US and European pharmaceutical sales and marketing executives believe that the current business model is ‘broken’, according to a new survey.

More than two thirds (68%) believe that pharma’s current sales model needs to be rejuvenated to face current industry challenges.

Danielle Rollmann, a partner in Booz & Company’s global health practice, says industry is in the “eye of a hurricane of change” and companies need to “identify and focus” new capabilities needed to succeed.

The survey, conducted jointly by Booz & Company and National Analysts Worldwide, asked 156 sales and marketing leaders, most with global responsibilities, how the industry can adapt to face a changing healthcare environment.

If found that respondents noted that growing healthcare prices along with the need to highlight value and outcomes were the greatest challenge faced by sales representatives.

More than half of respondents now expect to invest heavily in marketing to key accounts and payers to counter these challenges. New pricing approaches, new service models and new partnerships with clients were also highlighted as being important.

“Those of us who work with pharma companies to develop and implement commercialisation strategies know very well the challenges of maximising asset value in this new environment, where both key customers and customer expectations are being redefined,” said Susan McDonald, CEO of National Analysts Worldwide. “We’re not surprised to hear people acknowledge that they can’t count on doing ‘business as usual’ and that they’re looking for new ways to gain traction.”

Respondents said the strategies which they believe will be the most important moving forward include:

• Organising sales and marketing activities around diverse stakeholders
• Taking a more creative approach to customer relations and partnerships
• Effectively demonstrating value through outcomes to clients
• Innovatively using digital media channels.

“Virtually everything is changing in the model and the market,” commented Rolf Fricker, a Munich-based partner at Booz & Company. “In response, most respondents say they plan to spend more on all their target marketing activities. Yet this is not aligned with what pharma is doing and needs to do at a company level. The companies that focus, prioritize, and follow a coherent strategy will be the winners.”

How do you view CRM: as a chore, as a way of saving effort, or as a valuable window on your customers’ world? Leading CRM vendors tell Pf where the pharmaceutical industry sometimes gets it wrong – and how a combination of new business thinking and new technology can turn customer data into powerful insight.

Customer Relationship Management (CRM) is more than an electronic system for data handling. It’s a well-established business strategy for collecting and utilising the most relevant information about the market. As such, it is a function of the whole company that lends itself well to an integrated commercial strategy. A glance at the industry’s news shows that customer and sales data affect every aspect of a pharmaceutical company. Moreover, how a company uses those data to develop its products and communicate their value to customers can have a significant impact on customer relationships.

But is CRM in danger of going stale? Has it become something that only sales people use, and even then not whole-heartedly? Is a perceived lack of progress with CRM due to problems with the technology, the people using it, or companies’ approach to it?

The answer, according to the specialist CRM suppliers Pf spoke with, is all three. But as they also told us, these drivers of fail need to change. A new ‘golden age’ of CRM is on the way.

Dead-end data
According to David Round, General Manager at Cegedim UK, the most common problem of CRM use in the pharma industry is poor awareness of its potential: “If you have a particular group of users who don’t feel the system works for them, and therefore don’t put in the richness of information that they could, that has a bigger impact on the CRM project as a whole.” Unless the company is using CRM to its best advantage, field sales professionals may lack confidence in it as a tool. 

In addition, Round argues, not every CRM system is fit for purpose: “Where technology can be a hindrance is where the way that it works is relatively fixed or determined in some dark room somewhere, and it doesn’t match the day to day process of the people who are using it. The technology, if it’s not designed correctly with the end users in mind, can actually contribute to a lack of return or a reduced return on investment for the CRM solution.”

Adam Nicholson, Commercial Director at Conigi, identifies four sources of CRM blues: CRM only seen as a sales team tool, thinking limited by previous CRM experiences, fear of the system’s complexity and (conversely) fear/perception that it cannot deal with new commercial realities. All of these, he says, are consequences of narrow thinking: “The reality is that if you pick the right vendor and the right solution, you have enough headroom for development to build what you need now and as your business changes.”
Not seeing the wood for the trees, the insights for the data, is another source of CRM frustration. Dan Goldsmith, General Manager at Veeva Europe, argues that the most successful pharma companies are able to derive “rich and insightful information” from CRM by moving “beyond the operational or transactional information” to a deeper analysis of customer behaviours – with the CRM supplier “not just supporting their business processes but helping them innovate the way they engage and architect the customer experience”. 

Nick Plank, Director, C&C Group, says that CRM systems, like pharma’s operational model, have evolved to meet the needs of a changing NHS in the past decade – and will evolve further as technology continues to advance. “Ten years ago, the environment was very much focused on the rep and in particular on the traditional one-to-one face-to-face style of territory organised sales forces. Fast forward to the present and CRM looks very different, with KAM structured teams engaging with customers on an account basis as opposed to a geographical brick structure, plus a variety of new stakeholders in CRM from medical development advisors to medical science liaison. A fully-integrated CRM accessible to multiple stakeholders is now essential if business functions throughout the enterprise are to have holistic visibility of the account and contribute data from their specific areas such as information gathered during digital engagement.”

Keep taking the tablets
All relevant stakeholders are agreed on the revolutionary importance of the iPad and similar tablet computers for CRM in the context of field sales. These devices take CRM out of the office and onto the road more effectively than ever before. They also have the power to support closed-loop marketing and related strategies, giving CRM a more dynamic role in the customer relationship and in the pharma company.

David Round comments: “I think that CRM is about to enter a pretty golden age, because the birth of the tablet computer and the iPad in particular means that the rep can use the system much more effectively on the go. Reps are more inclined to enter information just after the call than wait until they get home, and what the iPad does is give them the ability to record this information with much more richness and much quicker after the interaction. Obviously, mobile access to the internet is still limited in many medical locations, and for this reason, the CRM must be able to provide most of its functionality in an office mode. As many reps would point out – what’s the point of having a mobile CRM that only really works online?”

In addition, the iPad gives the field-based sales rep rapid access to market information at a time when the UK drug market is going through dramatic change. The ability to keep track of the changing customer base and to structure new relationships with new types of customer is essential, and new technology is vital for this. As Adam Nicholson observes: “Gone are the days when you had a linear customer relationship in place and a linear CRM system to manage that. With the changes in the NHS, you’re going to have to have dynamic processes in place and a dynamic solution to manage it as you move forward.”

The iPad is arguably the first technology to make mobile CRM an effective reality. Dan Goldsmith argues that “it really hasn’t been until the introduction of the iPad that we’ve seen both widespread adoption and significant results delivered to pharma”. There are three reasons for that, he says: the mainstream adoption of mobile technology, the industry’s new appetite for “advances in digital and interactive presentations with customers”, and the reliability and simplicity of the iPad itself – “the ideal device at the ideal time”.    

A recent IMS report highlighted the growing importance of embedded business intelligence within the fully-integrated CRM. “This is where hosted European sales data warehouses are particularly useful, because they reduce costs by providing a single integration for analytical CRM across Europe,” says Nick Plank. “A managed hosted European approach to analytical CRM means employees across Europe can access market intelligence online when and where they need it without installing software. It also aligns well with the current move from on-premise systems to Cloud CRM because analytical data can be passed directly to the operational vendor using site-to-site integration – giving reps access to information immediately, wherever they are, via their mobile CRM tools or mobile business intelligence apps.”

Building dynamic relationships
What makes for an effective CRM system? The answer depends on how the sales professional and the company use the system. CRM is not about customer data: it’s about customer relationships.
David Round emphasises the need for “human-centred design”: it’s essential for the CRM user to be able to see the data in context and react appropriately. He uses the analogy of a sat nav system: it’s a superb tool to get you through unknown territory, but you also have to keep your eyes on the road. So the best systems support customer relationships instead of providing an electronic surrogate for them.

Round also warns against being too well-informed. If a rep greets a new customer they have never met before with the words Hi, I’m Jo. How are your children Sally and Billy? the relationship will get off to a bad start. What the rep really needs is the relevant background information to understand the customer’s role and make proactive suggestions from the start.

As Adam Nicholson observes, the CRM system has to deliver insights at both the quick overview and the deeper insight level: “We are rich with data within the industry; the old challenge has always been how you turn that data into information. Successful solutions should allow an individual to look at their data at a top level when they need it, but give them the ability to drill down into the customer data or the sales data to gain more in-depth analysis when needed.” 

The best CRM solutions are able to serve the needs of the most ambitious sales professionals and companies. Dan Goldsmith comments that cutting-edge CRM systems are enabling “interactive presentations, delivering better segmentation and targeting down to a more individual level, as well as collecting more psychographic or behavioural information”. The ultimate (and realisable) goal is a “behavioural profile” of each customer that feeds back into the sales message and interaction.

The bigger picture
The closed-loop marketing model implied by this approach cannot begin and end with sales. Adam Nicholson speaks for all forward-thinking CRM vendors when he says: “If you really want to make CRM work, it’s about engaging all the functions, be that marketing, medical, regulatory or finance, because if you implement the theory of CRM it actually impacts and improves business processes across all the functions.”

If you started reading this article with the mental image of a lonely sales rep (that’s you, that is) wrestling with interminable on-screen figures on a laptop in a hotel room, or on a tiny mobile phone screen in a rail station café, maybe it’s time for you and your company to consider upgrading your hardware, software and probably footwear. New CRM systems are able to support an integrated strategy of commercial interaction at every level of your company, and mobile devices exist to make the most sophisticated CRM systems easily applicable wherever you are.

With the right CRM system, the right mobile platform and the right attitude, you can: research each customer’s needs and behaviours; gain up-to-date information on the rapidly changing customer base; be fully primed with the right clinical information and tailored marketing messages; read and record key information without eyestrain or signal problems; and fit the technology to your individual needs and your company’s business goals. It’s up to you.

With so many pharmaceutical companies undergoing some sort of restructuring plans as a result of mergers, acquisitions or simply cost-cutting measures, field force worries immediately turn to job security. Apodi’s Tony Swift discusses valuable ways to ensure your job isn’t one under scrutiny the next time the axe is wielded, and how to progress in the new pharmaceutical world.

In the past a competent sales representative could look forward to a long and secure career in the same or similar role, often with the same company. For the more ambitious representative it was also possible to climb a well-defined ladder towards seniority – as field trainer, sales manager, sales director and beyond.

However, much has changed. Sales representative positions have reduced dramatically and the ladder to seniority appears far more difficult to climb. Job security and traditional long-term career planning is disappearing into oblivion. The situation is just as precarious for those half way up the ladder, in first or second-line management roles, and restructuring is affecting job security and career planning throughout companies in the industry.

These seismic changes are not temporary. We are seeing a transition to a new world order in the pharmaceutical industry where:

• Traditional career paths are disappearing
• Management roles are fewer and are just as susceptible to restructuring
• Employees can no longer rely on the organisation to develop their careers – career and personal development is an individual’s responsibility
• The company needs to provide support and experiences to individuals to learn new ways of adding value to the customer and the company itself
• Creative expertise to address the new NHS is in huge demand by pharmaceutical companies. This presents an enormous opportunity for representatives and managers who may currently be worried about their long-term future in the industry.
  

Personal development
I recently interviewed a number of successful pharmaceutical industry executives to assess how they addressed the issue of personal development. Almost all of them stated that they could not have solely relied on the organisations they had worked for to either fully develop their skills or, indeed, their career.

In the majority of cases these successful individuals had made a decision to take personal charge of their careers. By keeping abreast of changes in the industry, anticipating new developments and consistently reviewing and updating their skills and relationships, when changes did occur in the industry or company, they were often well placed to take advantage of the new opportunities these presented.

At Apodi, our resourcing division sees first-hand the changing dynamics of the marketplace. Quality market access and key account managers are much in demand and are, at times, very difficult to recruit. There are also lots of sales representatives looking for jobs, with many believing they now have to look outside the industry to secure their future. However, representatives who are aware of the changing dynamics and have adapted their skills are now often successfully obtaining those market access and KAM roles.

Taking charge
One conversation with a successful executive led to a more in-depth discussion about what sales representatives can do if they want a long-term career in the pharmaceutical industry. The executive detailed the steps he had taken, and I believe this serves as an interesting case study for those unsure about their prospects in the industry. He said: ”It quickly became apparent to me that to take charge of my career I had to focus on a number of key areas.” To summarise, these were:

• To develop a clear view of the future of the industry and the likely impact of this on an existing position and potential future roles
• Be successful in a current role –  believe that new opportunities will only arise following success
• Find a systematic way of increasing knowledge, skills and relationships – do this to differentiate yourself from colleagues.

The future
In a previous article, Leading the way – Pharmaceutical Field, September 2011, I mentioned a couple of quotes. One was from a leading member of the NHS responding to how pharmaceutical companies could more actively engage with the health service. They said: “Don’t just bring pills and gadgets in the future, bring us value added solutions that drive the QIPP agenda with a documented and robust cost/benefit analysis.”                                   

The other, by Sir Ian Carruthers, NHS Chief Executive Innovation Review Team, stated: “The pharmaceutical industry needs to think more in terms of working in partnership with the NHS rather than just sending in the sales force… the NHS needs your disruptive contribution to help NHS reform, but too few companies are coming forward.”  

Despite such prominent views from the NHS, many companies are still sending out sales representatives with a very limited agenda – primarily delivering some key messages about a particular product. Indeed, some observers believe that the pharmaceutical sales representative is one of the world’s most underutilised resources! And, given the limited ambitions of each visit, it is perhaps not surprising that HCPs are continuing to reduce access.

To counter this, companies are deploying key account managers whose role is to provide value over and above the ‘noise’ associated with a traditional rep visit. We believe there will be a gradual merging of the functions of sales representative and KAM in the future. This means that everyone representing a company in the field will need to operate to KAM principles and provide significantly more value than before. Indeed, our research shows that historically excellent representatives have effectively operated to KAM principles, irrespective of the training and direction received from head office.

Current success
Whilst each sales representative has key performance indicators (KPIs) to meet – often merely call rates, we believe that individuals need to focus on providing added value to their customers and their companies irrespective of their targets. By taking a more strategic view, identifying the key stakeholders, delivering and developing solutions with the help of their company’s marketing, medical and promotional functions, representatives will become a more valued partner to both parties.

Representatives can only do this if they are experts in their products, the therapy area concerned, the care pathway and the local healthcare economy. Additionally, they will need knowledge of best practice and potential solutions.

Unfortunately, to some this may be perceived as going ‘beyond brief’ and will sometimes result in knockbacks. However, we believe the risks attached to this are far less than continuing with the limited role noted above. The risks of a representative failing to distinguish themselves and failing to provide real value will leave them susceptible at times of restructuring, and with fewer skills needed to attract jobs in the new healthcare economy.

Using initiative 
Fundamental to taking charge of your career is to take responsibility for personal development. A colleague told me about how he had done this successfully with a process that included the following:

A) Yearly audit – produce an annual plan that addresses the following:

• I am currently known for…
• Next year I want to be known for…
• My personal development last year included…
• I currently differentiate myself from my colleagues by…

B) Quarterly plan – each quarter produce an action plan:

• I aim to develop a more in-depth knowledge of the product, therapy area, care pathway and local healthcare economy by…
• I will develop closer relationships with key stakeholders in my company by…
• I will develop closer relationships with key customers by…
• I will develop a better understanding of best practice and consider the most appropriate solutions for my customers’ problems by…

C) Quarterly assessment – assess the potential to drive value into internal/external customers against the following parameters:

• Do I demonstrate more than financial value to key accounts?
• Have I increased the number of internal/external relationships where I add real value?
• Do I possess specialist knowledge that I can share with colleagues/customers to add value?
• Have I influenced any changes to the benefit of the company or customers?

This learning and knowledge was primarily delivered through personal research using books, magazines and the internet. My colleague also constantly suggested projects that he could work on, even in his own time, that he felt could transform the value being provided to customers. Many of these were rejected, particularly initially, but eventually he developed close enough relationships with people in the company who recognised the value these projects might create. These projects were a very valuable learning tool and a superb way of displaying his talents.

In summary
Pharmaceutical companies are looking for new and innovative ways of providing value to customers. As decision making within the NHS increasingly shifts to those regularly interacting with the end user (patients), the opportunity for primary care representatives to adopt a more customer-centric approach based on KAM principles grows exponentially.

The advantages of this may lead to less complicated field force structures, reduced costs and additional value added for customers. With such developments, companies will be in a better position to assist each individual in developing their careers to meet the demands of the new healthcare economy.

Tony Swift is the Managing Director of Apodi. He may be reached on tony.swift@apodi.co.uk.

Pf Editor, Chris Ross, asks who pharma’s customers really are as the NHS reforms continue to progress.

The journey towards NHS reform was always likely to be a long and painful one for the coalition government – but, as opposition to the Health & Social Care Bill grows stronger by the day, it’s becoming increasingly difficult to predict where the journey will end. At present, Royal Assent seems many miles away.

But despite the fierce political and ideological objections to the proposals, in many parts of the country the NHS has already ventured some way along the roadmap to reorganisation. Embryonic Clinical Commissioning Groups are steadily establishing themselves across England, and the transfer of powers from PCTs to the new commissioning organisations is well underway. It is likely to prove costly for NHS productivity and patient care if the journey to reform finds itself at a dead end and the Kill the Bill movement finally succeeds.

Whatever happens in the coming weeks and months, the ramifications for the pharmaceutical industry have already been significant. Since the introduction of PCOs, PCGs, PCTs and, of course, NICE in the early 2000s, UK pharma companies have spent the best part of a decade trying to establish exactly who their customers are and realigning their sales and marketing efforts accordingly. During that time, it’s become increasingly clear that a one-size-fits-all solution to customer segmentation will not work, and that the identity of so-called ‘key accounts’ will vary from region to region, and disease area to disease area. In such a dynamic and fast-moving environment, the work of field-based medical sales professionals becomes ever more important. The role of the rep may have been redefined in the past ten years, but while numbers on the ground have dropped significantly, their value to UK pharma in a changing marketplace has only increased.

Chris Ross, Editor.

At a time when both the Government and the NHS are calling for value for money, how can pharma introduce and promote innovation and value propositions? Tony Swift discusses ways and means of promoting eye-catching solutions through the key account approach.

In my two previous articles, Making it work and It’s all in the execution, I discussed the transition to Key Account Management (KAM) structures that many pharmaceutical companies are currently addressing. They focused on the difficulties of execution and considered various related issues such as:

• The move towards decentralisation
• The role of leadership
• The importance of support from the people in power
• The need to change the culture, beliefs and behaviours of individuals within the business
• The requirement for supporting the new strategy with a process including short-term objectives, incentives and controls that drives the whole execution initiative.

My final article on this topic covers the issue of building innovation and value propositions into a company. This topic is, of course, fundamental to any pharmaceutical company. For example, the rationale for many pharma companies is to build a drug portfolio that differentiates itself from the competition – either through a cost advantage or by improving patient outcomes. This article concentrates on building innovation and value propositions into the KAM process and is based on the premise that to justify moving to Key Account Management, account managers have to be armed with value propositions that are attractive to the customer.

KAM and Jobs
Over Christmas I was lucky enough to receive the recent biography of the late Steve Jobs, the former CEO of Apple. It was a fascinating read and highlighted the pros and cons of working for the guy mainly responsible for building one of the most successful companies in the world. The key message that came out of the book for me was the total focus Jobs had on delivering the very best products for the company’s customers. Apple was able to do this repeatedly with products we are all familiar with, such as the iPhone, iPad and iPod. Jobs also managed to achieve success in the world of animated cinema through his company Pixar, which produced films such as Toy Story, A Bug’s Life and Finding Nemo, before being sold to Disney. Disney bought Pixar primarily because, for the first time in its existence, a company was out performing it in its core area of animated film production.

So why was Jobs continually able to innovate more successfully than his competitors and what lessons can pharma learn from his approach when moving towards a KAM structure? I will address this later, but would note that Jobs’ success had little, if anything, to do with market research and asking the customer what they needed – as Jobs stated, customers don’t know what they want until we’ve shown them.

The demand from pharma
It is clear that pharma’s primary customer, the NHS, is now a series of complex and multi-layered accounts with an increasing number of stakeholders and influencers. Prescribers, payers, patients and policy makers are looking increasingly for pharma companies to offer true value added solutions rather than just products. Key Account Management represents a real opportunity for pharma to develop an effective value proposition and nurture closer and more effective relationships with key customers.

I attended a conference recently and a member of the audience asked a leading member of the NHS how pharmaceutical companies could more actively engage with the health service. The response was: “Don’t just bring pills and gadgets in the future, bring us value added solutions that drive the QIPP agenda with a documented and robust cost/benefit analysis.”                                       

This is an increasingly typical response. Sir Ian Carruthers, Head of the Government Innovation Review Team for the NHS, stated: “The pharma industry needs to think more in terms of working in partnership with the NHS rather than just sending in the sales force…the NHS needs your disruptive contribution to help reform, but too few companies are coming forward.”      

The Government and NHS leaders are crying out for more innovative input, although potential trust problems between the NHS and pharma can impede the implementation of some value added solutions. In any event, there is no doubt that demand for more input from pharma is growing and, given the Government and NHS agenda, it appears this can only continue.

Can pharma deliver?
Our experience at Apodi shows that companies currently differ significantly in their ability to deliver innovation and value added solutions through their Key Account Managers. However, a number of companies are extremely well set up to drive this agenda with specific divisions established to identify new ways of working in partnership with the NHS. Some have managed to integrate the operations of these ‘centres of excellence’ with other parts of the company – particularly brand management, sales and KAM management, and marketing.  In other words, innovation and execution are inextricably linked.
Other companies are not so well positioned or structured to deliver such value added solutions. In this situation, the validity of establishing a KAM structure needs to be addressed. I was recently party to a discussion between a senior executive of a pharma company and a service supplier that went along the following lines:

Service supplier: “Do your KAMs have real value propositions/solutions to take to the customer?”
Senior executive: “No.”
Service supplier: “Why not?”
Senior executive: “There is no real process to identify propositions and any that are identified are blocked because of budgetary constraints, restructuring issues and so on.”
Service supplier: “So why invest in KAMs?”
Senior Executive: (Silence).

Success ultimately depends on the KAM delivering real value to the customer. If that is not possible, companies need to critically analyse whether they should invest in Key Account Management rather than, or as well as, a ‘share of voice’ solution.

An innovative culture
For those companies still at the starting blocks in terms of building and delivering innovative value added solutions to its customer(s), the key question is what steps are needed to drive these processes into the company?

a) Establish a ‘Centre of Excellence’
Firstly, it is clear that it takes investment to truly understand customer issues and develop a deep knowledge of the marketplace to identify how experiences and value can be improved. Such insight is a powerful foundation for strategic, product and service innovations that create value for all parties.
In the early stages, we believe a company needs to establish a function to identify value added solutions. This should be centrally driven and staffed full time by people with the appropriate skills. Whatever these centres of value added excellence are called, their role is to generate propositions that can be shared with other parts of the company to assess whether the propositions should become part of the ‘tool kit’ of Key Account Managers.

b) Develop links with other parts of the organisation
As mentioned earlier, it is critical to link innovation and execution. This may be best done by the company encouraging – even demanding – that the Centre of Excellence coordinates its activities with other parts of the organisation, particularly those involved in executing the value added solutions.
How well a company coordinates these activities and actually makes things happen depends on a number of factors. For example, we have seen companies identifying value added solutions and introduce them to the Key Account Management structure, but then nothing happens. In this situation, the company needs to implement a rigorous process of establishing short-term objectives, incentives and controls to ensure that behaviours change.

c) Focus
Steve Jobs stated that his real passion was to build a company where people were motivated to make great products and that everything else was secondary. The focus he was able to engender in his company was extraordinary. Leaders need to assess whether they are instilling a culture that supports innovation and building value added solutions for their customers.

The impact of value
With the NHS now being a complex, multi-layered organisation with an increasing number of stakeholders and influencers, most value added solutions will differ depending on the company’s particular circumstances, product portfolios, services and so on. They will, however, be focused in one or more of the following areas:

a) Prescribers: solutions may address best patient outcomes, other clinical benefits and cost effectiveness of treatment

b) Policy makers: solutions may address care pathways, disease management targets and integrated care clinics

c) Patients: solutions may address adherence, access, provision of information, support groups and integrated care clinics

d) Payers: solutions that address funding issues, monitoring usage issues, etc.

Back to Steve Jobs     
Ultimately, Apple was so successful in building the most innovative products in its industry because the company, through Steve Jobs, ensured that innovation and value added solutions became part of the DNA of the company.

If a company is establishing a Key Account Management structure, we at Apodi believe that pharma companies need to follow these same principles. After all, what is more important when establishing a KAM structure than making sure account managers are in a position to deliver real value to their customers?  

Tony Swift is the Managing Director of Apodi. He may be reached on tony.swift@apodi.co.uk.