Seth Godin had a very interesting blog last week that talked about the difference between macro trends and micro trends. He pointed out that although there is much hoopla about macro trends, for most businesses they are not nearly as significant as micro trends. Macro trends involve things like the percent of people who speak Spanish in our country or the aging of the population. These are interesting and for huge companies somewhat important. Micro trends have to do with finding subsets of the whole and determining what is happening with them and how they could support your business. This is especially important to the pharmaceutical industry as it stands in 2013.
Express Scripts recently gave us a quick look at how 2012 sales finished for our industry. Overall there was a 2.7% increase in sales but, and this is a big but, this was driven by an 18.4% increase by specialty drugs which offset a 1.5% loss for traditional pharmaceuticals. Specialty products are less price sensitive, hurt less by managed markets and generics, demand more clinical management and are viewed as perhaps more sophisticated scientifically. They should perhaps be considered in a completely different category than more traditional drugs based on these unique characteristics. The bottom line is that for traditional drugs, sales slumped significantly in 2012. But these are macro trends.
It will be very interesting to tease through individual drug sales for 2012 to look for the micro trends. Generics have hurt the industry tremendously and this was a significant reason for the losses in 2012. Drug launches for traditional products have not seemed to have driven growth significantly as there are not many new blockbusters being reported. That said, there must have been some significant growth seen in certain areas to offset these trends. These are the micro trends which must be found and duplicated by others who want to succeed. Are older drugs, with patent protection, doing better than expected? Which therapeutic areas seem more protected from managed market controls? How devastating are step edits and prior approval controls? Are co-pay vouchers working, and if so for which specific patient population? These are just a few of the many questions that need to be explored to uncover the micro trends impacting our industry.
Perhaps just as important as uncovering the micro trends would be considering what should be done to grow business based on these trends. It would seem that those companies with the highest skills in gathering and interpreting market intelligence would have the upper hand versus competition as they could uncover the micro trends first. But the real key might be in the degree of flexibility or agility a company has both in how they uncover the new trends and what they do to exploit them. Doing things the same old way tends to give you the same old results. New methods of research and analysis might be needed just as new science is often needed to discover new drugs. New marketing strategies may also be needed as micro trends need a much different approach than would macro trends.
Seth’s analogy about the book industry might be relevant. If you believe that nobody reads books anymore because the macro trend indicates this, then you would quit writing. But if you could find the 1 out of every 3,000 people in the country who would read your book then you would have a best seller with over 100,000 readers. The strategies and tactics for success are obviously going to be much different. I guess the challenge is whether we fully recognize the need to find micro trends and if we have the intellectual flexibility to be able to design new ways to take advantage of these trends. It is worth some thought.