Fw: Less Return in Marketing of Medicines, a Study Says I think this needs posted

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Subject: Less Return in Marketing of Medicines, a Study Says I think this needs posted

Less Return in Marketing of Medicines, a Study Says

The largest pharmaceutical companies have increased their promotional spending so much in the last four years that each dollar spent on marketing no longer brings in the profits it once did, according to a new report by Datamonitor, a market analysis firm.In 2001, the top drug companies generated $17 in sales from each dollar spent on marketing, down from $22.20 for each $1 spent in 1998, the report said.Attracted by the lack of drug price controls and of marketing limitations in the United States, the pharmaceutical companies spend most of their promotional dollars in American markets. They spend 12 times as much to promote their prescription products in the United States than in Europe's largest medicine market, Germany, Datamonitor said.But to continue to finance the large increases in promotional expenses, some companies will be forced to decrease spending in areas like research aimed at finding new drugs, the report said.Promotional spending in the United States by the 14 largest companies increased at an average annual rate of 32.4 percent from 1998 to 2001. Last year, those companies spent $9 billion marketing to consumers and primary-care doctors, the analysts said. By comparison, the industry's annual increases in research and development in those years ranged from 8.2 percent in 1999 to 16.6 percent in 2001, according to the Pharmaceutical Research and Manufacturers of America, the industry's Washington-based trade group.Taking money from research and development would hurt the drug companies, which are already suffering from a lack of new products, the analysts said.Other drug companies may be forced to merge with competitors to continue their high rate of promotional spending, the consultants said. But mergers may further reduce the effectiveness of the companies' marketing, Datamonitor said.The consultants found that the two largest drug companies — Pfizer and GlaxoKline, both formed through mergers — get lower returns from their marketing dollars than some smaller companies like Eli Lilly and Wyeth. The largest companies may be less effective at their marketing, the report said, because they have a broader range of products to promote.nn Caprino, a spokeswoman for Pfizer, said that the analysis appeared "overly simplistic" and that Pfizer considered its promotional spending a "valuable investment.""We take our responsibility of educating physicians and patients seriously," she said.At the same time, Ms. Caprino said, Pfizer is committed to research and development. "It's not a question of robbing to pay ," she said. Anne Rhyne, a spokeswoman for GlaxoKline, said she could not comment in detail without seeing the report. The company, she said, thinks its promotional spending "is an effective method of sharing information and encouraging patients to talk to their doctors."Datamonitor recommended that the drug companies reduce their promotional spending or find ways to make it more effective. But drug executives told the consultants that they planned to continue their rapid increases in promotional spending, saying they must keep up with competitors. "We are like a school of fish and no one is brave enough to go the other way," a pharmaceutical executive told the analysts as they researched their report, which was published last month.In European countries, promotional spending in the last four years has increased much more slowly or declined. In France and Britain, marketing spending fell at an annual rate of around 4 percent from 1998 to 2001. Both countries have laws that work to limit drug marketing and prices.Because of such limits, European drug companies are expanding their business in the United States. For example, the Swiss company Novarits increased its marketing spending in the United States at an average annual rate of 57 percent from 1998 to 2001, the report said.Last week, investigators from the General Accounting Office said some drug companies had repeatedly included misleading information in their advertisements despite warnings from regulators. Datamonitor consults with pharmaceutical companies as well as companies in other industries. The firm analyzed marketing spending by the 14 largest drug companies. It included only expenditures aimed at patients or primary-care doctors. gigi* http://www.nytimes.com/2002/12/12/business/12DRUG.html