The Perils of the Hard Sell

Merck and Schering-Plough stock took a dive because they overpromised and underdelivered.
By Elizabeth Blackwell ,

CHICAGO -- If you want your business to be successful, you've got to market your products. But push them too hard, and you risk a backlash.

That's what happened to

Schering-Plough

(SGP)

and

Merck

(MRK) - Get Report

this week. The two pharmaceutical companies joined together to develop and market the cholesterol-lowering drugs Vytorin and Zetia. Thanks in part to massive television and magazine advertising, the medications rake in about $5 billion in combined annual sales.

But are the drugs really an improvement on existing medications? A magic bullet for the millions of Americans suffering from high cholesterol?

Not necessarily, says the American College of Cardiology. At a meeting this week, the physicians' group recommended generic cholesterol medications over Vytorin or Zetia. Merck and Schering-Plough stock took a dive, and consumers were left wondering what to do.

There's a lesson here for any business: Ad campaigns may dazzle, but if the product itself doesn't live up to the promises, your whole company takes the hit.

"It's a reality check," says Michael Latwis, a corporate analyst with the health care market research firm Decision Resources. "Merck and Schering-Plough were very aggressive in direct-to-consumer marketing. They tried to bypass the physician and go right to the customer."

That seems to have paid off business-wise, given the billions the drugs generated. But long-term, all that consumer marketing has put doctors on the defensive.

"It was surprising how strongly the panel came out against Vytorin," says Latwis. "It might explain why they took a harsher tone."

The pharmaceutical industry's hard-core marketing tactics have turned off plenty of physicians, says Own Dahl, a medical practice management consultant and author of

Think Business!

Flawed Marketing Plan

"A consumer sees an ad, they recognize one of eight symptoms, then they come in to their doctor's office saying they need that drug," he says. "The doctor has to get past that preconceived notion before they can realistically asses their patient. Doctors are upset about that."

They're also less willing to welcome in-person sales pitches. "Many times, drug reps become friends with the staff, and they drop in at any time," says Dahl. "It disrupts the efficiency of the office. Every day I see more physicians putting limits on visits from drug reps."

So drug companies have been taking their message directly to patients. There's no question all those ads have paid off financially for Merck and Schering-Plough. But can the buzz behind these new drugs last? The longer a drug is on the market, the more data builds up about whether it actually works as promised.

And while drug companies may convince patients they need a particular pill, most consumers have to go through a powerful gatekeeper before they can actually buy the medicine: their insurance carrier.

"With pay for performance," says Dahl, "doctors who comply with certain protocols will get incentives from the payer. Insurance companies are looking to organizations like the American College of Cardiology to make suggestions about what works."

"A medication has to be able to demonstrate a benefit that makes it worth the cost," says Latwis. "That pressure is going to continue."

Seeing a great ad is one thing. But getting a doctor to write a prescription -- and having an insurance company cover it -- is another.

No matter what your business, you need to make a convincing case that your products are worth buying. Drug companies have been great at convincing consumers they need new medications. But they may face a harder time getting insurance companies to pay up. Just as bad is the slap to their self-esteem: Having a panel of experts downplay a product's effectiveness makes the whole company look bad.

In the long term, it never pays to overpromise and underdeliver. If you're going to market something as innovative, make sure you've got the experts on your side.

Elizabeth Blackwell is a freelance writer based in Chicago. She is the author of Frommer's Chicago guidebook, and writes for the Wall Street Journal, Chicago, and other national magazines.

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