Contract Sales: the issues in the field
pharmafile | September 1, 2006 | Feature | Sales and Marketing |Â Â contract sales, outsourcing, salesÂ
The changing NHS customer
As NHS customers change, CSOs are having to adapt and forge new partnerships, and develop new skills.
In 2005, 71% of global pharma growth came from products initiated by specialists, rather than GPs, and by 2009, oncology in particular is expected to account for $20 billion more in sales than the next biggest therapy class – that of statins, according to IMS Health. Over the last 5-10 years there has been increased dedication by pharma and its sales force providers to primary care, which means that reps with relevant secondary/specialist experience exist in very limited numbers.
Running parallel to this in the UK is the constant NHS change with regard to decision makers, which sees some specialists moving from secondary to primary care, poly clinics being formed to offer a wide range of services, and practice-based commissioning by October 2006. So, what was once sold in secondary care may move to the PCT arena in the future.
CSOs need to ensure teams and their managers are multi-skilled to support the flexibility that will be demanded to follow the customers and adapt to their needs. This is where CSO reps come into their own, as they are happy to move between products and environment and rapidly build relevant experience. The challenge to the whole industry is to drive the right coaching skills among all managers to build on their existing competencies and, by using unique training tools, enable them to develop skills such as protocol creation or formulary establishment.
A great deal of success is driven by attitude, and with this as a basis, good managers or coaches can drive the required skills, and existing primary care reps can become the multi-skilled sellers of the future.
Jane Mackenzie-Lawrie is associate marketing director at Innovex UK
Client company diversification and specialisation
Many pharma companies are now developing or buying-in products and need to build relationships and sell to customers outside their traditional experience base. Many of these products are highly specialist and in complex disease areas. There may well be significant funding/service challenges that must be addressed prior and post-launch, further complicated by the shift in balance of power between payer and prescriber.
Selling, using the traditional model of brand key messages with supporting data, will reduce the ROI of the sales team. Such market change requires more strategic teams with advanced selling, negotiation, networking and relationship management skills at a local level, working across the health economy to ensure early and sustained uptake is realised.
The competence and skill of field-based people to deliver this is quite different, requiring key account management capability with specialist expertise and ability to work with people across the primary/secondary interface – to not only sell the brand but to also ensure that there is the money in place to pay for it and the service is developed to increase access to the brand.
This is not purely the domain of specialist products but also applies to many in market primary care brands, in launch or expected growth phases, and is often an area that is neglected, resulting in sub-optimal uptake and barriers to prescribing.
Caroline Roberts is associate director of business development at HealthGain Solutions
Flexibility of resource
We are all well aware of the rapid pace of change within our market, with the emergence of stronger management influence and control on prescribing, and new customers coming to the fore, while pressure increases to maximise ROI and develop more efficient selling models.
Against this backdrop, how do we all get more for less from our sales forces, while still driving up the skill levels towards more of a key account management sell and away from a share of voice model?
To address this, the word flexibility is widely used. Flexibility means different things to different people; to In2Focus it means agility and responsiveness i.e. placing the appropriate resource where you need it, when you need it, with the ability to remove it quickly if necessary. Increasingly, this is what we are being asked to do and CSOs are probably best placed to do it.
Interestingly, an increasing part of our workload comprises of specialist roles e.g. healthcare development managers, hospital representatives, key account managers, pharmacists, medics, seasonal primary care teams and hot spot representatives. This marks a significant shift away from simply outsourcing for noise to outsourcing to acquire capability and flexibility.
Julian Tompkins, partnership director at In2Focus SDS
www.in2focus.com
The power of procurement
The pharmaceutical industry's embrace of procurement has a significant effect on CSOs. While individuals in the procurement department may have been working in the background for years, they are now much more embedded in purchasing commercial solutions, such as sales or nursing teams.
This has profound consequences for CSOs, whose entire model operates on a high flexibility/high risk basis. Getting the balance right between being a loyal and supportive employer (in order to offer clients stable teams) and being able to redeploy resource quickly and cost-efficiently is a challenge. This challenge is made harder as margins are eroded by the procurement process, leaving less room for CSOs to offer employment continuity.
Increasingly sophisticated sales and marketing strategies demand a different and more taxing set of skills and a higher salary/cost base. As a result, there is a danger that CSOs are driven by commercial reality to achieve demanding key performance indicators using a team that is not ideally skilled.
Andy Holgate is sales operations director at Ashfield Healthcare
Integrating CSO & pharma activities
The decision to outsource some or all of the sales function is one not to be taken lightly as it may account for the largest single expenditure of any outsourced function for a pharma company. Getting it right will be instrumental in the delivery of the full potential for any brand – but what does getting it right mean?
First, there must be a clear assessment within the brand teams plans of which customer group will deliver the greatest return on investment. Identification of this target group and putting together an activity plan around them will form the basis of the sales plan to be delivered by the in-house sales resource, CSO or a combination of both.
Secondly, whatever the configuration of sales resource deployed, it is vital that everyone at all levels within client company and service provider is working off the same piece of paper and shares the same goals.
Key to the delivery of these goals is open, effective communication, which means better teamwork, better productivity, greater success and a more rewarding experience for all involved.
The most successful deployments of contract sales resource have been where all involved have forgotten who is the client employee and who is the CSO employee. Key to achieving this is mutual respect and quality.
Andrew Trouton is commercial director at PharmaPoint
The rise and diversificiation of outsourcing
As M&A activity continues apace, there is increased pressure to reduce costs. Hence, outsourcing is now used by more than 75% of UK companies for non-core parts of their business.
Sales outsourcing is high-cost for any organisation, including as it does all of the associated HR, training, management and back office support that is required. There is now a growing tendency for more companies to outsource this function to relieve themselves of these costs. Although the typical cost for a 15-man sales team with support is approximately 1.4 million, there are options to cut costs including taking syndicated slots.
The new development in outsourcing is brand fostering, where manufacturing-based companies acquire other firms but are unable to focus on all their brands because of internal brand conflicts or because they are tail-end brands. Instead, they manufacture the brand and pass on its management to their chosen partner, e.g. warehousing, logistics, finance, sales and marketing.
Outsourcing supports the structuring of the business as it becomes more focused, streamlined and cost effective.
Howard Hopkins is director of healthcare professional services at CeutaMed Division
Reacting to pharmaceutical company pipelines
That new products require salesforce resource is a simple equation; the more new products coming to market, the greater the demand for salesforces from CSOs.
The majority of the world's top 10 selling products have, to a greater or lesser extent, been promoted by CSOs and healthy pharma pipelines are a fundamental driver of growth for CSOs. This is not that surprising when you consider these products are important innovations in large and highly competitive markets and will be supported by significant promotional spend.
It is not unreasonable to assume that as long as the next generation of blockbusters is on schedule, everything in the CSO garden will be rosy. While there are divided opinions on the ability of the industry to produce new blockbusters, it is a fact that the number of medicines introduced containing new active ingredients has declined, from an average of 60 in the late 1980s, to 52 in 1991 and down to around 30 as we entered this decade.
CSOs now have to consider the types of products that will drive pharmaceutical growth. As we approach 2010, a widely quoted figure is that 60% of big pharma growth will be derived from biologics. In some cases, such products will be indicated for smaller, specialised therapeutic areas. This means they may be higher priced but sold in lower volumes than traditional big-selling, small molecules that have been the mainstay of CSO promotion in the past.
So it is not just a question of a healthy industry pipeline, but rather what comprises that pipeline and how CSOs prepare themselves to provide the range of skills necessary to be able to play a part in driving sales of new generation products.
Nigel Mansford is managing director of Marvecs UK
Dispensing practices
The problem traditional contract salesforces face when targeting dispensing practices is one of access, access, access.
The distances between dispensing practices mean that the commercial side of the business can often be better covered by telephone. It is far more cost effective to avoid 150-mile round-trips on a maybe.
This approach frees up valuable time for both the practices and the pharmaceutical companies, the latter of which are then able to concentrate more on their target accounts and clinical message.
There are 1,760 dispensing practices and the art of gaining successful access to them is planning, planning, planning.
Lesley Strong, managing director at Forte Pharma
Developing effective reps
Why do 20% of territories often account for 80% of sales? When we look at the performance of representatives, we generally look at the hard call and contact data. But often the correlation between sales performance and hard data not as strong as you would think.
We recently looked at softer skills; how the sales calls of our most successful reps differ from those of the mid group. Shaw Results carried out a series of interviews using a neuro-linguistic programming language and behaviour questionnaire with both groups.
The differences were stark and are vital:
Reps must be trainable so they really believe that their product is the best.
Most GPs have an away from communications style, while most reps have a towards style which gives a mis-match. Developing a mixed style allows for the right level of customer communication.
Most GPs still see a lot of reps. Most successful are the reps who can get close to their customers before selling their product.
This information can be used to recruit the right sales force and it also has major impact on their training and development programmes.
Duncan Morris is managing director of AmDel
The CSO landscape
The UK's contract sales market is a highly competitive and mature one. CSOs are a mainstay of pharma product promotion with around a quarter of all sales reps outsourced through one CSO or another, according to industry estimates.
The early years of this decade saw a high rate of business activity. Quintiles acquisition of Innovex in 1996 was the first major acquisition in the sector, followed by Irish pharma wholesaler United Drugs deals for Ashfield (2000), Ventiv (2002) and In2Focus (2005), making United Drug the UK CSO market leader according to its management.
M&A deals have not just been the province of the two largest companies, as shown with the 2005 combination of Futures Resourcing and Fit4Business to form Marvecs UK.
Alongside this race for critical mass, there has been a parallel trend for CSOs to be formed with more niche offerings. Notable examples of this include HealthGain Solutions, which launched in 2000 and combined the provision of specialist teams with consultancy, and AmDel. Set up in 2004 the company aims to focus on the quality of its representatives.
For CSOs of every size there are challenges to be faced. But as widespread as some of the issues are, 2006 is shaping up to be a good year for contract sales.
Pharmafocus would like to thank all the companies for taking part.
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