Pharma sales forces will shrink, clinical skills in demand

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The current role of the sales and marketing function for pharma companies will become obsolete over the next decade as the industry shifts from mass marketing to target marketing, according to a new report by PricewaterhouseCoopers (PwC).

The report, Pharma 2020: Marketing the Future, states that current giant pharmaceutical sales forces will be replaced by a smaller, smarter and more effective sales force model, requiring pharma companies to recruit and train people with new skills who can negotiate with increasingly powerful healthcare payers and pharmacoeconomic assessment agencies.

In addition, the report states that pharmaceutical companies will adopt new talent management strategies, as well as ensure that performance measures and incentive systems are aligned with the behavior that will be needed to operate effectively in a more integrated environment.

Joe Palo, an advisor to PwC Pharmaceutical and Life Sciences Advisory Practice, told MM&M that as the industry moves toward specialty products and away from primary care, fewer sales force personnel will be needed. “It's not going to go to zero, you are going to have blockbuster products and sales forces going into primary care, but there will be less.”

In addition, pharma companies will likely recruit sales force personnel who have more of a clinical background such as pharmacists and nurses.     

PwC's Palo said that while the industry has always welcomed people who had clinical skills such PharmDs and RNs, that percentage will rise primarily because of the nature of the specialty products which are going to require a deeper understanding of pathology and alternative therapies. “It will be very helpful and candidates will distinguish themselves by being able to have a healthcare perspective. Having a nursing or PharmD degree would be good, but having been a practicing PharmD or a practicing nurse for a few years in a healthcare system would be even better,” said Palo.

The report claims that the current sales and marketing model is becoming increasingly ineffective, and although US sales calls to physicians still accounts for more than half the market share new brands win during their first year of life, one in five doctors now refuses to see any sales representatives and returns on sales visits to doctors have declined.

According to the report, many of the industry's biggest markets are saturated with sales representatives and the number of pharmaceutical sales professionals has been growing three times faster than the number of physicians. 

Between 1996 and 2005, the number of US sales representatives nearly doubled to 100,000 while the number of practicing physicians rose by just 26%.  Between 2004 and 2005, there was a 23% drop in dollar growth per sales call in the US. Pharmaceutical manufacturers have responded with various cost-cutting measures so that by the end of 2008, Big Pharma had announced plans to shed over 60,000 jobs globally, many of them in sales and marketing, the report concluded. 

According to the report, many pharmaceutical companies are shifting their product mix and investing in genomics, proteomics and metabolomics for specialized therapies. As their focus switches to specialist medicines, the pharmaceutical markets and sales function will be organized around brands, not products. The potential for creating brands that physicians and patients value is much greater with packages comprising different product-service combos than it is with isolated products, the report concludes.

The report notes that the market for specialized medicines is growing and at least 400 of the 2,000-odd treatments currently in development are biologicals or protein-based compounds. By 2020, according to the report, the global market for specialized therapies alone could be double what the entire prescription products market was worth in 2007.

According to PwC, as the balance of power shifts to payers, government and commercial entities are becoming the ultimate arbiters of pricing and reimbursement decisions, and thus the commercial success for drug companies. The PwC report states that by 2020, the focus on outcomes and measurement of outcomes data will drive product development, pricing and reimbursement decisions and risk-sharing agreements between industry, healthcare payers, providers and regulators.

Pay for performance will become the standard, and new medicines will be paid for on the basis of the outcomes they deliver. In addition, patients will become more influential as access to reliable healthcare information increases, and the use of co-payments proliferates, and the trend toward self-medication grows.

Pharmaceutical companies will also need to start thinking about pricing and reimbursement earlier in the development process. Price de-risking, a concept used in the clinical environment, will become more mainstream with drug manufacturers as pharma companies increasingly invest in the development of medicines the market actually wants to buy. Smart pharma companies will do a better job of "price de-risking" their portfolios earlier in development, thinking about pricing and reimbursement in Phase II rather than waiting until Phase III, and terminating candidates that don't look like they'll get premiums pricing/reimbursement.

The antagonistic relationship that has existed between pharmaceutical companies, payers and physicians will likely end, as the health system becomes more patient centric. Under pay for performance, the value chains of payers, providers and physicians are interdependent, and they will need to work much more closely together for what is in the best interest of the patient.

The report suggests that pharma has to develop products and services the market wants and is willing to pay a premium for because pharmaceutical companies are no longer being rewarded for incremental innovation, me-too products and selling the most pills. 
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