What Makes People Buy?

Over the weekend, I was sitting in an empty house (my own), waiting for my household goods to arrive from Bangalore and doing little more. This essentially gave me a lot of time to think of the one question that dogs us ‘drug pushers’. What drives buying decisions of end-consumers (patients)? Now this is not an earth-shattering question and certainly does NOT make me feel like Isaac Newton. However, it is interesting because the purchase of drugs is more than a ”purchasing act in itself”. It involves a multi-stage process in which, firstly, a physician writes a drug prescription, secondly, a retailer dispenses and substitutes and, finally, a patient consumes. My understanding (not backed by hard data, but I don’t think I will be challenged on this!) is that the existence of information asymmetries between physicians and patients and uncertainty about drug effectiveness generate opportunities for retailer inducement and brand loyalty respectively. This is the traditional business model where physicians are the core of the system. However, under the new scenario of easier access to information, patients are becoming more demanding and sometimes question their prescription (albeit largely in urban markets). Furthermore, new models (Pfizer India’s DMP and the way we want to develop patient assistance programs) will encourage patients to adopt an active role in the decision between innovator and generic drugs. In this sense, I expect that healthcare systems will go through a transition from a physician-directed system to a patient-directed one. This new pharmaceutical framework (if it evolves as I expect it to) makes the analysis of patient preferences interesting. Do you think so too?Despite their importance in the drug purchasing process, we know little with regard to the influence of these factors in the process by which patients decide between drugs at the chemist counter. Furthermore, our understanding on product demand is very limited and has always been focused on the behavior of physicians, or very rarely, on pharmacists. It will be interesting to see what could modify consumers’ decision. Is it the degree of illness awareness? Is it company reputation? Is it age group? We don’t know for sure yet!We know that when individuals are faced with a chronic disease, the higher is the dominance of expert inducement and lower the influence of brand loyalty. Furthermore, when faced with a chronic disease, individuals become more price inelastic. I also think that age is a relevant variable in the decision between an innovator drug and a generic at the chemist. The old probably trust incumbent brands and doctor’s prescription more firmly; on the contrary, those in the younger age group are easily influenced by a chemist’s recommendation and, despite not being loyal to incumbent brands, they might value company reputation. In addition to this, those patients exhibiting high switching costs firmly trust doctor’s opinion and are reluctant to switch to drugs other than the prescribed ones. But those that have already tested and learnt about generics are more easily influenced by a chemist’s recommendation or a company’s reputation. Another significant implication (more in the Western regulated markets) has to do with pharmaceuticals public policy, such as the Generic Paradox. Since generic drugs are generally equivalent and priced lower than their innovator counterparts, they are expected to entail substantial savings for both National Health Systems and final consumers. This also makes it difficult for us to use the “imported/MNC drug hence better quality” line in India. One possible interpretation of this situation is the rise of uncertainty among patients. Will working on both physicians and chemists exert an important influence on patients’ decisions? Will focused programs with these target groups help them become key agents in the process by which consumers do not accept generic versions as a feasible alternative? Can we develop DTC campaigns to explain our point to the lay public or at least to patients who are prescribed our products? I think these are very important questions that we need to crack if we have to fine-tune the art of patient acquisition and retain them to optimize CLV. This can be a very important way to increase top-line sales that we ignore today!

Your comments please!
1:09 PM

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