Drug Firms See Poorer Nations as Sales Cure
For the first time in a half-century, sales of prescription drugs are forecast to decline this year in the U.S., historically the industry’s biggest and most profitable market. The Obama administration and Congress’s attempt to pass legislation overhauling the health-care system, including provisions that could lower the cost of medicine, could put drug makers’ U.S. businesses under further pressure.
As a result, developing countries like Venezuela have begun to look more attractive to the industry. Sales of prescription drugs in emerging markets reached $152.7 billion in 2008, up from $67.2 billion in 2003, according to IMS Health, which tracks the industry. IMS forecasts sales will climb to $265 billion by 2013.
It seems that in the prescription drug business, emerging markets are where it’s at. Even in communist/socialist/whatever-it-is-it-doesn’t-matter-because-Hugo-Chavez-is-a-bad-guy-ist Venezuela. If you’re in the pill pushing business, go south.
Our friends at Pfizer understand this, and they’ve unveiled a dynamic new sales strategy to capture the ultimate in emerging markets. They’ve not only gone geographically south, they’re going socio-economically south as well. You could say they’ve hit bottom:
Until recently, drug companies doing business in emerging economies have catered mostly to the wealthy and middle class. Now, Pfizer is turning to what it calls, in internal marketing discussions, the “bottom of the pyramid.” Its program in Venezuela is an exercise in how to reduce prices enough to attract poorer customers while still turning a profit.
“There’s an economy in the barrios,” says Rafael Mendoza, the man Pfizer has put in charge of the strategy in Venezuela, as he gestures toward the satellite dishes and air conditioners that dot Petare [a Caracas slum].
Selling drugs in American ghettos has always been profitable, so why not branch out and go global? There’s a lot of sick people at the bottom of the pyramid. If they’ve got cash to spend on satellite dishes and air conditioners, surely they can cough up some dough for Lipitor or Zoloft, or the Little Purple Pill?
But here’s the beauty of Pfizer’s strategy: even if the poor don’t have the money for their drugs, they’ll buy them anyway. In fact, they can often be conned into spending more than they can afford. How? It turns out that folks on the bottom of the pyramid are highly amenable to persuasion. Pfizer’s man in Caracas explains:
He says patients in Petare will follow orders even if it means spending more. “If their doctor tells them — their doctor from birth, the doctor they have had all their life — ‘Look, this is what is going to cure you, this is what will guarantee your health,’ that’s what the patient buys.”
They’ll buy Pfizer products if their doctors tell them to. So how does Pfizer get the doctors to do that? Easy. Pfizer buys the doctors.
Pfizer also woos doctors by giving them computers and Internet access for use at their offices. In the U.S., the practice of drug maker “giveaways,” even of items as small as pens and coffee cups with logos, has drawn fire for influencing doctors’ prescribing, and the industry has voluntarily done away with most freebies.
In Venezuela and much of the developing world where doctors don’t earn as much, the practice is more common, and it sometimes can benefit patients. At one of the clinics Mr. Rodriguez visited recently, for example, Carlos Serrano beamed about the computer and free Internet access Pfizer has given him. Dr. Serrano, who has practiced medicine in Petare for 30 years, uses the computer and a Pfizer “telemedicine” Web page to help diagnose patients online by communicating in real time with doctors in downtown Caracas.
Pfizer says the computers start out as loans and become permanent gifts once the doctors have shown that they are using them for medical purposes and have signed a waiver stating they understand they’re not intended to influence their prescribing.
If free computers and Internet access aren’t enough, Pfizer will sweeten the deal even more:
In the coming weeks, Pfizer plans to refurbish the crumbling exterior of Dr. Serrano’s office and paint it with the logo of its program in Petare, called “Healthier Community,” which combines “Pfizer blue” and Chávez red.
Viola! The world really is that simple, wherever you are on the pyramid.
What an ingenious strategy. Bribe doctors, exploit the poor, make a tidy profit and give Chavez a kick in the nuts. It just doesn’t get any better than that.
Except that it does. With the profits they make in socialist Venezuela, Pfizer can mount a sophisticated propaganda campaign here in the US, warning Americans how bad socialized medicine is for business. It even has its own built-in talking point: Venezuela’s national health system can’t provide prescription drugs to the poor. The commies have to go shopping in the free market for that. Do we really want to go down that road, America?
It’s a perfect, profitable, self-perpetuating, holistic marvel of synergy. It’s brilliant. That’s why it works, and that’s why those of us at the bottom of the pyramid stay screwed.