2019 Kellogg Biotech

and Healthcare Case

Competition

Team Tan
Agenda
01 Perceptions and Policies

02 Long-term Implications

03 #GoBoldly

Recommendations &
04 Implementation
 Perception Leads to Policy

“Mr. Sanders recently proposed a bill that would peg

what the U.S. pays for drugs to what other industrial
countries pay.”
“What started as crank progressive politics is
Modern
becoming a litmus test for 2020 Democratic
presidential aspirants.” “72 percent of those surveyed
thought Americans should be
Portfolio allowed to buy prescription drugs
imported from Canada.”

Presentation
“FDA Commissioner Scott Gottlieb says the agency is concerned with certain drugmakers' tactics
designed to instill fear in patients and doctors about switching from originator biologics to biosimilars.”
 Future Projections of US Pharma Market
2019 2020 2021 2022 2023 2024

All numbers in billions

Revenue Proxy* 770.6 801.5 833.5 867 901.5 937.6

US Market Share** 347.6 361.5 376 391 406.6 423 Net Present
Value of US
Profit*** 68.5 71.2 74 77 80 83.3 Profits:
$371B
Present Value**** 64 65.6 61.5 60 58.7 61

*Revenue Forecast: Sum of top 23 Pharma Companies 2017 Revenues (from financial statements) with a conservative growth rate of 4% CAGR.
**US Market Share: Approximation of 45.1% of US share of total global Pharma sales based on OECD Report:
OECD., et al. Pharmaceutical pricing policies in a global market. 2008.
***Profit forecast: Average weighted forecast of profits of top 5 US Pharma companies from 2015-2017 (see 10k Financial Statements)
****Discount Rate: Weighted Average Cost of Capital of top 5 US Pharma companies
 Policy Impact on US Revenue
450

400

350

300
US Revenue
(billions)

250

200

150

100

50

0
2019 2020 2021 2022 2023 2024

*Rand Corp estimation of 20.3% reduction of revenue in the US Pharma industry given Price Control regulation:
Sood, N., De Vries, H., Gutierrez, I., Lakdawalla, D. N., & Goldman, D. P. (2009). The effect of regulation on pharmaceutical revenues: experience in nineteen countries. Health Affairs, 28(1), w125-
w137.
 Policy Impact on US Profits

400

350 Potential loss

of $75 billion
300
NPV of US Profits
through 2024 250
(billions)
200

150

100

50

0
No Regulation Regulation
Long-term Implications of Policy

Less Incentive
Profits Suffer to Innovate

Decrease in Negative
Life Impact on
Expectancy Labor Force
 #GoBoldly Campaign

Launched early 2017

Goal: To improve public perception of the

pharmaceutical industry through positive stories

*Source: “Rebranding Pharma” Kellogg School of Management Case Study, Tim Calkins, 2019

Sources: https://innovation.org/
https://www.youtube.com/watch?v=rzLQfUngldk
https://www.phrma.org/press-release/america-s-biopharmaceutical-companies-launch-groundbreaking-multi-year-initiative-heralding-new-era-of-medicine
 *Source: Gallup Poll 2018: https://news.gallup.com/poll/12748/business-industry-sector-ratings.aspx

Our Findings…
Before After %

Poll on Jan 21, 2019 All 3.57 4.04 13%

(n=45)
Local MBA students and professionals’ perception Pharma/Health
of pharma before and after watching the 3.55 4.14 17%
(n=21)
#GoBoldly Commercial
MBAs 3.60 3.96 10%
(n=24)
(1-7 ranking, 1= extremely negative, 4 = neutral)
 Roots of Negative Perceptions
Media Negativity Dominance Benefits few, costs many

Unaware of R&D investment Socially unconscious

and resources

Lack of awareness Bipartisan drive for policy change

Daunting perceptions of
“science” Distrust of scientists

Regulatory and political Industry disruption

consequences
 #GoBoldly: Gap Analysis
One-Stop Overview
Resources
Process -Stages of drug development
- Current research -Investment and costs
Awareness
- Broad disease spectrum Resources -Extent and labor behind research
- Various websites -Regulatory and IP hurdles

Optimize channels
Impactful Stories What’s -Broadcast efficiency
-Patient profiles Positive Missing Outreach -Refocus target audience
-Researcher profiles Stories -Social media & digital presence
-Patient/Researcher stories Already optimization
-Community programs
Have

Provide immediate benefit

Collaborations Inbound
Collaborations - Draw the public in with directly
-Patient Assistance Programs Marketing usage knowledge (eg drug
-Partnership for Patient Assistance information)
1. Additional Digital Media Advertising

2. #KnowYourDrug Campaign
 Current #GoBoldly Digital Media Outreach

Facebook

YouTube

0.3k – 400k views per video 30k – 700k views per video
 Increasing Importance
of Digital Media
• Continuous decline in TV consumption
• Increasing streaming service subscriptions for media and
entertainment, especially for young adults
• One-third of young adults receive news and information
digitally
 Additional Marketing Efforts

More Aggressive Digital Advertising

Use of existing #GoBoldly and #Together videos
Focus additional efforts on Push to additional online streaming platforms
digital media platforms through
captivating media contents

Replace Words with Infographics

Increasing popularity of infographics
Captures audience’s attention
Easier to digest complex information

Collaboration with Digital Content Creators

Create in-depth contents related to patients, researchers,
drug development processes
1. Additional Digital Media Advertising

2. #KnowYourDrug Campaign
#KnowYourDrug

• A supplementary website to addend social media campaigns

• #KnowYourDrug
• KnowYourRx.org

• Type in any FDA-approved drug

• Shed light on the hidden cost of drug development

• Celebrate the scientists, technicians, and engineers

 KnowYourRx.org

• Comprehensive and interactive website

• Showcase drug development histories
• Partners are DHHS/FDA and PhRMA
members
• Millennial friendly
Reinforcing a Palatable Narrative

An Astronomical Scientific effort

• Searching to the moon and back

• Each drug is the result of a
series of very exhaustive efforts
Reinforcing a Palatable Narrative
 Proposed Four Central Tenets of
Future Rebranding Efforts

Be More Accountable
1 Acknowledge setbacks and show progress

Be More Transparent
2 More direct information reduces speculation

Be Consistent and Persistent

3 Changes in perception does not change overnight

Be Bold
4 Face the controversies head on
Thank you!

Team Tan