1. Pharmaceutical Industry Emerging Opportunities for Mobile Health TechNet Meeting June 2005

2. 2 Agenda 1. Introduction & Background 2. Emerging Trends 3. Opportunities for Mobile 4. Summary

3. 3 Introduction

4. 4 Vianetix is an independent consulting firm that specializes in technology-based solutions for the pharmaceutical industry. Primary focus is on emerging technologies that support marketing and sales force automation. The company was founded to leverage expertise in field force automation and enterprise mobile specific to the pharmaceutical industry. Clients include major/mid-market pharmaceutical companies and venture capital firms that have funded solutions targeted at the pharmaceutical vertical.

5. 5 Introduction Mobile Applications: –No compelling business need: In the past, very difficult to prove business case in the pharma market. –Device Limitations: Technology limited the usefulness of mobile in the marketplace. –Low adoption rates: Underlying problems caused poor adoption rates, particularly sales/marketing. –Few success stories: Very few successes early on, mostly contact management, sample inventory, SFA and medical instrumentation diagnostics. Market Dynamics: –New conditions: Key market conditions have changed the need for mobile technology and other alternate channels in the pharmaceutical market.

6. 6 Background Market Dynamics: –Legislation: Changes in legislation have created increased price pressures, shortened patent life, increased generic use, patient privacy issues and direct to consumer advertising. –Managed Care: Payers and group purchasing agents have become more efficient in measuring and influencing physician prescribing practices. –Sales and Marketing: Increased pressure on physicians has resulted in less face time between the doctor and the pharmaceutical sales representative. “Estimates indicate that only 43% of sales calls result in face-to-face contact with the physician lasting less than 2 minutes.” - EYEFORPHARMA

7. 7 Background Market Dynamics: –Product Management: companies have had difficulty with marketing brands distinctly, overlapping development/marketing efforts, phasing-out mature products and the proliferation of sub-brands and line extensions. –Channel Management: pharmaceutical companies have been heavily dependent on a single channel to deliver their products and services. –Lobbying: Powerful groups (e.g. AARP) continue to support legislation and alternate sources for medicine.

8. 8 Background “Pharmaceutical companies have lost their informational edge. As a result, return on sales and marketing investment has gone down (average 24%) over the last five years.” - MEDADNEWS

9. 9 Background “U.S. pharmaceutical companies have for decades relied on the “pinball wizard” sales model: sales representatives bounce from one doctors office to another in hopes of catching a few moments with physicians and influencing which drugs they prescribe.” “In recent years, the changing dynamics of the business have prompted a massive expansion of sales forces. The resulting system is costly, inefficient, and rife with dissatisfaction.” - MCKINSEY “Industry average for field force budgets is nearly $875 million with top spending organizations committing more than $1billion” – Cutting Edge

10. 10 Emerging Trends “In the past, companies focused on geographic segmentation to sell their products. More recently, account level segmentation with more emphasis on clinical knowledge by the sales representative has shown some success” Dosing Safety Side Effects Reimbursement Efficacy Convenience “However, market dynamics and the complexity of clinical differences between specialized medicines is driving the need for collaborative interactions between sales professionals and the physician in ways never seen before.” “Pharmaceutical companies are looking at new technologies such as mobile to add value and optimize the interaction between the rep and the physician.”

11. 11 Emerging Trends Market Intelligence –The clinical complexity of drugs has made the need for market intelligence more important that ever as companies look to new ways to differentiate their product from the competition. –Increased intelligence is driving new forms of market segmentation based upon prescribing practices and targeting physician’s in specific market segments –Sales strategies are shifting toward targeting the “right” physicians at the “right” time based upon prescribing behavior and practice settings. “About 38% of physicians have consciously decided to make less time for pharmaceutical representatives than they did in 2001.” - EYEFORPHARMA

12. 12 Emerging Trends Alternate Channels –Physicians are using additional channels (internet, mobile) to gain information about new drugs and treatment practices. –Physicians are learning about new treatment therapies much earlier in their lifecycle. –Physicians are becoming more technically savvy and are relying on new technologies for research, education and an alternate channel to deal directly with suppliers. Sales and Marketing –Companies are seeking sales reps with broader skills that can serve as a “trusted advisor” to the physician on new treatment practices.

13. 13 Opportunities for Mobile

14. 14 Opportunities for Mobile “The same study that showed 38% of physicians that have made less time for sales representatives also reveals that 57% of physicians would make more time for sales reps if they provided more value- added services.”

15. 15 Opportunities for Mobile Advances in mobile technology are: –Enabling more collaborative experience between the pharmaceutical sales representative and the physician. –Providing access to improved market intelligence and ability to segment physician’s more easily based upon their prescribing practices/brand loyalty. –Creating opportunities to more easily capture interactions with the patient/healthcare service provider. –Enabling the delivery of medical services in ways and to remote locations that were not possible before. –Creating new opportunities around patient compliance. –Enabling consumer-based healthcare applications.

16. 16 Summary

17. 17 Summary “In order to regain their informational edge, pharmaceutical companies will continue to deploy technologies such as mobile to improve their sales channels and their ability to provide advanced treatments to the patients they serve.”