Given the importance of a rapid launch of new products, many pharmaceutical firms are turning to consumer marketing tools to create consumer demand. To date, much of the consumer marketing effort has focused on direct-to-consumer advertising, but more and more drug companies are learning to harness the power of the Internet to push out their product message.Far more than simply establishing a web site, interactive DTC--or iDTC--marketing is a two-way approach whereby companies and consumers exchange information through feedback loops, the end result of which is to develop and deepen customer relationships. To be effective, however, iDTC campaigns must have a clear sense of the bottlenecks to product adoption, establish reasonable goals and expectations, and coordinate with and complement much more traditional launch strategies.

Medsite has built a steadily growing revenue stream and customer base, primarily through online sales of books and medical supplies. It also leverages those e-commerce offerings to provide pharmaceutical and other product companies with a means of promoting themselves to physicians by using incentives, such as discounted books or supplies. With further growth in mind, the company filed a $100 million IPO earlier this year--only to withdraw it a few months later when the bottom fell out of the e-health public markets. Facing a suddenly hostile financing environment, Medsite's management re-engineered their business plan, with the goal of accelerating the company's drive to profitability by emphasizing the higher-margin end of its business that derives income from promotional deals with product companies. A key element of this effort is an ambitious package of customizable Internet tools for physician practices that is intended to bring in lucrative sponsorship contracts from product companies. In entering this arena, Medsite will find itself up against some major players with significantly greater resources. And to fund their ambitious new initiative, Medsite will have to convince a wary investment community that, in an industry apparently headed for domination by a few billion-dollar companies, they will be one of the survivors. But Medsite's management expresses confidence that its higher-profile competition has yet to make any deep inroads into the physician market, which they argue remains quite open. The task now is to persuade investors, product companies, and physicians that they can succeed---where others have largely failed--in getting doctors to make the Internet an integral part of their practices.

Big Pharma has been generally cautious in developing Internet capabilities and strategies: most companies are only selectively applying Web technologies to their existing business models. The Internet opens many potential opportunities for drug companies, including streamlining procurement & manufacturing, sharing R&D knowledge through virtual communities, enhancing clinical development productivity, and developing new techniques for marketing to consumers and physicians. To design and execute an effective Internet strategy, companies need to develop in-house capabilities in six categories: continuous strategy development; rapid decisionmaking and resource allocations; e-commerce dealmaking; best in market sourcing; technology architecture; and performance-driven management.