Healthy Skepticism Library item: 18254

Warning: This library includes all items relevant to health product marketing that we are aware of regardless of quality. Often we do not agree with all or part of the contents.

Publication type: Electronic Source

Ferguson J
New sales models and market access
Eyeforpharma.com 2010 Jun 22
http://social.eyeforpharma.com/story/new-sales-models-and-market-access

Abstract:

John Ferguson explores new ways to update pharma sales methods to improve market access.

Full text:

If it ain’t broke don’t fix it!

But as Peter Drucker said: “If it isn’t broke, you are not looking hard enough.”

Industry leaders are looking to “fix” their sales models in response to the biggest threat the industry has faced since its inception.

That threat is commoditization.

On every side and in every country there is pressure to reduce prices, especially from governments that face increasing health costs from an aging population, higher expectations, and improvements in technologies.

The health landscape as we knew it has changed forever and the genie cannot be put back in the bottle, so industry has to adapt or die.

No wonder then that the pharmaceutical industry is examining the potential for new models of going to market, such as market access and key account management.

But does industry fully understand what market access means and do they have the mechanisms/models to make the most of the opportunities presented by the emerging health landscape?

Adding value

Pharmaceutical company success, like any other business, depends on its ability to acquire and retain customers.

In the UK, NHS prescribing decisions are consolidating and competitors are increasing their investment in their sales strategies.

Added to this, internal forces are driving managers to constantly seek out better processes for engaging their largest customer, the NHS.

Change is difficult, but necessary in response to today’s rapidly evolving NHS.

The redesign of pharmaceutical field operations is probably one of the most strategically important and difficult tasks of senior executives.

In the late 1990s, two technology giants-Xerox and IBM-faced similar structural market problems.

Both companies were producers of great technologies and manufactured market-leading high tech products.

Both had established enormous manufacturing facilities and both companies were reliant on a huge and gifted sales force to create pull-through for their products.

Both companies were faced with the same problem-commoditization.

Market entrants were selling similar products far more cheaply, customer needs were changing as a result of the digital age, and costs of production were too high.

Both companies took a similar view.

From products to solutions

They had to try to prevent the erosion of their sales base by adding more value to their customers and thus retain premium pricing.

To do this, both companies sought to move from selling product (moving tin, or hardware) to selling solutions.

This new model required dramatic and far-reaching cultural changes to the company’s structure and strategies.

Solution selling is not the same as product selling.

Features and benefits are not part of selling a solution.

A solution is a much broader concept, involving bringing together a combination of elements to solve a problem for the customer.

In the solution world, the term partnership has real meaning.

The pharmaceutical industry has to take the same route by providing more value to their customers.

And there lies the rub.

Industry is no longer able to focus its attention solely on the clinician, as their decision-making power has largely been revoked.

It is now the payers who call the tune and their motivations are very different from clinicians.

What do payers want?

First and foremost, the interest of the patient still lies at the core of payer intent.

Examine the primary care organizations and you will find they are staffed at senior level by healthcare professionals with twin objectives: to implement government health policy and to ensure the availability of care to those in need within budgetary limits.

It is up to industry to decide how it will add value to these organizations.

One way to do this is to develop integrated market access strategies as a process of bringing products to market.

The implementation should unite the company’s value chain as one comprehensive and complete unit.

Break down the barriers between R&D, clinical, marketing, and sales in order to allow everyone in the process to be part of creating, developing, and marketing a product.

Marketing needs to be involved in the process very early on in its development stage so that it can devote time and energy to understanding the market and build a value proposition much earlier.

Statisticians, outcomes managers, and market access managers need to be involved in planning and preparing the value proposition to create a consistency of approach.

HTA is a critical hurdle, and ensuring HTA acceptance earlier means that marketing departments can get the product on the market earlier.

Marketing plans need to focus on new decision makers as well as the clinician/prescribers. The decision-making processes are complex.

Value Propositions

In making the change to a customer value management strategy and making market access work, companies need to develop their value propositions.

A value proposition is a clear statement of the tangible results a customer gets from using your products or services.

In today’s new environment, with complex decision-making dynamics, a company needs to develop a thinking process that enables it to develop a proposition that cuts through the noise and gets attention.

In today’s NHS, that proposition has moved away from patient benefits to financially orientated returns.

The provision of outcomes data and specific numbers or percentages showing the advantages of your products and service offering will get more attention.

Strong value propositions should offer tangible results and answers to critical issues the PCO, SHO practice face, such as decreased costs (admissions, tests, consultations, etc.), improved operational efficiency, reduced patient interventions, reduction in key health issues (obesity, smoking, cholesterol, alcohol consumption), increased revenues, faster cycle times, improved market share (for acute trusts), improved morale and reduced employee turnover.

The value proposition involves everyone in your value chain and is the lynchpin of your market access strategy.

Combine market access strategies with strategic account management and you will have a powerful platform for developing your business in the modern environment.

Does your organization have documented success stories?

Has R&D produced market-useful data that can be incorporated into the value proposition?

Most pharmaceutical companies will have work to do to enhance their proposition.

The process of development will include brainstorming with colleagues, customer research, competitive research, market research, and epidemiology.

The collated results form the basis for the prototype value proposition, which is then rigorously tested.

To each part of the proposition, you should ask: “So what?”

In this way, a robust story can be developed for the sales teams, account managers, and HTA managers to give to the various customer groups.

Strategic account management

A sage once said, it is no good having the best story in the world if you have no one to tell it to.

Account management provides the focus for telling this story.

The term key account management arose from retailing, where sales people were given a number of accounts-existing customers who already had a relationship with the supplier-such that that customer was deemed to be key to the supplier by dint of profitability, turnover, or potential development.

The objective of account management was to become strategic in outlook rather than tactical.

The account manager was not concerned with day-to-day sales, but rather with developing a relationship with the customer so that the company’s total sales and market share would increase over a longer period.

Account management principles were taken up by the IT industry and, in particular, companies involved with enterprise-wide solutions to tackle the problems of complex and high-priced contracts.

These key account managers would build relationships within the customer company and develop decision maps that looked at all the influences within the business that could affect the outcome of the sale.

These key account managers are very senior people in their own organizations with the power to make spending and budget decisions, even sometimes influencing the design of the product.

Over time, account management methodologies have emerged that help construct account plans and measure results.

Key account managers

The pharmaceutical industry has not reached the level of sophistication in account management that other industries enjoy and is still relatively immature in its development of these skills.

One reason is that account managers have yet to be recognized as senior decision-making people within their own organizations.

I still hear PCO chief executives complaining that the people they talk to are unable to take decisions and have to refer back to their company or that their account manager has no budget for a particular project.

Industry has yet to find the right formula and structure for account management.

There is no doubt that key account managers are an important innovation for the pharmaceutical industry, but the skills and processes still need to be developed.

Companies should still be asking fundamental questions about their customers.

What is the compelling event or issue that the customer has?

How can we bring our resources to solving that problem in a way that will enhance our reputation, improve our knowledge and most important ensure that our value offering is successful?

Answer these questions and you will be well on your way to establishing your company as a marker leader.

John Ferguson is a business consultant with 25 years of experience at senior management level in the pharmaceutical industry and NHS.

For more on KAM, see ‘Getting to grips with KAM’.

For more on payers, see ‘Market access and what payers really want’.

For more on HTAs, see ‘HTAs go global: What it means for market access’.