Lou Schachter, Managing Director Global Sales
Practice for international strategic consultancy BTS works with
major pharma companies such as Merck, AstraZeneca and
Procter & Gamble on sales force transformation. On his recent visit
he spoke to Pharma in Focus about adapting to an
increasingly challenging pharma sales environment.
Schachter's mantra is that in the
post-GFC environment, selling solutions is not enough. To outgun their
sales professionals have to deliver improved results for
their customers. So how does this work in pharma? It's a matter of
"There's no question that the way
in which pharmaceutical companies provide value to their customers is
may be for the best that pharma companies are actually
forced to re-evaluate whether free coffee is really the kind of value
they want to provide
their customers or whether there is more value they can
provide while still being safely inside regulatory guidelines, and I
think all pharma
companies, whether they are in Australia or around the world
at this moment are sorting that out."
That sorting out is taking place in an environment of increasing regulation, mounting patent expiries and greater
government scrutiny of pharma company behaviour.
"Part of what's driving
transformation is absolutely a re-evaluation of the doctor-rep
interaction and how and what constitutes value."
Currently, says Schachter, the
ways that companies are reacting to this challenge are quite fluid.
"There are directional trends but I don't
think any company that I have seen has got it figured out
yet. I think they're all struggling and I think and at this moment
they're still interpreting some of the
regulations. They're saying what are the clear boundaries on
what we can talk about in our conversations with doctors."
This means that right now is an extraordinarily confusing time for companies, their sales managers and sales reps.
"Around the world a lot of pharma
reps are losing their jobs so there are real questions around how many
reps do we need, how many times a
rep should be calling on a customer, what they should be
doing when they call on the customer and where it's all going, So I
think its an amazingly challenging time."
Schachter says the companies that
are doing the best research into these challenges are realizing there
are multiple things that doctors value
including patient results, improvement in the way their
practice runs and improvement in their quality of life.
"Different pharma companies are
reaching somewhat different conclusions about the extent to which they
can help with those," he says. "On the
most conservative side companies are saying we can only talk
about patient results. Others are exploring how, while staying
consistent with the regulatory guidelines they
can provide information about how the practice is run and
could be run better, how patients can be managed more efficiently or
effectively, how they might do things that
would improve their overall quality of life and how
information might allow them to understand the whole pharmaceutical and
medical ecosystem in a new way that could
make them more successful.
"I don't see anyone out there
doing anything aggressive yet but I have certainly participated in many
conversations where people are thinking
about what can we do that is still in compliance with the
regulations that our customers value."
These conversations are going on
in Australia as much as anywhere else, he says, but like everywhere
else, widespread results on the ground
are yet to be seen. None-the-less, sales practices in the
pharma space are evolving just as they are in other businesses.
"As we've studied companies both
in pharma and outside pharma what we've identified is a shift in the way
sales is evolving. For a long time
across all industries sales was really about product
selling. It was about being an expert in your product and being able to
describe that to the customer.
"There was a shift there to more
of a focus on solutions selling where you were going to provide some
value-added services in addition to the
basic product. Now we're really seeing the next wave which
is about the overall results the customer is trying to achieve.
"In the pharma space that means
the business results and the medical results that the physician is
trying to achieve. I think where pharma is
heading is in that direction of focusing more broadly on
results, both medical and business. I think they're wrestling with
whether and how they can address business
results. The jury is still out on how that will work but I
do think that's the direction they should be heading and I think that it
may well be the best thing that
ever happened to pharma companies that they can't give out
pens and doughnuts and coffee."
Schachter says that among the
trends he sees in pharma right now, tailoring information for individual
doctors based on patient profile,
is assuming new importance.
"We've seen one company here in
Australia that is beginning to survey doctors after rep visits to
identify how valuable that discussion
was for the doctor and that is contributing to the reps'
bonuses, the level of customer value that they create in their
"That's an enormous shift from
past reward processes to now basing some of the reward on whether the
customer actually perceives
value in the exchange."
Another trend centres on collecting data in new ways, collecting a lot more data and subjecting it to greater analysis.
"One example is the data that is now required in Australia about educational activities which, interestingly, I think, gives
competitors a window into what each other is doing which is going to change things,' Schachter says.
"There is also data being
increasingly collected around the world around the behavior of
individual doctors and what's happening
in specific territories. So we're seeing companies say to
their sales force we want you to become experts on your localised
markets. We want you to feed data
back up through the system so we can analyse that and make
decisions on it.
"There are a few companies that
are pioneering that. Again, we're in the early stages of it. They're
just trying to figure it out
so they're doing some pilots but one of the things they're
discovering is that even once they collect the data - which is no easy
task - they haven't
trained people to interpret it and make decisions based on
it. So there are some analysis and decision-making skills that the
companies are beginning to invest in."
The movement of general practice
from individual or small practices to corporate medical centres is also
changing companies' approach
to sales internationally.
"They need to understand how
those businesses work in ways that they haven't had to before. Whether
or not they're advising anyone in a
practice about how the business runs they need to understand
how those businesses work."
The upshot is that in their
interactions with healthcare professionals companies are increasingly
trying meet what each individual values.
Although this might appear to be a costly approach, Schachter says, "in the end it turns out to be cheaper".
"The old approach was to maximise
the number of visits and the number of messages is a very expensive
model. You need a lot of people.
The actual interaction between the doctor and the rep isn't
that complicated but the volumes that you need to get these messages
across are quite expensive.
And so I think because this requires fewer people and more
targeted messages that the doctor is ready to hear it is actually less
expensive, more efficient and higher ROI."
The change to a more targeted,
customised approach is still in its infancy, says Schachter with those
out in front at least eighteen months away from
implementing it in a serious way but most more like five
years. But, he adds, pharma is advantaged by a strong awareness of
rapidly approaching change among its middle and
front line management and by having leaders who have often
spent 20 or 30 years in industry, something not often seen in other
The toughest challenge these
leaders and managers face in pharma is the "value challenge', Schachter
says. "If in the past we created value by providing
patented products and education and doughnuts and pens, how
are we going to provide value going into the future?"
The answer appears to lie in
closer, more individualised interactions with healthcare professionals
that conform to the demands of regulators while
delivering real as opposed to illusory value.
For more information go to www.pharmainfocus.com.au