Advertisement

Strategic Marketing Decision Models for the Pharmaceutical Industry

  • Venkatesh Shankar
Part of the International Series in Operations Research & Management Science book series (ISOR, volume 121)

Introduction

1The healthcare industry is one of the largest industries worldwide. Healthcare expenditures constitute about 8–15% of the gross domestic product (GDP) of most developed countries. For example, in the United States of America (U.S.), healthcare expenditures made up about 15.3% of the GDP in 2003. Over the past 45 years, these expenditures have grown 2.7% faster than the U.S. GDP.2

The pharmaceutical industry forms a critical portion of the healthcare industry. The pharmaceutical industry comprises “companies that research, develop, produce, and sell chemical or biological substances for medical or veterinary use, including prescription, generic and OTC drugs; vitamins and nutritional supplements; drug delivery systems and diagnostic substances; and related products, equipment, and services, including distribution and wholesale” (Hoover’s 2006). In 2006, sales of pharmaceutical products in the U.S. were $274 billion. Today, about 10 cents of every health care dollar spent...

Keywords

Gross Domestic Product Market Entry Product Portfolio Therapeutic Category Repeat Purchase 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

References

  1. Agarwal, S., S. Desai, M.H. Holcomb, A. Oberoi. 2001. Unlocking the Value in Big Pharma. McKinsey Quarterly 2 65–73.Google Scholar
  2. Berndt, E.R. 2006. The United States’ Experience with Direct-to-Consumer Advertising of Prescription Drugs: What have we Learned? Chapter 9, in Sloan, F.A., C.-R. Hsieh, Promoting and Coping with Pharmaceutical Innovation: An International Perspective. Cambridge University Press, Cambridge MA.Google Scholar
  3. Caciotti, J., B. Shew. 2006. Pharma’s Next Top Model. Pharmaceutical Executive 26(3) 82–86.Google Scholar
  4. Chintagunta, P.K., R. Desiraju. 2005. Strategic Pricing and Detailing Behavior in International Markets. Marketing Science 24(1) 67–80.CrossRefGoogle Scholar
  5. Danzon P., S. Nicholson, N.S. Pereira. 2005. Productivity in Pharmaceutical-Biotechnology R&D: the Role of Experience and Alliances. Journal of Health Economics 24 317–339.CrossRefGoogle Scholar
  6. Dekimpe, M.G., D.M. Hanssens. 1999. Sustained Spending and Persistent Response: A New Look at Long-Term Marketing Profitability. Journal of Marketing Research 36(4) 397–412.CrossRefGoogle Scholar
  7. DiMasi, J.A., R.W. Hansen, H.G. Grabowski. 2003. The Price of Innovation: New Estimates of Drug Development Costs.Journal of Health Economics 151–185.Google Scholar
  8. Ding, M., J. Eliashberg. 2002. Structuring the New Product Development Pipeline. Management Science 48(3) 343–63.CrossRefGoogle Scholar
  9. Ding, M., J. Eliashberg. 2008. A Dynamic Competitive Forecasting Model Incorporating Dyadic Decision-Making. Management Science 54(4) 820–834.Google Scholar
  10. Fischer, M., V. Shankar, M. Clement. 2005. Can a Late Mover Use International Market Entry Strategy to Challenge the Pioneer? MSI Report No. 05-004, 25–48. Marketing Science Institute, Cambridge: MA.Google Scholar
  11. Gatignon, H., E. Anderson, K. Helsen. 1989. Competitive Reactions to Market Entry: Explaining Interfirm Differences. Journal of Marketing Research 26(1) 44–55.CrossRefGoogle Scholar
  12. Gatignon, H., B. Weitz, P. Bansal. 1990. Brand Introduction Strategies and Competitive Environments. Journal of Marketing Research 27(4) 390–401.CrossRefGoogle Scholar
  13. Grabowski, H., J. Vernon. 1990. A New Look at the Returns and Risks to Pharmaceutical R&D. Management Science 36(7) 804–821.CrossRefGoogle Scholar
  14. Grabowski, H., J. Vernon, J.A. Dimasi. 2002. Returns on Research and Development for 1990s New Drug Introductions. Pharmacoeconomics 20(3) 11–29.CrossRefGoogle Scholar
  15. Grewal, R., M. Ding, J. Liechty. 2006. Evaluating New Product Portfolio Strategies. Working Paper. Penn State University, PA.Google Scholar
  16. Gönül, F.F., K. Srinivasan. 2001. Promotion of Prescription Drugs and Its Impact on Physicians' Choice Behavior. Journal of Marketing 65(3) 79–90.CrossRefGoogle Scholar
  17. Hahn, M., S. Park, L. Krishnamurthi, A. Zoltners. 1994. Analysis Of New Product Diffusion Using A Four Segment Trial-Repeat Model. Marketing Science 13(3) 224–247.CrossRefGoogle Scholar
  18. Hoover’s .2006. Hoover’s Index.Google Scholar
  19. IMS Health 2006. IMS Retail Drug Monitor. December.Google Scholar
  20. Kalaignanam, Kartik, V. Shankar, R. Varadarajan. 2007. To End or Extend: An Empirical Analysis of Determinants of New Product Development Alliance Terminations. Working Paper. Texas A&M University, TX.Google Scholar
  21. Lee, J. 2003. Innovation and Strategic Divergence: An Empirical Study of the U.S. Pharmaceutical Industry from 1920 to 1960. Management Science 49(2) 143–159.Google Scholar
  22. Lilien, G.L., A.G. Rao, S. Kalish. 1981. Bayesian Estimation And Control Of Detailing Effort In A Repeat Purchase Diffusion Environment. Management Science 27(5) 493–506.CrossRefGoogle Scholar
  23. Manchanda, P., P.K. Chintagunta. 2004. Responsiveness of Physician Prescription Behavior to Sales force Effort: An Individual Level Analysis. Marketing Letters 15(2–3) 129–145.CrossRefGoogle Scholar
  24. Manchanda, P., P.E. Rossi, P.K. Chintagunta. 2004. Response Modeling with Nonrandom Marketing-Mix Variables. Journal of Marketing Research 41(4) 467–478.Google Scholar
  25. Manchanda, P., P.E. Rossi, P.K. Chintagunta. 2004. Response Modeling with Nonrandom Marketing-Mix Variables. Journal Of Marketing Research 41(4) 467–478.CrossRefGoogle Scholar
  26. Manchanda, P., E. Honka. 2005. The Effects and Role of Direct-to-Physician Marketing in the Pharmaceutical Industry: An Integrative Review. Yale Journal of Health Policy, Law and Ethics 2 785–822.Google Scholar
  27. Mantrala, M.K., P. Sinha, A. Zoltners. 1994. Structuring A Multiproduct Sales Quota-Bonus Plan for A Heterogeneous Sales Force: A Practical Model-Based Approach. Marketing Science 13(2) 121–44.CrossRefGoogle Scholar
  28. Mizik, N., R. Jacobson. 2004. Are Physicians 'Easy Marks'?: Quantifying the Effects of Detailing and Sampling on New Prescriptions. Management Science 50(12) 1704–1715.CrossRefGoogle Scholar
  29. Montgomery, D.B., A.J. Silk 1972. Estimating Dynamic Effects of Market Communications Expenditures. Management Science 18(10) B485–B501.CrossRefGoogle Scholar
  30. Narayanan, S., P. Manchanda, P.K. Chintagunta. 2005. Temporal Differences in the Role of Marketing Communication in New Product Categories. Journal of Marketing Research 42(3) 278–290.CrossRefGoogle Scholar
  31. Narayanan, S., R. Desiraju, P.K. Chintagunta. 2004. Return on Investment Implications for Pharmaceutical Promotional Expenditures: The Role of Marketing-Mix Interactions. Journal of Marketing 68(4) 90–105.CrossRefGoogle Scholar
  32. Neslin, S.A. 2001. ROI Analysis of Pharmaceutical Promotion (RAPP): An Independent Study. Association of Medical Publications, (accessed October 26, 2005), [available at http://www.rxpromoroi.org/rappl/]
  33. PhRMA .2007. Pharmaceutical Industry Profile Pharmaceutical Research and Manufacturers of America, http://www.phrma.org/files/Profile%202007.pdf.
  34. Rangaswamy, A., L. Krishnamurthi. 1991. Response Function Estimation Using the Equity Estimator. Journal of Marketing Research 28(1) 72–83.CrossRefGoogle Scholar
  35. Rangaswamy, A., P. Sinha, A. Zoltners. 1990. An Integration Model-Based Approach for Sales Force Structuring. Marketing Science 9(4) 279–98.CrossRefGoogle Scholar
  36. Rao, A.G., M. Yamada. 1988. Forecasting With A Repeat Purchase Diffusion Model. Management Science 34(6) 734–752.CrossRefGoogle Scholar
  37. Shankar, V. 1997. Pioneers’ Marketing Mix Reactions to Entry in Different Competitive Games Structures: Theoretical Analysis and Empirical Illustration. Marketing Science 16(4) 271–293.CrossRefGoogle Scholar
  38. Shankar, V. 1999. New Product Introduction and Incumbent Response Strategies: Their Interrelationship and the Role of Multimarket Contact. Journal of Marketing Research 36(3) 327–344.CrossRefGoogle Scholar
  39. Shankar, V. 2008. The Role of Product Life Cycle and Market Dominance in Marketing Expenditures of Products. Working Paper. Texas A&M University, TX.Google Scholar
  40. Shankar, V., G.S. Carpenter, L. Krishnamurthi. 1998. Late Mover Advantage: How Innovative Late Entrants Outsell Pioneers. Journal of Marketing Research 35(1) 54–70.CrossRefGoogle Scholar
  41. Shankar, V., G.S. Carpenter, L. Krishnamurthi 1999. The Advantages of Entry in the Growth Stage of the Product Life Cycle: An Empirical Analysis. Journal of Marketing Research 36(2) 269–276.CrossRefGoogle Scholar
  42. Singh, A., P. Henske 2003. Has the Pharmaceutical Blockbuster Model Gone Bust? Bain & Company Report.Google Scholar
  43. Sorescu, A.B., R.K. Chandy, J.C. Prabhu. 2003. Sources and Financial Consequences of Radical Innovation: Insights from Pharmaceuticals. Journal of Marketing, 67(4) 82–102.CrossRefGoogle Scholar
  44. Trombetta, B. 2007. Industry Audit. Pharmaceutical Executive, September.Google Scholar
  45. Wierenga, B., G.H. van Bruggen, R. Staelin. 1999. The Success of Marketing Management Support Systems. Marketing Science 18(3) 196–207.CrossRefGoogle Scholar
  46. Wosinska, M. 2005. Direct-to-Consumer Advertising and Drug Therapy Compliance. Journal of Marketing Research 42(3) 323–332.CrossRefGoogle Scholar

Copyright information

© Springer Science+Business Media, LLC 2008

Authors and Affiliations

  1. 1.Mays Business SchoolTexas A&M University, College StationUSA

Personalised recommendations