Is It Time for a Pharma Sales Remodel?

The notion that pharmaceutical companies are faced with an urgent need to reexamine – and perhaps overhaul – the sales model that has dominated the industry for decades is gaining more traction every day. Already convinced is Huw Tippett, the head of global sales for Novartis, who told attendees at eyeforpharma’s recent SFE Europe 2009 conference that the era of Pharma’s so-called sales force "arms race" is rapidly drawing to a close.

Rather than focus on concerns like resource and investment allocation, performance and incentive management, call quantity, targeting, and quality and mirroring of product lines to drive frequency, Tippett says, pharmaceutical sales will have to redirect its attention to those most mundane of sales concerns: "customers" and "value."

Seeking inspiration from a company outside the pharmaceutical industry that had successfully undergone such a transformation, Tippett discovered Azko Nobel, one of the world’s largest paint, sealing, and coatings suppliers.

Up through the 1970s, Azko Nobel had sold paint directly to painters, but during the 1980s, expanded its customer base to include workshop managers and then auto body shop managers. By the year 2000, Azko Nobel had adopted a "key account management" sales approach that helped deliver a customer base that included accident management, body shop managers, car makers, insurers and leasing agencies, and commercial vehicle groups. Thirty years ago Azko Nobel had virtually no penetration with business-to-business accounts, yet today 60 percent of the company’s profits come from these customers.

Like Azko Nobel, the pharmaceutical manufacturers need to understand that they can no longer sell exclusively to their existing customer base, Tippett says. The industry needs to move beyond selling drugs to prescribing doctors, and embrace a new business model that includes new approaches to pricing and value-based selling that reflect a more diverse range and depth of customer needs and priorities. Tippett says a key account management (KAM) model – such as the one adopted by Azko Nobel – would help achieve what he refers to as "true value creation."

"KAM should mean focusing on mutual value and aligned business objectives with customers," Tippett says. "And that means understanding and supporting customers’ goals and priorities, choosing long-term relationships over short-term gain, partnering with customers with a business-to-business dialogue, focusing on creating tangible win-wins with customers, and demonstrating transparency that builds trust."

Tippett acknowledges that for such a change-averse industry as Pharma, the shift to key accounts management-based selling will be nothing short of revolutionary. For even the most dedicated company, such a difficult transformation can take as long as three to five years. "People think they get it, but it really takes a quantum shift in mindset, and even at this very first state – understanding the customer’s goals and needs – it proves difficult," he says. "It means not going in with a product-based approach and most of our teams just aren’t used to doing this. At Novartis, we’ve spent a lot of time here. And getting from here to developing solutions can take three to six months or longer."

Having undergone the process, Tippett says Novartis has taken pains to monitor the behaviors and traits of high-performing key account managers, as opposed to their more average performing colleagues. One key difference: whereas average performers often assumed that customers would be on board with the key account approach, high performers understood that their first sales job was to develop trust and convince potential customers that common interests exist and mutually beneficial outcomes are possible.

This recognition, along with other assessments, is helping Novartis recruit new representatives with the desirable qualities that will help the company achieve success moving forward. But there’s more to the process than simply altering the sales focus, Tippett says.

"You must have a KAM-centric mindset across the organization, not just among the reps on the road," Tippett says. "Department heads and other managers worry that it’s going to cost them a lot of money to achieve, but it’s not about costing money; it’s about releasing value. When we can do that and are innovative in our approach, I think we can not only be successful, but we can be super-successful – just as this industry always has."