Knowledge @ ESCP Europe


A Stakeholder Approach in the Healthcare Industry: Towards an integration of Multiple Players


By Frédéric Jallat, Professor of Marketing, Scientific Director of the open programme Marketing & Management for Health Industries, and Scientific co-Director of the Specialised Master in Marketing Management for the Pharmaceutical Industry and Biotechnologies on the ESCP Europe Paris Campus.

The pharmaceutical industry is currently undergoing a structural crisis of unprecedented proportions. Until now, these companies have relied on the proceeds generated by the sale of a few blockbuster drugs – i.e. molecules capable of bringing in a minimum of $1 billion annually. Unfortunately, these molecules are successively falling into the public domain, while current research is still looking for a way to make up for the revenue loss. The patents for no less than ten blockbusters across the world – which account for nearly $50 billion in revenue – are to expire this year. In 2012, more than 30% of the turnover of groups like Pfizer, BMS, Sanofi-Aventis or Amgen will be jeopardised by generics.

The lack of efficiency in developing new molecules can be explained in part by complex research protocols and increasingly drastic regulations. Indeed, the process has become longer and more expensive as clinical trials today must meet more and more demanding requirements. Authorities have also influenced prices and health insurance reimbursement policies by implementing stricter evaluation criteria. Along with incentive measures to encourage doctors to prescribe generic drugs, these recent developments have led the whole pharmaceutical industry to question its current organisation, which is primarily structured around innovation and oriented towards medical practitioners.

Multiple stakeholders

The fact that pharmaceutical companies started communicating on their products – a prerogative which was traditionally associated with medical practitioners – has progressively widened the gap between companies and their various 'audiences'. As a result, the whole industry is now ailing from this structural flaw, as the recent Mediator and Eli Lilly crises have shown.

Today, both patients and the media still have little knowledge of the activities and social contributions of the healthcare industry. This lack of information is detrimental to the reputation of pharmaceutical companies, which, as a result, are subject to peremptory criticisms despite their undeniable societal commitments. Whether it is expressed directly or insidiously, the social pressure adds to economic constraints resulting from risks associated with research processes and patent expirations.

With the difficult relationship between the industry and society, these challenges have led pharmaceutical companies to rethink their position in order to account for other key players: patients associations, pharmacists, health authorities, institutional partners, private insurance companies, etc.

This article will not discuss the specifics of the relational strategies companies have come to implement. It will be focusing instead on three particular players, so as to give a quick overview of current challenges and future evolutions for these dynamics.

Patients associations

Patients associations have managed to find an original positioning in the midst of a fast-changing industry. As a matter of fact, they are at the junction point between the interests of their members, clinicians, laboratories and health authorities. They are often influential institutions, whose support can be crucial for the implementation of certain laws. In France, for example, 3 to 4 million members are structured in 8,000 associations, the most active of which often have extensive knowledge on the status of private and public research. For this very reason, INSERM (the French National Institute of Health and Medical Research) has dedicated a branch of its activities to teaching the heads of these associations about the process of clinical research. To promote their campaigns, they frequently call on pharmaceutical companies for financial support, and most agree to provide funds, realising the important role of these associations in the healthcare system – for instance, GSK supports a total of 23 associations.

A number of these associations are actually powerful lobbies and, as such, have become fully involved in the reimbursement of new treatments. The case of Europa Donna, a patients association focusing on breast cancer, can be mentioned here, as it is present in 40 countries and operates directly at the European Parliament. A unique example is the AFM, the French Association against Myopathies (website in French only), which has recently been authorised to manufacture its own drugs. The AFM has invested 28 million euros into the Généthon Bioprod project to carry out five clinical trials on rare diseases.

Activists and the media

Activists are the product of the social and political struggles that raged during the 1970s. Today, they make up a new form of resistance – or even opposition – and fight for their right to express alternative opinions. Activists often have an ambiguous relationship with the media, using them to make their demands heard. Today, the advent of information and communication technology, with the development of social networks, gives them more weight and influence on government decisions. For instance, Act Up Paris (website in French only) demanded that the Finance Ministry officially take a stand on the question of licences and parallel imports in the struggle against AIDS.

Religious and non-religious foundations

In the USA, religious communities are much more influential than in Europe and have a major impact on corporate social responsibility. An example of this is the ICCR (Interfaith Center on Corporate Responsibility), which was founded in the early 1970s by several protestant communities, which decided to join their efforts into a single organisation. Nowadays, the ICCR is a large faith-based network bringing together investors of more than 275 religious denominations – hospitals, pension funds, insurance companies –, with assets totalling over $110 billion.

As a result, pharmaceutical companies have shown growing interest in analysing and understanding the dynamics between the industry’s various stakeholders and in integrating this insight into their strategic planning. Economic considerations aside, new challenges have recently appeared with the emergence of a new 'ecosystem', where each organisation can be pictured as bound by a series of contracts bringing together companies with divergent rationalities and interests.