Changing Business at Wyeth

Geno Germano, President – US and General Manager of Wyeth Pharmaceuticals, shares his insights around the drivers that have forced pharmaceutical companies to change their business model and how Wyeth has responded.

Today a number of factors are causing pharmaceutical companies to rethink their business model amid the changing dynamics of the healthcare system. Two overriding influences have contributed to such change: the rising cost of healthcare and greater public and patient knowledge about healthcare.

Sky-high healthcare costs have encouraged both payers and physicians to alter their behavior to offset and control costs. “The escalating cost of healthcare has stimulated most stakeholders to adjust and manage through a changing environment,” Germano remarks. “Payers today, for example, are much more aggressive about controlling costs; and physicians, because of cost, are being challenged to do more with less in shorter periods of time.”

Another trend is the heightened involvement and awareness of the public largely due to greater information availability in light of recent technological advancement. While healthcare and pharmaceutical systems were once considered mostly obscure and private, such access to information has drastically altered the formerly distant relationship between the general public and pharmaceutical activities, products, and stakeholders. “Historically, healthcare for many people was private – between them and their doctors,” Germano recalls. “Pharmaceutical companies, frankly, were almost invisible to patients. Today we have a much more engaged public and there’s significantly more information available to them.”

In turn, the healthy appetite for awareness and knowledge has inevitably produced a greater level of scrutiny for healthcare and pharmaceutical companies to operate under. “There is increased attention being paid to the risks and benefits of pharmaceutical products,” Germano admits. “We believe this is a good thing, but it requires us to think and behave, and communicate differently.”

Wyeth has responded to such industry changes by creating a new commercial model, much more focused on external relationships. The new customer-oriented model is geared around helping customers achieve their objectives alongside Wyeth’s intentions.

As part of its outward focus, Wyeth reorganized its primary care sales department in structure as well as function. As a result, Sales at Wyeth has undergone a significant shift. “We’ve directed our people to migrate from a model that was much more focused on repetition and quantity to one that’s much more focused on building and strengthening longer-term relationships and bringing value to our customers,” Germano explains. “This is a significant shift in design, structure and functioning of the sales organization.”

One major change at Wyeth comes in the shape of its traditional investment in market research. Its new organization has been renamed ‘Customer Insights’ to reflect its new motivation. “We want to understand not only what is happening but why the marketplace is behaving in certain ways,” Germano elaborates. “We’ve brought in talent from different places and industries to augment our capabilities, and we’ve increased our overall resources in the area of understanding our customers and preparing to better meet their needs.”

On top of its market research remodeling, Wyeth also has taken action to integrate its healthcare systems’ functions under one roof. Its new approach brings together its selling and marketing, and contract and administration capabilities to better understand customer needs rather than concentrating on product-related initiatives. These changes are all part of the new commercial model, which began with structural changes to Wyeth’s sales force in late 2005 and is still evolving today.

Relationship building
A major overlying change in the model is an emphasized focus on external relationships with customers, physicians and the general public. Particularly, improving customer insights and improving interaction with physicians have been key focal points in the new model design.

The revamped customer-centered design aims to reach out to customers in a more meaningful way at every touch point possible in order to sustain strong relationships. “Our new model has enabled a customer-focused approach, one that emphasizes value,” Germano says. ‘It’s become paramount that we understand every time that we interact with one of our customers, how to bring value to them so that we can achieve our goals and at the same time help them achieve their goals.”

Germano points out that the heightened customer focus translates all the way down to the individual efforts of sales reps and account managers. “Our Sales representatives and Account Managers now maintain responsibility for a portfolio of products and they have the responsibility and autonomy to adjust their sales activities to the needs and interests of their individual customers. Again, this is in contrast to the prevailing practice of promoting the product the company most wants to focus on.”

Aside from a greater customer focus, Wyeth is also engaged in improving interaction with physicians and the general public. The foremost example is Wyeth’s shift away from approaching the US market in a single market fashion. Wyeth has employed a micro-market approach to drill down into specific regions and the different opportunities each presents.

“We’re concentrating much more on where the opportunities for our products exist and where it makes sense for us to apply our resources to achieve our goals and most appropriately address the needs of our customers,” Germano explains. “This comes into play, for example, when considering the different levels of access for some of our products in different parts of the United States among the different health plans. We now have the capability to identify and adjust customized commercial approaches to specific regions where opportunities for our products may be stronger than in other parts of our country.”

Wyeth has also pursued innovation and better interaction with healthcare practitioners through the web. “We’ve significantly upgraded our web capabilities and have put some pretty interesting, innovative resources on our web page,” Germano says. “As a result, we have been attracting physicians at a rate that far exceeds our initial expectations not only for visits but for actual registration so that we can have an ongoing dialogue with healthcare practitioners.” While other companies have used the web as an avenue to better connect with healthcare practitioners and customers, Wyeth feels it’s at the forefront of building this capability.

The overall external focus of the new commercial model at Wyeth has proven to be a fruitful move – as Wyeth has experienced both strong business performance and high employee and customer satisfaction. “For the new commercial model, I can say we’re pretty pleased because we’ve been able to sustain the growth of our company and appropriately manage our costs,” Germano relays. “The survey feedback that we get from our salespeople and customers is that they recognize and appreciate the changes we have made.”

The model of the future
While Wyeth has already made substantial progress amid significant change, the model is expected to continue to evolve, as forthcoming pressures will no doubt continually drive change. Wyeth gladly welcomes and embraces change as part of its culture, and views the ability to adapt to change as a key competitive advantage.

Amid such a shifting dynamic marketplace, readiness to change has become a stance companies need to take to stay agile and competitive, especially in healthcare and pharmaceutical industries. “We are going to need to continue to evolve. Changes in healthcare are not going to end,” Germano acknowledges. “The companies that are able to innovate and continually look for different and better ways to explore, pilot and experiment with approaches, and continually adapt to the changing marketplace are going to be the companies that are going to be most successful.”

Germano is pleased that Wyeth has developed such a culture that’s comfortable with change. “I’m encouraged that Wyeth has an appetite to do this. In fact, our chairman often refers to the marketplace as constant white water where there’s rapid change. He encourages an organization that is comfortable with experimentation and reasonable risk-taking to ensure that we are at least trying different approaches. There’s an enthusiasm and excitement about that here at Wyeth because people feel energized as opposed to being paralyzed by that thought.”

Part of that healthy culture comes from three primary themes that have helped to guide Wyeth through states of change: value, innovation and leadership. For Wyeth, value begins with being able to define the true value behind its medicines. “Clearly understanding and being able to articulate the value of the medicines that we develop – for payers, consumers, customers, shareholders and even us for our own internal planning – is going to be crucial to our success going forward,” Germano admits. “Fully understanding the clinical, therapeutic and economic value of our medicines and being able to educate the world about this will be a critical success factor.”

Its second theme, innovation, involves continually seeking better ways to bring value to and communicate with different stakeholders. “We have to push ourselves to continue to look for different and better ways to interact with all the stakeholders within the industry,” Germano says. “All of these changing dynamics and pressures that are occurring affect everybody, not just the industry. Innovating and finding new ways to either bring value or to interact with our customers is going to be another crucial success factor for our company going forward.”

Lastly, its third theme, leadership, directly relates to how a company does something, not what they do. “For a company to demonstrate leadership in the way that they do things, not just what they do – their ability and their willingness to be transparent, to divulge and fully disclose information in a way that’s constructive – is going to be a success factor for a company for the future,” Germano says.

These three themes are part of the formula that has made Wyeth a standout in the industry and should continue to lead Wyeth down a path of success. “I think about those three themes everyday in terms of what we need to do broadly to be successful in this ever-changing environment,” Germano says. “When we look at the changing marketplace and all the dynamics that are occurring, if we do well with those three themes, we’ll navigate the future successfully.”