The Competitive Advantage of Synergies

Sales, Marketing and Medical Affairs should co-operate to create substantial extra value for customers, argues Barrett Madrigal.



Pharma companies looking to succeed in Japan need to integrate their sales and marketing activity. Moreover, those that generate synergies between Sales, Marketing and Medical Affairs are going to create “tremendous value for customers.” That’s the view of senior Eli Lilly executive Barrett Madrigal, who has worked in Japan for over 20 years and will be speaking at the eyeforpharma Tokyo 2016 conference, July 13-14.

Madrigal has been with Eli Lilly for 26 years and has extensive, ground level understanding of the Japanese pharmaceutical market: he is responsible for two business units and four major therapeutic areas – osteoporosis, pain (particularly neuropathic pain), dermatology and rheumatology – overseeing revenues of approximately $500 million (according to 2015 NHI sales data) and with more than 700 people in his group.

“You have to be looking at those one-on-one customer relationships, as well as the larger market – the different segments of the market – anticipating what different channels you can use to create more touch points with the customer so you generate a real positive overall experience.”

He summarizes the three common commercial models in Japan:

 

  • Fully integrated sales and marketing – found more frequently at large international companies
  • A traditional segment where sales is separate from marketing; and
  • Sales with “marketing” acting as sales support.

“I would say that the more traditional Japanese companies have a very clear separation of sales and marketing, and I think you still find quite a lot of Japanese companies – especially those with older products – which have a large sales function and a sales support group that they may or may not term ‘marketing.’

Need for change

“I believe that this is going to be a real challenge,” he tells eyeforpharma. “Today in Japan we are about a decade behind the US and Europe, heavily invested in the share of voice model – that’s just not going to be sustainable.” Spending controls, reduced access to HCPs and loss of autonomy among physicians are just three reasons why the share-of-voice model is becoming less effective.

Sales and marketing synergies

Accordingly, savvy companies are seeking to boost productivity through improved sales and marketing synergies and creating multiple touch points to focus on the patient journey, and what Eli Lilly refers to as “core moments of truth”.

So what has hindered this model in the past? Madrigal highlights a number of barriers to be overcome if sales and marketing are to work closely together.

“The day-to-day jobs are quite different – one is all about the individual customer and the other is looking at the market as a whole and focusing on different segments within that market and trying to create a good experience. That leads to a culture difference. In certain organizations, the budget battles are pretty significant – it’s a zero-sum game; there’s only so much money to go to sales and marketing; if sales gets the lion’s share, then there is only a small part left for the marketers to use.”

Integrating the two functions

So how do you genuinely integrate the two functions? “At least in our company, we cross-train people: every marketer, even the newest MBA, has to go out and do sales for a couple of years to understand the customers, to understand the sales process, to understand what it’s like to be working alone in the field with the materials, and trying to adapt those materials to a wide range of different customers and customer needs.

“The second thing that we do is provide training to both groups: everybody gets basic sales training, and everybody gets basic marketing training, so that we create a common vocabulary and a common framework. Most people don’t want to be told what to do; people want to understand why they are doing it and, if they understand why they are doing it, it is much easier to get them aligned to it.

“The third thing we do, we make sure that all of our senior sales leaders work in the corporate headquarters. So, it’s very hard to become a regional sales director or a national sales director without spending some quality time at headquarters, either on a brand team or in compliance, or the consumer analytics team. Not only do you establish a network in the headquarters and gain a few tools, but you also start to understand the process that went into developing the strategy; you understand where input is best provided.

“Then, when you go back out into sales, you’ve got this network, you know who to talk to; you know the language; you can suggest some tools to understand the market better. This cross-pollination enables the sales and marketing people to better collaborate out in the field.”

Out in the field

Of course, this approach equally applies to the marketers, who gain continuing insight into customers’ views and work in the field by accompanying reps on a regular basis.  Every member of a brand team spends one day a month, from early in the morning to late at night, with a sales rep – usually a different sales rep each time.

“We don’t allow people to go for just an hour and make spot a visit. Usually, you are up very early; you go to the wholesalers; you see key customers; you go through the pre-call planning process and the day wrap-up, so that you really see a full day.

I think change is inevitable and those that don’t change may not survive. However, those that do are going to be able to touch their customers on a wider basis and reduce their reliance solely on the sales channel. They’re going to find that as they get good at all these other channels, there’s a synergistic effect and their salespeople are much more productive.

“They do that 12 times a year and we think that gives them great insight into implementation: you get to hear live what the customer had to say; that gives you a real piece of the sales business that you can own with the salespeople.”

Productivity benefits

Madrigal warns: “I think change is inevitable and those that don’t change may not survive. However, those that do are going to be able to touch their customers on a wider basis and reduce their reliance solely on the sales channel. They’re going to find that as they get good at all these other channels, there’s a synergistic effect and their salespeople are much more productive.”

He quotes research suggesting that, by adding extra customer touch points, you can achieve a 20% productivity gain each time – adding two additional touches improves productivity by 40%. “That’s a phenomenally powerful improvement in productivity. Those that really embrace this are going to realize these kinds of productivity gains – you’re going to run circles around your nearest competitor by doing that.”

Need for innovation

Nevertheless, productivity improvements only take a business so far. “At some stage, you’ve got to flip to being more creative and innovative. I think the companies that get the sales and marketing mix right are going to do that and they’re going to do it in such a profound way that the dinosaurs in our industry are going to become extinct.”

In conclusion, he predicts a new commercial model, picturing a three-legged stool where Medical Affairs is the third leg in addition to Sales and Marketing. “These three teams, when they really work well together, are going to create tremendous value for customers, and answer the key questions that they have, and provide insights and solutions that today we might be missing.”


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