Editor’s Note: In an era where life sciences companies face unprecedented challenges to bring novel therapies to market and declining expected returns, conventional commercialization strategies are insufficient to deliver brand success. The traditional approach of driving demand to the top of the funnel, expensive media campaigns, and large field sales forces no longer guarantees adequate product adoption and long-term financial viability. Thus, a paradigm shift is in order – one that centers around an integrated commercial strategy that is laser-focused on patient access and underpinned by gross-to-net optimization.
The PhilRx Platform Digital Hub offers manufacturers the opportunity to easily integrate an alternative channel that is responsive to modern consumer expectations and helps brands overcome utilization management challenges to unlock patient access. Our platform is purposefully built to empower field teams in this evolving landscape where the prioritization of patient access is critical to help brands capitalize on hard earned formulary placement. To better understand how our platform can elevate your commercial strategy, read our latest white paper offering insights on how to optimize field teams to support patient access.
The pharmaceutical industry is in the midst of profound transformation. Downward economic pressures, a tightening federal regulatory environment and changes in competition and market expectations are upending the traditional pharmaceutical commercial model. As these pressures intensify, the need for a new model becomes increasingly evident. While many manufacturers are adapting, new research reveals resistance and challenges as they navigate the "new normal."
Across the broader healthcare delivery landscape, seismic shifts are accelerating. Mergers and acquisitions (M&A) among hospitals and health systems continue in response to pandemic induced financial losses. The shortage of physicians, along with nurses and other clinicians, is stretching staff resources thin. In the biotech sector, layoffs are widespread as pharmaceutical companies rethink their business strategy in response to market upheaval. Notably, the Inflation Reduction Act’s (IRA) price-negotiation mandate has forced manufacturers to scale back their research and development (R&D) portfolios. All these factors are eroding the effectiveness and sustainability of the old commercial model playbook.
Our recently released Numerof & Associates 2023 Commercial Model Report, conducted annually since the start of the pandemic, reveals two consistent trends. The commercial model is rapidly changing in ways most companies did not predict three years ago, and there is a growing recognition that approaches to development, commercialization and market access require an urgent overhaul. In this year’s survey, we conducted in-depth interviews with 103 executives from 35 pharmaceutical and 9 medical device companies of varying sizes between mid-March to mid-August. The goal was to gauge where companies were in their transition to a fundamentally new approach.
So, what have we learned on the long and winding road to evolution?
A significant shift in how manufacturers engage with customers has emerged. The onset of the pandemic forced sales teams into virtual meetings and email communication, and many hoped initially this would be a temporary setback. However, it's evident that virtual engagement is here to stay–even as hospital access has largely returned.
The report found that in most organizations, 50-70% of customer engagement is now done virtually. It is also the preferred communication method for providers and payers, who generally prefer a limited number of these meetings, due to increased workloads and time constraints. And, while most manufacturers continue to use more traditional means of communication (i.e., digital conferencing, email blasts and social media platforms), novel forms of engagement have emerged.
Large and mid-size companies with robust IT resources have been investing in new digital marketing and data analytics capabilities, with several companies adopting “omni-channel engagement.” These approaches allow for more targeted outreach and tailored content delivery designed to meet customers’ evolving communication needs and preferences.
As for in-person meetings, respondents believed they will still be important, but reserved for certain situations, such as building new customer relationships, product launch, and the availability of new product data or indication expansion.
“We’re starting with a blank sheet of paper, listening to what the markets need, and tailoring approaches to individual markets,” said one executive.
As old assumptions about sales and marketing engagement techniques continue to be questioned, the changing face of the customer has also given way to a new reality.
Manufacturers also agree that today’s customer looks far different than a decade ago, particularly in healthcare delivery.
As discussed at the outset, hospitals are consolidating into integrated delivery networks (IDNs) at a feverish pace due to rising cost pressures, clinical staff shortages and the impact of ongoing healthcare reform. As IDNs become larger in size and fewer in number, physicians, who once drove drug purchasing decisions, have seen their clout diminish significantly over the years. While their voices still matter, it’s now one of many in the room. As these decisions move to more centralized committees made up of C-suite senior executives and population-based decision-makers (PBDMs), many manufacturers are taking a more targeted approach, honing in on this set of key influencers to drive maximum return on investment (ROI).
To manage large enterprise accounts, commercial leaders are now building more experienced account teams that include National Account Managers, Key Account Managers or Strategic Account Directors that serve as the lead point of contact for top IDN administrators. As account leads, they must leverage greater expertise, particularly when it comes to having more sophisticated discussions about purchasing decisions.
While a product’s clinical efficacy remains table stakes, decision-makers on purchasing committees within IDNs need more information. As I wrote about previously, customers are demanding answers to key questions with respect to pricing, reimbursement assurances, a product’s value in relation to competitors and evidence of improved clinical outcomes over treatments currently in the market. As one respondent told us: “healthcare leaders want to know the ‘what’ (i.e., what a product does), but also the ‘how’ (i.e., steps to ensure coverage/reimbursement), and the ‘so what’ (i.e., how the outcomes are better than standard of care).” And, as purchasing decisions come under greater scrutiny, interviewees at large companies say they are also investing in efforts to demonstrate “above-brand” value as customers seek more holistic product solutions in care optimization across a disease area or broad patient population.
In a more centralized decision-making environment, it is also evident that field staff, including account managers, medical science liaisons (MSLs) and sales representatives, will also need to demonstrate expanded capabilities in building client relationships, diagnosing and addressing customers’ needs and showing greater business acumen than ever before. Some organizations are training these teams to better understand the operations of the entire customer organization, top to bottom.
“We need to equip team members to go in and say, ‘we’ve analyzed the business, see the [STAR] scores, and believe we have solutions.’ If I’m a CEO, now I have undivided attention,” said one interviewee.
As the sales model shifts amid consolidation, it is also calling into question the continued need for traditionally large salesforces.
The pharma sales force, which has been in decline for years, continues to grow smaller. This year’s data shows that some companies have reduced their sales force by up to 70% after realizing that they could generate the same or greater sales with a leaner group. It is another signal that the “army of sales reps” or “feet-on-the-street” approach, which historically defined the old commercial paradigm, is not only expensive but ineffective in succeeding in this new environment.
“Just throwing more people out in the field has gone away. We’re much more attentive and sensitive to right-sizing the team based on target customers,” said one executive. “To cover a geography or area, you need a fraction of the people if 90% of the interaction is not face-to-face,” remarked another interviewee.
It is clear that the conventional commercial model upon which most manufacturers rely is no longer sustainable. They are all at different stages of transitioning to a new approach, but as that evolution continues, we are reminded of one constant: institutional change is difficult.
A number of hurdles remain in getting to a new destination. Most interviewees found that one of the biggest struggles was demonstrating to their own senior leadership the impact of their new commercial model approaches, and making the case for why they should continue to build on the changes already in progress.
“Nobody thinks we get as much out of omnichannel interactions as we have from historic sales relationships,” said one skeptical company executive. Another remarked: “the real question for my commercial colleagues is, ‘are we seeing similar reliability from other commercial models as we are with the traditional model?’ So far, the answer is no.”
Respondents pinpointed defining the right metrics as a major reason for the resistance. Determining benchmarks beyond sales to gauge impact is necessary to inform continued refinement of their new commercial approaches. The report cited other areas of challenge for manufacturers, including gaining alignment across different levels of their organizations on an optimal approach to strategic account management as well as the need for the pharma industry to realize the full potential of emerging customer engagement technologies.
As we concluded in our report, the road ahead will by no means be easy or linear. But conceptualizing a new model and successfully executing on it is imperative. Pharmaceutical and medical device companies’ success going forward depends on their ability to get this right.
Our consultants will work with you to analyze your current channel strategy and make recommendations for how to improve patient access and increase the percentage of scripts getting covered by insurance.