The perceived impact of the SA Code of Practice for the marketing of medicines on customer equity in the pharmaceutical industry of South Africa

Abstract

The SA Code of Practice for the Marketing of Medicines was formulated in an attempt to reduce the cost of medicines, thus ruling out certain marketing practices. This research report investigated what the perceived impact of the Code may be on customer equity in an already volatile industry. Quantitative, cross-sectional research was undertaken. A pre-tested, selfadministered, e-mail survey based on the regulations of the Code was distributed to key account retail pharmacies of a particular pharmaceutical company in South Africa. Four hypotheses were statistically tested at significance levels of 0,1 %, 1 % and 5 %. Inferences were then drawn based on the quantitative analyses. The results show that the market is in favour of the “Code-not-condoned” value, brand and relationship equity marketing practices; thus the Code’s impact may be perceived as negative. Pharmaceutical firms should be careful in selecting “Code-condoned” marketing practices, as these may not contribute to customer equity. This aspect adds to the complexity of choosing the correct marketing practices. It is recommended that only those marketing practices not contributing to customer equity should be outlawed by the Code. The indication is that the Code’s impact may reach further than just attempting to drive down the price of medicines; it may also impact the long term value of a pharmaceutical firm. Copyright