Allergan Cuts Costs by Regulating Promotions
A case study on Business Intelligence & Analytics in Pharma & HealthcareReader ROI
Executive Summary
CIO 100 Winner: K. T .Rajan envisioned a plan to cut costs of promotions. So they deployed an electronic promotional expenses management solution called eXpro, which works in tandem with a system that captures the modalities of generated prescription data. It effectively establishes the link between the cost of a promotion and what the company's getting out of it, and hence helps in cost-cutting related decisions.
Although many people assume that healthcare is immune to slowdowns, they are wrong. "People have become highly cautious about their healthcare spends. They are becoming choosy about which therapies to use and the implant of medical devices has decreased," says K.T. Rajan, director operations, information systems & projects, Allergan India, a joint venture between Allergan and Nicholas Piramal India that offers high-tech solutions and drugs primarily for ophthalmic and cosmetic requirements.
Case Study Highlights
The slowdown put pressure on Allergan's costs. "We were looking for high-impact reductions with no or minimal impact on results," says Rajan.
They found that in their promotional budgets. Pharma companies tend to spend a significant percentage of their revenue in promotions. "Promotional expenses were about eight percent of overall sales at Allergan," says Rajan. "Any reduction in these expenses would not only impact the bottom-line but may also increase the top-line five times over."
So Rajan and his team deployed an electronic promotional expenses management solution called eXpro, which works in tandem with a system that captures the modalities of generated prescription data. It effectively establishes the link between the cost of a promotion and what the company's getting out of it. This gave the marketing team and product managers better decision-making powers and ensured that promotional activities that were not contributing could be abandoned quickly.
But for the project to take off, Rajan needed to get through the marketing team. "Promotions is the exclusive domain of the marketing team. Because a one-to-one correlation between effort and result was not easy to establish, concerned personnel operated on intuition," says Rajan. "The success of the project was dependant on their maturity and their permission for an external review of their operations."
Today, eXpro lets Allergan to reduce promotional expenses by about four percent (Rs 32 lakh), and realize its ROI on the Rs 22 lakh project in four months. "Our solution provided ample visibility to every cost element that goes into promotional expenses. Today, budgeting is possible to the last detail and the estimates are more accurate. There is little ambiguity and more certainty in the entire exercise," says Rajan.
The Person Behind It
“Allergan’s promotional expenses were about 7 to 8 percent of sales. Any reduction would add to the bottom line.”
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