Jon Bircher | Article

Feeling the heat, anticipating the competition

“Conquerors estimate before the war begins, and they consider everything; the defeated also estimate before the war, but they do not consider everything. Estimating completely creates victory; estimating incompletely causes failure. When we look at it from this point of view, it is very obvious who will win the war.”

So wrote Sun Tzu, the ancient Chinese military strategist, often quoted in the context of business – with good reason, because in our increasingly competitive marketplace, being successful requires the same kind of strategic discipline.

What is particularly apt about this quote is the ‘estimating completely’ bit. In pharma marketing terms, this is about understanding as much as I can about what your competitors could do in the future in order to make your strategy as robust as possible. Most marketers realise the importance of gaining insight into their competitors, but translating today’s insight into future foresight, is much more revealing; helping us interpret what competitors could do.

The shift within pharma to more specialised markets highlights the need for companies to bring brands to market swiftly, with a keen eye on the landscape, including possible competitors. At the same time, the EMEA has been quoted as wanting to encourage greater competition within the sector to improve innovation, quality, value and diversity of treatments available for patients – whilst applying scrutiny to strategies that are deemed as ‘anti-competitive’. So pre-empting the competition needs to be done in an appropriate anti-trust context.

It is clear that in most situations we face competitors; but whereas in the past more specialist areas have been less competitive than the big primary care markets, we are now seeing the same level of competition in those areas too. This also translates into biotechnology with more companies becoming proficient, plus companies such as Pfizer highlighting their desire to be market leaders in this field. We are increasingly working with companies facing a significant competitive threat in orphan and rare disease markets, where traditionally only a few small companies played.

So competition is stronger than it has ever been, and in many ways that is very healthy. From a customer perspective it helps keep drug budgets under control, it provides greater innovation in the system, and on the whole it provides patients with access to better medicines.

As with all planning, gaining true competitive foresight requires a circular process. Using competitive foresight to adapt your strategies will cause the competition to make their move, to which you will need adapt – and so it never stands still.


Knowing Your Competitor

In an ideal world, you would spend enough time looking at all your competitors in detail. You would consider everybody in the market or who is planning to enter and try to gain an understanding of them all. However, this is often not viable. So who are our core competitors?

Keep it simple; first, the market leader. Understanding what they do to maintain that position, and seeing how they drive, challenge and alter the market itself.

Secondly, consider the fastest growing competitor, what are they doing to grow and how are they changing the market dynamic? What are they doing differently that is driving success?

Thirdly, are there new competitors entering the market? What is their likely strategy and how are they shaping the market?

Finally, look at companies which are strategically significant, or have strategically significant products. They may not be obvious competitors but they will have similar goals to you, making them a disproportionately bigger threat.

Although we often recognise that there is a need for competitive analysis, many companies have no formal way of collecting the data. They rely on past experiences, or assumptions that are made internally, coupled with gut feel. However if we want to win the fight we need to gather data in a systematic way, with the goal of using it to decode competitors’ future strategies. This is a big task, so the data needs to be utilised effectively, otherwise it simply becomes an information-gathering exercise – which is a little pointless.

The trick is to turn data into insight, and translate this into foresight. Insights are those deep, penetrating things that you didn’t previously understand that helps you consider how to do business differently, whereas foresight is understanding the implications of those nuggets for the future.

Understand Your Competitor

To understand your competitor, there are probably four ‘buckets’ of insight you need to grab which inter-relate with each other to provide you with the foresight you need to consider their strategies moving forward.

The four areas to understand are:

  • The ambition of the company
  • Their organisational views of the world
  • Their current strategy
  • What they are good at

Your competitor’s ambition will be central in influencing how they go about developing their strategy, and how they will react to competitors’ (i.e. your) moves.

Some questions you may want to consider include: what are their financial goals; short-term and long-term? This will tell you whether they are going for absolute market growth or whether they are actually trying to gain as much profit from this product as they can.

What are their beliefs and values? What current pressures are they under? These will help you understand their hot buttons if you threaten them – and equally, the areas where you could go unnoticed or comfortably co-exist.

What is their attitude to risk? Understanding that, and how they react to competition, is a pretty good indicator of how they might react to your own strategies.

Decoding a company’s goals and ambitions for the future is critical, because it ultimately helps you formulate the most appropriate strategy yourself. Can you peaceful co-exist, and do you want to? If not it helps you understand the consequences; if your competitor has a product which is important to them strategically and emotionally, tackling them head-on will require a completely different approach and skillset.

The second thing you need to understand is their organisational view of the world. How do they understand the marketplace; how do they understand themselves? If they have a particular view of the way the market works, then you may be able to work out a strategy where you don’t need to take them on head-on, so they won’t see you coming.

If, for example, their view of the world is that the whole ‘patient voice piece’ is simply irrelevant, and therefore they spend all their time and energy on the physician, you may be able to create a strategy which is about leveraging the patient’s voice, whilst going relatively unnoticed. You get to see the opportunities by looking at their blind-spots in their view of the world.

Identifying this view of the world is relatively straightforward. How does your competitor talk about its marketplace and the trends of the future? How does it communicate about itself, about its future, about the opportunities that exist? Where is it investing its energy and its resources? How historically has the competition leveraged their offering? How emotionally attached does it appear to be to this marketplace or this patient population?

Next comes their current strategy; understanding this will help you understand the strategy for the future. Generally pharma marketers are pretty good at understanding the core components of our direct competitor’s strategy; we are less good at considering it in the context of the overall company.

There are lots of indicators of a company or product strategy. For example, chief executives like to stand up and tell people about how clever their strategy is, what they are doing, and how they are approaching it.

Is your competitor aiming for growth through focused knowledge and energy in a certain therapy area or technology? Are they diversifying their portfolio and managing risk that way? If their strategy is about becoming the number one bio-pharmaceutical company, what implications does that have on their future strategy? Are they going to be the key specialist in rare diseases? Are they going to be the number one in personalised medicine?

When considering the most appropriate strategy for your business unit or brand you must also consider the tier below. What are the implications at business unit level? If they are a company that has a broad strategy of diversification, but one particular business unit has real focus within a therapy area, what pressures does that put the business unit under, and what does their strategy look like moving forward?

The final part in the jigsaw is to understand what your competitors are good at. You can consider a lot of different things at a whole company level, from the products they promote, their marketing capabilities, their distribution network, their clinical trial programme, their corporate management, or their financial positioning down to the tactical level around their sales teams and marketing materials.

This helps you understand how capable the company is at achieving its overall ambition – and the possible areas of danger. If you go up against a company that has a fantastic, proactive legal department which will take on anybody who tries to challenge their patent or their position in the marketplace, you have to recognise the degree of risk involved.

This is a quick look at the different areas to find competitive insight. You now need to look at those four buckets together, play them out decoding the competitor’s future strategy so as to optimise your own.

Generating Fresh Foresight

One of the best (and most interactive) ways of decoding strategy is through some kind of simulation – we use competitor rooms. These can be run in many different ways depending on your challenge, but essentially they involve playing out different scenarios and different competitors. They should use all the insight that you have gathered, internal knowledge and perspectives in order to get under the competitors skin and generate genuine foresight.

In a given situation, how will this competitor react to our move? If we generate an aggressive market growth strategy what are the reactions, the implications? What are the likely moves from competitor A and competitor B when we implement a new segment-based approach?

Interaction is important. These sessions act as a ‘test bed’ for what could happen in reality, whether simulating competitor reactions to your strategic moves or simulating changes from a competitor, all will help you understand the strategic options available and their implications.

This then helps you decide the best strategy to put in place; for example, it may be, because of new competitive foresight, that you find a way to go unnoticed. Your price-based strategy can work alongside their innovation and clinical-based strategy. It’s not the space they own, it’s not the space they compete in, and you go unnoticed.

Equally, it is important to understand how they will defend when you make a threatening move. What level of provocation will your attack cause, and therefore what is their likely retaliation?

If a company is really comfortable with its current approach, and it appears to be working for them, they are going to be pretty reluctant to change it. However, if you hit them in a place where they are sensitive, or vulnerable, you might move them out of that comfort zone and take them on head-to-head when you didn’t need to.

The idea of this whole exercise is not about just getting loads of granularity around the competition for the sake of it; it’s actually about making sure your own strategy is as good as it possibly can be, robust enough and with the right components, built on your learnings from a competitive perspective.

And only when you have this level of understanding can you ‘estimate completely’ and ensure the strategy you build is as future proof as it possibly can be.

With an increasing emphasis on regulation around competition, should the pharma industry be nervous about trying to gain foresight in to their competitors’ likely behaviour? It is true that there is a nervousness about anti-trust laws, especially when it comes to primary competitive intelligence – employing people or organisations to speak to specific individuals.

It is important to point out that competitive analysis and competitive intelligence should not about breaking the law. Competitive intelligence is an ethical and legal business practice, as opposed to industrial espionage which is illegal. In the context of this article it is also not about formulating strategies that conflict with the anti-competitive laws. It is certainly not about predatory pricing or illegal trade restrictions or M&A deals.

What it is about is understanding and anticipating your competitors in such a way that you optimise your own strategy and approach. So in the context of ‘competition is healthy’ – because it keeps the market alive and keeps innovation happening – we need to understand more about our competitors to optimise our own approach. And in optimising our approach, they will inevitably optimise theirs.

The one thing you can rely on is that in a market with more than one product, the approach and strategy of one company will be influenced by the other player or players in the market, and each will react to the competition’s moves. So the whole interplay between the competition is in part what brings about better access to medicines, better pricing and better innovation.

In other words, having an insight into what your competitors are doing doesn’t lead to the stifling of competition, rather it provides future foresight that actually enhances the competition and potentially ups everyone’s game.