Smaller, refocused sales force will enable pharma companies to create greater value for patients

The current role of the pharmaceutical industry’s sales and marketing workforce will be replaced by a new model over the next ten years as the industry shifts from a mass-market to a target-market approach to increase revenue, according to a new report published by PricewaterhouseCoopers (PwC).

Today’s army of sales representatives, the billions of dollars in free drug samples, the millions spent on TV advertising and aggressive marketing to doctors and patients will no longer be practical as the industry shifts its focus from pushing pills to demonstrating through products and services that it can promote health, improve quality of life and reduce healthcare costs.

According to PwC, the pharma industry’s sales force of the future will be dramatically smaller, more agile and require new skills, including an education in science or health, greater understanding of specific complex diseases and the ability to negotiate with powerful payers and medical specialists. Its focus will no longer be just selling products, but better managing of health outcomes through a full complement of health management services, including health screenings, compliance programmes and nutritional advice.

Denis von Hoesslin, South African pharmaceutical and life sciences leader, PricewaterhouseCoopers, commented: “Products alone will no longer guarantee the pharmaceutical industry’s long-term future. The shortcomings of pharma’s current marketing and sales model can no longer be addressed by simply reducing the size of the sales force; the problems go deeper. If pharma succeeds in bringing bold, brave changes to the current model it will be in a much better position to ensure that the billions of dollars it invests in R&D are wisely spent, and eliminate the need to spend massive sums persuading increasingly sceptical doctors to prescribe medicines whose clinical superiority may be questionable. The pharma industry will be able to slash its expenditure on sales and marketing by selling products and services that the market will pay a premium price for.”

In its paper, Pharma 2020: Marketing the future, PricewaterhouseCoopers outlines a range of dynamics leading to a new marketing and sales system, including:

Balance of power is shifting to payers: For years, pharmaceutical companies have decided what their products were worth and priced them accordingly, investing little effort in understanding the payer’s perspective or what the market was willing to buy. With healthcare costs rising, payers including governments and private insurers are becoming the ultimate arbiters of pricing and value, reimbursement and prescribing decisions. A more flexible approach to pricing will be required, particularly so in emerging markets, and several pharmaceutical companies have recognised the need for differential pricing. Recently, a multi-national pharmaceutical company started offering its medicines at variable prices within, as well as between, middle income countries. It is reported to be testing the strategy – which is designed to generate a premium from wealthier people in emerging economies without excluding those who cannot afford to pay – in countries such as India, Morocco and South Africa. Others should soon follow this approach and by 2020, most pharmaceutical companies are forecast to be using differential pricing, based on variations in income, to increase sales in developing countries.

There will have to be a stronger link between marketing and R&D, according to PwC. Pharma companies will start thinking about product pricing earlier in the development phase, commercially de-risking their portfolios in phase two by terminating any drug candidate that looks unlikely to generate commercial demand.

All for one and one for all: The often contentious relationship and competing agendas that have long existed among pharma companies, payers and providers will end as pay for performance and comparative effectiveness analysis force them to work together for the common goal of improving health outcomes for the patient and demonstrate value for the money.
Product portfolio to change: The current blockbuster model was designed to promote mass-market treatment of common diseases such as hypertension, diabetes, high cholesterol to primary care physicians. Sixty-five percent of these drugs are now sold generically in the U.S. and 70 percent in Central and Eastern Europe. In the next ten years, only drugs considered truly innovative will be financially rewarded with a premium price. Pharma companies that choose to focus on specialised medicines will gradually shift their product mix to include more biologics and medicines that are targeted to specific and more complex disease states. In addition, it’s no longer solely about the product.
Specialised medicines to soar: Science is leading the pharma industry toward specialist medicine – highly effective therapies developed for specific complex conditions, typically administered by a specialist versus general practitioner, developed in small doses and in need of refrigerated handling and storage. Specialised drugs are significantly more expensive, in some cases costing thousands for a single dosage or treatment. The global market for specialised medicines, which accounted for 44% of worldwide prescription drug spending in 2008, could be twice the size of the current market for all prescription drugs by 2020, according to PwC.
Regulatory harmonisation will facilitate simultaneous multi-country launches

The FDA and other leading regulatory agencies are exploring various new methods for assessing, approving and monitoring innovative medicines. While a single global regulatory body is unlikely, global regulatory harmony will make simultaneously multi-country launches routine. By 2020, the launch of a new drug will become much more incremental. The big bang, big budget, blockbuster launch will be replaced by a process in which clinical outcomes information is continuously disseminated in a series of much smaller waves. New medicines will be launched with ‘live licenses’, conditional on further in-life testing to substantiate their safety and efficacy in larger/different populations.

According to PwC, the future sales and marketing process must master each of these dynamics and synthethise them into a new system. Pharma companies will need to restructure their marketing functions accordingly, with the appointment of key account managers who will be responsible for collaborating with healthcare payers to shape the information doctors receive and provide hard proof that a product really is safer, more effective or more economical than its rivals before they add it to the formulary.

Von Hoesslin concluded: “In the past, the sales and marketing function shouted loud and jumped high to sell products. Soon, the imperative will be who can add the most value, not who can sell the most pills. The pharmaceutical companies that succeed in demonstrating value will be rewarded with a longer period of exclusivity, stronger financial health and greater loyalty to its brand. The challenge for pharmaceutical companies will be managing through the changes in their business model as the shift from blockbuster to specialised evolves over the next ten years.”