How to Change Course, Refit the Pharma Boat, and Remain Afloat
Healthcare is experiencing a tsunami; how do we negotiate the choppy waters that lie ahead for the industry?
In their just-published book Healthcare Disrupted – Next-Generation Business Models and Strategies, Jeff Elton, managing director in Accenture Strategy and Anne O’Riordan, global industry senior managing director of Accenture's Life Sciences industry group describe how the industry faces a “tsunami of change” that is pounding through the healthcare sector. But will we be swamped?
It’s a question that has been exercising the best commercial minds in pharma for a while now. On the one hand, we need to establish new commercial models built on a strategic approach to customer interaction and move away from simply tactical initiatives designed to shore up the systems of the past, however well they once served us. On the other hand, the trick remains how to maintain business as usual, as we seek to implement a transformation towards those new commercial models.
A further complicating factor is that the relationship between strategy and implementation in the field has always been fraught – it takes time for the message to get through if it ever does at all. For instance, KAM is a proven option for addressing the market changes that we’re seeing, but it’s a long-term approach that takes many years to embed successfully, and it is a methodology that has often been poorly understood.
So, what do we do in the meantime? Luckily, we do have several tools in our chest that can help, ranging from organization redesign at one extreme to less radical enhancements to our existing operating processes – and let’s not forget the impact of digital. Essentially, the pharma boat faces the complex and difficult task of undergoing a complete refit while still at sea, but it is possible.
Value, differentiation and solutions
This approach implies that we are able to adapt the field force to drive sales while simultaneously building on meaningful engagement with physicians despite declining face time. It requires a move toward B2B and B2B2C models while also honing and adapting existing processes and tactical approaches. As we are all aware, one of the keys to future success is establishing the value of our solutions in the minds of customers; and, of course, another is to successfully differentiate our offerings from those of the competition.
In many ways, Big Pharma does an extremely good job of selling its products, but the focus tends to be squarely on the doctors. The education aspect is something we regularly pay lip service to, but is often secondary to our focus on driving prescription volumes.
Elton explains: “We don’t see any scenario where there’s going to be a return to the volume-based or fee-for-service-based models of the past and we will see whole regions that are entirely value-outcomes based. That has huge implications for the industry. Everyone needs to accept that; everyone needs to have readiness for that, and everybody needs to have their response to that.”
Peter Hoang, Senior Vice President, Business Development & Strategy at Bellicum Pharmaceuticals and one of the speakers at eyeforpharma Philadelphia agrees. He suggests that pharma is well aware that it cannot be seen as simply peddling pills.
Establishing partnerships with health systems and payers will require both a change in sales approach as well as a change in strategy, according to the one-time investment banker and venture capitalist. “It requires a mindset change at corporate level,” he says. “But it is also a structural one: the shape of our sales forces will change. Talking to reimbursement professionals requires a very different set of skills versus talking with physicians.”
New approaches will need to be learned and new recruits found. “This is a necessary change that we, as an industry, have to make,” Hoang believes. Specifically, he contends that pharma has to strike a balance between selling and educating.
“In many ways, Big Pharma does an extremely good job of selling its products, but the focus tends to be squarely on the doctors. The education aspect is something we regularly pay lip service to, but is often secondary to our focus on driving prescription volumes.”
This works up to a point: pharma will still have to have “mindshare when doctors write prescriptions”, but other elements are increasingly required. “Currently, many of us have a sales focus which is not that different from the sales approach of a software or automotive company. That has to change – and it is changing.”
The Affordable Care Act has concentrated minds in the industry on total costs to the system, Hoang says. “That is going to be magnified as people look much more closely at the overall cost of care. There is a real impetus on behalf of regulators, payers and patients to drive down costs.”
Technology can be both a facilitator and a transformational tool. New digital approaches will help to deliver the transition, both in terms of newfound capability such as big data and advanced analytics, but also through more effective and innovative application of tried-and tested technology such as CRM.
To truly engage HCPs and other customers “you have to design an integrated campaign, not just stand up a bunch of tactics around a customer.” That’s the view of another eyeforpharma Philadelphia, Kirk Keaffaber, Director of Integrated Marketing at Eli Lilly’s biomedicines business unit. In this role, he is responsible for working across operations, helping the business create multichannel campaigns.
At the conference, Keaffaber will be talking about how to develop and implement these integrated campaigns, and designing the customer experience through the brand story in channels that the customer prefers. “You have to proactively design that before you start launching tactics,” he explains.
Such an integrated-channel approach that focuses on giving the customer the right information at the right time should be founded on “loads and loads of analytics to understand customer behavior brand by brand and channel by channel.”
So what kind of data is important? It turns out that CRM – often much maligned in the sales world – is a vital tool. “CRM is too often referred to as what a sales rep uses.” Instead, effective CRM offers a holistic view of the customer from sales, though marketing, calls centers and medical channels. Moreover, you need visibility on all engagements to avoid data gaps, not forgetting third-party suppliers – “So you need to work that into your contracts.” Additionally, the impact on actual prescribing behavior is also key.
While doctors definitely still need clinical information, our records show that 72% of them would like this type of information through different channels.
Another eyeforpharma Philadelphia speaker, Cathy Hayes, who is Director of Commercial Solutions – Customer Facing Effectiveness for AstraZeneca, is also a strong advocate of effective CRM. However, she is mindful that when looking at an adept and agile CRM strategy that this too is a long-term journey.
As the amount of time physicians can spend with sales reps continues to decrease, she sees the use of CRM data as a valuable tool to assist in delivering information more effectively: "While doctors definitely still need clinical information, our records show that 72% of them would like this type of information through different channels.” This is where flexibility and the correct interpretation of analytics will play an important part.
A large part of a successful strategy is the ability to provide reps with the insights behind that strategy, a step that can be overlooked yet remains critical if salespeople are to understand the value component. Hayes accepts that analytics aren't always 100% accurate, while sales reps can also feed in valuable real-time insight. For instance, a rep might dismiss a recommendation that an email be sent to a physician, by providing the local insight that it is the office manager who receives all emails, and seldom passes these on.
“Having feet on the ground will remain essential,” Hayes acknowledges, “but the relationship needs to change from being transactional to being customized to a physician in a way that’s relevant and provides value.”
Good digital strategy
At Novartis, Milind Kamkolkar, Global Head Next Generation Analytics, and his colleague Chapman Richardson, Global Head Next Generation Digital, have been in their current roles for about a year. As their job titles suggest, they think a lot about the future and will be giving delegates their view of what’s to come. However, they’re well aware that some return is also required in the short term if pharma companies are to keep the lights on.
“We’re still in the change agent role, educating business teams and so on,” Richardson suggests. Establishing a baseline for what GDP looks like and establishing that as a standard operating procedure will be a major step forward.
“Digital is new to pharma: there’s an expectation that there’s going to be a magical unicorn produced in six weeks,” says Kamkolkar. “It’s a very sexy area,” Richardson continues. “We’re trying to put some structure round it, it’s a bit like the Wild West at the moment.”
This means that the pair need to keep one eye on both the present and the future, which “gives us the ability to pivot if things change”. Indeed, while digital is often viewed simply through the prism of things like apps, websites and wearables – with little thought to its wider implications – it has yet to feed through into softer benefits, Kamkolkar suggests. “Has digital changed how pharma works with patient groups or has it helped to improve pharma’s reputation?”
A significant issue forpharma – as in many other traditional industries – is that every senior executive knows you need to “do something” in digital, but too fewhave even the faintest understanding of why you should be doing it. One of the key things, therefore, that smart experts like Kamkolkar and Richardson are doing is to help guide the company towards the areas that will offer the most potential in terms of investment.
And herein lies a seeming contradiction: an over-reliance on new digital tools in the wrong hands has the potential to over-complicate and degrade existing tools such as compensation plans, that help drive sales force behavior. Sales is essentially about human interaction – “people buy from people” is the usual expression – and local markets and knowledge, not so much about command and control from the center.
Incentive plans can be “incredibly effective” in shaping field force behavior but the golden rule is to keep them simple if you want them to be motivational, argues another conference speaker, Marc Bacon. “A plan that is not simple is not motivating,” stresses the Director of Incentive Compensation at Sanofi.
A plan can easily become overloaded with attempts to drive behavior such as targeting specific segments. “One of the challenges we have is marrying the idea of simplicity and then driving every behavior that we may need those sales associates to achieve. When we we’re working with the brand, working with the directors, we really do challenge folks to pick one or two metrics that would signal success for the sales associate and the brand.
“I’m not doubting the importance of focusing on that segment of customers,” Bacon declares. He suggests, however, that a more fruitful approach is to focus the incentive plan on the outcomes of targeting a specific segment, with this working alongside appropriate communications and sales leadership aligned around communicating how to achieve success with the incentive plan.
This does not mean that analytics and segmentation are not valuable – indeed, the opposite is quite patently true – but simply that we need to derive genuine insights from analysis of our data to inform our decision making, and this needs to be tailored to the specific resources we have at our disposal.
Bacon is responsible for designing the compensation plans for some 3,000 sales associates across pharma, surgery, bio-surgery, US managed markets and oncology at Sanofi. “That’s a wide range of strategic imperatives we are trying to design incentives around. My primary role is to make sure incentive design work is aligned to our overall incentive philosophy and of course aligned to the strategy of each of the brands that we work with.”
So how do you align the twin requirements of market segmentation and providing the field force with the autonomy to carry out their jobs effectively? Bacon will be talking about some of this during his presentation.
“The challenge is finding the incentive scheme that balances the imperative of focusing on the right customers with the correct amount of flexibility that allows for a local sales rep to say: ‘These are our very important customers over here but, if I look over here, I can see some potential customers that I can work on as well.’
The short answer is putting the patient first. You can’t have a strategy or incentive compensation plan that is not mirrored to the needs of our customers and their patients.
“Not to be left out of the mix also is a strong field leader to say: ‘Yes, these are non-targeted calls or non-segmented customers that you are spending time with; at the end of the day, we really need to drive our energies here towards what we know are these valuable customers here while spending a small, more appropriate time prospecting these customers over there.’ So from an incentive standpoint, there are myriads of choices between paying only on segmented customers and the universe.”
Putting the patient first
So, back to one of our original questions: how does the industry build a field force that drives sales, while also building on meaningful engagement with physicians in the context of declining face time? “The short answer is putting the patient first. You can’t have a strategy or incentive compensation plan that is not mirrored to the needs of our customers and their patients,” Bacon concludes.
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