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Time running out for pharma sales and marketing

Published on 26/02/09 at 11:19am

The pharma industry's current sales and marketing model will be defunct in the next ten years.

That is the stark message from a report by PricewaterhouseCoopers (PwC), which concludes: "By 2020, the role of the traditional sales representative will be largely obsolete."

"Most - if not all - pharmaceutical companies will have to transform their marketing and sales functions," it adds.

The report, Pharma 2020: Marketing The Future, says 60,000 or so jobs are expected to go in the next couple of years as the global pharma industry downsizes.

But Steve Arlington, PwC global pharma and life sciences advisory leader, warned: "The shortcomings of pharma's current marketing and sales model can no longer be addressed by simply reducing the size of the sales force; the problems go deeper."

The balance of power is shifting towards those who pay for medicines, contends the report, with governments and insurers the ultimate arbiters of pricing and value, reimbursement and prescribing decisions.

"Products alone will no longer guarantee the pharmaceutical industry's long-term future," Arlington continued.

Focusing on specialist medicines to combat generic erosion and creating healthcare packages for treating specific conditions are seen as the main ways forward.

The increasing trend for pharma companies to buy up biotech outfits is reflected in the report's assertion that "science is leading the pharma industry toward specialist medicine".

The global market for specialist brands accounted for 44% of worldwide prescription drug spending last year and could be twice the size of the current market for all prescription drugs by 2020, according to PwC.

By contrast, around 65% of blockbuster drugs for common diseases such as hypertension and diabetes are now sold generically in the US and the figure is 70% in Central and Eastern Europe.

"Soon, the imperative will be who can add the most value, not who can sell the most pills," said Simon Friend, PwC global pharma and life sciences leader.

"The challenge for pharmaceutical companies will be managing through the changes in their business model as the shift from blockbuster to specialised evolves over the next ten years."

Rather than selling medicines, pharma companies need to be promoting health, improving quality of life and reducing healthcare costs, the report says.

Brand building, managing networks of external alliances, negotiating with governments and health insurers, liaising with secondary care specialists and communication with patients will be the key skills required in future.

There will also have to be a stronger link between marketing and R&D, according to PwC, with companies thinking more about pricing earlier in the development phase.

Drug candidates that look unlikely to generate commercial demand will increasingly be ditched in phase II, the report suggests.

A more flexible approach to pricing, such as the risk-based model on certain brands that manufacturers are already adopting to ensure patients use their medicines, is going to be seen.

And the importance of emerging markets means differential pricing within and between countries will also become commonplace.

PwC adds that one in five doctors now refuses to see any sales representatives. Other issues the industry will face are growing public scrutiny over the way pharma companies and healthcare professionals do business and resistance from regulators.

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