Eli Lilly Japan KK is a top 20 pharmaceutical company headquartered in Kobe, Japan, with revenues of more than $2 billion. Its core therapeutic areas include neuroscience, bone/osteoporosis, diabetes and oncology. In the Japanese market, Lilly Japan has ranked first or second in sales growth for the last three years.
Dimitri Livadas, Lilly Japan’s Director for Channel Innovation, joined the company five years ago from the consumer electronics industry. His task: To establish an e-channel strategy and capabilities. McKinsey’s Brian Salsberg, a principal in the Tokyo office, recently asked Livadas a few questions about the past and prospects for e-detailing in Japan.
Salsberg: How long has Eli Lilly Japan been actively engaged in e-detailing?
Livadas: Our journey started in 2008, and was driven by the recognition that Lilly Japan’s online activities were at a competitive disadvantage. The channel accounted for less than 3 percent of customer engagements; there was no clear vision; and funding was fragmented, reflecting a general lack of focus.
Research confirmed that physician use of the Internet was growing steadily, while impacting prescription behavior. What we did not clearly understand, however, was where and how physicians wished to engage online. The first 18 months were filled with learning through trial-and-error, evaluating several solutions and business models. As a result, we changed from a “build” to a “buy” strategy in the middle of 2010, becoming the first pharmaceutical company (pharmaco) in Japan to establish a strategic alliance with m3.com, the dominant third-party healthcare portal in Japan.
Salsberg: How advanced is e-detailing in Japan, compared to other developed pharmaceutical markets such as the US and Europe?
Livadas: E-detailing in Japan is unique, accounting for up to 90 percent of all e-detailing activities worldwide, according to some research. Initially, we ascribed this popularity to the wide adoption of consumer technologies in Japanese society. That led us to create solutions aimed at younger physicians who actively use smart phones and tablet PCs. The reality, however, is very different. The typical profile of a Japanese health-care provider engaging pharmacos online is a 55-year old male clinician.
This is where the influence of m3.com should not be underestimated. Launched more than 12 years ago, it established an online service model mimicking a field engagement, while tailoring to its customers’ needs not only as a physician but as a human being. In addition, m3.com early on adopted three- to five-minute video messages as a means of communication, further lowering the adoption barrier for older physicians.
Nearly 70 percent of all Japanese physicians are registered on m3.com, and weekly visiting frequency is extremely high. And although not every Japanese physician registered to m3.com actively accesses pharmaco programs, the reality is that the pull power of this platform in Japan is so strong that the resulting reach, frequency and impact are at an altogether different level compared to any other country or region.
Salsberg: Can you describe how Lilly uses e-detailing to promote its products?
Livadas: “Double-coverage” is at the core of our strategy, providing physicians who are regularly called on by Lilly sales representatives with easy access to high-quality online information, programs and services.
Increasingly, we are leveraging the e-channel for educational peer-to-peer programs to engage physicians less familiar with diagnosing and treating patients in the disease areas we serve. This service significantly extends Lilly’s impact to physicians less receptive to promotional messages delivered through sales representatives.
For 2012, we are on track to exceed 2 million online e-details, accounting for more than 50 percent of all recalled customer engagements (including traditional in-person sales representative details) across the entire company. Measured by e-detailing volume, Lilly Japan is a Top 10 player, significantly ahead of our industry sales rank. And nearly every marketed brand in Lilly Japan’s portfolio occupies the top position in online share of voice.
Lilly Japan is ranked No.1 among the top 20 pharmacos when considering the combined effect from sales representatives and online detailing activities. Furthermore, the research concludes that Lilly Japan’s e-detailing significantly boosts our sales representatives’ effectiveness, further validating our aggressive e-channel maximization strategy.
Salsberg: What are you learning as you experiment with the medium?
Livadas: We are still learning every day, with insights coming from a deeper understanding on how to satisfy our customers’ true unmet needs, tensions or frustrations.
One surprising find (besides the demographics of online Japanese physicians) is e-detailing’s perceived impact. There are many surveys out there that seem to indicate that e-detailing is most effective in driving awareness, and relatively ineffective at generating new business or increasing loyalty. However, the deeper you get, the more evident it becomes that the reality is exactly opposite. And if you think about, it is quite logical; at the end of the day, if you don’t know something is out there, you don’t go looking for it.
Salsberg: What pitfalls or challenges are you seeing?
Livadas: The first and most obvious pitfall I see is that some organizations still see e-detailing, or e-channel at large, as technology-driven rather than customer-driven. As a result, there is too much focus on developing a smorgasbord of solutions, as opposed to delivering unparalleled customer experiences. A more structural challenge is pharma’s traditional desire to own the channel. Conditioned by direct control over a large sales force, many pharmacos struggle to work effectively with e-channel partners. In the online space, not only does the winner take it all, but more importantly, it is the customer who controls it. It’s not because you build it that they will come.
But the biggest challenge is cultural, and is related to how you reward failure. The cost structure to establish an effective e channel is completely different from that of a traditional sales channel. Initial investments are high and non-linear, requiring a significant level of risk-taking when the benefits might not be well internalized. Few senior leaders in pharma have a clear and practical understanding of what it takes to be successful in this space. Initial failure is part of the process, and the commitment of executive management to work through those failures is absolutely essential.
In early 2010, many other companies' general managers would have pulled the plug after our initial investments failed to pay off. Ensuring we had a brutally honest forward plan based on the lessons learned from those failures, Alfonso “Chito” Zulueta (President and General Manager of Lilly Japan), provided his full support to the team, including additional funding. The rest is, as they say, history.
Salsberg: Where should e-detailing fit into an organization—sales, marketing, somewhere else?
Livadas: Ultimately, this is a channel reaching the customer, and as such it should be aligned within the sales organization. However, the capabilities required to develop and operate an e-channel are significantly different from those to run a large sales force. Considering the high reach and frequency with sales representatives, it makes a lot of sense to anchor e-detailing in marketing while you incubate the channel. As you reach critical mass through the e-channel (or any other alternative channel for that matter), the ultimate challenge becomes to establish true multi-channel sales leadership.
Salsberg: How do you measure the financial impact of e-detailing?
Livadas: The beauty of online customer engagements is the wealth of data available throughout the process. Nevertheless, very few companies are able to truly understand the sales contribution and ROI by touchpoint, although simple segmentation and control-group analysis quickly reveal the positive impact of e-detailing.
Part of the challenge in Japan is the lack of comprehensive prescriber-level data, as well as the plethora of pharmaco touchpoints with physicians. Through extensive analytical modeling, we are now able to understand touchpoint impact at a very detailed level. Suffice it to say that e-detailing is among the most effective programs to drive a profitable top line. But ultimately, it comes back to strategy. If e-detailing is positioned to substitute for sales rep detailing at the end of a product’s lifecycle, it will satisfy an internal desire for action, but one shouldn’t be surprised if bottom-line impact is negative.
Salsberg: What’s next?
Livadas: So far in 2012, e-detailing in Japan has grown 15 percent by volume, with established players only entering the space in earnest from this year. Demographic and social changes, as well as increasingly limited access, are all drivers for increased future use of the channel. There will be some bumps in the road. The expectation, however, is that the use of e-detailing will be evolutionary, rather than revolutionary.
Read the related McKinsey interview with Philippe Auvaro of GSK Japan: “The beginning of a very long journey.”
To read McKinsey's research on e-detailing, download “Making sense of e-detailing in Japan’s pharmaceutical sector” (PDF–1.96 MB).