The Future of Pharma Sales: Part I
Manufacturers have been engaged in an “arms race” in which the number of “feet on the street” was the principal point of competition. A 1996 study even calculated that the volume of sales reps had surpassed the capacity of all physicians to see reps!
As R&D productivity has declined over the past decade and blockbusters went generic with no replacement cash flow, the race has become economically unsustainable and ineffective. Pharma companies have responded by paring their field sales forces, competing now on layoff numbers. While reducing the labor intensity of the old sales model may respond to short term cash flow concerns, it doesn’t address the issue of effectiveness.
Pharma companies need to radically rethink the role of the sales rep in response to the changing power dynamics in healthcare delivery. Physician-based marketing of product features that saturates doctors’ offices is an increasingly ineffective commercial strategy. The new sales role will require different competencies, supported by a new training, evaluation and reward system and a new career development model. All of this will have significant implications for the entire commercial organization. In this month’s column, I identify key questions manufacturers should consider as they build a sales force prepared for both the present and the future.
How has the sales challenge changed?
As a result of recent healthcare reforms, the customer landscape is being radically reshaped by declining reimbursement, resulting in massive consolidation and a shift in buying criteria towards product value. Physician access has been shrinking as well, caused by productivity pressure on independent physicians, and institutional barriers to access for the increasing segment of employed physicians.
Continuing consolidation across providers increases the potential business risk as each customer now accounts for a more significant share of revenue. An individual physician switching to a competing product, while important to the rep involved, is trivial in terms of the impact on the company’s top line compared to having one or more products shut out of the formulary of a major hospital system.
Perhaps most importantly, as more physicians have opted to become employees, decisions about what drugs are on formulary or which devices will be used are increasingly made by committees with administrative and clinical representation. Whereas individual physicians typically did not require evidence of either economic savings or incremental clinical effectiveness as a condition of purchase, these new decision makers focus on economic and clinical value. Here, the old model of reps calling on docs to pitch features and benefits doesn’t speak to the institutional concerns of a formulary committee.
The emergence of evidence-based medicine and the concurrent growth in the development of care paths has further limited physicians’ freedom to prescribe certain drugs. Manufacturers must get “plugged into” such developments and be able to provide assistance, support, and exert influence to ensure that their product is included in the care path.
What are the implications for sales reps and commercial strategy?
Pharmaceutical sales techniques have traditionally been uniform and relatively one-dimensional -- Let me tell you about our product’s features and benefits. Such a one-size-fits-all approach is no longer viable. Manufacturers must take into consideration the shift in decision making authority and their implications for the role of the rep. Field sales must address a different set of customers with more limited access, and a very different set of decision criteria.
Continuing consolidation across the hospital sector, coupled with centralized purchasing makes relationship management with institutional decision making groups increasingly critical. At the field sales level, manufacturers will have to build complex, long-lasting relationships with multiple stakeholders within thesame institution or group.This strategic shift from “selling to one” to “selling to a network”requires teams of sales and marketing professionals engaging in a coordinated manner with multiple stakeholders in a key account management structure. Here, representatives’ ability to map decision-making and influence networks will be critical.
Manufacturers will have to structure each sales account uniquely by taking multiple variables into consideration, including the number of key stakeholders as well as the account’s geographic location/density. Essentially, sales reps will be expected to work efficiently as a liaison between physicians, hospital and ACO administrators, and other KOLs responsible for product adoption. Depending on the size, influence and location of particular customers, sales staff may be organized into teams calling on different stakeholders within a customer, or representing different areas of disease expertise. This will have major implications on the qualifications manufacturers should be looking for in their sales reps.
As I discussed earlier, the dialogue is now centered on economic andclinical value. This means that reps need to build relationships that rely on their ability to provide decision makers with evidence of real value in the context of running their business including data demonstrating a more effective (and affordable) continuum of care for their patients. Manufacturersthat understand a rep’s redefined role must ensure that their reps are adaptable and have the competencies needed to succeed in this evolving market.
The ability to influence the development of care paths will probably not rest with a typical sales rep, but will require the skills and training currently resident in medical science liaisons (MSLs). Whether this results in a team based approach or a requirement for sales reps to possess skills and qualifications similar to those of an MSL will have significant implications for hiring and training of field personnel. This will be the focus of the next column.