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Emerging pharma markets: How to profit in Latin America
eyeforpharma's Ursula Sautter talks to Rafael Quintanilla Chong, head of primary care at Bayer Healthcare Mexico, about the promise of the Latin American market
Pharma companies are increasingly looking to Latin America as an attractive new market. The region's economies are "being sustained largely by private consumption, thanks to an improvement in labor indicators and an expansion in lending," the UN’s Economic Commission for Latin America and the Caribbean (ECLAC) stated last summer. "Expectations of buoyant domestic demand and the depletion of idle production capacity ... are fuelling investment." As a result, the ECLAC projects the region's GDP to grow at 4.7% this year and at 4.1% in 2012.
In this environment of an increasing consumer base and private pharmacy spending, pharma, too, hopes to thrive. In 2013, predicts pharmaceutical research firm Espicom Business Intelligence, the region's eight major markets—Brazil, Mexico, Argentina, Chile, Colombia, Cuba, Peru and Venezuela—will represent a retail value of $80 billion, up from $50 billion in 2010.
Despite this promise, pharma companies—both domestic and international—would do well to keep certain things in mind if they want to capture this market.
Give regional reps more freedom
Granting local sales managers more leeway to tailor their approach to local market needs is one of them. While many Latin American countries share a common set of healthcare opportunities and challenges, each still has its own unique economic, social and political idiosyncrasies, which makes a blanket approach to sales less than wise.
"In marketing, you can implement the policy predefined by headquarters in every market without much adaption," says Rafael Quintanilla Chong, head of primary care at Bayer Healthcare Mexico. "In sales, it's a different matter." The Latam countries, he points out, are characterized by very different healthcare set-ups. So payers as well as pricing, reimbursement and protectionism policies vary greatly. "For that reason, your need to give regional reps more freedom to suit their pitch to these factors."
Then there's the need to train and promote your sales and marketing teams more effectively. "If you want to increase the effectiveness of your sales model, moving away from a large generalized sales force to a smaller, specialized through upskilling one is a great opportunity," says Quintanilla.
While most pharma companies in Latam are still using a competency model for their staff, he says, some, like Bayer are now promoting a more talent-based one. This, he believes, is the way to go: "If you want to improve the efficiency of the activities of your sales force, it's crucial to leverage skills through coaching and leadership development."
Make time for face time
To make the move towards a combined model easier and establish a mindset that embraces it, Bayer Mexico has been running an e-coaching program since the last quarter of 2010. Via a desktop icon, business unit directors, for example, can access all coaching situations that have been carried out in recent days, read about the objectives discussed between reps and first-line managers as well as the relevant sales results.
On the basis of this information, top management can then evaluate the strengths of individual sales staff members—strengths that may not necessarily express themselves in skyrocketing figures each quarter but in other factors—and point them out to first-line managers. These managers are often only interested in the bare figures achieved on the market, but Quintanilla argues a broader perspective is needed: "After all, results are a thing of the past, not the present."
If you don't want to be late in detecting new developments, you need to also be interested in the quality of the discussions your reps have with doctors. "We are trying to change the minds of our first-line managers in this respect, which isn't easy, and make them realize that the most important thing is to have the best team in the field," says Quintanilla.
Most Latin American doctors still seem to favor face-time with company reps over digital communications and information. According to a FirstWord report from 2010, the Internet is still "only accessed by a privileged few."
For that reason, says Quintanilla, it's crucial for pharma firms to find a balanced approach. "Communicating with physicians via the new channels is essential, and I'm a great fan of it,” he says, “but it needs to be balance with the old-style personal contact." Video conferences with doctors, for instance, are a great way of saving time, but "you can only profit from them because of the face-to-face interactions that back them up."
Since finding the right mix is so important, Bayer, which was the first big-pharma company in Mexico to provide its 400 field sales staff with iPads, is working with e-media experts from the country's top universities to develop a targeted communication strategy. The firm also has its own dedicated team working on best practices for digital contact with customers. (For more on Mexico, see Making the most of the Mexican pharma market.)
And then there's the challenge of the generics market. With many governments' support for low-cost generics, this drug segment is expected to grow throughout the region, forcing pharma companies to be even more precise in their targeting efforts.
Take the example of Mexico, Latam's second-largest pharma market. Although brand loyalty is still quite strong, the value of the generic drug segment, BMI forecasts, will rise considerably in the coming years, mainly due to the government implementing universal healthcare coverage. By 2020, the segment is expected to account for 7.56% of the market.
In this environment, says Quintanilla, "you need a clear-cut customer-centered targeting and segmentation strategy or you will die. That means, if you don't have the information about which physician prefers to prescribe generics and which doesn't, you have a big problem and will spend a lot of money in vain."
For more on Latin America, see Special report: Pharma's emerging markets.
Join the sector’s other key players at Market Access Mexico on March 28-29 in Mexico City, Commercial and Marketing Excellence Brazil on May 15-16 in Sao Paulo, Emerging Markets USA in June, and SFE Latam in June in Miami.
For exclusive insights into the Latin American market, download eyeforpharma's Pharma Emerging Markets Report 2011-12.
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