America’s Next Top Selling Model

By Malcolm Fleschner

For years evidence has been mounting that the traditional pharmaceutical industry sales model is losing its efficacy. According to Datamonitor, between 1998 and 2001 the ROI from detailing calls dropped by 24% on average at 14 leading pharmaceutical companies. Medical Marketing and Media reports that 43% of today’s pharmaceutical sales calls don’t make it past the receptionist’s desk.

So why is this happening? There are a number of forces operating against the detailing model. The experts at the management consulting organization Peppers & Rogers Group (www.1to1.com), a division of Carlson Marketing, suggest the following as some of the factors most responsible for driving changes in pharmaceutical sales:

  • managed care, which has shined a spotlight on the economics of drug reimbursement
  • hospitals and other healthcare delivery networks increasingly restricting prescribing guidelines
  • risk-sharing plans adding to the costs borne by physicians and HMOs
  • group purchasing organizations negotiating better rates from pharmaceutical companies
  • pharmacists’ greater drive to substitute generic products
  • patients taking greater interest in their own prescription choices

Based on these factors, not to mention future trends that have yet to emerge, Peppers & Rogers argues that pharmaceutical companies need to shift from focusing exclusively on physicians to considering strategies directed at influencing patients, hospitals, pharmacists, managed care companies and other groups that hold sway over the prescription process. They offer the following three key suggestions for adapting to these changing dynamics.

1. Budget more effectively.
The influence of different groups varies from one product to another and so should pharmaceutical companies’ resource allocation. For example, an effective cancer treatment will be prescribed regardless of cost, whereas price becomes a much greater factor in the area of gastro-esophageal reflux disease. In the latter case, when there is a choice between similar branded and generic products, patient preferences and reimbursement issues undoubtedly will affect physicians’ prescribing.

2. Find common ground.
It’s no secret that many consumers take a dim view of the pharmaceutical industry. A perceived focus among pharmaceutical companies on patent litigation, lobbying and advertising has furthered this negative image. Instead, pharma companies need to reach out to physicians, pharmacists and patients to better understand consumer values, needs and preferences. There is a substantial alignment between pharmaceutical companies’ interests and patient interests. These areas of commonality should lead to more effective, efficient and convenient healthcare solutions.

3. Blaze new trails.
In an increasingly convoluted marketplace, pathways to the most influential customers are different today than they were just five years ago. So instead of relying on salespeople to detail physicians, companies at times might find consumer influence a more effective conduit. Today’s powerful data tracking and analytics tools can help companies determine which sales and marketing investments will squeeze the most impact from ever-tightening budgets.