Wednesday, April 25, 2012

Common Errors Healthcare Marketers Make

As publishers of market research information, we are analyzing companies on a regular basis and have seen certain patterns in what successful, and unsuccessful companies do.  Here are a few common errors we’ve seen over and over during the years.  

·         Misidentifying the Customer – Healthcare products operated in a market environment that can make it less than obvious as to who the customer is. Consumers may use the product, but the providers are the ones ordering their use. Payers may be the ones pulling the strings. Administrators or facility procurement  managers may have the say on equipment, tests, forumlaries. To understand market dynamics, one must correctly identify who is making the buying decision.

·         Assuming Statistics that Don’t Exist – The most elegant market model or sophisticated scenario analysis will only output data that is as good as the inputs. Be sure that the variables you want to plug into your model are data that can be reliably obtained. Like lines diverging from an angle, models built on estimates built on guesses can leave you pretty far from the truth. And all the time it took to work out the model may prove to have been wasted.

·         Overestimating Adoption Rates – Even the most efficacious technology, the most well validated theory, can take a remarkably long time to penetrate healthcare markets where everything from entrenched attitudes among physicians to risk-averse organizations can be a force for market inertia. In our line of work, some companies were quick to predict more rapid adoption of molecular diagnostics, or EMR software systems, than has actually occurred.  Forecasting scenarios must take into account the very conservative nature of the medical community. (Does anyone know what causes stomach ulcers yet – isn’t it stress?)

Some of these ideas are applied to the IVD market in a title we published a few years ago titled What's Working in IVD 

Monday, April 23, 2012

With Purchase, Nestle Leads Infant Nutrition Market

Nestle's purchase of Wyeth's nutrition unit makes it the largest provider of infant nutrition products, according to Kalorama Information's research on clinical nutrition.   (, easily eclipsing Mead Johnson and Abbott.  The Swiss food giant Nestlé agreed on Monday to buy Pfizer’s infant nutrition business for $11.9 billion.    That's far more than the 1.8 billion they earned in 2010 sales.  

Nestlé said it was paying 19.8 times the Pfizer unit’s estimated pretax profit for 2012. That compares with 10 to 12 times for other recent acquisitions in the food industry, according Jon Cox, an analyst at Kepler Capital Markets in Zurich. 

Nestle is paying a premium according to the article, the price of becoming the largest provider and eliminating a competitor, according to the Times:
The large price paid is not entirely surprising.  Fast growth is expected in this market, particularly in sales to emerging markets such as India, Pakistan and China.   In our report on clinical nutrition, we detail the size of the market, what the market shares were prior to this purchase and the competitors remaining.