Pharma’s Reputation Crisis: Can Communications Keep Up?
Big pharma has a reputation problem. Over the years, the industry has been criticised for a wide range of controversies – high drug costs, political lobbying, the opioid crisis, marketing spend and data privacy – which have all kept big pharma firmly in the spotlight. Regulators, media and other stakeholders continue to apply pressure and public trust is at an all-time low.
In an industry plagued with crises and controversies, companies are more cognisant than ever of investing in reputation. So, what does this mean for the communications professionals trying to shape positive perceptions?
To find out, FTI Consulting undertook an in-depth global study to better understand what issues are keeping pharma and biotech communications professionals up at night and whether they are receiving the support they need to do their jobs effectively. Afterall, investment in communications is integral in shaping reputation and trust; something that the industry desperately needs.
- The majority of biotech/pharma companies are not prepared to respond to a crisis
- Industry challenges that impact an organization’s reputation vary by region
- There is a growing need to use communications to help protect reputation
- Digital strategies are seen as increasingly important for crisis response and preparedness
Crisis on the Rise
Respondents across all geographies confirmed what other surveys have previously found: 81% agree that the pharmaceuticals industry in their country has a reputation problem. In Benelux as many as 97% believe that this is true for their region. Surprisingly, given the significant perceived reputation issue, many companies are not prepared to protect their reputation in the case of a crisis: 66% of respondents do not have a crisis communications protocol in place and 59% of respondents do not believe that their company is prepared to respond to or mitigate a crisis. Poor reputation coupled with the lack of a strategy to protect reputation at times of crisis points to a significant level of support required across communications functions. The good news is: 89% of respondents indicate that their company understands how important communications is in protecting corporate reputation.
Operating in a Complex and Challenging environment
- In the US, drug pricing will continue to be an issue across the sector.
- Scarcity of sources of external innovation is a critical topic for communications professionals in France.
- In the UK, Germany and Benelux, R&D programmes and the ability to run them is a future challenge.
Despite a poor reputation and significant challenges facing the sector, respondents identified a number of specific growth opportunities. In the US, Government funding and support is seen as a growth
opportunity. Increased access to the US market is significant for the UK.
In France, partnerships with non-traditional companies, such as Google, Apple or IBM, are giving the industry an edge. Greater investment in R&D is seen as an opportunity in Germany while in Benelux, industry partnerships and collaborations are a focus.
A Growing need for Communications to Mitigate Challenges and Protect Reputation
Along with the need for crisis preparedness, 51% of respondents believe that financial communications investor relations is the most important communications function, a possible indication of the number of companies looking to the public markets for investment and growth.
Over 75% of respondents across the surveyed markets expect communications needs to increase across the sector over the next year and over 75% will see their budgets increase over the next 12 months. The largest increase looks to be the spend on corporate reputation (+88%) in the next year. A high number of respondents (75%) said they find it difficult to evaluate the success of their communications strategy. In an industry with such a significant reputation issue, this is something that needs to be addressed.
As such, establishing the right measurement framework at the outset is critical to measuring success against business outcomes (e.g. message resonance among key stakeholders like the media or investment community). Equally important is designing an approach that is nimble and agile, refining tactics to ensure KPIs are met. For example, digital content allows biotech/pharma organizations to:
- Report on data (engagement, shares, likes, impressions) in real time
- Draw insights from that data to refine a campaign
- Continually track progress against benchmarks
Ensuring successful tracking of KPIs allows an organization to progress its communications strategy, as needed and find its optimal role as the business evolves.
Growing Appreciation for Digital
Digital strategies – and social media in particular – play an important role in shaping brand reputation and responding adequately when a crisis hits. In a highly regulated industry such as pharma, the survey aimed to understand how respondents view and make use of digital as a communications channel.
The survey found that 84% agree that regulation impacts their ability to use social media in their strategies. Nonetheless, 89% say social media is a key element of their communications strategy, while at the same time, there seems to be room for improvement: 68% agree that they do not use social media as effectively as they could. While this is not surprising, there is work to be done to educate the pharma/biotech industry on how to best use social media to support their communications strategies. This is in line with the expected spend for social media: 85 % of respondents believe it will slightly or significantly increase in the next 12 months.
So What Does All of this Mean?
The survey confirms a key theme across all geographies: reputation continues to be a key concern for pharmaceutical companies. At the same time, the preparedness to respond to crises is low. With the increasing scrutiny on the industry, how companies use communications to help navigate the changing landscape for Life Sciences will play an important role in shaping their reputations.
At FTI Consulting, we have a dedicated team of professionals that help clients prepare for situations that have the potential to threaten enterprise value, reputation or business continuity. Preparing for the unexpected, training and stress-testing an organisation’s people, processes and plans before a crisis arises, and responding quickly when trouble hits will help safeguard a company’s reputation and its license to operate.
If you would like to find out more about our research and discuss the effectiveness of your communications in today’s environment, please do get in touch with us.
- 550 respondents – split equally across 5 geographies
- 25% of respondents were in C-suite roles and 47% in senior management positions
- 47% of companies report more than USD$50m annual turnover
- 20+ questions focussed on communications issues, trends, challenges and opportunities
- Conducted in Fall 2019 using a random quota-based sampling technique
- Due to the standard convention of rounding, please note that some totals may not add up to 100%
This primary research was conducted online by FTI’s Digital & Insights team in New York, with professionals across 5 markets involved in communications and/or marketing decision making for pharma/biotech organizations.
For any questions relating to the primary research methodology, please contact James Condon