{"id":8006,"date":"2005-10-20T12:12:00","date_gmt":"2005-10-20T12:12:00","guid":{"rendered":"http:\/\/www.pharma-mkting.com\/cut-marketing-raise-sales\/"},"modified":"2019-02-21T01:28:17","modified_gmt":"2019-02-21T01:28:17","slug":"cut-marketing-raise-sales","status":"publish","type":"post","link":"http:\/\/ec2-54-175-84-28.compute-1.amazonaws.com\/pharma-mkting.com\/blog\/cut-marketing-raise-sales\/","title":{"rendered":"Cut Marketing, Raise Sales"},"content":{"rendered":"<p>As pharmaceutical companies post their quarterly earnings, I see that some major pharma companies have done better than others at increasing their sales and profits. Take Novartis, for example:  <\/p>\n<blockquote style=\"font-family: arial;\"><p>Novartis, based in Basel, Switzerland, said net profit rose to $1.67 billion, or 71 cents a share, from $1.47 billion, or 62 cents a share, a year earlier. Sales increased 19% to $8.42 billion from $7.06 billion. Sales of prescription drugs rose 9.6% to $5.09 billion. (WSJ: <a href=\"http:\/\/online.wsj.com\/article\/SB112961467672371697.html\">&#8220;Novartis&#8217;s Net Profit Rises 13%, Driven by a 19% Sales Increase&#8221;<\/a>)    <\/p>\n<p>So Novartis had a nice increase in sales. What could have contributed to this? <\/p>\n<p>Usually, marketing would claim credit for an increase in sales. After all, without marketing there would be no sales. It&#8217;s common knowledge that for every dollar spent on marketing (e.g., DTC advertising or eDetailing; see, for example, &#8220;<a style=\"font-family: arial;\" href=\"http:\/\/pharma-mkting.com\/blog\/2005\/06\/edetailing-roi-better-than-dtc.html\">eDetailing ROI Better Than DTC?<\/a>&#8220;), two to four dollars are made in sales. Marketers are careful to suggest a direct correlation and take credit.<\/p>\n<p>Novartis, however, seems to have achieved the impossible: it increased sales while decreasing costs, including cutting back on marketing!    <\/p>\n<blockquote style=\"font-family: arial;\"><p>&#8220;Marketing and sales costs [for Novartis] came down, this is certainly a result of the Vioxx debacle and of Pfizer&#8217;s announcement to cut marketing spending,&#8221; said Karl Heinz Koch, analyst in Zurich at private bank Lombard Odier Darier Hentsch. (WSJ)  <\/p>\n<p>So you might say, in this case, decreasing marketing has led to increased sales. I don&#8217;t know how to calculate ROI in such a situation &#8212; it&#8217;s a little like dividing by zero &#8212; ROI would be infinite! <\/p>\n<p>NOTE: It&#8217;s interesting that Koch mentioned Pfizer, which vowed back in February to cut its sales and marketing staff (see &#8220;<a style=\"font-family: arial;\" href=\"http:\/\/pharma-mkting.com\/blog\/2005\/02\/pfizer-to-slash-30-of-its-sales.html\">Pfizer to Slash 30% of its Sales &#038; Marketing Staff<\/a>&#8220;) and which recently dropped out of the top ten advertisers in the US (see &#8220;<a style=\"font-family: arial;\" href=\"http:\/\/pharma-mkting.com\/blog\/2005\/09\/pfizer-no-longer-top-10-advertiser.html\">Pfizer No Longer Top 10 Advertiser<\/a>&#8220;). This cut in marketing coincided with a net drop in revenue of 52% for Pfizer (WSJ: see <a href=\"http:\/\/online.wsj.com\/article\/SB112964060349171841.html\">&#8220;Pfizer&#8217;s Net Drops 52%&#8221;<\/a>). I am sure marketers will claim that there was a correlation, but you also have to take other factors into consideration, including a <a style=\"font-family: arial;\" href=\"http:\/\/pharma-mkting.com\/blog\/2005\/01\/ed-drug-sales-limp.html\">limp ED drug market<\/a>. <\/p>\n<p>Some Novartis drugs did better than others. Could marketing have been a factor? Zelnorm, which had a 36% increase in sales, and Elidel, which decreased 36%, both seem to have been equally heavily marketed (I have no numbers to support this, only my personal experience). In this case, there seems to be no correlation.<\/p>\n<p>[It should be noted that Elidel is having unique problems affecting it sales. In March 2005 the FDA issued a public health advisory about a potential cancer risk from the topical use of Elidel cream. <a style=\"font-family: arial;\" href=\"http:\/\/www.drgreene.com\/21_1887.html\">According to Dr. Alan Greene (drgreene.com)<\/a>, &#8220;aggressive advertising, both to health care providers and to consumers, has created the false impression that these drugs are safe enough to use without a second thought. Not so. Perhaps the combination of the warmth of the ads and the chill of the FDA warning will create a more balanced impression.&#8221;] <\/p>\n<p>Anyway, the jury is out regarding whether all pharma companies can cut back on marketing and yet improve sales overall. It seems like a contradiction, but Novartis may be succeeding.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>As pharmaceutical companies post their quarterly earnings, I see that some major pharma companies have done better than others at increasing their sales and profits. Take Novartis, for example: Novartis, based in Basel, Switzerland, said net profit rose to $1.67 billion, or 71 cents a share, from $1.47 billion, or 62 cents a share, a [&hellip;]<\/p>\n","protected":false},"author":2,"featured_media":13101,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[12],"tags":[],"topic":[],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v22.0 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Cut Marketing, Raise Sales - Pharma Marketing Network<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"http:\/\/ec2-54-175-84-28.compute-1.amazonaws.com\/pharma-mkting.com\/blog\/cut-marketing-raise-sales\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Cut Marketing, Raise Sales - Pharma Marketing Network\" \/>\n<meta property=\"og:description\" content=\"As pharmaceutical companies post their quarterly earnings, I see that some major pharma companies have done better than others at increasing their sales and profits. 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