Pharmaceuticals and the Battle for Public Opinion

Since the U.S. Food and Drug Administration permitted branded promotional advertising to consumers in 1997, drug companies have deployed innovative marketing campaigns that have changed the competitive landscape of the industry. In doing so, pharmaceutical manufacturers have heightened the awareness of not only their brands, but also of their business practices. The rising level of debate in the United States and elsewhere in the world suggests that the next marketing hurdle for pharmaceutical manufacturers is the battle for public opinion.

Why battle for public opinion? With direct-to-consumer advertising, different treatment options, competing over-the-counter and prescription offerings, and new portals for health information, health patients are increasingly becoming health consumers. With flattening response levels to direct-to-consumer advertising over the past year and the presence of generic alternatives, developing loyalty amongst target markets is critical to brand success.

Public opinion also shapes the decisions of legislators. While the pharmaceutical industry is one of the most powerful and effective lobby groups in the U.S., counter lobbyists, political activists, and disenfranchised consumers have managed to make drug pricing a leading issue in the upcoming presidential election. A recent article in CNN highlighted this point, advising investors to wait until after November before cashing in on a potential pharmaceutical stock rally. In the meantime, many companies' shares have underperformed or slipped amidst the uncertainty posed by the highly publicized challenges facing the industry. Public opinion is an indispensable aspect of managing stakeholder relationships, and leveraging public opinion is a key element of a successful business strategy.

The expectations of these divergent groups--stakeholders and consumers--create a tension between the industry and consumers, as high prices that satisfy business imperatives can jeopardize public trust in the motives of the industry. Educating customers and evaluating pricing strategies (as maximizing profit margins could alienate customer base, and lead to a smaller return) may lead to a sustainable balance. This challenge to the drug industry requires that marketers employ a systematic approach to managing their corporate reputation that entails monitoring and shaping public opinion.