Amgen\'s Bone-Loss Drug Faces Marketing

¶ … Amgen's bone-loss drug faces marketing hurdles discusses challenges it perceives as unique to biotechnology. The first issue is that of the high price of Amgen amid healthcare reform that is focusing on decreasing prices. The second issue mentioned is the difficulty in communicating the benefits of the drug when the FDA is communicating the side effects. Lastly, the article mentions a tremendous marketing war in the osteoporosis drug market where competitors to Amgen have luanched multi-million dollar advertising campaigns. While these issues may appear unique to biotechnology, many industries face the very same challenges.

Just like any other product, the price for a new drug must cover the incremental expenditures on manufacturing and marketing, not past expenditures on research and development (Robinson, 2006). Instead, prices of drugs are based on what the market will pay. This has important implications for the marketing strategies of drug companies who have in the past emphasized their high cost of research and development, the years in the laboratory and the clinic, the innumerable failures for each successful product, and the imperative to reward investors' high risks with commensurately high returns (Robinson, 2006).

The example of trying to communicate benefits while the FDA is emphasizing health risks seems analogous to having to decide how to respond to negative campaigns of competitors in many industries. Negative campaigns are frequently used by companies with little name recognition or when there is evidence that a product is significantly better than another.

Certainly, large expenditures on advertising campaigns are familiar to many industries beyond biotechnology. Yahoo has just announced that it will be spending $100 million on a new ad campaign and political candidates spent hundreds of millions on advertising in the recent presidentail election.

So, marketing in the biotechnology is not really different from other industries. The terminology and players may be different, the basic fundamental marketing principles are the same. A company has to have value-based pricing, not pricing based on costs. and, companies must respond to negative statements about their products as well as spend huge amounts of money on advertising to win mind share.

Questions:

What are the differences between effective marketing strategies in biotechnology and other industries? Is the pricing strategy for biotechnology products different from other products?