Business Breakdowns
· Matt Reustle, Jim Jones
[00:00:00] S0: Seems very logical to me that the doctor would be the highest-value target of an advertiser as well, so just keeping that customer happy and satisfied is particularly important from that side of the business perspective. Do they monetize any of those add-on solutions as they're rolling them out? Because it does feel like the DocuSign-esque, the HIPAA compliance, all of those productivity tools can make a material difference. They're gonna increase the stickiness of you using the platform, which is a net benefit to the advertising business, but I'm just curious if they've explored monetizing any of those add-on tools. [00:00:00] S1: They'll sell enterprise agreements to hospital systems to get all the doctors on the Dialer Pro, but doctors can use all the tools for free. If your system doesn't necessarily have an enterprise agreement, then doctors can use the tools for free, but most of the revenue comes from pharma advertising to the doctors as opposed to the hospital systems. [00:00:00] S0: What has the trend line looked like for that in terms of advertising spend coming from pharma? I know it's just always high, but I'm sure there's some cyclicality to it. Are there any secular trends in that ad bucket that are worth noting? Because it feels like the most obvious KPI here.
· Matt Reustle, Jim Jones
[00:00:00] S0: What has the trend line looked like for that in terms of advertising spend coming from pharma? I know it's just always high, but I'm sure there's some cyclicality to it. Are there any secular trends in that ad bucket that are worth noting? Because it feels like the most obvious KPI here. [00:00:00] S1: The market grows about 5% to 7% per year. That's because there's a secular shift to digital from traditional sources of advertising. The healthcare industry is pretty far behind the rest of the economy in terms of how far we've gone digital, and it makes some sense. The healthcare industry, specifically pharma, has an army of salespeople that are going into hospitals that a lot of industries just don't have that. The latest numbers I saw are that digital advertising is 75% penetrated in most parts of the economy, and we're about half that in healthcare. There's a long runway of shift that needs to happen. It helps that you can identify the ROI. When you put a TV commercial on, you have no idea if that consumer saw the ad and then fulfilled a script or not, but it's very clear: we target a group of doctors and then we buy third-party data to see who's getting the prescriptions. Being able to see the ROI is driving that shift to digital. The rate at which pharma will move over is the governing factor there.
· Matt Reustle, Jim Jones
[00:00:00] S0: Meta and Google, obviously there's an eyeball thing going on there. They built quite impressive businesses on the back of that thesis alone, the ability to measure the ROI in your ad spend, so certainly checks out. I was reading this, negative investor reporter, COVID, you obviously had all of those sales reps basically grounded, weren't able to visit hospitals. Therefore there was this big need for Doximity. Was there anything noteworthy that came out of revenue from that time period where naturally you would expect to see a big push into a channel like Doximity? Was there any hiccup or breaking of that trend as you merged out? What did the revenue trajectory look like through that period of time? [00:00:00] S1: Your instinct is right on. During COVID, this was an absolutely necessary tool. Coming out of the COVID probably pushed some pharma into the digital channel maybe a little faster than they would've gone otherwise. I think opened their eyes to the effectiveness. During COVID, hospitals were shut down. Pharma reps weren't allowed to go in. What we see now is an increasing number of doctors that are what's called "no-see" doctors, where they don't want you to bring them in a box of donuts and talk about their drugs anymore or take the doctor out for a steak dinner. It's almost generational that that's not how people are being marketed to or prefer to be marketed to these days.
· Jim Jones, Matt Reustle
[00:00:00] S1: Your instinct is right on. During COVID, this was an absolutely necessary tool. Coming out of the COVID probably pushed some pharma into the digital channel maybe a little faster than they would've gone otherwise. I think opened their eyes to the effectiveness. During COVID, hospitals were shut down. Pharma reps weren't allowed to go in. What we see now is an increasing number of doctors that are what's called "no-see" doctors, where they don't want you to bring them in a box of donuts and talk about their drugs anymore or take the doctor out for a steak dinner. It's almost generational that that's not how people are being marketed to or prefer to be marketed to these days. [00:00:00] S0: The medical sales profession is quite unique. Would you expect, in terms of that share shift over time—you mentioned still quite far behind most other industries or just the economy broadly in terms of digital ads as a percentage of total—would that be the natural place where you see share gains coming from, from the medical sales profession? Is it split evenly from traditional linear advertising, print advertising? Where would you expect it to come from the most?
· Matt Reustle, Jim Jones
[00:00:00] S0: The medical sales profession is quite unique. Would you expect, in terms of that share shift over time—you mentioned still quite far behind most other industries or just the economy broadly in terms of digital ads as a percentage of total—would that be the natural place where you see share gains coming from, from the medical sales profession? Is it split evenly from traditional linear advertising, print advertising? Where would you expect it to come from the most? [00:00:00] S1: It's coming from a few different areas. The pharma reps will have fewer of those going forward. Banner ads and print, more traditional sources. Increasingly, consumer advertising will be moving over. There was an executive order to really clamp down on what needs to go into a TV commercial for pharmaceuticals advertised to the consumer. In essence, you need to add 30 seconds to the commercial and talk about all the risks. It sounds a lot less appealing after 30 seconds of all the things that could go wrong. The ROI or the attractiveness of that channel is decreasing with this executive order. Pharma spends about $10 billion a year in direct-to-consumer marketing today. Direct to the physician is about $7 billion. This is a pretty big shift in terms of where the dollars were going historically, both from within the HCP channel and then also now stealing from other buckets as well.
· Jim Jones, Matt Reustle
[00:00:00] S1: It's coming from a few different areas. The pharma reps will have fewer of those going forward. Banner ads and print, more traditional sources. Increasingly, consumer advertising will be moving over. There was an executive order to really clamp down on what needs to go into a TV commercial for pharmaceuticals advertised to the consumer. In essence, you need to add 30 seconds to the commercial and talk about all the risks. It sounds a lot less appealing after 30 seconds of all the things that could go wrong. The ROI or the attractiveness of that channel is decreasing with this executive order. Pharma spends about $10 billion a year in direct-to-consumer marketing today. Direct to the physician is about $7 billion. This is a pretty big shift in terms of where the dollars were going historically, both from within the HCP channel and then also now stealing from other buckets as well. [00:00:00] S0: You mentioned the numbers on the overall market growth being quite healthy, multiples of GDP growth. Has there been any periods of time where you've seen a material pullback, or would there be anything that could represent a threat to overall pharma ad spend that would be noteworthy to keep in the back of your mind?