February 28, 2014
Digital Excellence in the Global Pharmaceutical Industry in 2014
By Dennis van Rooij and Tim van Tongeren, February 28, 2014
To determine digital excellence maturity inside the world’s largest pharmaceutical companies, DT Associates surveyed digital leaders and used our Digital Excellence Maturity Model to rank these companies on thirty-two different criteria. The leaders, Johnson & Johnson’s Janssen and Merck, demonstrate the strong change management skills required to drive digital excellence. In contrast, the laggards, AZ and Roche, suffer from a lack of a sharp vision to guide and govern the various digital programs and capabilities. To accelerate their digital transformation, firms should adopt an approach that advances all of the different facets of digital excellence toward maturity at an equal pace.
Companies surveyed for this report: AbbVie, Astellas Pharma, AstraZeneca, Bayer, Eli Lilly and Company, GlaxoSmithKline, Johnson & Johnson / Janssen, Merck & Co., Mylan, Novartis, Pfizer, Roche, Sanofi, Teva Pharmaceuticals.
Are Global Pharmaceutical Firms Achieving Digital Excellence?
Superior digital prescriber, payer, and patient experiences don’t just happen—they’re consciously developed and supported by healthcare organizations that understand the opportunities of and details behind digital technologies. And while implementing new technologies is important, it’s vital to view digital transformation as a change management program that includes important factors such as people, processes, and a culture that supports digital excellence. To understand how close global pharmaceutical companies are coming to achieving digital excellence, we:
Defined a model of digital excellence maturity. DT Associates’ Digital Excellence Maturity Model is a framework of twelve core competencies related to effectively embedding digital technologies at pharmaceutical firms (see Figure 1). We organize these competencies according to the four stages of organizational maturity—assess, plan, accelerate, and optimize— and evaluate two or three specific characteristics of each. For example, we have found that buy- in is important to the success of a significant digital project or program, so we look to see if at least one senior sponsor is championing the project (see Figure 2). In total, we used thirty-two criteria to determine a firm’s digital excellence maturity.
- Surveyed digital leaders about their organizations. We fielded an online survey to thirty-two digital leaders at global pharmaceutical companies and asked them to rate the state of their digital excellence as defined by our model.1 We found that these leaders typically head up teams with about eight members. These teams support a range of countries and brands— nine countries and thirteen brands on average—and are working with a budget of about €2.1 million in 2014, a rise of about sixteen percent compared with 2013 (see Figure 3).
- Ranked global pharmaceutical companies’ digital excellence maturity. For each of the thirty-two statements, respondents rated their firms on a scale of one (strong disagreement with the statement) to five (strong agreement). We converted these scores into percentages and averaged them to arrive at an overall score ranging from 0% (a complete lack of digital excellence) to 100% (full digital excellence maturity). Where we got more than one response from the same firm—due to factors like geographic coverage or organizational structure—we averaged those scores to determine the company’s overall score.
J&J and Merck Top the Digital Excellence Maturity Rankings
Just two companies—J&J and Merck—received scores in the upper quartile, thus demonstrating proficiency in digital excellence. A dense pack of companies, led by Sanofi and Bayer, follows; the difference between the first and last firm in this cluster is just nine percentage points (see Figure 4). Overall, here is what we found among the eleven top global pharmaceutical firms:
- The most mature: J&J and Merck. J&J emerged as the clear leader with a score of eighty- eight percent—ten percentage points clear of its closest competitor. This high score is mainly due to J&J’s very strong Assess and Launch phase capabilities, including having a clear strategic plan and capability road map. J&J’s primary weakness is its lack of ability to benchmark its range of customer experiences; the firm also faces challenges in embedding digital capabilities into core company functions once those capabilities have been defined and built.Merck’s strong points include setting a clear vision for digital, securing company-wide buy-in for the digital strategy, and aligning the organization to that strategy; the firm is clearly reaping benefits from the Univadis legacy. Merck can further accelerate its digital excellence by putting in place empowering governance frameworks for those brand teams that want to adopt digital channels such as social media and personalized email.
- The strong contenders: Sanofi and Bayer excel in specific areas. With overall digital maturity scores of sixty-six percent, Sanofi and Bayer tied for third place our 2014 benchmark study. Sanofi is strong in defining digital standards in cross-functional governance charters, but it will need an effective measurement framework to track the impact of digital initiatives on overall business outcomes. Without such a framework, pressure from the management team will eventually result in the firm diminishing its investments in digital.Bayer received the same overall score as Sanofi; while Sanofi was stronger in the Accelerate phase, Bayer clearly did better in the Assess phase. Our data indicates that Bayer’s senior executives provide good support to the digital team; its challenge is finding the right people to staff the team with. Given the primary location of Bayer’s digital team, the company has had difficulty attracting the right skills to advance its digital transformation.
- The weakest: Roche and AZ. Roche reports that the senior management team has a solid commitment to the digital team’s role and vision. However, the vision that execs are endorsing is not well understood throughout the organization—to the point that leaders in other parts of the company don’t actively support the digital road map!AZ’s digital road map is its biggest obstacle; its digital implementations suffer from weak project management skills and fail to meet the requirements of its internal target users. AZ’s strongest pillar of success? The digital training program that the firm makes available to the wider organization, supported by strong levels of digital expertise within its digital team.
Companies Struggle With All Facets Of Digital Excellence
We drilled down into our data to examine and evaluate individual criteria, or competencies, of digital excellence from an industry-wide perspective (see Figure 5). We found that pharmaceutical firms:
- Are strongest at assembling a team with management skills and digital expertise. The success of a digital team depends on its ability to change the culture into one that wants to do promotional and product-related activities differently, including the use of digital channels and tactics. This requires team members to have a combination of change management skills and solid digital expertise. Our respondents rated this as their main competency: seventy-five percent say that their digital team has strong business acumen to drive change through the organization, and seventy-two percent believe that their team has strong expertise—gained from inside and outside the industry—to help their colleagues understand and apply digital marketing techniques.
- Are weakest at setting and cascading a vision for digital in the organization. A clear vision acts as a team’s North Star, providing direction and decision guidelines for digital programs and stimulating people to change and try something different. This is what the firms we surveyed struggle with most—just twenty-eight percent of the respondents agreed that their company has a clear, shared vision of what it’s trying to achieve with digital. Half of these companies are able to translate their vision for digital into one that aligns closely to the challenges and objectives of their primary internal “customer”: the therapy and brand teams.
- Face a major challenge to make their digital capabilities accessible. Building digital capabilities is a long, complex process that must carefully consider the requirements of different departments and affiliates and take into account legal and medical governance frameworks. Given the time and effort that companies invest in this, it’s disappointing that only one in four digital transformation programs takes the next step: making sure that everyone knows how to access and use digital capabilities. Company-wide training programs and rich intranet sites have proven successful for companies like GSK and AZ.
Apply a Systematic Approach to Digital Excellence and Focus on Turning Skeptics into Champions
Building digital excellence is a comprehensive change program whose success depends on many factors. Our study of global pharmaceutical firms shows that the weakest links in the digital excellence chain are not related to budget or the technology itself, but rather to a lack of buy-in—or even resistance—to the idea of doing things differently. Companies undergoing digital transformation need to continuously evaluate how they are doing in all twelve facets of digital excellence and identify where they’re lagging behind. But that’s just the baseline. Digital leaders who want to break free from the pack and use digital as a competitive differentiator for their company must do more:
- Avoid false starts by setting crystal-clear visions. A strong digital vision is not just a one-line statement of what the company wants to be, or achieve; it’s the guiding light that teams—including those that are skeptical about digital—can use to orient themselves. Everyone affected by a digital transformation needs to understand where he or she fits in. Strongly conceived visions do this, but individual contributors and teams often struggle to translate the vision into specifics—so managers need to spend the time to craft a message tailored to the specifics of the team and effectively communicate that message. Finally, when shaping your vision, enlist primary stakeholders in the effort to define the purpose of digital excellence and conduct a “five whys” exercise on general statements such as “Digital enables us to build a patient website.”
- Demonstrate the value of digital to mobilize supporters. One of the most common change management challenges is deciding how to allocate your time and effort: do you spend it persuading the people who are resisting change, or supporting those that are embracing the new way of working to illustrate success? One of the best ways to ensure that your vision lasts and to inject more confidence into the change process is to measure the success of digital initiatives using a rigorous framework. Bonus points go to those managers who can relate digital success to key business outcomes, including NPS, cost, or even profitability. You can also demonstrate value by means other than company-wide KPIs. For example, a top-five pharmaceutical company boosted senior management involvement by determining the percentage of target customers that the firm’s field teams were unable to meet in person. This turned into a project, led by the management team, aimed at understanding how the company could use digital to deliver relevant information and services to these “unseen” customers.
- Build the capability that commercial teams need most—and can find. Running a social media account (with or without social listening capability) puts significant demands on a digital team. The team must allocate a lot of time and resources to coordination, alignment, risk management, and setting global policies. Social media is a hot topic and can give companies great insight into the benefits of interacting with the public, but companies shouldn’t forget to set up foundational digital services such as websites, email marketing, and electronic detailing; often, these should be built before launching social media capabilities. To understand which capabilities to prioritize, digital teams should work through their firm’s various brand plans and identify planned digital activities. Checking how the brand team’s intentions line up with current digital capabilities will give a clear picture of the required digital skills and technologies. This essential step can take some of the heat off of your already overloaded brand managers.
DT Associates fielded its Q1 2014 Global Digital Excellence in the Pharmaceutical Industry survey to forty-nine digital professionals who demonstrated interest in and familiarity with digital marketing and strategy as part of their role in a pharmaceutical organization. The forty-nine professionals who completed the survey answered basic questions about their role, their team, and their budgets. Based on answers to these questions, we excluded seventeen of the respondents from our final sample, which included only those who have significant digital responsibility and budget (e.g. heads of digital, digital directors, and digital leads).
We fielded the survey from January 2014 to February 2014. Respondent incentives included a copy of a business eBook or a donation to a charity, as well as a copy of a report containing the collected survey data.
Our sample is not guaranteed to be representative of the population. Responses do not convert directly into precise maturity scores for respondents’ respective companies. Unless otherwise noted, data is intended for descriptive purposes.
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Tim van Tongeren
Dennis van Rooij