Pharma Reform

In the last post we discussed how Big Pharma might have avoided having to lay off so many of their loyal employees had they done a better job of managing their business for the long-term.  Well, easy to look back and criticize but how about looking forward?

Here are some things for Big Pharma executives to consider as they restructure for the future:

• No single blockbuster product can fix a dysfunctional pharmaceutical company.  It can only buy time to make the inevitable difficult but necessary changes.
• The pharmaceutical market will become increasingly global with less regional variation in treatment practices, regulation, and pricing.
• Unsubstantiated value of seemingly unjustifiably high prices will be met with market rejection, outright price controls, government price negotiations, and higher rebate expectations.
• Relative to Big Pharma pipeline needs, Biotech will have a finite supply of clinically meaningful differentiated innovative products available for acquisition
• Traditional marketing and sales activities will have little impact on prescribing behavior which will be more influenced by scientific rationale, demonstrated meaningful clinical benefit, and the impact on overall healthcare costs of treating the patient
• Prescribing will be increasingly managed with “best practice treatment guidelines” prompted and monitored for compliance through e-prescribing technology
• Electronic medical records with medical information systems driven algorithms will allow for real world assessments for determining relative therapeutic benefits and healthcare cost implications of treatment options
• Financial incentives, cost management benefits, and more effective products and programs will drive a revitalized interest in making preventive medicine and medically prescribed life style changes a priority
• Product and treatment assessments will be more rigorous, more sophisticated, and less easily influenced by Pharma companies unless they have  compelling real world clinical data to support their claims
• Comparative efficacy will become a regulatory and healthcare market expectation
• Therapeutic options will include stem cell, gene therapy, and synthetic biology- derived treatments.  Some may ultimately eliminate the need for chronic treatment in small molecule mass markets.
• Drug-device and delivery systems will target treatments to specific disease targets, increasing efficacy at lower doses while reducing the potential for side effects and adverse reactions
• Companion diagnostics and personalized medicine will be a regulatory, market, and healthcare provider expectation
• Reliable, high quality manufacturing that ensures consistency and safety will be a differentiating feature for pharmaceuticals, especially for generic drugs
• Affordability will eventually mean denying insurance coverage (private or government) for high priced drugs with marginal therapeutic benefit, especially those with minimal end of life benefits
• To maintain profitability under intense pricing pressure Pharma companies will be forced to dramatically reduce their operating expenses (well beyond their current thinking)
• Big Pharma companies that maintain their large organizational size will have less pricing flexibility and will be hampered in their ability to deliver innovation, ensure customer satisfaction, and avoid regulatory and legal missteps

So what to do now:

• Pharma recruiting, training, and talent management must improve with a focus on expertise, competence, and integrity.  Hire and develop “the best” (e.g., world class scientific expertise, visionary leadership with integrity, highly skilled operations personnel) rather than just finding somebody who has done or can do the job.
• Focus research on comprehensive understanding of diseases rather than just exploiting chemistry and disease targets.  Strive for preventions and cures rather than just developing another compound or molecule to get to the market.
• The number of pipeline projects is only meaningful in the context of new market expectations.  Products that can not deliver clinically meaningful differentiation should be objectively reevaluated for commercial viability in a more demanding healthcare market. Fewer development programs will make it past this assessment if companies are truly objective and critical in their evaluations.
• Pipeline target product profiles should define the potential “comparative efficacy“ and the meaningful clinical benefits relative to other therapeutic options
• Identify and develop plans for securing the specific data needed to substantiate the claims of efficacy, safety, and “value”.  This is not just to meet regulatory requirements but to withstand rigorous, more sophisticated managed market expert assessments.
• Make companion diagnostics a requirement for pipeline projects
• Develop managed market expertise throughout the organization not just as commercial function.
• Develop healthcare system collaborations that allow for understanding, designing, and executing comparative product and treatment assessments in different electronic medical records systems
• Assume none of the traditional marketing and sales tactics will work (including social media) and then prepare plans for promoting your products in this new healthcare market. For example, think about how electronic medical records and best practice treatment guidelines will influence e-prescribing.  How will you educate a physician population without traditional tactics?
• Assume that even your most aggressive cost cutting programs in operations will not be enough.  Root out legacy, non-essential expenses as if you were facing bankruptcy.
• All non-core competencies should be critically evaluated as outsourcing opportunities
• Invest in expertise, competence, integrity, and high performance systems and equipment to ensure consistent high quality manufacturing (if the company plans to continue manufacturing as a core competency). Invest and retool your processes now for the future.

Critical Success Factors

• Innovative new products with companion diagnostics
• Robust real world data to support clinically meaningful differentiation
• Organizational managed market expertise
• Talent management focused on expertise, competence, and integrity
• Low cost, efficient yet reliable operations
• Commercial programs designed to help healthcare providers and patients realize the full value of the company’s products
• Become a trusted and credible source of disease and treatment information
• Patient well-being must be a priority (e.g., patient safety more important than negative impact on sales or potential implications for litigation)
• Leadership and organizational integrity

The intent here was not to draft a business plan but rather to identify some of the predictable changes of the evolving new healthcare market that will impact Pharma companies.  This was merely to demonstrate that it is possible to anticipate the changes we see evolving in the market and prepare for them if we look forward and take action now.

Now, I’m sure some of you are thinking… ” do you think we are idiots? You made me read all this for nothing.  Obviously, the industry and its executives are doing this.  We have strategic planning groups of MBAs working full time on this stuff.”

Well, I’m pretty sure industry executives thought they were taking care of the future back in the mid-1990’s as well.

mike@pharmareform.com

Layoffs, divestitures,  and closing of facilities continue in the pharmaceutical industry and I don’t believe we are even close to seeing the end.  This is horribly painful and almost inhumane in some cases.  Big Pharma executives could have and should have seen that their business model, product pipelines, and more importantly, their balance sheet projections were not sustainable in the evolving healthcare market that was becoming increasingly managed, more cost conscious,  and more demanding for innovation, clinically meaningful differentiation, and proof of value (think about the recent public review of Provenge^®).

I believe the current layoffs are in large part a result of Big Pharma mismanaging the cash they were generating over the past two decades.  Innovation in R & D was not critical for market success when you could “tweak molecules” and drive sales of even marginally differentiated products with aggressive, and wastefully expensive marketing and sales tactics.  Efficiencies in operations were not a priority when you had so much cash coming in that the modest  savings generated by pseudo cost reduction programs seemed inconsequential and not worth the effort.  And despite laboring through annual departmental political battles for headcount requests, cash rich Big Pharma continued to add staff while still delivering Wall Street acceptable operating profits.

You can’t blame the economy for historically bloated operating expenses, diminished R & D productivity, or the billions of dollars spent on litigation, fines and settlements for questionable marketing and sales activities.  The patent cliff and the increasingly managed evolving new healthcare market were not only predictable but their impact could have been mitigated had executives worried more about long term strategies rather than focusing on meeting quarterly numbers to appease Wall Street and ensure their own personal financial security.

But now Big Pharma has no choice. There is no way for the slowing revenue growth to support the expensive, inefficient operating infrastructures they have accumulated over the last several decades.  Unfortunately, and even unfair perhaps, this means their front line employees will bear the brunt of the mismanagement.  Even more unfortunate, is the loss of jobs at Big Pharma at a time when unemployment is at an all time high and the global economy is struggling to recover.

Even without 20/20 hindsight, I believe the current situation was avoidable.  Had Big Pharma pursued innovation in the mid-1990’s rather than relying on “tweaking chemistry” just to get products to the market, managed their expenses when cash was plentiful, and had the foresight to begin adjusting their strategies and workforce for the evolving new healthcare market rather than trying to be the biggest Big Pharma you would not be seeing the layoffs we have been experiencing.

So what does Big Pharma need to do to make sure they realize the benefits of this painful but necessary downsizing?  We’ll discuss that in the next post. mike@pharmareform.com

I would say that from the feedback, comments, and tone of comments I have received pharmaceutical sales representatives definitely hate scripted presentations.  Here’s my take on it.

I should have made a point that pharmaceutical sales representatives should not be expected to deliver the exact same script verbatim to the same physicians more than once. I don’t believe there is any way to make the exact same scripted presentations not sound disingenuous.

If your company feels that compliance with a Corporate Integrity Agreement mandates tightly scripted sales presentations, then those responsible for drafting those scripts must do a much better job of crafting them as prescribed in the previous blog.

Companies and commercial management that feel scripted presentations will be more impactful than letting reps “wing it”  must also do a much better job of crafting the presentations, making them much more rep and physician-friendly as prescribed in the previous blog.

Perhaps I got this from my first District Manager ( one of the best I ever met in the industry)  but I am a firm believer that for product presentations there is always “a best way to say it.”  Getting a scripted presentation right is really hard work and requires an iterative process to get it right.

I also know that when I am shopping to make an important purchase I prefer a sales person who is well prepared with a carefully crafted, well thought out, information packed, and smooth flowing logical presentation (including answers to my questions and objections) than somebody who just “wings it.”  You may nail it occasionally by “winging it”, but I believe you will be more consistent in delivering important information and come across as more professional with a well scripted, prepared presentation.   Again, I also believe the more you practice delivering the presentation the less it will sound robotic and monotonous.

My impression from the feedback is that the scripted presentations pharmaceutical sales representatives are being asked to deliver do not meet the quality of presentations I have referred to in these posts and no amount of practice will make them better.   That being the case,  I would probably hate them as well.   mike@pharmareform.com

It is alarming to see prominent pharmaceutical industry names in the headlines these days regarding manufacturing issues serious enough to require recalls and plant closings, and for the DOJ to be compelled to seek prosecution.  Is it just a matter of the FDA increasing their surveillance scrutiny and compliance enforcement or is there really something more fundamental going on with pharmaceutical manufacturing?

Even with all the automation, IT support, instrumentation, purpose built facilities, and technical expertise, pharmaceutical manufacturing is difficult.  Those who do or have done pharmaceutical manufacturing know how challenging it is to maintain consistency and the high quality of products, batch after batch for tens of millions of tablets, capsules, or doses, year in and year out.

Pharmaceutical manufacturing is tightly regulated for quality with highly developed quality systems supported by rigorously defined product specifications, detailed SOPs (standard operating procedures), training requirements, job qualification expectations, and mandatory supervisory and quality assurance (QA) checks and balances.  One of the biggest question I  had when these issues started to more frequently hit the press was, “where was  Quality Assurance management?”

I believe with all the regulatory safeguards supposedly built into pharmaceutical manufacturing,  industry executives who have never worked in manufacturing have  very simplistic views of manufacturing, have developed a false sense of security about compliance requirements, and many are probably taking quality of manufacturing for granted.

Here are a few issues, attitudes, and situations that may be at the root of some of these pharmaceutical manufacturing issues.  Many if not all of them have to do with management’s perspective or the perspectives and expectations they project to their manufacturing teams.

• Management thinking that manufacturing is all about efficiency, so “let’s have manufacturing find another 5% reduction in cost of production.”  If you make this request year after year, at what point do you compromise quality?
• With the jobs so well defined in our SOPs, “we can train anybody to do these jobs.  How hard can it be?”
• Once the process is defined, it’s just a matter of production execution and efficiency
• Repetitive, routine operational steps by otherwise competent operators can lead to complacency, including at the checking and double checking steps of the supervisory role
• we don’t need QA people who are going to be difficult to work with (interpretation…we don’t need people who aren’t flexible in their process reviews and sign-offs)
• “we are not making any product when we are cleaning.”  “what is the longest stretch of time between cleanings that we can justify?”   Facility, manufacturing room, and equipment cleaning time, when viewed as non-production time (reduces productivity), puts pressure on performance metrics.
• Similarly, “when people are training they are not making product”
• “We are not going to let a meticulous operator get in the way of making our numbers.  Find a new operator.”
• “I am so busy with paperwork…nobody is going to know if I just sign off on this, even though I haven’t really checked it”
• “Nobody in management needs to know, we’ll just write that batch off as waste”
• “Let’s just do another sampling. I’m sure the batch will pass”
• “let’s just get a management authorized override for that deviation”
• We can’t afford the shutdown time to make the necessary upgrades to the process, even though it makes sense.
• FDA will require a new set of trials if we make these changes to our outdated process
• “We’ll never get caught up with these CAPAs” (Corrective Action and Preventive Action).  Sometimes the hardest but most important never get addressed in a timely fashion despite SOP defined prioritizations and timelines that are supposed to safeguard against delaying the fixes.

OK.  I think I have made my point.  Time for pharmaceutical manufacturing to get some respect and more importantly, some much needed investment.  I’m not talking just about buildings and machines although that may be in order for some.  I’m talking about putting quality standards of production ahead of production output metrics (no game playing, not just lip service).   I believe well managed manufacturing teams of  competent, conscientious operators, supervisors, and QA/QC staff with expertise and integrity will take pride in delivering high quality products as efficiently as they feel is possible.  It is the “well managed” part that I believe may be missing in some manufacturing operations.

It is also time for pharmaceutical company executives to appreciate the contribution manufacturing makes to the revenue line and not just look at the expense line impact.  Some executives, unfortunately, now know the negative impact manufacturing can have on revenues, especially if you take it for granted and don’t pay attention to it.

mike@pharmareform.com

Many pharmaceutical companies have been divesting assets and downsizing operations as they try to accommodate the impending patent cliff, disappointing research productivity, diminishing impact of traditional commercial tactics, and the slowing revenue growth.   Given the state of the industry and in light of the market changes taking place,   I also recommend in Pharmaplasia™  that pharmaceutical companies downsize their operations.   Despite being painful to employees (and their families)  and as disruptive as it might be for the company, it in many cases is the absolute right thing to do,  but how you go about doing it matters.

Criteria used to assess what gets divested or downsized include things like poor or mediocre past performance, lack of perceived need, and the magnitude of the potential expense savings.  In the spirit of fairness (especially when it comes to employee relations issues) and to satisfy the quantitative justification needs of management, numbers often drive the decision making process.  As strategic as companies might try to be,  a numbers-based decision making process will lead to collateral damage with unintended consequences including:

• Loss of  expertise
• Loss of management experience
• Disruption of business relationships

Unfortunately, these are the very business assets pharmaceutical companies need and can least afford to jeopardize as they prepare for the evolving new healthcare market.

But you might be thinking that companies and management are smart enough to avoid these pitfalls by being analytical about their choices, right?  Well, let’s take a look at a few examples of where the process may not yield the results expected and could be detrimental to the company.

• Early retirement packages often accommodate employees with years of experience, including seasoned managers, scientists with expertise, and employees (including sales) with valuable long standing business relationships.  How many of your best people can’t resist the offer and walk out the door?  Remember, your best people are not afraid of being unemployed for too long if they take your offer.
• How about when the numbers  suggest eliminating sales representatives and territories with lagging sales and diminishing physician access.    Are less effective and even poorer performers being protected by having better sales numbers because their territories are in a less managed market…today?  Are your sales numbers a real reflection of the experience, expertise, and effectiveness of your sales representatives and managers?
• What about a manufacturing operation with a perfect track record for production that has comparatively higher costs driven mostly by the expenses associated with a larger, more experienced quality staff and more operational training.  Is this staffing and training perceived to be quantitatively excessive and unnecessary in the context of downsizing expectations?  Have you factored the complexity of their manufacturing and the impact (and expense) of a recall compared to the other production facilities? If so, do you eliminate the management experience, the staff (operational expertise), or the training?  What numbers do you use for that decision?

The point is that divestitures and downsizing while necessary in the current business environment for most large pharmaceutical companies will have collateral damage that goes well beyond the personal impact such decisions have on employees and their families.  Also,  a company’s assets may not be accurately reflected in the numbers used for the analysis of what to keep and what to let go.  Companies that are aware of potentially losing these hidden assets may ultimately make the same decisions but they also might look to find ways to avoid the loss or at least mitigate the impact rather than just accepting collateral damage as a part of the process.   mike@pharmareform.com

As we have discussed professional representatives may not be as focused on sales numbers and are less responsive to incentive pay than the traditional sales representative.  This alone can make it frustrating for a traditional sales manager.  But professional representatives are self motivated and driven by personal performance excellence.  They strive to be the best that they can be and never seem satisfied with the level of skill or expertise they attain.  This includes selling skills, persuasive techniques, and managing their territories.  So why do so many pharmaceutical sales managers hate managing these people?

I believe it is because it takes experience and a much higher level of coaching skills and management expertise to leverage the value and satisfy the performance expectations of a professional representative.

You may have heard the term “high maintenance rep.”  Well, they can exist on both ends of the performance spectrum but it is probably used most often to describe professional representatives.   The reason is that professional representatives will push sales managers, sales training, and marketing to their limits of technical and scientific competence, coaching skills expertise, and management capabilities.  When the skills and expertise of the professional representative exceed the management competence of the sales manager, it becomes personally threatening to the manager and makes their job much more difficult and sometimes even impossible.

Professional representatives are so good at what they do and they have such an instinctive sense for what is going on in their market that they are often the ones that ‘complain” about the crappy marketing materials and boring marketing messages they are being asked to use.  When they point out that they really don’t have the data to support the claims or the efficacy implications of the marketing materials they get labeled as trouble makers.  Professional representatives also expect insightful post call coaching for improvement not just critique of what they did wrong.   And, despite being less driven by numbers, when they point out that their sales forecast makes no sense as it applies to their territory, professional representatives are frustrated by the lack of rationale for their increase, especially in the context of other conspicuously low territory growth rates.

Experienced, skilled sales managers with expertise treasure and nurture professional representatives.  They lean on them for help. They tap their technical and scientific expertise for the benefit of the district or region.   Experienced and skilled sales managers know how to inspire and help professional representatives achieve their seemingly impossible expectations for excellence.  They have the exceptional coaching skills necessary to identify the nuances of interpersonal and presentation skills that can make the difference between an impactful discussion and merely delivering another marketing message.  It takes a confident (not arrogant) manager to hear what is really being said in the “complaints” of the professional representative.  You have to be a much better, more experienced sales manager to appreciate and effectively manage a highly skilled professional representative.

If you lack experience, sales management skills, coaching expertise, and technical competence, you will hate managing a professional representative.

mike@pharmareform.com

Unless you really understand and appreciate the mindset difference between that of the professional representative compared with that of the traditional pharmaceutical sales representative, this compensation discussion will not make sense to you.  As GlaxoSmithKline recently discovered, a change in sales compensation structure, especially incentive compensation,  away from traditional sales and prescription volume model will take an organizational and perhaps even industry realignment of pharmaceutical sales compensation philosophy.  Most pharmaceutical companies, their commercial management teams, and many representatives are not ready for this.

In fact, I predict that sales organizations will be most resistant to this change as most pharmaceutical sales representatives and managers are too grounded in the traditional sales mentality.  Many sales people are just going to see this as a take-away and will want nothing to do with the job.  It will also be hard for managers to get their arms around how to manage sales (“drive sales”) and evaluate performance without sales quotas and other activity based numbers.   They will complain about the inability to fairly and consistently assess performance if they don’t have hard numbers.  They ignore the fact that today’s prescription data and sales volumes are not accurate and are filled with national, regional, district, and territory caveats.   They also like to think that today’s sales goals and territory alignments are fairly distributed and accurately reflect potential.  And when was the last time we correlated the number of territory activities to sales results?

In the end, none of this matters because incentive compensation is not a performance driver for professional representatives the way it is for traditional sales representatives.  Incentive pay is not a scorecard like it is for traditional sales reps.  In fact if the lack of incentive pay is the reason for a representative to quit, you really didn’t lose a professional representative, you lost a sales representative and this is fine because they wouldn’t be happy or satisfied trying to make it work.  This is the hardest concept to get comfortable with if you have a traditional sales and sales incentive mentality.

Professional representatives want to be paid for their expertise, their stature in their medical community, and recognized for their personal performance excellence.  They prove their expertise and the effectiveness of that expertise by the business health of their territory in terms of how their products are perceived, formulary and reimbursement status, their access to key decision makers, and the professional respect those decision makers have of them personally.   They appreciate that actual sales of their product depends on a number of factors, some they can influence while for others it would be inappropriate to influence (e.g., encouraging the use of their product for patients who are not good candidates or where there is a better product available).  Sales and prescriptions are merely surrogate markers for a lot of things going on, not just their performance.

So how do you compensate the professional representative?  You pay them relatively high base salaries (compared to traditional sales representatives) consistent with their expertise and ability to create or maintain a healthy market environment for your products.   How many people can you hire with that level of expertise and ability to keep a territory healthy?  If you think you can find a lot of these people, you don’t have much for expectations and you are probably not looking beyond physician prescribing.  Are the people you are talking about able to hold their own in a scientific discussion with the Medical Director of an insurance company or pharmacy benefits manager that is considering how your product should be used in their patient population?  Can your representative cite the scientific literature to support their claims and recommendations for appropriate use? Is your professional representative so knowledgeable and good at their job that the insurance company Medical Director wants to hire them?

As for incentive pay, you might as well save it or better yet, invest it in your professional representative’s development.  You’d be better off spending the $20,000 per year on training, development, or sending them to more scientific meetings not to stand in an exhibit but to go to sessions and interact with their professional and academic colleagues.  If you still feel compelled to provide incentive pay, test them regularly on their expertise and give cash awards for testing performance.

You have to remember, professional representatives don’t do things because there is an additional pay opportunity associated with it.  They inherently want to do it because they see it as their responsibility. Their job is a big part of who they are and they take pride in themselves and the work they do. They view their compensation as a reflection of the level of expertise they have and the value they bring to the company when they apply that expertise.  They get more job satisfaction out of applying their expertise than any incentive pay could possibly achieve.   In fact, they’d rather have a pay raise as recognition of their advanced expertise than an incentive to drive sales.

The industry’s strong sales mentality will make it difficult to embrace the professional representative concept and even more challenging to formulate sales compensation plans that are not tied to sales and prescription volume.  You have to start someplace so perhaps this at  least has got you thinking about it philosophically.

mike@pharmareform.com

So what keeps representatives from having more engaging, more informative, and more credible discussions with physicians?  One of the most frequent reasons, or excuses, I hear about is the regulatory constraints placed on representatives.  Regulatory restrictions get in the way of being more effective as a sales representative when opportunities for product use exceed the label claims or where representatives could drive more sales by implying or even making comparative claims they can’t support with label claims or “substantial evidence.”

To ensure regulatory compliance, many companies, especially those with Department of Justice Corporate Integrity Agreements, now require representatives to stick to verbatim scripted presentations that mostly do not resonate well with physicians.  This “regurgitation of the company message” is an immediate turnoff for physicians, lacks credibility, and makes for awkward representative – physician interactions.

Now, keep in mind the premise of our discussion here. You are a professional representative and your mindset and focus is on making sure patients in your territory are getting the best treatment possible.  You are not just “driving sales” by doing and saying whatever it takes to get physicians to prescribe your product as much as possible.   Professional representatives don’t need to be reminded of fair balance or to stick to label claims and approved literature, they just do.  The challenge for them is whether or not they have the claims and sufficient regulatory compliant data and literature to meet the information needs of their customers.

Some sales representatives might suggest that they have all they need in terms of claims and published data and regulatory is just getting in the way.  If that is the case, then why would there be a regulatory compliance issue?  Why is regulatory review such a big deal?  Why would companies and representatives feel a need to promote off-label to make their sales? Why would companies feel compelled to script boring marketing messages to ensure sales representative compliance? More importantly, why is the market still clamoring for more comparative trials and better data to help them identify best treatment options for patients?

In this competitive market and knowing that products we now have were developed with a “get it to market “ mentality and indication – driven clinical trials to satisfy regulatory requirements for safety and efficacy, I’m going to suggest you do not have the claims or data you need.  How many of your products have two well controlled comparative efficacy trials to support claims of differentiation that you can use in sales presentations?  Can you claim superiority?  If not, how can you discuss why your product is better than another for a particular patient type? Can you do this and be compliant with regulatory requirements or are you expected to just cleverly implying a difference?

Here is the problem.   Even today, research gets the indications and it is up to marketing and sales to differentiate the product in the market.  When a physician or managed plan decision-maker asks why they should use your product rather than a competitive product, how do you answer?  Blatant claims of superiority or implied differentiation are the only way to convince them why your product should be used over another product.

What’s interesting is that when research and management talk about products to investors or in company presentations, especially before launch, they talk about and always answer questions about how the product is better than anything else out there, often using historical data from competitive products compared to their just released clinical data.  They highlight all the wonderful features and benefits that your product has over the competition, even quote data that imply superiority.

But, when marketing and sales wants to take those same messages to the market they have this regulatory issue.  While the research and management statements may be true,  they don’t necessarily come with the label claims or “substantial evidence” to support those same claims in advertising and promotion.  Yet, revenue forecasts are driven off those claims and expectations for differentiation.   And besides, who ever launched a product that wasn’t considered by their research team and management to be better than anything out there?

Pharmaceutical companies can no longer expect, pharmaceutical representatives to fill the label claim and “substantial evidence” data void for products.  The disconnect between product differentiation assumptions used for revenue forecasts and the regulatory constrained messaging puts the representative in an unfair position of having to deliver sales expectations beyond that which would be or ever could be achievable given a compliant presentation.

To be effective, even professional representatives need regulatory compliant information, comprehensive label claims, and more importantly, “substantial evidence” documented in peer-reviewed published literature.  This is the responsibility of management and the research team.  It is then marketing’s responsibility to develop forecasts that are aligned with the label claims and regulatory compliant information available for presentations and discussions by representatives.   mike@pharmareform.com

For professional representatives to flourish in the evolving new healthcare market executives must create a corporate environment that understands the importance of and is committed to changing the commercial model.  An environment where executives and commercial managers are committed to do whatever it takes to help professional representatives be successful in this evolving new healthcare market.  With the professional representative focused on the customer (again, not just physicians), corporate and commercial management should be focused on developing the products, label claims, data, information, and programs that help professional representatives meet the needs and expectations of the evolving healthcare market customer.

This organizational transformation will require that commercial management step up their game and the level of their own professionalism.  Expertise in traditional marketing and sales tactics is not going to help much in this evolving new healthcare market. There are no slick technology quick fixes or gimmicky tactics that will substitute for meeting product and data needs of the market.  It is critical that marketing and sales management understand and accept that tactics that worked in the past and the bad behaviors that drove revenues in the past, are no longer going to be tolerated and will not work in the evolving new healthcare market.  It means marketing and sales management must reformulate their strategies and acquire new skills and expertise that are better aligned with the needs and expectations of the evolving new healthcare market.  This includes being able to effectively deploy a  sophisticated team of professional representatives and arm them with products and support resources that address the evolving healthcare market needs and expectations.

Unfortunately, most executives and the people running commercial teams today are grounded in a traditional mentality about pharmaceutical marketing and sales.  This is where I predict most organizational transformations will fall short and stall out.  Those who can make the changes and should be championing the changes will feel threatened by a move away from their own expertise, experience base, and comfort zone.

Here is something to think about.  Let’s assume the company decides to embrace the organizational changes we have discussed and it is ready to embrace the new professional representative profile. Where do you find marketing and sales management with the new skills, expertise, and mindset needed to formulate and implement the new commercial strategy?  For example, will sales managers understand and appreciate the differences between sales reps and professional representatives?  Will marketing managers understand that they need to spend more time comprehending the complexities of the evolving decision-maker processes and nuances of customer expectations (not just market research) rather than worrying about the copy and graphics for their next TV commercial?

Again, don’t underestimate the need for executives and commercial management to really understanding the market at the customer level and having the right mindset about how to approach this new commercial model.  Some sales representatives and some commercial management may be close to the desired profile and mindset needed for these changes but they also need corporate executives who can create an environment in which these individuals can champion these changes and flourish.   Unfortunately, there are probably more who don’t get it, won’t get it, and will probably fight it, if not actively, passively by doing nothing.

mike@pharmareform.com

If we are trying to figure out how sales representatives can add value, we must start with those who will determine whether or not there is value being added… the customer.  This may be obvious to some, especially sales representatives, but over the past several decades pharmaceutical industry management has characterized the “value added” in the context of what sales representatives can do for the company or the product and not what sales representatives can do for the customer.  So let’s start with the customer (which is not just physicians in the evolving new healthcare market) and what their needs are and how we can add value by meeting or exceeding those expectations.

I don’t want to get off on a tangent but the needs and expectations I’m talking about here are not for things like lunches being delivered or a return of the tchotchkes.  Unfortunately, the industry trained physician offices into developing these expectations in lieu of meaningful clinical discussions about products.

So let’s review some of the evolving market expectations for pharmaceuticals that the industry must be ready to meet, especially in light of healthcare reform:

• Safe and effective products that can be differentiated (clinically proven and with label claims where possible) from currently available treatment options (including preventive medicines)
• A clear understanding with supportive data for the basic science behind the product, its mechanism of action, and rationale for efficacy and potential side effects and adverse reactions.
• Clinical data to support “comparative efficacy” and other claims of differentiation or even superiority (justify the premium pricing)
• Personalized medicine supported by biomarkers and companion diagnostics that can predict response, determine extent of response, and anticipate side effects and adverse reactions with specificity and accuracy
• Real world pharmacoeconomics data to support the economic value of the product and pricing that reflects the value being delivered. Again, justify the premium pricing.
• Hospitals will want data and methodologies to demonstrate the impact of products on newly established quality metrics and outcomes data that will be used to force rank their institution performance against national standards.

One of the first implications of meeting these more demanding market expectations is that pharmaceutical companies must readjust their thinking to be more selective in their pipeline evaluations and  a lot more comprehensive in their approach to research and development.  In the past, you could just find a compound, identify the potential indications for use, do the clinical studies, get approval, and go to market.  This traditional “get it to market” approach to R & D will deliver products and data that fall short of market expectations and hamper commercial viability of products in the evolving new healthcare market.

It also becomes apparent that regardless of the representative’s scientific or technical expertise, even the best of sales representatives will struggle to address these market expectations if the research foundation and data are lacking.  I believe this is one of the reasons sales representatives are struggling today.  Pharmaceutical research has not kept pace with the demands of the market and sales representatives are being asked to compensate for limited regulatory product labeling, a lack of product differentiation, and minimal real world clinical data that can be used in product discussions.

But let’s assume your company is committed to a much more comprehensive research approach to deliver truly innovative new products with robust data packages.  This has significant implications for how pharmaceutical sales representatives can add value for customers.   You might be surprised by some of the implications we’ll discuss in our next post.  mike@pharmareform.com