Dr. Bates Talkback: Sales force effectiveness in the Japanese market
Dr. Andree K. Bates on why relying on current sales tactics wont work for Japanese pharma firms
By on Feb 11, 2011Japan contends with many of the same problems that the United States and Europe face when it comes to sales force effectiveness.
Japan has been an active participant in the arms race, throwing sales reps into the field in staggering numbers in order to drive product sales.
But, as with Western countries, Japan has seen diminishing returns on this investment.
Japan boasts the second largest national pharmaceutical market in the world, behind the United States.
Its pharmaceutical industry accounts for approximately 11% of the total world market.
Nearly 20% of Japans annual healthcare expenditure goes to pharmaceuticals, compared with 16% in European Union countries and 8% in the US.
Despite this, signs of a slowdown in the Japanese pharmaceutical market are apparent.
No domestic Japanese drug makers rank among the top ten companies for global sales.
Pharmaceuticals accounted for 1.3% of the countrys GDP according to recent figures, steady compared to the past several years but down from a high of 2.9% in 1991.
As in other markets, Japan has inundated the field with sales forces.
Today, there are more than 72,000 registered representatives in Japan (including about 20,000 working for wholesalers) serving more than 260,000 doctors.
Japan has the potential for massive pharmaceutical sales.
Just like in the United States and Europe, the population is aging.
Demand for innovative treatments is growing.
But relying on current sales tactics wont work. (For more on European sales tactics, see What's next for SFE 2011.)
Challenges of the Japanese market
Japanese pharmaceutical companies face a few unique challenges.
The Japanese government focuses heavily on cost containment measures to control healthcare spending.
This discourages domestic companies from carrying out research and development.
Japanese sales reps have a tradition of focusing on strong relationships with doctors to drive product sales and prescribing behavior.
This sounds like an excellent tactic but, with personnel changes, the trust built between a rep and a physician may not transfer to the company.
This happens frequently, as the nature of hiring and training in Japan means constant movement.
Japan is moving from traditional relationship-driven systems to more scientific models.
These rely on targeting, doctor profiling, and appropriate sales force sizing.
Theyre looking to sales and marketing strategies based on client segmentation, targeting and frequency analysis, just like those considered best practices in Western countries.
The implementation, though, is slow.
They often lack objective measures of the cost-effectiveness of these new strategies, and companies resist the change.
While they are dedicated to improving sales force effectiveness, many are not convinced this is the way to go.
The need for change
The need for improvement in sales force effectiveness is profound.
IMS data shows that, on average, most of the targets identified by the typical Japanese pharma company are actually doctors who should be non-targets.
On average, 70% of resources are focused on the physicians that make up the bottom 20% of the market potential.
Additionally, 10% or more of targeted doctors receive no attention, while 20-30% of calls may go to non-targeted doctors.
Pharmaceutical companies are also diversifying their sales forces to regain effectiveness.
Until recently, companies in Japan had one sales force for an entire product line.
This meant reps were responsible for an overwhelming number of products as well as an impossible number of doctors and departments within hospitals.
Their messaging ability may have been compromised, as they lacked enough specific detail on an individual product to sell it effectively.
Growing numbers of companies are moving towards specialty-based sales forces.
Reps now promote just a few products each, allowing them to develop their expertise on the product and more effectively impact prescribing behavior.
This is a change welcomed by physicians, who face better-educated patients and government pressures.
They need more specific information for their individual practice, therapeutic area, and patients. (For more on specialty-based sales forces, see Getting sales reps ready for specialty care roles .)
Jumpstarting sales force effectiveness
In Japan, access is less of an issue than in Western Europe or the US.
The average detail in Japan lasts nine minutes, compared to an average 90 seconds or less in the US.
But this vast amount of time is not always spent on discussing the product.
Instead, the reps are talking about personal topics.
When the topic does turn to the drug, Japanese sales reps dont deliver.
The messages they give are scattershot and unmemorable.
Despite being responsible for a companys entire product line, they may only mention one drug.
Also, the reps and their managers struggle with determining the right frequency with which to target doctors.
The number of calls per year on a given doctor ranges, for a typical company, anywhere from two to 200.
Japanese sales reps lack the support to build these detailing efforts.
They lack professional selling ability, and sales managers dont have the skills to guide them.
Their problematic messaging and frequency strategies are also due to limited targeting data.
Data is not as widely detailed and available as in the US nor as restricted as in Europe.
Information includes identification of which doctor works in which hospital and in what roles, along with profiling information on the doctors.
Many industry analysts think that despite the issues, getting Japanese pharma to change will be difficult.
More so than in other countries, entrenched systems stay the same in Japan unless there is significant reason for change.
Since success is still being seen by sales force activities in the country, impetus to alter current systems and implement better measures of sales force effectiveness is not strong.
Those who have made changes, however, have remarked on the newfound understanding of company strategy among managers and sales reps.
Once moving past being overwhelmed, companies that have selected a sales force effectiveness model that is right for them have been eager to implement it.
They have found that jumpstarting and prioritizing sales force effectiveness initiatives has had a big impact.
Dr. Andree K. Bates is CEO of Eularis, which applies analytics to determine the sales impact of marketing programs.
For more insights on pharma sales and marketing in Japan, join the industrys key players at Marketing Excellence Japan on May 17 and 18 in Tokyo.