A product is no longer enough
Hanno Wolfram talks about how the pharma sales model is broken and how the future sales model lies in key account management (KAM).
(Continued from “What is Key account management?“)
Pharma’s past experience relates to launching, promoting and selling drugs. This era is coming to the same end as the times of frequent blockbusters are. The drought in pipelines in addition to missing therapeutic exclusivity, makes it ever more difficult to achieve a decent payback for the efforts of finding and marketing new drugs.
There is a rise in the number of new drugs that don’t achieve reimbursement grants and, therefore, market access. The amount of money getting lost due to unexpected outcome of cost-benefit assessments is harming the industry. Pharma companies are disappointed by their costly identified product features are viewed in a very different way by new stakeholders. Non-reimbursement in reimbursed markets is blocking market access for external reasons. Only getting a price of the current gold-standard generic drugs is an internal roadblock. Both scenarios lead to bitter tears.
“Non-reimbursement in reimbursed markets is blocking market access…”
Pricing and reimbursement over time have become key disciplines in trying to gain access to markets. Evidently, a number of old rules no longer apply.
To better move along the pathway to market access, a new industry has emerged. Dossier experts are trying to keep the old paradigm of drug-selling working. Writing dossiers for pharma companies trying to match the assumed needs of regulatory authorities has become a very powerful discipline. The number of words is vast and it is becoming an art to finely hone the words in an attempt to impress decision-making bodies in favour of a product. Some might assume that many of these efforts will be done in vain: sooner or later a product will no longer be enough.
The growth in yearly global spending is forecast to more than double by 2016 says IMS. This growth will be owed to governments who responsibly seek to grant improved health care to their rural and remote population. In some of the emerging markets, this is an essential step in preventing unmanageable urbanization. The additional funds will not be allowed to feed international pharma and compensate slower market growths in mature markets.
As Booz&,Co identified in 2012, 68% of executives see pharma’s current sales model as broken. This finding is nothing alarming – it should have been realised sooner.
“…68% of executives see pharma’s current sales model as broken.”
The future model is spelled KAM
As Lynette Ryals1 writes in Harvard, KAM is an organizational change and not a sales technique. In addition, the first textbook on Pharma Key Account Management points out that – a lasting and beneficial relationship is the heart of Key Account Management.
Most stakeholders in our pharmaceutical industry nowadays need to be seen as accounts, since a number of people are actively involved in making decisions. This similarly applies to registration, reimbursement, recommendation, purchasing, usage, and prescribing a product. All of these decision makers must be seen as bodies or decision-making units, consisting of more than one person.
These decision makers, we call them New Stakeholders, have various problems and issues that need to be solved. They need a lot more than simply a drug. They need a solution to their problem. Pharma knows and has a number of remedies to solve problems.
A remarkable sentence from an important person:
“This isn’t just about saving money – most importantly, it is about making sure that patients stay well and get the best outcomes from their medicines.”2
Lord Howe, July 2011
“…KAM is an organizational change and not a sales technique.”
Imagine if pharma would offer:-
• Disease-related education to patients.
• Solutions to the most pressing problem of patient’s non-adherence.
• Assistance in educating professional nurses for deployment in rural regions.
• Clinics to diagnose and treat widespread diseases in remote areas.
• Industrial project management skills.
• Support to clinicians, reducing the administrative burden freeing time for patients.
• Assistance to increase efficiency of national health systems.
• Help to establish improved treatment pathways.
• Support creating and maintaining networks of HCPs.
• Access to its huge and vast archives of disease-related knowledge.
These examples all carry a clear connection to an area of interest specific to a company, its areas of research, expertise and products. Yet the objectives and offerings are very different from “increasing our revenue by x% until end of y”. The above offerings will differentiate companies from each other and really make a difference. The public will probably gain an idea of company names and brand values, and stakeholders will be very happy if a KAM comes to see them regularly, teaming up with colleagues on both sides in support of solving a mutual problem. Who does not have ideas must grant rebates.
1. Lynette Ryals is professor of Strategic Sales and Account Management at Cranfield University School of Management.
2. Lord Howe, Parliamentary Under-Secretary of State for Quality, Dep. of Health, UK.
About the author:
In 1975, Hanno started in pharma as a rep. Over the following years, he took on various roles in the research-based pharmaceutical industry including, Sales Manager, HR responsibility, Marketing Director and BU-Head in Switzerland, Area Manager Europe. In 1996, he founded Innov8 Software &, Training GmbH. Innov8 designs, creates and delivers implementation workshops, changing professional behaviour supporting the coherent execution of strategy in pharma marketing and sales in many countries.
Is KAM the pharma sales model of the future?