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Why Sanofi's Afrezza Marketing Strategy Is Brilliant

This is meant to be long-winded and comprehensive.

Let me start this off with a few disclosures:

  • I am long MannKind (NASDAQ:MNKD) for about a year and have done countless hours of due diligence before I decided to invest.
  • I am a long-term focused investor. I make few trades, so it takes a long time for me to pick a company. I like to "set & forget" and to "buy the dip."
  • I do not profess to have any idea what's going to happen to the share price from day to day, and quite frankly, I don't care. I'm confident in the long-term prospects.
  • My career is in marketing - specifically, lead generation/advertising.

Coming from a marketing/advertising standpoint, this roll-out is great thus far (for Afrezza's success - not short-term stock traders). I believe Sanofi's (NYSE:SNY) strategy for rolling out Afrezza follows a simple, structured plan.

I believe the 5 steps are:

  1. Completion of the CLAMP and other follow-up efficacy studies
  2. Apply for a new, better label (allows them to make bold advertising claims)
  3. Use the new label and study results to gain Tier 2 insurance coverage
  4. Gain approval in other countries
  5. Once insurance mostly covers Afrezza, Sanofi will hire more sales reps and begin a "full-on" DTC campaign.

Sanofi's Current (9/29/15) Advertising

Advertising is meant to spread awareness about one's product. Its eventual goal is to convert the user from an impression (showing of the ad) into a sale (or prescription, in this case).

Based on what I have seen so far, Sanofi is definitely ramping up its advertising efforts. The company is choosing the channels that are cheapest first, and that provide a level of awareness. It started out with paid search ads on branded terms like "insulin human" or "Afrezza". These are cheapest because they own these terms, making it harder for others to "outbid" for the top ad spot. Since then, we've seen them start to bid on other diabetes terms as well as begin its display advertising though banners on several sites. Finally, the company has appeared in Time Magazine multiple times, as well as Good Housekeeping and others!

The purpose of this is to pique the interest of the viewers, but not to make them jump up and call their doctor. It is solely to make them more generally aware of the product. As time goes on and they see it at more and more places, the viewer will then say "hmm… I've seen it here, here, and here… maybe I should check it out?"

This is where timing is everything…

Imagine you've seen a TV ad for Afrezza and you visit your doctor (before the above step 3 is complete). Consider the following scenarios and how they would present barriers to prescriptions/renewals.

  • What if your doctor hasn't heard of Afrezza yet? There are many drugs and it takes time to learn.
  • What if your doctor does some research and isn't impressed by the FDA trial results? Will he/she prescribe?
  • Suppose your doctor has heard of Afrezza. Suppose he prescribes! What happens if your insurance doesn't cover it?
  • What happens when the samples run out and it's too expensive to continue?

All of these scenarios can negatively affect your opinion on whether to continue/get started. If Sanofi is able to complete the 3rd step (above) before your first real impression (with the doctor) happens, the chances of success are much higher.

I believe Sanofi currently spending minimal $s on advertising right now because the patient's experience isn't greatest yet (high cost, insurance claims, pre-authorizations, tests, etc.), and the claims they're legally allowed to make aren't that impressive yet.

In fact, Sanofi's EVP of Global Divisions and Strategic Development, Pascale Witz, has stated that the company is taking more of a "grassroots approach" to let the patients decide which products it likes best before a massive sales launch or a consumer advertising campaign.

Now comes the real test of the moves Witz has made to date. With new CEO, Olivier Brandicourt, at the helm, Sanofi is bringing six new vaccines to market this year, and 18 more products over the next six years - a pace of one rollout every three months. In pharma, that's light speed.

"We have the opportunity to rewrite medical history," Witz says.

In February, Sanofi launched Afrezza, the only inhalable insulin on the U.S. market. One month later, the company got a boost with the U.S. Food and Drug Administration (FDA)'s approval of Toujeo, a successor to a type of insulin called glargine that could be a game changer in diabetes treatment. And in July, the company obtained FDA approval of Praluent, a potential blockbuster cholesterol treatment that has had dramatic success in clinical trials.

As change roils the pharmaceutical and health-care spaces, the once orderly rollout of new products has been upended. Yet that need for speed can undermine a solid strategy in the crucial execution phase.

New product rollouts traditionally consist of marketing to physicians, pharmacists and payers-once "the biggest decision-makers," Witz says. "But in the end, all of these drugs are used by patients."

That's why Sanofi's upcoming rollouts will look and feel so different.

Half of diabetics stop taking insulin within their first year of treatment-often because they don't understand that the lack of immediate consequences can mask more serious long-term problems, Witz explains. Demonstrating the value of continuing therapy is good not only for patients, but also for drug makers.

So instead of simply pushing its new insulin drugs, Afrezza and Toujeo, into the sales channel, Sanofi will focus on raising patient awareness and transition to a partial pull model, in which patients request specific medications or information.

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