The brave new world of pharmaceutical sales

Posted 29th October 2009 in Articles, Commercial | 5 comments

Jonathan Carney

Interactive Medica

Much has been written about the demise of the traditional pharmaceutical sales model and the “Complex Buying Environment” that now pervades within our industry.

The reasons have been well documented and include:

• Healthcare spending outstripping GDP growth

• Health technology appraisal mechanisms

• Patent expiry and the resultant generic prescribing initiatives

• Health economics and patient outcomes dictating product reimbursement

• Specialist niche products replacing the traditional block-busters

This has led to the replacement of single decision makers by more complex buying groups that are focused on meeting strict criteria and are influenced by a larger ecosystem of information sources. For example, The National Institute for Health and Clinical Excellence (NICE) in England and Wales has taken on the mantle of appraising new treatments to look at whether they are clinically worthwhile and cost-effective.

When approved, purchasing power can devolve to local Health Service organisations, but even here the Decision Making Unit (DMU) is changing dramatically. It is no longer a single doctor making a decision in isolation – when choosing the best treatment they will consult with colleagues and Key Opinion Leaders, read specialist literature and network with others within the local health service or wider field. It is not uncommon for regional and even global influences to be involved as the individual country Health Services become a well connected community.

So how can pharmaceutical companies change to meet this new environment?

Sitting still should not be an option – though many organisations seem to be doing just that, by cutting costs and reducing sales force or building economies of scale through merger and acquisition. While this may prolong the inevitable status quo, ultimately every pharmaceutical organisation needs to change and embrace new business models.

“Sitting still should not be an option – though many organisations seem to be doing just that…”

One such approach, that is becoming more popular, is Key Account Management (KAM) which involves a much more strategic selling and planning approach that goes beyond traditional selling models. It reaches inside both seller and buyer organisations (many to many) and is undoubtedly more complex and more difficult than the (one to one) model of traditional pharmaceutical selling.

KAM is a team-based approach that focuses on high value customers, realising that there are multiple decision makers. At the heart of KAM is information and collaboration – the sales team needs to know about the roles and motivations of everyone involved in the purchasing decision, as well as to have a comprehensive overview of all contact between the two organisations.

Through Interactive Medica’s work with clients some important strategies have emerged that may well help differentiate the more successful KAM environments

Strategies for reconciling Key Account Management and the pharmaceutical enterprise

1. Don’t plan for a specific outcome, plan for a successful new process

KAM in pharmaceutical companies (and everything it encompasses such as collaborative team selling, account plans, customer strategies and relationships, etc.) isn’t about figuring it all out ahead of time as in the good old days of coverage and call frequency targets, it’s the exact opposite. It’s a process of engagement and relationship building in which the process itself is the star. It’s not until everyone, within the company and within the customer, is involved that you even know what needs to take place. Transforming the sales process of your business intentionally will certainly help this but be prepared for an uncertain less predictable environment that will continue to evolve and change based on reality on the ground.

2. KAM requires enterprise wide involvement

This is not just about ensuring that company wide knowledge, experiences and skills support the selling teams; it is about ensuring that all the company resources are actively involved within those teams. From the most Senior Executives down and through the enterprise it is a pre-requisite that they should be actively involved.

To believe that it is only the Key Account Manager who will have the ability, experience and skills to handle and communicate at all levels within customer is naive. Even if that was the case the customer would dictate otherwise or worse still engage actively with your competitors. Orchestrating the complex selling process, calling on the appropriate resources within the organisation (including Medical, Financial etc) and sharing knowledge and strategies about the customer account are extremely critical parts of the Key Account Managers role. In addition ensuring that at every customer interaction “value” is added and “relationships” are cemented.

3. The more control management gives up, the more value you will get from your selling teams

The impedance that top-down management structures create is a vacuum where things won’t happen until decisions are made. In a KAM environment, you have much more access to ideas and inputs to make decisions, even partially formed decisions and decisions-in-process that should be encouraged, directed, approved, or even discouraged.

Rather than holding on too tightly to the reins, allow broader margins for your Sales Teams to operate within with clear mandates on critical parameters for your organization. Healthy, open processes can’t exist where freedom isn’t maximized to the point of best return. Leaders in the organization can then involve themselves selectively into the transparent, KAM processes of their organizations, tap into the best ideas, and nudge activities in the direction they wish while understanding that they can never understand and control it all.

4. KAM literacy differs dramatically by executive, department, and Business Unit

The reality is that different parts of your organization or even your entire organizations often have a low KAM maturity. This either puts some of the sales team at a disadvantage or it puts the entire company at risk if the business benefits of KAM (growth, profitability, efficiency, productivity, etc.) are to be borne out.

Promoting your top Sales Executives to be Key Account Managers may not be the correct thing to do. Be aware that just like all the traditional Sales Executives had to undergo benefits and features training for the last 20 years, everyone (enterprise wide) needs to go through KAM principles and practices if today’s pharmaceutical Company is to succeed. This isn’t a huge body of knowledge, but it’s essential to ensure that workers (and even entire companies) aren’t left behind and can function well as the workplace evolves in the 2.0 era.

5. Measure your KAM returns and understand the value you are receiving

As I mentioned above traditional sales performance measures such as coverage, call frequency and distribution sales statistics are no longer enough. I am not advocating that you throw them away but measuring your return on investment in a KAM environment is a lot more involved and one of the hardest things to do. Understanding and developing new KAM metrics that are in essence forward looking and define critical actions organizations will all be different and business are unique environments in their own right but measurement turns blind adoption into something that you have conscious control over.

Distilling these down to the key performance indicators (KPIs) and sharing them enterprise wide as account plans work through will dictate how focused and successful you will be. However it will sometimes be a challenge to find the right metrics to help drive the decisions about your KAM strategies. Don’t give up the KAM, just measure something else until it works.

6. An enterprise wide change catalyst ensures rapid and consistent KAM implementation

One such catalyst is a collaborative, flexible technology environment that underpins this step change and can be tailored to individual company needs. It needs to allow the building of stronger links between sales and marketing, medical and other enterprise departments to ensure Key Account Teams can interact and share information. In today’s dynamic and real-time, mobile working world it has to be accessible by all wherever and whenever they need it. The ability to scale and rapidly adapt with changing business and strategic needs, as the plans evolve is fundamental. It is hard to imaging this being capable in anything other than a web-based environment.

“At the heart of KAM is information and collaboration – the sales team needs to know about the roles and motivations of everyone involved in the purchasing decision…”

As can be seen, KAM addresses a complex situation requiring companies to look at a complete change of business processes and mindset. However, it seems that most pharmaceutical companies still lack the tools to support this initiative in an uncomplicated manor. This is particularly true when it comes to technology and the current systems that most pharmaceutical companies deploy. Traditional sales software has been essentially a call reporting and processing system that monitors what action has happened and what sales have been booked.

By ensuring open communications around new processes and embedding these through the technology platforms, pharmaceutical companies can be sure that they will quickly see a return on their investment.

About the author:

Jonathan Carney is Business Solutions Director at Interactive Medica, based in the UK.

For enquiries he can be emailed at jc@interactivemedica.com

ABOUT INTERACTIVE MEDICA

Interactive Medica specialises in providing Software as a Service (SaaS) solutions to the Life Science industry. Our unique focus on the on-demand approach in the Life Sciences sector has led to us becoming the leading provider in many countries within Europe delivering solutions that increase the value of the key commercial processes within our clients. We have offices across Europe, supporting 130 instillations from 52 companies in over 30 countries. For more information please visit http://www.interactivemedica.com.