Meeting Pharmaceutical Sales Challenges

Transcription

1 Meeting Pharmaceutical Sales Challenges By Steve Gielda and Peter Pisarri This White Paper is intended to identify and examine changes in the pharmaceutical sales environment that challenge the ability of sales professionals to reach their goals, and to propose methods to overcome those challenges. Four Challenges A pharmaceutical sales representative in today s market faces four challenges that became significant in the last decade and continue to grow in scope and intensity. These challenges make traditional detailing and sales techniques far less effective than they once were, but many sales professionals are still trained and equipped to sell using these outmoded approaches and tactics. Unless pharmaceutical representatives can identify and overcome these challenges in their own practice, they may have to accept mediocrity or even failure in their chosen profession. These challenges are best stated as follows: Alliance Performance Systems, inc. All Rights Reserved. 1. It is increasingly difficult to get more than a few minutes, and in many cases, a few seconds, of a doctor s time. 2. More than ever before, the delivery of health care is becoming a collaborative effort between doctors, nurses, nurse practitioners, and physicians assistants, which means that the sales rep must communicate effectively with all team members. 3. On average, the degree of differentiation between competing products is becoming smaller and smaller. 4. Pharmaceutical companies are placing greater reliance on marketing dollars to generate sales. Let s briefly examine the causes and consequences of each challenge. 1

2 A Shortage of Time The time available to pharmaceutical reps to meet with physicians and other decisionmakers within the health care industry has been vastly reduced in the past decade. This reduction is directly attributable to two causes: the emerging dominance of managed care and its associated reimbursement models, and the proliferation of sales representatives in the field. Managed care systems, regardless of the reimbursement model they use, are profitdriven. They apply the same management criteria to a doctor s activity that other industries apply to worker productivity. In almost every case, this results in pressure on doctors to see as many patients as possible within a given time frame. While the causes and effects differ among individual situations, the problem is most clearly seen where doctors are providing services for an HMO under a capitation scheme. Capitation literally a head count pays doctors a set fee for every patient assigned to that doctor s practice under the HMO plan. This fee is modest, on the order of $10-$40 per month. Whether a patient is an annual or a daily visitor to the doctor s office, the payment remains the same. Doctors respond to this system in two ways: they try to enroll as many patients as possible, and they try to provide treatment options that minimize the number of visits required by any given patient. In some cases, these options include treatment by a nurse practitioner or other non-physician. PPOs, or Preferred Provider Organizations, provide both physician and patient with more flexibility, but once again, a premium is placed on the number of patients that a physician can see. Under PPO plans, financial caps are set in terms of allowances for particular treatments or procedures. Strict guidelines for administering care and for making referrals also provide additional cost-control. In the past ten to fifteen years, the pharmaceutical industry has experienced a period of growth, consolidation, change, and innovation. The limitations of patent protection have led to a dramatic increase in the number of generic and work-alike compounds, and companies eager to protect their intellectual property have responded by developing slight variants on successful products. Biotech startups trying to meet investor expectations are releasing entirely new classes of product, and ongoing genetic research is powering the development and introduction of highly targeted designer compounds. One result of this tumultuous change is a roughly tenfold increase in the number of pharmaceutical field representatives. According to a recent article in USA Today, the number of field reps has doubled since 1996 (from 41,000 to 81,000). One clear indication of the growth in the sales rep population is a corresponding growth in the number of doctors adopting no see policies. Some studies indicate that the length of the average pharmaceutical sales call has shrunk from fifteen minutes to less than one Alliance Performance Systems, inc. All Rights Reserved. 2

3 A Bevy of Customers A 1996 study sponsored by Pharmaceutical Representative found that over 30% of pharmaceutical reps surveyed called on ten or more nurses each week. A more recent Scott-Levin study conducted in 2000 found that 10% of all sales calls were going to nurse practitioners and physician assistants. Why are successful reps turning their attention to these non-physicians? The answer is twofold: NPs and PAs have prescribing authority in many circumstances, and exert considerable influence over doctors in terms of prescriptions. By and large, the sales profession is recognizing this fact and making calls accordingly. In fact, in the first quarter of 2000, more sales calls were paid on nurse practitioners and physician assistants than hospital-based doctors. This reflects the fact that NPs and PAs now write more prescriptions than these physicians. What sales reps may not do, however, is consider that these health professionals do not always share the same concerns or the same perspective as physicians. While most NPs and PAs still regard the pharmaceutical industry favorably, their opinion of pharmaceutical reps is slipping. Less than half of the survey population viewed reps as a useful source of information. Pharmacists, office administrators, and physician practice management staff are also potential team members who represent both an opportunity and a challenge for the pharmaceutical rep. Each has different concerns that may not be addressed by traditional detailing or a one size fits all approach. A Lack of Differentiation The effective length of patent protection for pharmaceutical products is nominally twenty years, but the rigorous and lengthy approval process, combined with the difficulties of successfully manufacturing and marketing the product, effectively reduces that period to eleven years or even less. Consequently, manufacturers are constantly seeking for new ways to maintain exclusivity for a given compound or product. These methods include designing new delivery systems, providing different doses, or listing the product for new indications. On the other side of the industry, generic manufacturers are quick to seize on each proprietary compound as it comes out from under patent protection and claim it for their own. We have referred to these phenomena before in connection with the increase in the number of reps who detail and sell this ever increasing flood of similar products, but another consequence is the difficulty of differentiating between similar (or functionally identical) products in the marketplace. Sales professionals who have a genuinely new or highly differentiated product to offer can rely on traditional techniques: presenting clinical studies, providing product information, and providing samples. But reps who have been selling the same product for years must find other ways to distinguish their offering from the competition. Doctors and other customers are only too likely to become bored or annoyed if the same monotonous message is delivered on call after call. If the rep insists on raising minor differences between products to a critical level, that rep runs the risk of losing credibility with his or her audience Alliance Performance Systems, inc. All Rights Reserved. 3

4 A Boom in Marketing Three major trends in marketing continue to affect the pharmaceutical marketplace. First, the amount of marketing dollars, both in absolute terms and as a percentage of total expenditures, is going up. Second, an increasing percentage of those marketing dollars is being spent by a decreasing number of major manufacturers. Third, regulatory changes that permit direct-to-customer, or DTC, pharmaceutical advertising, are affecting patient behaviors and influencing prescription patterns. In the year 2000, pharmaceutical manufacturers spent over $11 billion on promotion, including marketing, detailing, events, and other marketing-related activities. A Scott- Levin report published in May 2001 indicates that just five companies are responsible for 35% of these marketing expenditures. $2.5 billion of this total was spent on DTC advertising alone. Meeting the Challenges It would be simplistic to assert that even one, let alone all, of these challenges could be successfully overcome by a single technique. Each of them springs from complex causes, in many cases complicated further by individual circumstances. And yet, one underlying truth holds the key to meeting not only these challenges, but almost every other difficulty sales professionals routinely face. An understanding of the needs of the customer is essential to successful selling. Most sales professionals, if pressed, will agree with this statement. Unfortunately, this professed understanding does not always carry over into actual behaviors in the field. In the health care industry, customer needs certainly include clinical concerns, but if we assume that those are the only unmet needs that we as sales professionals can fill, we will almost certainly fail to achieve our full potential. Sales professionals whose companies cannot or will not meet the increased pace of marketing expenditure may feel that they are at a competitive disadvantage. Even reps whose companies are in the forefront of this marketing binge need to be cautious of complacency. Doctors are perfectly happy to accept honararia, trips, and other perks from competing manufacturers, but their prescription patterns may be based on other criteria. As for DTC ads, a recent Scott-Levin study indicates that physicians disapproved of these advertisements 45% of the time, and approved only 28% of the time (the remainder were neutral) Alliance Performance Systems, inc. All Rights Reserved. 4

5 Research Yields Results For the past twenty years, Huthwaite has been in the business of providing researchbased training and consulting services to a very wide range of customers. Huthwaite s basic research, conducted during thousands of sales calls over a period of years, indicates that successful sales professionals in every business sector share common behaviors. To briefly sum up this extensive and thorough research, effective sales personnel spend more time listening than they do talking, and they encourage their customer to communicate by asking particular types of questions. If we look again at the four challenges facing sales professionals in the pharmaceutical industry, we can see that in every case, uncovering customer needs is the key to overcoming obstacles. Buy more time. Doctors are not limiting the time they give to sales reps out of spite. Time is their most precious resource, and they give it sparingly, even to their colleagues. According to Dr. Michael Kessler, head of the Medical Communications Center in Atlanta: When doctors say they ll give you a minute or two, some reps take this as a sign of disrespect. But doctors are really just asking you to communicate on their level. Physicians typically talk with each other in one- to twominute bites. Use your time to buy more time, or to provide value to your customer. Perhaps the doctor is trying to predict the growth patterns in her practice if you know this, you may be able to provide information from your company or another industry source. A doctor in a relatively wealthy area may have one or two financially strapped patients that aren t covered by your company s indigent program a few strategic samples may help out. Until you know the customer s specific needs, you are wasting your time by repeating unproductive behaviors. Know your audience. Each member of today s health care teams has a different perspective and has different needs. Pharmacists, for example, don t like to be in the dark when physicians call them with questions about a new drug. Nurse practitioners may in a better position to see the financial effect of drug expenditures on their patients. Practice managers make decisions on the basis of business concerns rather than clinical considerations. You are in a position to add value to each one of these customers, but only if you understand what they are really asking for. Become the differentiator. In the absence of distinct differences between competing products, the buyer s perception of the seller becomes critical. It s obvious that the buyer is more likely to deal with a seller who adds value to the product, but what is not obvious is what constitutes value. Real value emerges when the seller understands the buyer s need, and understanding is developed through communication. Nowhere is this axiom more applicable than in the field of pharmaceutical sales. As practicing psychiatrist Dr. Andy Farah writes in Pharmaceutical Representative: One of the best sales reps I know gets me talking about her drug by inquiring about my cases and treatment results. This allows me to really reflect on the product as she verbally highlights the positive experiences. She uses her time making me reflect and listens to me drag previously forgotten experiences to my conscious mind. To paraphrase, it is up to you to add value to the relationship by uncovering needs and then finding a way to fill them Alliance Performance Systems, inc. All Rights Reserved. 5

6 Marketing Judo. Judo is the martial art of using an attacker s own strength against him. Faced with the overwhelming muscle of Big 5 marketing dollars, sales professionals may feel that they must match this expenditure, or simply fade away. In fact, there is mounting evidence that doctors resent some aspects of modern marketing, especially DTC advertising that impairs their ability to conduct a thorough diagnosis and make independent therapy recommendations. Discover this fact, and you have opened the door to a constructive partnership between you and your customer. Can t wine and dine the entire office in Aruba or St. Thomas? Take time to find ways in which you can provide ongoing service on a smaller scale. Steve Gielda develops strategies for numerous pharmaceutical and medical products companies to improve their sales and management effectiveness. Peter Pisarri, Vice President of Client Development at Alliance Performance Systems, is a former pharmaceutical representative who now provides strategic consultation and sales training through APS, a leading industry solution provider. For more information on these topics and others not covered in this report, please visit our website at contact Alliance Performance Systems via E- mail at info@allianceperformance.net, or call (239) In the future, the successful pharmaceutical sales rep will: Understand the constraints on a practitioner s time, and work within those limits to provide value. Understand that health care is increasingly a team activity, and that each member of the team has unique needs. Understand his or her responsibility to add value to the products being sold. Understand that marketing dollars alone are not a guarantee of success, but that uncovering and meeting customer needs is a proven method of increasing the chances for success Alliance Performance Systems, inc. All Rights Reserved. 6