Marketing Pharmaceuticals in Uncertain Times


Jefferies University *
Equity Research Team

Stephen Barker †
Equity Analyst
+813 6830 3612

Naoya Miura †
Equity Associate
+813 6830 3613

* Jefferies Group LLC † Jefferies (Japan) Limited

25 March 2020

Key Takeaway

The ongoing global pandemic is forcing pharmaceutical companies to change their promotion strategies. Social distancing rules have forced pharma companies to pull their reps from the field. This may accelerate the trend away from traditional face-to-face marketing in Japan. Our expert speaker, the founder and president of a digital marketing company, reports on the evolution of digital solutions for the pharmaceutical industry and the impact of COVID-19.

COVID-19 is upending the model. Social distancing rules have put an end to most face-to-face meetings between pharma company sales reps and Japanese physicians. This may cause lasting harm to products being launched over the next few months. But it may not have much impact on pharmaceutical sales overall.

MRs under pressure. Even before COVID-19, the traditional pharmaceutical marketing model, which relies heavily on face-to-face meetings between doctors and medical reps, was under pressure in Japan. An increasing number of hospitals and clinics have introduced limits on when MRs are allowed to visit. Stringent regulations have also made it harder for MRs to build rapport with their clients by restricting the scope for entertaining. The perceived decline in the efficacy of sales forces, combined with pressure on pharma company revenues, has encouraged most pharma companies to reduce their sales forces in Japan.

Digital solutions filling the gap. Japan has been something of a leader in terms of digital marketing solutions for the pharmaceutical industry. In addition to M3, two other publicly-traded companies, CareNet and Medpeer, are helping pharma companies get their messages across to prescribers. The dislocations caused by regulatory changes and, more recently, COVID-19, have created new opportunities for digital solutions.

Aim narrow, go deep. The focus of pharma promotion budgets is transitioning away from mass-market primary care products towards specialty products such as anti- cancers. This poses a challenge to traditional digital promotion platforms, which are good at raising awareness but less good at influencing prescribing behavior. The successful e-promotion platforms of the future are likely to be platforms that help companies deliver in-depth messages to smaller, more tightly defined groups of physicians.

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Marty Roberts

Marty Roberts, PhD, likes breaking stuff and then remaking systems to change industries. An American entrepreneur in the Japanese healthcare space as well as a clinical psychologist by training, Marty has been the director of several Japanese companies servicing pharmaceutical and medical device clients, inclusive of market research, CRM software, publishing and consulting services. Marty founded enTouch KK in 2015 with the mission to “Provide Health Care Professionals quality online medical education to enhance patient care.” enTouch KK has grown to become a leader in this space in Japan.


Stephen Barker: Hello. My name's Stephen Barker, pharma analyst with Jefferies Japan. Today's expert speaker is Marty Roberts, who is an American entrepreneur in Japan healthcare. Marty is the President and founder of enTouch, a marketing company that provides pharma companies with alternatives to traditional face-to-face meetings between medical reps and doctors.

WIth the advent of COVID-19, this is a service that is very timely indeed. Marty, perhaps you'd like to provide a bit more detail about your background and tell us something about enTouch.

Marty Roberts: Sure, sounds great. I've been in Japan for about 12 years. I trained as a clinical psychologist in the United States. I worked at Forest Laboratories before moving to a global French company doing pharmaceutical market research, sales force automation software etc. for pharma and med device companies. About 12 years ago, they sent me to Japan, where I ran their operations.

In 2015 I left to start my own company, enTouch. At enTouch we are trying to provide a better way for pharmaceutical companies to provide high-quality, complex information to doctors.

The pharma industry depends very heavily on face-to-face interaction to deliver information to physicians and other healthcare practitioners. And this is particularly true in Japan.

Although online advertising models have been around for a while, there was no method of scheduling one-to-one online conversations between physicians and reps. Our model facilitates meeting at times that are convenient for the doctor, using online video conferencing technology similar to Skype and Facetime.

Our team of experts covers all therapeutic areas and provides that service on behalf of different customers under a white-label offer. The experts (medical reps) interact online with doctors at a convenient time for the doctor, in order to explain new medicines.

Stephen Barker: Thanks Marty. It might be helpful to get a bit more background on the nature of pharmaceutical marketing in Japan and how it compares with the rest of the world. In Japan the number of medical reps has been going down, but only a few years ago I believe there were 65,000 reps in Japan. That's a lot. The US only has 80,000.

Marty Roberts: Yes, exactly. In the US there are eight reps for each 100 doctors; in France it's about four, in the UK it's two but in Japan there'll be 23 reps for every 100 doctors and then six more wholesaler reps. So, in Japan, 100 doctors are being covered by 29 human bodies compared with two in the UK.

It is very much a face-to-face business in Japan. But things are changing. The number of MRs has been decreasing since 2014. From a peak of about 70,000, we're now down to about 60,000.


MR numbers are declining for three reasons; Firstly, government policies have enabled generic drugs to increase their market share, hurting profitability for the branded companies. The second point is pricing. Older, long-listed drugs have been subjected to substantial price cuts. The third thing is the regulatory environment. It is no longer possible to entertain doctors, which makes it harder for sales people to add value. The regulations in Japan are now probably as strong as Europe and the US; each year they keep getting stronger. This makes this vast army of sales people seem suddenly less efficient.

Stephen Barker: Okay, but correct me if I'm wrong; Aren't face-to-face meetings with MRs still the most effective way to get a message across to the doctors? Is that still true, Marty?

Marty Roberts: I'm not so sure it is. Of course it depends upon the brand and the complexity and if it's a new molecule or not. Presentations at big international meetings are incredibly effective. Peer-to-peer also seems quite effective. In terms of traditional models, face-to-face is still considered effective. But many of us in the industry have doubts.

It will be interesting to see if the decline in face-to-face meetings caused by COVID-19 will affect sales. Most pharma companies have pulled their reps from the field. It is an interesting experiment.

Stephen Barker: Will the decline in face-to-face meetings make it particularly hard to promote new product launches?

Marty Roberts: I think that's true. I've been in touch this week with three companies who are in that situation. In Japan, a lot of approvals come in March and companies try to launch in April, May and June. There are many companies that are freaking out. With reps being pulled from the field, any drug launched now will never be as successful as it otherwise would have been.

The smarter companies are trying to pivot to digital strategies. But if you haven't been working on it, it's difficult to do quickly.

Stephen Barker: Japan has a lot of MRs. But it is also something of a leader in digital. M3, for example, has been very successful. I understand that at your previous job, your pharma company clients hired you to measure if they were getting value from M3's services, particularly the famous MR-kun. Perhaps you could explain something about M3's services

Marty Roberts: Sure. M3 started almost 20 years ago, supported by Sony. Basically they created what I would call a Yahoo for doctors. The main page shows news of the day and you can search some stuff and there's some advertisements. That's the M3 portal.

Then there is a little section on the top called MR-kun, where, for example, you can view a video or an article sponsored by a pharma company that wants to promote a product.

But your question was, does MR-kun work? After many years of research for many different pharmaceutical companies, if I had to give one answer I would say, I think it is effective at increasing awareness, but I don't think it changes prescribing behavior.

That's the positioning where my own company, enTouch, came in. We aim to facilitate online discussions with the experts, in order to actually change prescribing behavior.

Doctors want high-quality information which only comes from speaking with an expert, but they want it on their own time. We took the contract sales model and created the first fully digital, fully online contract sales organization.

Working from home, our medical reps connect with doctors. The doctors select a time on the calendar when they want to speak with the expert and then our experts connect and speak with them through a Skype. The calls last on average 20, 25 minutes which is much longer than a typical field-based call, which might only be two minutes. These are really long discussions than can create step-changes in the behavior of doctors. It's really effective.

Stephen Barker: With the advent of COVID-19 and the prohibition on actual visits, I imagine a lot of pharma companies must be scrambling, looking for a solution like yours. Has your phone been ringing off the hook?

Marty Roberts: Yes. It hasn't stopped ringing. It's difficult times for everyone. But I think this will cause pharmaceutical companies to rethink their entire salesforce strategy. They're already starting to have those conversations with me because they're starting to realize it's not just COVID-19. Even before COVID-19 there were a lot of doctors they can no longer access.

Five years ago, I recall, 60% of institutions in Japan had already instituted some sort of visit restriction on MRs, meaning MRs can only visit on Thursdays or MRs can visit by appointment only, or MRs can only come to one area of the hospital.

So I have a feeling, especially with COVID-19, we're going to see more restrictions on MR visits.

Stephen Barker: Yes, it's a challenge for companies to get their message across. I think it's about time we opened the lines for questions.

Q1: Are you employing your own MRs or are MRs from the pharmaceutical companies using your network and your system or is it a mixture of both?

Marty Roberts: It's a mixture of both. Our primary offer is utilizing our own MRs. But we're very open to people utilizing our platform structure with their own sales people.

Q2: Would you consider offering points to doctors, like M3 does?

Marty Roberts: For us the points system doesn't make sense. M3's pitch is that they have almost every doctor on their platform. enTouch is more focused. Our clients want to offer the doctors an opportunity to have long, in-depth discussion with an expert.

In that way I don't see that there's a point in offering points; it would almost defeat the purpose. We almost want doctors to only want to take these appointments if they are ready to have an in-depth discussion and that means we think that they're ready to change their behavior, to actually start prescribing for the first time or to be convinced to prescribe more or be convinced to try a drug for a new indication, etc. It's a different strategy; M3 is about coverage and we are about depth.

Stephen Barker: Marty, CareNet and Medpeer are two publicly-listed companies that compete with M3 for the pharmaceutical digital dollar. What kind of services do they offer?

Marty Roberts: CareNet is similar to M3. Medpeer's vision was improving healthcare via collaboration. I personally find it a bit more interesting, a bit more engaging, than the M3 model.

Stephen Barker: There is an ongoing move away from mass-market primary care products to specialty products. Are pharma companies putting more effort into developing their own digital platforms as opposed to relying on third parties such as MR-kun and M3?

Marty Roberts: Yes. I think e-advertising becomes less effective as the size of the target market gets smaller. A lot of companies are therefore developing their own online services. A great example of this in Japan is Biogen.

Stephen Barker: Marty, what kind of results have you gotten for your clients?

Marty Roberts: It's actually really impressive. A face-to-face call, as I mentioned, lasts about two minutes and this translates into an increased intent to prescribe only about 30% of the time. Our calls last longer because the doctors select the time for the discussion. After those calls, 60-80% of doctors say they have an increased intent to prescribe.

Stephen Barker: Marty, any parting words you'd like to leave us with?

Marty Roberts: Japan is a unique market. There's a wealth of opportunity make the healthcare system better. I hope enTouch is playing our small part, along with M3 and CareNet and Medpeer, and the pharmaceutical companies themselves.

Stephen Barker: Thank you Marty. Thank you everybody for joining today and we hope to catch up with you soon.

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