Written by Don Panek - CRMDirectory Editor Monday, 05 October 2009 18:41
NEW YORK--Reportlinker.com announces that a new market research report is available in its catalogue.
Executive Summary
The social, demographic and economic context in which the pharmaceutical industry operates is changing dramatically, with huge implications for the industry as a whole. All these challenges have major ramifications for the way in which pharmaceutical companies market and sell the medicines they develop. With these challenges comes pressure to gain efficiencies in all facets of the business, but perhaps no aspect of pharma operations is under as much scrutiny as the sales and marketing function. The discrepancy between the growth in sales force size and the decline in prescribing makes sales force effectiveness the top challenge for pharmaceutical sales managers.
The industry has traditionally relied on aggressive marketing to promote its products. One recent study (NEJM, August 2007) estimates that, between 1996 and 2005, total real spending on pharmaceutical promotions rose from $11.4bn to $29.9bn in the United States. Another study (PLoS Med, January 2008) suggests that the true figure is closer to $57.5bn in real terms. Much of this increase in spending has gone on the expansion of the sales force. For years now there has been an unshakable belief that the bigger the sales force, the greater the market share. However, many of the industry’s biggest markets are now saturated with sales representatives, and its selling techniques are becoming increasingly ineffective. The industry has begun to embrace the reality that this model no longer guarantees growth or future profitability. The opportunity lies in moving beyond sales force growth and mass promotion into a new era of sales force effectiveness.
Key features of this report
• Detailed analysis of the current state of the pharmaceutical industry, including the five major trends reshaping the pharmaceutical marketplace and their impact on the sales force.
• The impact that sales force size has on sales, costs and profits in both the short and the long term. Different situations for sizing a sales force such as expansion into new markets, new product launches and downsizing are illustrated. Three different methods that companies use to size their sales force are provided.
• Highlights the importance of sales force recruiting and hiring process as well as the role of training in preparing the pharmaceutical sales force for success. Practical advice on how to implement incentive plans and how to set effective SFE (Sales force effectiveness) metrics.
Use this report to
• Learn how the changing social, economic and demographic context has huge implications for the way in which pharmaceutical companies will market and sell the medicines they develolp in the future.
• Discover why pharma industry revenue will decline for the first time in its history and what the effects on the pharmaceutical sales force organization are.
• Quick and comprehensive understanding of sales force sizing, structuring and deployment and recent trends in physician targeting.
Discover
• Is the pharmaceutical sales representative an endangered species?
• Why should pharma companies adopt a Key Account Management approach to their customers?
• What will the expected shift in marketing and sales efforts look like?
• How can sales organization be sized, structured and deployed for max. effectiveness in the new healthcare environment?
Table of Contents
Pharmaceutical Sales Force Effectiveness Strategies
Executive Summary 9
The pharmaceutical industry at a crossroads 9
Sizing and structuring the sales force for strategic advantage 10
Recruiting, training and motivating an outstanding sales force 11
Reinventing the pharmaceutical sales model 12
Utilizing new technologies for sales excellence 13
Beyond 2010 – The future of pharmaceutical sales 14
Chapter 1 The pharmaceutical industry at a crossroads 16
Summary 16
Introduction 17
The state of the pharmaceutical industry 18
Patent expiration and generic substitution 18
Pipelines not delivering innovative products 20
Slowing growth in mature markets 23
Government intervention and price controls 25
Poor reputation and new restrictions 26
Restricted access for pharmaceutical sales representatives 27
Pharma industry revises Codes on interactions with physicians 29
The traditional go-to-market strategy 31
ROI in pharmaceutical sales force has plummeted 32
The access problem 34
The end of armies of pharma sales reps in the field 34
Need for new marketing and sales approaches 36
Chapter 2 Sizing and structuring the sales force for strategic advantage 40
Summary 40
Introduction 41
The role of the sales force 41
Determining sales force size 42
Activity-based method 42
Target return-per-call method 43
Sales response method 44
Getting sales force deployment right 45
Resource allocation 45
Optimal profitability 46
Matching sales force structure with companies’ business lifecycle 48
Sales force structure 48
Getting the size right 50
From mass market endeavor to individual physicians’ needs 51
Rethinking targeting strategy 51
The impact of lifecycle factors on sales force targeting 55
Year 1 – New product launch 55
Year 2 – Accelerate growth 56
Year 3 – Defend and grow 56
Year 8 – Manage the sales decline 58
Conclusion 59
Chapter 3 Recruiting, training & motivating an outstanding sales force 62
Summary 62
Introduction 63
Hiring pharma sales reps: Getting the process right 64
The impact of bad hiring decisions 64
The right recruit 65
Key points to consider when hiring 67
The evolving training needs of the pharma sales force 69
The training dilemma 70
Training for the new environment 72
Changing environment places different demands on sales training 75
Motivating and compensating the sales force 79
Motivation 80
Driving performance through incentive compensation plans 82
Conclusion 83
Chapter 4 Reinventing the pharmaceutical sales model 86
Summary 86
Introduction 87
Sales force model progression 88
Addressing a range of new customers 89
Existing stakeholders are gaining influence 90
The path to key account management 92
Is the pharma sales rep an endangered species? 95
The customer-centric approach: a new model for pharmaceutical sales 95
From mass army to specialty sales force 98
Conclusion 99
Chapter 5 Utilizing new technologies for sales excellence 102
Summary 102
Introduction 103
e-Learning – meeting sales reps training needs 104
Case study – e-Learning as part of AstraZeneca’s sales training strategy 104
e-Detailing 105
Virtual live e-Detailing 106
e-Detailing through a portal for doctors 106
Scripted e-Detailing 106
The benefits of e-Detailing 107
Putting it in practice: The key factors for success 108
From tablet PCs to closed loop marketing 109
Will closed-loop marketing transform the pharma sales process? 111
Common pitfalls on the way to implementing closed-loop marketing 114
How to ensure successful implementation of closed-loop marketing 116
Conclusion 117
Chapter 6 Beyond 2010 - The future of pharmaceutical sales 120
Summary 120
Introduction 121
The sales force of the future: variable in size and structure 121
Will samples need pharmaceutical sales reps? 123
New industry models and their implications for sales force effectiveness 125
Aligning marketing and sales to match the healthcare environment 126
The use of analytics to drive sales force approaches 126
Content-driven interactions between sales reps and customers 126
To what extent will the sales model change in the immediate future? 127
Designing a marketing and sales function that is fit for the future 129
Chapter 7 Appendix 134
Bibliography 134
Index 136
List of Figures
Figure 1.1: Projected revenue losses ($bn) due to patent expirations, 2007e-2012p 19
Figure 1.2: R&D investment ($bn) in the US, 2004-2007 21
Figure 1.3: FDA new drug approvals, 2000-2008 22
Figure 1.4: Global pharma market growth slowdown 24
Figure 1.5: Survey of US medical practices, February 2009 28
Figure 1.6: US sales force size - top 30 companies, 1997-2007 32
Figure 1.7: Pharma sales rep funnel 34
Figure 2.8: Field force: Sales, cost and profit impact 47
Figure 2.9: The impact of three different sizing scenarios on company profits 50
Figure 2.10: Physician segmentation enabling effective targeting 54
Figure 2.11: Modeling doctors’ prescribing behavior 58
Figure 3.12: The training trade-off 71
Figure 3.13: Effective sales force training responds to a new selling environment 73
Figure 3.14: Sales rep characteristics with the most influence on physician satisfaction 74
Figure 3.15: Implications for future sales force training 76
Figure 4.16: Sales force restructuring and innovation - State of the industry 89
Figure 4.17: The expected shift in marketing and sales efforts 91
Figure 4.18: Implications for pharma companies on the path to KAM 94
Figure 5.19: e-Detailing as part of the multi-channel approach to CRM 109
Figure 5.20: CLM feedback loop 112
Figure 5.21: TGaS survey on CLM implementation among top pharma companies, 2007-2008 114
Figure 6.22: Sampling trends %, 2008 124
Figure 6.23: Readiness for new business models in the next two years 128
Figure 6.24: Future organization of the pharmaceutical marketing and sales function 130
List of Tables
Table 1.1: Blockbusters going off-patent 2010-2012 20
Table 1.2: Planned job cuts by big pharmaceutical companies, October 2008 35
Table 2.3: Target return-per-call method in eight steps by Zoltners & Sinha 44
Table 2.4: Comparison of sales force sizing methods 45
Table 3.5: Common pharmaceutical sales force training settings 70
Table 5.6: How tablet PCs support sales force activities 110
Table 6.7: New approaches to marketing and sales challenges 127
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