead, the old adage of "strength goes to strength" should apply. Partner companies should determine which company has stronger sales ties to the intended audiences, as well as which company has greater brand equity and credibility in the indication being targeted.

Merge Best Practices. As implied above, drug and device marketers each bring strengths to the table. Drug manufacturers initiated the concept of direct-to-consumer marketing and have the know-how and infrastructure already in place. Device companies are skilled at setting up training and proctoring programs to get specialists comfortable with new techniques so they will trial their instruments. Both practices help companies overcome physician resistance to change by increasing patient demand and breaking down usage barriers.

Although these varied strengths complement one another nicely, they also raise another potentially thorny issue in regard to who pays for which portions of a marketing budget. The answer can vary widely depending on the terms of a licensing agreement, including whether one company is paying milestone disbursements and downstream royalties to the other. It also depends on which company plans on taking the lead in marketing the product, which sales force has closer ties to the intended audience, and the amount of risk each company is willing to assume. However, the opportunity to combine efforts to properly fund a marketing budget should not be overlooked.

Validate, Validate, Validate. Beyond the initial challenge of product adoption, combination products ask physicians to step outside of their comfort zones by combining therapies once considered separate. To assuage practitioner concerns, companies must continually validate the product's efficacy and performance. Symposia led by thought leaders, user conferences in which practitioners can exchange anecdotal evidence, case studies, and regular updates on clinical studies will help drive adoption through the ranks of medical practitioners, from the early adopters to the fast followers to the conservatives. These tactics help build a brand and lock in customer loyalty by answering questions before they're asked.

Budget for the Future. In the device world, companies often budget for launch and important initial trade shows, but then fail to periodically invest in continually sustaining the brand. Because of continued dual efficacy-performance expectations, combination products will need to go beyond the typical launch model of ads, brochures, and direct mail to support downstream marketing. E-marketing can help, including product-specific micro Web sites targeted to both physicians and patients, as can continuing medical education program registration gateways and virtual product demonstrations on CD. In addition, trade show follow-up programs can make the most of in-booth lead generation. An effective marketing budget needs to allow for such additional steps.

Getting Started

There are many factors and many possible approaches to consider in marketing a combination product. In general, combination products call for a new era of combination marketing, which requires a higher degree of cooperation and collaboration than companies have entered into in the past. More than comarketing, combination marketing succeeds when companies merge the best of their respective worlds, deploying best practices that already exist in both the drug and device worlds to deliver a combined message of efficacy and performance.

With the right resources in place and recognition that marketing in the combination product era calls for new approaches, companies should be well poised to reach more customers, sell more products, and, ultimately, benefit more patients with truly innovative healthcare technologies.


References

1. Lynn Gray, B-205 Drug-Device Combinations, (Wellesley, MA: BCC Research, 2005).
2. Mark B McClellan, "Speech before Biotechnology Industry Organization," [Washington, DC: June 23, 2003], available from Internet: www.fda.gov/oc/speeches/2003/biotechnology0623.html.
3. "Medtronic Wins European Permit to Sell New Stent," Reuters, August 1, 2005.

Rob Kinslow is senior director for quality assurance at Seidler Bernstein (Cambridge, MA), a marketing communications firm focused on healthcare and life sciences.
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