My now defunct dotcom i-Beacon was buried deep in the Rx market research space (and, yes, the pun is deliberate). A new report from Cutting Edge Information suggests that we were onto something. (The report summary/ad piece is here, but if you want the whole thing you need the odd $5,000). An average of $26 million on market research is spent per drug over its life, with over 70% of that spent post-launch. Assuming that you can triple those numbers for a blockbuster of $1 billion, and again assume that most of that is spent in the first two years, a reasonable guestimate is that a new blockbuster has $30-40m spent on market research annually, which is roughly 30% of what is spent on consumer advertising for a similar drug and probably only 10-15% of what’s spent on marketing to doctors. All in all you can understand why the pharma business is so critical for market research companies. We used to estimate that that the whole market research and sales data market totalled $1.2 billion in the US compared to something like $8-12 billion spent on marketing and sales teams (of roughly a $100 billion market).
Despite this enormous invetment in pharma market research, buyers don’t seem to be getting the information they need. G & S Research conducted a market landscape study on the pharma market research business environment earlier this year.
The data is comprised of responses from 165 market research professionals with an average of 10 years experience as healthcare market researchers, representing 59 pharma and biotech companies (including 19 of the top 20 global healthcare manufacturing companies, based on annual revenue).
Basically, the study found that market research suppliers need to up their game if they want to win pharma projects. Specifically:
–Market research buyers want convincing, boardroom-ready results from suppliers; yet only 45% say suppliers are doing a good job providing insightful deliverables.
–While most buyers want their agencies to be accountable for the impact of research results, nearly half report that many projects don’t reach their potential to impact business.
–Research clients indicate they are seeking actionable results that resonate cross-departmentally; yet many say suppliers deliver recommendations that are ‘naive and/ or superficial; [buyers] cannot act on them.’
–Buyers Most buyers prefer industry-experienced agencies that take a custom approach to their project(s). This is especially true for qualitative research.
–PSPs: Preferred supplier programs based primarily on cost savings (representing 60% of these programs) are perceived as less successful than those with other top objectives.
FREE study synopsis and full reprt are available at http://www.gs-research.com.