We’re partners, aren’t we?

pharmafile | January 29, 2010 | Feature | Business Services, Sales and Marketing |  PRIME, nhs partnerships, pharma training 

The times they are a changin’ and not just according to Bob Dylan. It’s hard to go to any UK pharma industry event these days where someone doesn’t stand up and point out that the world is changing. What you’ll hear less about however, is how, why and what to do about it.

The last 10 years, the ‘Labour Years’, have seen the most radical changes in the NHS since its inception. Having toyed with the concept of the internal market under the previous administration, choice and competition are now a reality. Plurality of provision, top-up payments and other new initiatives are forcing NHS professionals and managers to think differently about how they plan, commission and deliver services.

The NHS is arguably still the most centralised health system in the world, but policy developments since the 2000 NHS Plan have changed it significantly; care closer to home, practice based commissioning and plurality of providers are starting to turn the wheels in a different direction and have cranked decision making up a gear. However, with a spending squeeze on the horizon, commissioners and payers will be focusing more than ever on value for money.

The Department of Health started talking about Shifting the Balance of Power at the end of the 90s, but it has taken the best part of 10 years to see real change. Who, in reality is now making key decisions that effect treatment choices?

Changes in the NHS infrastructure combined with policies that seek to shift care out of hospitals and into the community have challenged the status quo in specialist care. It is widely recognised that targeting clinicians is no longer as effective as it once was. This doesn’t mean that supporting clinicians and seeking to understand the challenges they face should not remain a priority for pharma, however, successful engagement will require a well-equipped tool-box.

So the situation is thus: the NHS is facing a huge financial challenge, but has the opportunity to manage and deliver services very differently under new policy initiatives. The world of the customer is changing, but are we ready for it?

Probably the most significant part of that question is the word ‘customer’. A few years ago there was little or no ambiguity about who the canny rep needed to target. In this new world the answer is not quite as straightforward. Identifying where you target your resource to maximise return is taxing many a regional sales manager.

Who are pharma’s customers?

Talk in the world of pharma sales has moved from a focus on the prescriber to the ‘payer’; but who is the ‘payer’?

Talk to half a dozen people and you’ll probably get half a dozen different answers: It’s the PCT, they pay the bills or It’s the prescribing advisor, they influence and control primary care. Others will says: It’s the Drugs and Therapeutic Committee, they determine what’s on the formulary.

Understanding who and what influences prescribing decisions in your specific therapy area is essential. You might say that’s obvious, but how do you go about engaging those key customers?

What you have to ask yourself is why would they want to talk to you?

• Because you’ve got a great product to sell? Unlikely.

• Because you understand what patients need? Still unlikely.

• Because your product can genuinely improve outcomes?

Would be nice, but unfortunately still unlikely.

 Understanding not just who the customer is, but what their needs are, is the answer. What makes them tick, what drives their decisions on a day to day basis? Talk to customers in their own language, but avoid buzz words and jargon that just make it look like you read the papers! Demonstrate that you understand their priorities and show them what you can do to help. Forging meaningful relationships that look to the long term rather than the quick sale should be your aim.

Focusing on pharma partnerships with customer groups

Partnership working with customers is a relatively new concept but one that is endorsed by both the ABPI and the Department of Health. For many years now pharma companies have recognised the value in supporting frontline clinicians, often, by directly providing additional capacity. But how do you provide support to those planning, commissioning and purchasing care?

Getting in front of these customers will be the first challenge to overcome and there may only be one chance to get it right. How not to do it is to send what may be an excellent hospital representative into a PCT with no prior training. Talking to a commissioner about the clinical benefits of drug will not only turn them off but will confirm what they believe about pharma companies – it’s all about selling the product.

It is worth investing in preparing teams that will be taking on this challenge. Work with someone who knows and understands the inner workings of the customer’s world. Preferably someone who has walked the walk, not just someone who can talk the talk!

Partnership working will mean different things to different customers and knowing what each one wants can only come from the customer. The skill is in drawing out their needs, understanding the issues and working together to identify possible solutions to problems. Never go in with a solution at the first meeting, take time to understand the issues

Alternative service provision and customer needs

Alternative service providers offer a whole new customer base. In many cases these customers will be providing a service for the first time and will welcome support, not only in considering treatment choices but the wider aspects of service provision.

The many potential new service providers will have a myriad of other responsibilities and may well be under-resourced in the planning and development of new services. Supporting organisations in setting out proposed care pathways and business cases can have the benefit of giving unprecedented access to a first hand understanding of how the service works and where the key decision points occur.

Planning and costing services, along with auditing and monitoring, are all areas where extra capacity will certainly be appreciated. The opportunity to build a lasting, mutually respectful relationship with customers should not be underestimated.

However, be aware of the pitfalls of being drawn into disputes between PCT and provider. The challenge is to build good relations on both sides and often an impartial facilitator, particularly one who has demonstrated an understanding of the issues, can help move things forward.

Commercial Partnerships History

As the ancient proverb goes, “your enemy’s enemy is your friend”. If Machiavelli did not write it, he certainly should have, for this thought has sown the seed of centuries of unlikely partnerships and alliances; first between families, later great Houses, nations and today between commercial organisations seeking competitive advantage. It encourages you to look beyond the normal boundaries of strategic fit and perhaps to identify improbable allies.

As Steven Covey says in his Seven Habits of Highly Effective People, ‘Start with the end in mind’, unless you have a clear view of why you are seeking an alliance, the chance of identifying the right partner and of making the venture a success is minimal. All too often the people who are charged with making an alliance work are different to the ones that came up with the idea, and this can lead to significant implementation challenges unless the thinking process has been rigorous.

There are a few key questions that need to be considered at this stage:

• Vision: What is the vision for the brand – What does it represent for the organisation?

• Corporate Objectives: What are the ultimate goals of the organisation?

• Organisational Capability: Does the organisation have the capability to achieve its goals – what are its major strengths and weaknesses?

• Strategic Options: Does the organisation wish to build its own capability in these areas – can it actually do so?

• Timescale: What needs to be achieved and how soon – can it be done?

Only once these questions have been considered fully can an organisation move to the next stage.

Identify gaps, partners and synergies

The process of capability audit and gap analysis should make clear whether an alliance is needed and the likely capabilities of a potential partner organisation. It is important here to refer back to the overall strategy and to decide whether it is appropriate and desirable to build a commercial platform by relying on a third party. It is at this stage that companies may decide to go it alone and build their own capability or complete their gaps by outsourcing.

The ideal partner is one who can complete your own gaps but also has gaps that you can fill with your capabilities. The concept of ‘Mutual Strategic Fit’ is important, as it indicates the possibility of a quid pro quo that can be a considerable sweetener for the deal.

A vital element can be overlooked at this stage. The cultural fit of the two organisations must be considered early on. It is not that a mismatch should be a bar to a deal, rather that the differences need to be accounted for in the shape of deal agreed and the mechanisms and principles used to run the agreement. It is this area that can lead to the greatest difficulties for operational managers and reduce the overall effectiveness of the arrangement.

It is also important to examine the aspirations of your potential partner, and to see how they fit with your own. If your partner is seeking entry to a market where you are already strong and they see this as a stepping stone to a future franchise, is this compatible with your long term goals for that market? You may find yourself contractually obliged to set them up as a future competitor to you by building their market position.

At this stage and later ones, the process of due diligence must be highly active, and tuned to detect the underlying motivations of your potential partner.

Agreeing the terms of the deal

There are countless possible shapes to partnership deals in pharmaceuticals, ranging from the least complex detail swap to the most highly integrated joint venture.

Frequently as the deal is designed, it is forgotten that with the benefits of a partnership, certain freedoms must be foregone. Sometimes these are the elements that can come back to haunt the agreement in future years.

Successful partnership requires sufficient process to ensure smooth running. There are always points of disagreement in any implementaton process and, with two distinct corporate agendas to accommodate, partnerships are certainly no exception. It is important to establish a clear hierarchy of decision making and resolution at the outset, and most partnerships will encompass a steering committee or panel of senior representatives from both organisations. This is charged with resolving implementation issues, reviewing and approving plans and expenditure and laying out communication channels and processes. In the event of intractable disagreement, consideration must be given to who has the final say.

It goes without saying that every contract requires full contractual support with suitable built-in renewal and exit arrangements to protect both parties.

Smooth running

With any alliance, the devil is definitely in the detail, and issues that we manage easily in a single company scenario can become magnified into complex issues within an alliance environment, where systems and processes may not align or even be fully compatible. Key areas to consider for a fruitful partnership are:

Business and financial planning

There is often tension between the planning processes and timings of the two organisations, and whilst company managers are accountable within their own planning framework they need to be respectul of their partner’s needs. Run successfully, the joint approaches to busiess planning can enrich the overall plan

Ownership of the forecasting process is usually set out in the contractual document, but it is perhaps surprising how often two partners may have different expecations of their brand, and reflect those in differing forecasts and financial targets. These differences can result in significant management challenges at salesforce level where bonus schemes and incentivisation may become misaligned.

Performance management

Successful implementation within any alliance requires a clear and robust process of performance management, a process that is traditionally highly individual to an organisation. The appropriate reward of good performance and the management of poor performance requires a high level of transparency between partner organisations. Achieving this across different performance appraisal systems and information systems can present real challenges for operational managers.

To avoid duplication of effort, it can be productive to allocate certain tasks to one or other marketing team. If this approach is not to be taken, an extremely high level of communication and collaboration is essential to ensure effective decision making.

Medical approval and compliance

All organisations work within a clear regulatory and compliance framework, but each has it own their own unique internal standards, systems and processes. A good example of this is how the ABPI’s Code of Practice is interpreted – each company has a slightly different take on its many clauses and guidelines. Some companies take an extremely conservative perspective, whilst others are more pragmatic in their interpretation. Managing these differences can represent a real challenge as they go to the core of a company’s culture.

By understanding the pitfalls and being clear about what both parties want from the partnership, it is possible to build a fruitful and long-term relationship.

Jonathan Dancer and Victoria Cook from red kite consulting group work in Strategy Consulting and Health Service Engagement. The group works in partnership with the PM Society on its PriMe training programme. For more information on PriMe Training and the ‘Successful Partnerships’ module, please visit the PriMe website: www.prime.pmsociety.org.uk