In this rapidly evolving healthcare environment, traditional notions of who the customer is and even what the sales force does may be holding pharma companies back from making necessary changes. It’s time to radically alter sales organizations, says Alasdair Mackintosh of Archstone Consulting, or be left behind.
At a recent eyeforpharma conference, Mackintosh spoke on the need to “Redefine your sales model to address an expanded set of customers and a harsher economic reality.” The sales model that has brought pharma so much success in the past may actually be a barrier to a successful future.
Changing the model
The current model of focusing on doctors, of defining the sales force as the “ones who do the detailing” is no longer operable, says Mackintosh. And pharma companies know that already. In a survey conducted by eyeforpharma and Mackintosh’s own Archstone Consulting, UK pharma industry professionals identified the “sales model” and “sales capabilities” as their highest priorities for change, specifically training for sales reps and sales managers and for members of the organization generally. That the detailing dominated sales paradigm is over seems universally recognized; the question now becomes, where do we go from here?
As Mackintosh points out, there is a bewildering array of choices for a company looking to jettison their old sales model and slot in a new one. However, the radical changes taking place in the healthcare environment call for radical changes within the industry. Simply picking a new model to replace the old one isn’t good enough. A better approach, says Mackintosh, is to pick and choose elements from multiple models, adopting and adapting those which seem best suited to the company.
However, choosing a new model – even a Frankenstein one – requires looking more deeply at the current environment, what the changes mean now and what they are likely to mean in the future. Mackintosh suggests that we start asking some very fundamental questions, questions to which our traditional “answers” no longer apply.
Different questions, new answers
“Who is the customer and what do ‘selling’ and ‘sales effectiveness’ mean in the new healthcare environment?” asks Mackintosh. In the era of “payer power,” detailing to doctors is becoming less and less important as a driver of business. Given that the doctor-centered model is no longer the appropriate choice, what model is appropriate? And what new skills are needed within the organization to manage the changes and go forward? As traditional detailing yields ever-smaller returns, how do we ensure an adequate return from our sales force? How quickly do the changes need to be implemented? All of these questions point towards deep changes in the sales organization – changes that pharma has been very reluctant to make.
Says Mackintosh, pharma is under considerable pressure on several fronts. First, there is the driving force of money – or the lack of it. Budget limitations in the healthcare system have resulted in “cost-containment” measures that make it harder for pharma to do business as usual. Second, the management of healthcare is much more complicated than in the past, with a far larger group of players. Access to doctors is rigidly controlled and incentives for doctors to prescribe low-cost alternatives make reps’ jobs harder. There is increased scrutiny from industry regulators and much greater payer influence over doctors’ prescribing decisions than in the past. And the expectation from patients themselves regarding what therapies can do for them is higher than in the past and rising.
In the past, Mackintosh says, pharma companies have responded to pressures by tweaking the traditional sales model. Small, incremental changes have been the norm in the industry for a long time, and they served the industry well up until about five years ago. But, says Mackintosh, these were “point solutions,” meant to handle smaller problems or take advantage of new technologies. Companies introduced e-detailing, for example, and started encouraging cooperation between sales and marketing and medical teams. But the Share of Voice was still dominant and the sales force structures remained largely as they had been for the 30 or 40 years preceding.
The challenges of the future, says Mackintosh, will require far more radical changes. As examples of what the future might look like, Mackintosh offers these possibilities: “full engagement and partnering with payers and providers to achieve healthcare priorities.” Pharma will have to move away from its purely supply function, engaging instead in “enhanced patient support and compliance focus” and increasing “service orientation to support successful health outcomes.” “Increased partnering and alliances” could be the key to a secure future for pharma.
What’s getting in the way?
There are a lot of challenges to be overcome on the path to the future. According to Mackintosh, one of the biggest barriers to necessary change may be the industry’s past success. Understandably, pharma companies are loath to give up a formula which has served well in the past. Innovations have been piloted, but only on a small scale – considerable “ramping up” is needed, but presents what Mackintosh describes as a “major implementation challenge.” Existing sales organizations are large and complex and already under considerable pressure to maintain the level of returns that pharma companies have enjoyed over the last several decades. There is, in the industry, a noble but possibly conflicting desire to “look after” employees, even when new skill sets may be called for. And, says Mackintosh, because of the nature of the industry, there have been no savvy upstarts to challenge the traditional model – no Southwest Airlines or Esurance.
At what point, Mackintosh asks, does the current system, with its decreasing returns on investment, become too uncomfortable to maintain? When do companies finally acknowledge that they must make the leap, especially in an industry where incremental change has always been the norm?
Prioritizing change
There are, says Mackintosh, three priority areas in redesigning the sales model. First, we must redefine the customer. Second, we must have a clearer, broader idea of the stakeholder network, and third, we must remodel the scope of sales.
Doctors are no longer the sole or even the primary customer base for pharma sales. Already, doctors are being given instruction on what medicines to prescribe from payers; physicians are given therapeutic protocols, and most doctors are following them. Drugs are and increasingly will be chosen not on the basis of safety and efficacy alone, but also with consideration of risk and cost effectiveness. Patients are influencing healthcare decisions more and more, and better tools for diagnosis and monitoring are giving patients more information and power than ever before. As resources dwindle and budgets tighten, there will be even more drive to use remaining resources efficiently. Over time – and this has already begun to happen, says Mackintosh – the sales reps of today will have to shift focus from primary- and secondary-care providers to government and other payers. This trend is not limited to the UK, Mackintosh says; it’s global.
One key to the future is understand that the key customer must be the decision maker(s) – formulary committees, organizations like the National Institute for Health and Clinical Excellence (NICE), key opinion leaders, local brand advocates and patient support groups. All of these influence decisions, but they are not typically in the target range of the sales force. If they receive attention at all, it comes from some other functional group within the pharma company such as the brand team or customer support. Pharma companies that understand who their audience is stand a far greater chance of reaching them.
Understanding who your stakeholders are in the changing pharma environment can be difficult. A project Archstone undertook in Sweden looked into the diabetes care market. In-depth study and mapping revealed stakeholders and gatekeepers in unexpected places; with Sweden’s very strict access limitations, people were making important decisions about what information would be allowed through to the doctors, and the pharma company didn’t even know these people existed. Once you get into analyzing who your stakeholders are, you quickly realize that there are a lot of them; fortunately there are tools to help companies organize and prioritize their sales efforts across these stakeholder groups. As Mackintosh says, in this new environment, “managing sales is about orchestrating interactions with key stakeholders.”
Says Mackintosh, there is a case for “realigning the interface between marketing and sales.” The role of the sales director, in particular, needs to be broadened, and one of the key accountabilities of the role must be to maximize sales realization from the brand. As detailing diminishes in importance as a lever, there should be a concurrent embrace of new levers: Mackintosh suggests formulary access, partnerships with healthcare providers, physician education and support, patient support and compliance programs and local brand advocacy programs. The functions and responsibilities of the sales and marketing departments must be entirely redefined and new skills sets sought and included among teams.
A lot of the capabilities this new environment requires already exist in companies, they just haven’t traditionally been under the sales umbrella. According to Mackintosh, one of pharma’s greatest weaknesses is that the necessary competencies are siloed in different segments of the company when aggregating them together in one unit would be far more effective.
In the end, pharma may be its own worst enemy. Deeply entrenched notions of what the sales force looks like and what its tasks are are making it difficult for companies to negotiate the changing pharma climate. Mackintosh claims that the time is now to make radical changes, to – at the least – develop a “transformation map” that indicates a path for the future. Look for effective combinations of multi-channel and multi-disciplinary activities, Mackintosh suggests, and understand that it’s about key account management that is based on a deep, comprehensive understanding of stakeholders and their influences. Empower sales directors to maximize all the market drivers. The age of detailing and completely doctor-centric sales is waning. The pharma companies that commit to fundamental changes in their sales structure will weather the coming storms. Is your company ready?
Author: Shannon Perry, journalist, eyeforpharma
