I have been wondering for some time what the effects of the current Covid-led recession will be on the pharmaceutical industry, and, by extension, the consultancies supporting the industry.
So far, the industry has done a good job of responding to the Covid-19 pandemic and has even benefitted in some areas. For example, some low-profile drugs have come to the fore because they have proved useful either to treat patients sick with the virus or because they can be used in the community to keep people out of hospital. Indeed, some consultancies – my own included – have fared well during this strange year, but I have kept a careful eye on whether we would experience a lag with the slowdown. This seemed likely given that many trials had to be halted during the initial shutdown and the fact that many health technology assessment (HTA) bodies paused their processes.
What we are seeing now is that the industry may indeed be starting to feel the effects of the recession with some pharmaceutical companies cutting hundreds of jobs. This led me to discussions with peers in the industry about how this would affect health economic consultancies, and these conversations served to further confirm my suspicions.
So, what does all this mean?
First, we are currently operating in a false economy because many pharmaceutical companies have a January to December budget, which means consultancies are still working from budgets set pre-Covid. Indeed in any year, the fourth quarter is typically a busy one for consultancies as pharma clients use up their budgets, and this may have served to heighten our false sense of security. After the typical first quarter lull and summer break, consultancies often look forward to a surge in business around the autumn conferences when services companies meet with pharma clients to showcase their expertise. Of course, none of that is happening now, in the normal sense.
In the previous recession, health economic consultancies flourished because in times of economic downturn, it is even more important to justify the price on new therapeutics. However, back then, there were a handful of consultancies offering these services. In the current climate, health economic consultancies are operating in a much more crowded market. As a result, health economic consultancies may very well face a larger decline in business in 2021 than they have in previous recessions. To counter this drop in business, consultancies must start to invest in their own business development strategies, and in establishing and promoting their own value message. Ironically, this is something consultancies are very good at doing for their clients but not good at doing for themselves. They often don’t stop to consider what their own value message is, where their positioning should be and how the issues that impact their clients will impact them.
Strategies for business success
My colleagues and I at Gatehouse ICS understand the barriers that often prevent consultancies from developing the right strategies for the future. We are, first and foremost, researchers so we know why selling doesn’t come naturally to research focussed consultants. We also understand that when consultants are busy delivering to their clients, it’s incredibly difficult to find the time to focus on business development. However, we also know that without clear strategies and commitment to building business relationships and understanding your clients’ needs, expectations and priorities, any downturn or recession will be that much harder to ride out.
At Gatehouse ICS, we offer a number of services that are designed to help consultancies position themselves more effectively – something that will be even more crucial in a tighter marketplace. These services include:
- A service analysis to determine which services are essential and which are “nice to have”. These insights can be gathered from past and current clients by explicitly asking them which services they most value.
- Customer satisfaction interviews to help with relationship building and to determine the right services to be promoting. The feedback from clients can often also be used in marketing materials to demonstrate evidence of good customer relationships.
- Proactive key account management training for all client-facing staff. The idea is to help research-focussed professionals to harness their skills to maximise client relationships and to understand what success looks like for the consultancy and the client.
- Consistent, persistent outreach conducted by us on our clients’ behalf to gain leads for the year ahead. The objective is to build leads to mitigate slumps for the business.
Over the next couple of blogs, I will discuss these services with you in greater depth in the context of the rapidly changing economic environment, and share my thoughts on why conducting the research, outreach and customer-building strategies are so important to your long-term success – and possibly even survival.