Fueled by budget increases, pharmaceutical incentive meeting buyers now are placing more emphasis on service levels rather than price when choosing suppliers, especially as industry regulations force companies to reevaluate their vendor relationships. However, continuing medical education and drug development meetings continue to operate under tight budgets and drug companies increasingly are consolidating their outsourcing partners to ensure they are compliant with the web of diverse rules and regulations placed on the industry, vendors said.
Pharmaceutical companies spent $9 billion on meetings in the United States in 2006, according to San Antonio-based research and consulting firm Frost & Sullivan Inc. Meetings service providers said that statistic has risen steadily over the past several years and that the price sensitivity that marked the industry as recently as last year
(Meetings Today, Jan. 23, 2006) has begun to recede for some kinds of pharmaceutical meetings, specifically incentive trips.
Professional attendance at large healthcare meetings and conventions increased by nearly 14 percent in 2006 compared with 2001 levels, according to a report by the Healthcare Convention and Exhibitors Association.
Zachary Curry, director of sales and marketing for The Ritz-Carlton Palm Beach Resort, said pharmaceutical meeting customers are beginning to return to resorts and luxury properties. In years past, some pharmaceutical companies have avoided high-end properties due to fears their companies would be seen as excessively extravagant.
"If the group's needs match the property, it circumvents the concerns on spend," the Ritz-Carlton's Curry said, adding that pharmaceutical events are getting bigger. "We're growing in space, and that helps with the pharmaceutical and insurance clients."
Pharmaceutical clients primarily are focused on service, business needs and relaxation when bringing groups to the resort, he added, and are looking for "fresh and new" offerings.
To meet the growing demand, partly fueled by pharma, Curry's Ritz-Carlton is undergoing a $60 million redesign with additional meeting space, spa and dining, reopening in stages throughout 2007.
Building preferred relationships with high-demand healthcare clients and drug companies is a challenge, but quality service is the key to repeat business, said Michael Lyons, president and CEO of the Global Events Partners affiliate in Philadelphia.
"Price isn't really the issue anymore," Lyons said. "They may have to pay us more than another destination management company in town, but they're willing to do that and they'll find the money in the budget somehow."
Referrals play a big role in gaining new business in the pharmaceutical market, he added. Service has to be both seamless and reliable. "As a DMC, they are turning a lot of elements of their program over to us to manage. When they ask us to take on the meet-and-greet at the airport and there are 67 rides coming in on one day, they want all 67 rides to go well," he said. "Transportation is typically the one thing that is mishandled."
Pharmaceutical companies, with their VIP and high-level attendees, in particular want seamless, top-shelf service from start to finish, he added. "What's the value of a bus that doesn't show up?" Lyons asked.
Pharmaceutical companies also increasingly are looking to third parties to manage their burgeoning meetings volume. The growth in volume is "unbelievable," he said.
"They don't have enough meeting planners that can handle 300 meetings a year, which is about what the average pharmaceutical company is doing," he said.
Maureen Concklin, president and CEO of San Antonio-based CMM Global, a meeting planning firm for the drug development industry, said her corporate clients' budgets remain tight. The company's clients include Amgen, Pfizer Inc. and Sanofi-Aventis.
Drug developers increasingly are regulated to ensure they do not have influence over the doctors that prescribe their products, she said. As a result, such companies are consolidating their meeting service providers and seeking partners with experience in pharmaceutical events.
"The latest trend has been the consolidation of outsourcing," Concklin said. "They have procurement departments now. Suddenly, after working with someone for eight years, now you have to go through a process."
That procurement focus has also pushed price above all for CMM Global's clients, she said, while metrics for service levels increasingly are added to the request for proposal process. "There's the business metrics, have you lived up to the budget and performance—and then there are the softer metrics, following guidelines and being compliant with policies," she said.
Negotiations continue to be fierce for procurement-based standard pricing or unit pricing, she said, a model that does not always fit with service-centric meetings.
Ninety percent of CMM Global's clients are either repeat customers or referrals from existing customers, she said. "It's a relationship business," Concklin said. "Drug development is confidential in nature and the target audience, being physicians and executives, are very high -end."
Some clients will even adjust the dates of their event to be able to work with their previous outsourcing partner, she added, rather than educate a new partner on all the company-specific policies and procedures.
"There are so many things that are client-specific," Concklin said. "You don't want to ruin the relationship by not being up on the latest changes."
U.S. Regulations on physician-attended meetings come primarily from The Pharmaceutical Research and Manufacturers of America Code and the U.S. Office of the Inspector, and can become even more complex for events with attendees from more than one country.
"It's a new challenge for meeting planning companies," Concklin said. "They have to have someone who pays attention to all of the new guidelines."