Strategies to Optimize Pharma Competitive Intelligence for Maximum ROI
Competitive intelligence (CI) is a widely used decision-making tool in the biopharma industry. In order to seek competitive advantage, pharma and biotech companies often employ external agencies or vendors for competitive intelligence support. In this article, we address the reality-based key issues that users need to consider in procuring CI services in order to maximize the return on investment (ROI) of pharma competitive intelligence which in turn affects the value added by the activity. We proxy ROI as the quantity and quality of intelligence provided by the vendor for the dollar spent on the engagement by a pharma company. While this article focuses on maximizing ROI, diagnosing an underperforming competitive intelligence is a prerequisite.
Aren’t they well-known?
One of the key elements in primary intelligence collection is to introduce yourself to the respondents during the conversation. If an agency is famous for being a competitive intelligence provider, then the chances are that no respondents will talk to them – the respondents know what the researcher and the company do. In order to overcome this problem, a large and famous CI vendor will mislead or misrepresent in several ways, which constitutes an unethical practice. Engaging ‘not-so-famous’ competitive intelligence groups is a smart strategy adopted by several pharma companies. One can argue that the effectiveness of this strategy is the reason for an increase in the number of niche CI vendors.
Collectors become defenders
This phenomenon occurs when executives from large CI vendors assume competitive intelligence roles on the client side. Such executives use their vendor-side expertise to devise effective counter-intelligence strategies. For example, they might prevent company executives from speaking with the vendor-side researchers from their past firm or similar other CI firms that they are aware of or be extra-vigilant about the vendor-side researchers in medical conferences and so on.
Consulting firm aspirants
The growth of a CI agency is self-limiting, i.e., it can’t grow in the CI area for a long time due to visibility issues, conflicts of interests, and so on – consequently, CI firms seek to diversify into other areas. Myriads of pharma CI agencies claim to be strategy consultants or consulting firms, or advisories or are trying to grow into them. If there are needs for consulting services, pharma companies should (and they do) engage consulting firms. Pharma companies have deep pockets, and they have a majority of consulting firms on their books.
Procuring non-core services of suppliers
One does not need to purchase CI services from consulting firms or market research agencies either. This practice invariably leads to either higher prices or sub-optimal services. If one is using a consulting firm for procuring CI services, the likelihood is that one is overspending, thus reducing the ROI of the pharma competitive intelligence budget. We provide CI services to some consulting firms, and we know that our deliverables are supplied to end-users at much higher markups. Market research firms are generally not trained to conduct competitive intelligence research- there are significant differences in the methodology employed by competitive intelligence firms and market research firms for conducting primary research. The differences are often incompatible and make co-existence mutually exclusive.
The evolving market of suppliers
There has been a significant increase in the number of CI vendors. The majority of new entrants are due to:
- New CI agency emerging from people who used to work in other large CI vendors
- Entrepreneurial ex-pharma CI executives who establish new CI agencies
- Pharma consulting firms growing down the value curve and adding CI services to their suite of services
The influx of such players has led to a fragmentation of the pharma competitive intelligence market. Agile pharma companies sense the market dynamics and evolution, and adapt quickly, while large inertia-prone companies adhere to their old practices and generally overpay for inferior services. Loyally sticking to old vendors prevents a company from capturing the benefit from new entries – let’s not ignore fundamental economics that it is always the consumers who benefit from the competition in the market. Repeated use of the same vendor also limits the freshness of insights that end-users get.
An agency with ex-pharma employees
Not many people are keen to work on the agency side – the job is not as pleasant as on the client side, a fact usually reflected in the high employee turnover at CI agencies. It is also implied in the fact that several vendor-side executives go on to work on the client side, but relatively few pharma-side executives work on the vendor side. If they do, then a vast majority of such executives have undergone structural changes in their organizations. For them, a vendor-side job is a stopgap opportunity- they leave the vendor-side role as soon as they find another suitable opportunity, which is undoubtedly a smart strategy.
Intelligence collection is the bulk of the work
A significant proportion of the vendor-side work is intelligence collection, which is not to the liking of many people. A way to verify this- ask yourself if would you be comfortable conducting primary research over the phone. A majority of people freeze on the name of cold-calling, let alone collecting meaningful intelligence. One can argue that experienced executives such as strategy consultants, investment bankers, ex-pharma executives, etc., add value to the engagements- however, this is a minor portion of the work in vendor organizations.
Asset-focused executives
Several pharma competitive intelligence agencies claim to be product consulting firms or strategy consulting firms by utilizing a few brand or product-focused executives. From the perspective of established strategy consulting firms, executives with product experience do not become strategy consultants. If this were true, then such asset-focused executives would work for McKinseys and BCGs instead of CI vendors. While valuable but an overly asset-focused approach leads to atomistic insights that are usually not aligned with the franchise or corporate strategy. A savvy competitive intelligence professional will be able to discern the disjoint between product and corporate strategy, and it is worth reading ‘Assessing the quality of competitive intelligence in the pharmaceutical industry.’
Rigid buying process
Traditionally procurement is a process that is relatively slow to change – partly due to the fixed operational logistics and partly due to the risk-aversion. Procurement procedures tend to eliminate innovative and specialist service providers. The processes are based on criteria that inherently are biased towards established and large vendors and usually work on the principle of ‘Nobody gets fired for buying IBM.’
ROI of Pharma Competitive Intelligence: Key Takeaways
We have advised several pharma clients and helped them adopt this ‘reality-based’ strategy in procuring competitive intelligence services. All of them have adhered to this strategy for over five years, which is a testimony to its effectiveness. Being conscious of the factors mentioned above and objectively, including them in the purchase decisions will maximize the ROI of pharma competitive intelligence engagements.
Author: This is a guest post contributed by a pharma competitive intelligence professional with over twenty years of experience. The author has led competitive intelligence functions at various pharma companies and has experience working for several consulting firms and CI vendors.
BiopharmaVantage specializes in providing premium quality competitive intelligence and decision-making services to pharmaceutical and biotechnology companies. If you would like to discuss how we can assist you, then please contact us.