Sales and Marketing Productivity in Pharma’s New World Order

It was just a brief sentence, barely taking a minute or two in an earnings presentation in January 2007, but the message from Jeff Kindler, CEO of Pfizer, has stood an industry model on its head by announcing a reduction of 10,000 of its staff, including 20% of its U.S. sales force. As the largest company in pharmaceuticals shared its pain with investors, we were told what its new size and structure would be and, not surprisingly, the focus was on productivity from top to bottom, beginning to end.

Many were quick to ask the obvious, “What does this portend for the industry?” Part of the answer came only days later as David Brennan, CEO of AstraZeneca announced a reduction of 3000 staff there. These statements follow reductions by other companies, either through “right sizing” decisions or post-merger rationalizations of staffing levels, and they won’t be the last. For an industry in evolution, losing people, plants, and labs is not a strategy in itself; it could be a recipe for losing more. While much information has been given recently regarding changes in structure and processes at many companies, much remains to be seen. Certainly all would agree that embracing productivity in every operational function is critical, especially now. However, the organization and integration of those functions promises even greater gains, and therein lies an increasingly important role for marketing and sales organizations.

Integrating Commercial Development for Marketing and Sales Productivity

Productivity in marketing and sales functions is most often thought of in terms of return on call frequency, territory alignment, sample intensity, share-of-voice, message quality and recall, and so on. While that is true, what is too often given short shrift or simply neglected altogether is the role of in-line marketing and sales in positively affecting corporate productivity by envisioning and shaping markets in coordination with commercial planning, licensing, discovery, development, and other critical functions.

Certainly all drug discovery and development gets input from “Marketing,” typically in the form of commercial planning groups. These groups have often been separated from in-line marketing for fear of distracting in-line teams from the business of today. The best prepared companies, however, increasingly view today as just one important point in an expanded product lifecycle. In today’s emerging model, commercial planning sits as an equal partner in a lifecycle management process, where the constant monitoring and evaluation of a category, from discovery research to patent expiry, equally informs today’s promotion by the brand team, and tomorrow’s term sheet from Business Development. For the most nimble of manufacturers, who deal strategically and effectively with the broad range of issues challenging productivity today the integration of information and input from those closest to each stage of the lifecycle has brought new processes for improvement into sharp focus.

Challenges to Productivity in Pharma’s New World Order – the Shortlist

• A poverty of pipeline, payment, and policy initiatives demanding manufacturer resources, research, and structural consolidation
• Prescribing, access, and pricing control shifting to government, employers, and payers
• The burden of a global commercial, clinical, and manufacturing infrastructure being out-of-sync with market and economic evolution
• Payers, patients, providers and policy-makers embracing restrictive formularies and generics
• R&D and Corporate realigning the complex financial, discovery, and clinical requirements of specialized therapeutics

The simple fix of buying our way to prosperity does not work as well as in the past. True opportunities are fewer and highly contested, to which any student of recent deals will attest. The straightforward licensing evaluation of just a few years back has been fundamentally altered as almost every manufacturer deals with profound uncertainty in pipelines and in a transformation that has seen business development engage in aggressive bidding wars for prime assets. What emerges is the need for a rigorous process that continually identifies candidates, describes markets, evaluates molecules, and forecasts uptake – both for external candidates and internal pipeline evaluation – to provide a comprehensive view of how competitors and markets are developing. This integrated analytical process establishes a far more complete basis for risk evaluation.

Issues in Evaluating Risk and Forecasting Opportunity for Pharma BD

• Manufacturers are purchasing assets far earlier in development, entailing significantly higher technical and commercial risk.
• Multiple early bidders are promoting greatly increased deal complexity, competitive maneuvering, and ultimate acquisition cost.
• Discovery companies are requiring longer life-cycle control and far higher fees for unproven early-stage intellectual property.
• Originators and purchasers are challenged by accurate forecasting of early-stage new products in the highly complex markets of clinical, access, payment, policy, competitive, and promotional flux.

These issues do not change whether we are looking at our own pipeline or others’. What is notable is that the breadth and diversity of issues we face moving forward – issues that directly impact people, plants, and labs – will touch on every aspect of the business of fully integrated manufacturers.

Leading the Charge

For sales and marketing productivity, our own research reveals a handful of pioneering companies utilizing a holistic process that monitors and evaluates the spectrum of clinical and commercial activity for every compound in a therapeutic area, from earliest discovery through late lifecycle. These companies do not view inline sales and marketing productivity as an isolated activity focused largely on today. Nor do they view sales and marketing as independent or secondary to the full range of competitive clinical, corporate, manufacturing, and commercial parameters that must be accounted for to plan and support robust growth. The most crucial parameters among these include:

• Identifying and continually analyzing molecules, formulations, and devices that represent clinically differentiable advances in efficacy, safety, comfort, cost, manufacturing process, IP protection, regulatory pathway, and physician/payer acceptance
• Delineating disease epidemiology, physician practice, treatment algorithms, access to care, payment and policy, product, and competitive environment
• Identifying and quantifying critical prescribing criteria and drivers by specialty physician, access scenario, and market of interest
• Uncovering and ranking physician hierarchies of need relative to disease stage and market environment
• Determining and validating adoption hurdles by type of physician, comorbidities, and market
• Evaluating and comparing competitive product attributes
• Aligning projected attributes against unmet market needs to uncover ideal attributes and indications for developmental planning and forecasting
• Subtle relationships of projected value attributes and assumed value propositions in complex diseases and markets
• Trial, adoption, market share, and forecast growth in multiple clinical and competitive scenarios

Obviously these parameters also serve as the foundation of in-line marketing and sales functions and, equally, commercial planning, but over the past 20 years the increasing size and specialization of major manufacturers has meant much less integration of these functions. As marketing and sales, on the one hand, and commercial planners, on the other, increasingly made choices in isolation from each other, no one team or process monitored, analyzed, and integrated these parameters to provide the most effective guidance and support possible across the entire organization. As a result, productivity has been reduced, through both less knowledge of what is coming down the pike and less insight of what is happening on the ground today along with its potential future impact on the enterprise.

For instance, success in a new product launch today is most fully assured only when the in-line staff comprehends not only the current competitive environment but also those products, technologies, or approaches-to-care advancing through development. By understanding what is coming, not just in products but in economics, policy, practice, and patients, inline sales and marketing can work today to shape the market in ways that most effectively differentiate their franchise from each new competitor entering the market. That certainly represents the potential for major improvement in sales and marketing productivity. Those steps being taken by some already, and The Mattson Jack Group’s own STEPsm Process, represent the newest paradigm in marketing and sales productivity in pharmaceuticals today.

The STEPsm Process – A Comprehensive Approach to Continuous Landscape Monitoring for Clinical and Commercial Planning

At MattsonJack, our own STEPsm Process (Scientific, Therapeutic, Economic, and Provider analysis) assists many with product planning that identifies and anticipates the therapeutic and economic environment moving forward.

Scientific – Do we have a viable drug or technology? This phase allows a comprehensive series of scientific and technical reviews of developmental and launched molecules, as well as new formulations, devices, delivery systems, and other therapeutic interventions. It seeks to catalog and continually re-evaluate clinical utility, efficacy and safety, developmental programs, cost of goods, and manufacturing and regulatory programs. Among the topics included:

• Patents, Structure, MOA, Phase I and II Activity
• Manufacturing Issues, Stability, Delivery Formulations
• Competitive Molecules/Technologies and Portfolios
• Clinical Developmental and Regulatory Issues

Therapeutic – Is there a reasonable market? Understanding a treatment market requires an integrated approach to evaluating clinical practice today and the impact of events and issues that will change each therapeutic market throughout each developmental and competitive scenario. While approaches may vary among the best prepared companies today, many embrace research objectives similar to the STEPsm Process that include understanding:

• Diagnostic Practice, Presentation, Access and Site of Care
• Treating Physicians, by Specialty, Site, Practice Type
• Treatment Algorithms, Drug Utilization by Severity and Patient Type
• Hospital or Other Inpatient Care Dynamics
• Identification and Delineation of Unmet Needs
• Developmental Drugs or Technologies – Awareness, Involvement, Adoption Issues, Competitive Development Programs

Economic and Forecasting – Will they pay, can we make it, will it sell, and how fast?
Tracking and analyzing all available economic variables involved with product development, product approval, formulary placement, payment, manufacturing, pricing, and promotion including:

• Epidemiology addressing incidence, prevalence, and severity by disease process and market, as well as treated populations, including demographic and socioeconomic indicators
• Access, policy, formulary, reimbursement, and managed care policy issues
• Understanding pricing dynamics in accelerated cost-control models
• Manufacturing capacity and plant planning models in an age of uncertainty
• Promotional strategy and resource effectiveness tracking and analysis

Provider – Who will use it, and how often? Today, merely bringing a treatment of value to market is no guarantee of success, no matter the company size. Looking back at new product launches over the years, disappointments following great expectations are easy to find. Those directly involved in patient care today – physicians, institutions, managed care organizations, or pharmacists – operate from a continually shifting set of guidelines and processes that typically give an advantage to the provider at the expense of the manufacturer. Identifying and analyzing these dynamic processes are fundamental to establishing a continuing program of inline and pipeline market opportunity that will reliably inform sales and marketing planning and productivity moving forward:

• Reaction and Receptivity to Current Modalities and New Product Concept
• Evaluation of Relative Importance of New Product Attributes
• Establishing Points and Focus of Differentiation, Uptake, Adoption and Conversion
• Cost and Reimbursement
• Patient and Product Simulators
• Forecasting Input and Modeling

As we watch our STEPsm process and similar models being utilized, we are impressed with the newfound confidence and precision with which integrated teams are approaching age-old questions of comprehensive lifecycle planning, business development, and product management. The enhancement to sales and marketing productivity at these manufacturers, already significant, can only continue to improve as companies streamline people and processes to cope with the emerging “New World Order” of the pharma industry.

In monitoring and integrating all information and analysis appropriate to an expanded lifecycle model in a therapeutic area, we see a new and promising future for our industry in which commercial planners, brand managers, and clinical developers work together seamlessly to effectively manage the franchise. Reading between the lines of recent announcements, we see many companies adopting their own version of comprehensive lifecycle planning, and the sales and marketing productivity improvements it should prove to rapidly bring.

Our industry has seen its share of challenges over time and has always shown a remarkable ability to learn and adapt. There is no telling how nimble we may become if the right “STEPs” are taken. No doubt the vital lessons conferred by those manufacturers already utilizing an integrated approach will help point the way.