The Death of a Sales Model?

For a model that is supposed to be dead, the field sales force continues to drive a remarkable portion of growth for pharmaceutical companies. As a result, how companies have cut back field sales has had as much impact on performance as how much they have cut back. The companies that approached reductions strategically gained immediate efficiencies and in some cases even improved revenue, mostly by shifting resources to the highest potential prescribers. They also ruthlessly disinvested where returns were unlikely. Other companies took the blunt instrument approach-and felt all the pain and little of the gain.

David Quigley

Be Sharp

The lesson learned is that the industry needs to look far beyond the simplest metric of account value-past prescribing behavior-to prioritize the field effort. A more nuanced, factored measure is a must-have to compete today: By looking at such factors as the impact of the managed-care environment, ownership structure (i.e., group practice), office access, and the type of physician (is he or she an early adopter? does he or she prescribe generics?), companies can identify the best of the best prospects. Once the value of targets is clear, companies must match resources to targets. The result? Maintaining or even increasing volume with reduced headcount. By contrast, companies that continue to deploy based on historic prescribing volume see measurably lower sales and profit.

We have seen that using this refined criteria to assign field representatives to a tightly focused list of highest-potential physicians generates far better growth than assigning reps an entire zip code or territory-the sharper the focus, the better the results. We also believe in cutting your losses; companies that significantly reduced field strength in highly payer-controlled markets, de-emphasized highly controlled physicians, and in some cases shifted new resources to replace the traditional detail where it wasn't working did not lose share in these markets.

Prioritizing the field effort is a must in this age of cutbacks. A less-is-more approach will only be successful at your company if your sales force is optimized to isolate the best prospects. (GETTY IMAGES / MICHAEL HITOSHI)

We also believe that isolating the best prospects using the factored measure and then pointing resources at those prospects is not enough. You have to arm the field (whether traditional representatives or other resources) with the right messages and the right tools and offerings for each type of prescriber. For example, doctors managed under strict pay-for-performance (P4P) metrics respond well to messages about how a product can help them meet their performance goals. Using this approach, teams that specialized in large group practices gained share where the traditional field had stagnated.

What to Do Now

First, throw away the idea of using a single field deployment model for the whole country and for every type of customer-approaches will differ by environment. Also, understand that when you use multiple measures to gauge physician value, you must also deploy in a more sophisticated way-with customized roles and coverage models for each geography.

Second, get comfortable making decisions in uncertainty. As the industry updates the commercial model, innovators will need to size the field based on the (uncertain) potential of new approaches. Typical industry sizing and deployment analysis is built on backward-looking, nationwide physician data, which measures responsiveness to traditional reps. This strategy may be irrelevant for determining the value of deploying a different type of field resource to a subset of physicians. Innovators must experiment, learn, and rapidly adapt as the ownership structure of the physician office and many other factors change the landscape.

Third, stop investing in losing propositions and put money into new growth levers. Stop deploying incremental representative resources until the point of zero marginal returns. Invest instead in the full toolkit of personal and non-personal levers that are increasingly useful. Build an arsenal of promotional levers tailored to the specific product, including field-based promotional medical, sample droppers, patient educators, etc. Use non-personal promotions: outbound tele-details, e-mails, and even traditional (snail) mail. Pharma companies will need to coordinate a mix of resources effectively to get optimal results.

Despite the cutbacks the industry has made, we believe that personal promotion will remain one of the most powerful tools for branded pharmaceutical revenue and profit maximization. However, maximizing sales rep productivity will remain a top concern, too, and will require more insight, more flexibility, and more variety in roles. The rumors of the death of the sales model are greatly exaggerated.

David Quigley is Director, Global Commercial Practice for Pharma-ceuticals and Medical Products at McKinsey & Co. He can be reached at David_Quigley@McKinsey.com

The lesson learned is that the industry needs to look far beyond the simplest metric of account value–past prescribing behavior–to prioritize the field effort. A more nuanced, factored measure is a must-have to compete today