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The use of combined conjoint approaches to improve market share predictions.

Article Excerpt
Within the pharmaceutical prescription sector, just like many other markets, maintaining competitive advantage has become increasingly difficult. In the healthcare arena, the period of time that a new chemical entity has on the market before a key competitor emerges has been significantly reduced. If a company has already developed an important market franchise in a given sector or disease area, it is essential that that company understands the potential threats it is likely to face in the future from new product entries and also to appreciate what, if anything, could be done to protect or enhance the product franchise in the light of market developments.

Background

Given the ever-increasing pressure on pharmaceutical companies to provide an attractive return on investment to shareholders, the higher costs involved in bringing a product to market (estimated to be in the region of $800 million), and increased downward pressure on prices, there is a greater need to prioritise the potential offered by a range of new product opportunities. New product opportunities arise from:

* A company's own research and development (R&D) efforts

* In-licensing opportunities

* Joint marketing agreements, etc.

No matter what decisions or research developments have given rise to the opportunity, an accurate means of assessing the likely uptake of the product is essential. Such calculations are the essence of critical decision making. Factors for consideration include:

* Does the company divert resources to another opportunity?

* Should the product be 'fast-tracked'?

* What is likely to be the threat from other market entries?

* What is the most suitable strategy to help expand an existing franchise in a given market?

Assessing the likely market penetration for a new product can be achieved in a myriad of ways, for example secondary data analysis, qualitative assessments, quantitative studies involving diary studies, gap analysis and new product assessment and conjoint investigations. All of these methods have their place, as those involved in marketing research for any length of time will appreciate.

However, maintaining competitive advantage in a market has become more difficult. The period of time that a new chemical entity has on the market before a key competitor emerges has been significantly reduced; thus it is vital when assessing market uptake to take into account:

* New market entries

* New line extensions

* A loss of patent for an existing product

* Price changes

* Government or 'payor' policy changes, e.g. formulary restrictions

Given this complexity and the impact such issues can have, there is a need to get as close as possible to the 'crystal ball'.

The use of conjoint investigations

As a methodological approach, conjoint investigations have become widely recognised in the fmcg sector as well as in the healthcare sector as providing the means of determining how markets will change given various 'what if?' scenarios. Because of the variety of conjoint methods that can be considered, it is not always a simple matter to agree on the most suitable approach. This paper will not address the pros and cons of the alternatives, but will explore a solution to an important marketing issue that hopefully will be of interest to the reader. Referenced are a variety of articles about various conjoint approaches that may also be of interest to the reader.

The case in question

In discussions with a major pharmaceutical company earlier this year, it became evident that the company, which already had a significant franchise in a specific prescription market sector, wanted to examine:

1. What would be the 'key drivers' (product features) that would be essential for newly developed products to offer to potential customers.

2. The likely market developments with existing brands:

* New formulations likely to be introduced

* Loss of patent of a key competitor.

3. The introduction of entirely new products.

4. As a result of 2 and 3, how the existing brand franchise could:

* Be protected (defensive strategy)

* Be expanded (offensive strategy).

Given the objectives, a conjoint study appeared to be the logical choice. Because of the need to explore a large number of potential product parameters relating to how the product could be taken, the range of dosage frequencies, a variety of different attributes relating to efficacy, pricing issues, an Adaptive Conjoint Approach (ACA) seemed to offer many attractions.

However, there were several key objectives that could not be addressed by ACA alone.

* Results from ACA provide preference shares that are notoriously difficult to convert accurately to actual market share information.

* Given that the study was focused on a well-established market,...