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 to Australia, 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 rivals, sales professionals have to deliver improved results for their customers. So how does this work in pharma? It's a matter of value, says Schachter.

"There's no question that the way in which pharmaceutical companies provide value to their customers is changing. It 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."

Fluid reaction

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.

Sales evolution

"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 conversations.

"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."

Individual values

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 industries.

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