Jim Featherstone asks what the end of the blockbuster generation means for the sales operation’s business model and how pharma should react to the transition.
Amid declining productivity, increasing costs, decreasing pipelines, lower earnings and a host of other challenges, the pharmaceutical industry urgently needs to change its traditional operating methods. The drug development industry is entering into a new health landscape, and its success will certainly be determined by how well pharma navigates the new risks of this landscape and seizes the new opportunities it creates.
The reason for change is clear — by many measures, the current drug development and commercialization model simply isn’t working. Clinical and commercial success, for example, is rare, with FDA approving only 24 first-of-a-kind drugs in 2008. Furthermore the impending ‘patent cliff’ will serve to heighten the pressure. Specifically, from 2009 to 2014, an estimated US$128 billion of branded revenues will face generic competition. Meanwhile, development time and costs of production continue to rise, reaching between $800 million and $2 billion over eight or more years.
As a result, the days when biopharmaceutical companies could rely upon a steady stream of blockbuster products to fuel sales and support large, fixed-cost infrastructures appear to be over. It is clear that with the issues facing the pharmaceutical industry — coupled with a changing future environment — the current commercial model is too cumbersome to deal with hard economic conditions or to react to new stakeholder environments. A new way of delivering innovation to the market must be found. A new commercialization model for this new health landscape — one that takes into account the changing relationship between patients, physician and payer and can be scaled according to the economic environment — is therefore necessary.
Three factors can be seen as driving a successfully re-engineered commercialization model: the changing relationship between patients, physicians and payers and the subsequent shift in influence; increased payer and patient decision-making power; and the need to effectively demonstrate value. Common to all of these environmental factors is the potential of physicians to face erosion in their near monopoly on prescribing and healthcare choices, with payer mandates against healthcare inflation continuing to drive decision-making and patient influence increasing.
In Europe, in particular, the payer is likely to drive more and more treatment decisions as national healthcare systems attempt to rein in costs and seek greater value from their pharmaceutical spend.The traditional sales modelFor many biopharmaceutical marketing and sales operations, demonstrating value through long-term health outcomes and patient-centric data analytics is only beginning to come into view in product and brand management strategies — if they’ve arrived at all. In addition, the need to leverage this insight and the use of key market access issues within clinical development planning phases is recognized although rarely co-ordinated effectively.
Instead, a continued focus on physician detail continues to absorb the lion’s share of resources — by some measures, as much as 80 to 90% of commercial resources are still poured into physician detailing despite rapidly diminishing returns. Such strategic deployment of resources belies a recent survey by Oliver Wyman, which found that only 56% of physicians are willing to meet with pharmaceutical sales representatives, and only 24% are willing to spend more than two minutes with a rep.
Additionally, within the industry there would appear to be an acceptance of patient attrition as long as enough patients replace this dynamic population and continue to drive sales. Besides continuing to saturate an already overfilled marketing channel, this misalignment of resources fails to address the eroding position of physicians at the nexus of the treatment decision-making process, as well as the need to communicate effectively to patients not only to drive compliance and adherence, but also to gather important feedback on product performance to help optimize the next generation of products within clinical development. Today, physicians are seeing their influence over prescribing and healthcare choices challenged by better-informed and more empowered patients, along with public and private payers who are imposing increasingly restrictive formularies. Add into the mix the movement for physicians to group into larger practices — diminishing sales access even further — a stakeholder combination develops that is unlikely to be effectively served by current detailing methodologies.
Good patient outcomes: a key sales goal
As patients are equipped with more information, they are likely to demand the ability to have a greater say in what treatment they receive and how it is delivered, either as individuals or through patient groups. From a pharmaceutical commercialization perspective, such a paradigm shift presents both challenges and opportunities.
Within this shift, patients will increasingly seek new settings and ways of delivering healthcare that fits in better with their lifestyle, and ‘self service’ primary care and home healthcare will gain new adherents and importance. It is likely that patient choice of prescription medication (where medically appropriate) will become more commonplace. Payers and regulators will want to support these choices with increased patient medical education, of which much can be industry sponsored. Irrespective of the level of patient empowerment that occurs over the next 5–10 years, the inescapable fact is that a focus on patients will be critical for the pharmaceutical industry to deliver ‘proof of value,’ and the ability to which the industry can effectively do this within the current regulatory environment is questionable.
Biopharm sales and marketing programmes that utilize direct-to-patient communication channels will need to be more transparent and effectively balance educational and promotional messaging. Therefore, a new model of commercialization must recognize the patient as a key stakeholder and include the direct communication of value messages. While traditional patient-centric programmes focus on driving compliance and persistence, this model shifts sales goals from increasing physician prescribing to communicating improved patient outcomes and effectively demonstrating the overall value of the biopharmaceutical product.
Additionally, long-term health outcomes are likely to be an increasing indicator of success for both regional and national payers. Here, the voice of the patient will come through patient associations, but patient-level data will become vital in the measurement of value.This reality presents further challenges to sales and marketing efforts, as many biopharm companies are currently satisfied with physician-centric models and have developed few internal champions for the patient as decision-maker.
Developing a commercialization model that demonstrates value may well require adopting a mindset not unlike the consumer-driven models prevalent in other industries. Where the voice of the patient has an impact on payers, physicians or pharma behaviour, it must be accessed and acted upon. And to access and act upon that voice, effective communications mechanisms must replace the interactions currently employed in physician detailing.
The need for the convergence of pharmaceutical and consumer healthcare experiences will also be joined by advances within the diagnostic and device industry, and future successful players will need to blend best practices from each area of domain expertise.The centrepiece, however, of this new commercialization model is the ability to access the data necessary to interpret patient behaviour — to listen to the voice of the patient with greater sophistication than previously employed.
Taken as a whole, these data can be broken down into a range of constituent parts:
Information — What drives the patient to the doctor?
Advocacy — Will the ‘political’ voice of the patient support access to therapy?
Experience — Which patient pathway allows optimal access to therapy?
Satisfaction — What are the specific therapy issues relating to treatment satisfaction that need to be addressed?
Behaviour — What will increase the level of adherence?
New metrics for new realities
In order to prove successful, a renewed commercialization model must also adhere to a further critical component in this new health landscape: recognition that the basis of value creation within the biopharmaceutical industry is shifting.In the current model, sales forces focus primarily on detailing prescribers about cost and clinical data and are organized around and identified with brands.
Patient attrition is perceived as an acceptable cost of doing business as long as new patient acquisition help drive new sales. In a re-engineered model, sales teams will need to be refocused using key account managers who work with multiple stakeholders, including prescribers, payers, patient groups, regulators and other local stakeholders (eg, NICE) with a blend of brand and customer-centric approaches to help communicate the value of good patient outcomes.
A renewed commercialization model must also recognize that the basis of value creation within the biopharmaceutical industry is shifting. In this model, industry needs to demonstrate the benefits of its products in meaningful terms for varied stakeholders and other audiences. High-value innovation is not merely to introduce new medicines, but to introduce better ones — proven to provide greater therapeutic benefit, safety, improved quality of life or convenience for patients or providers. By this measure, the overall treatment process or outcome of a particular product must be shown to be a significant improvement to become commercially viable.
Biopharmaceutical manufacturers struggle to make sense of the future during this period of significant and rapid change. The rules governing successful commercialization of new and existing products are changing. And, as the rules change, so, too, must the business models these companies need to move forward.To effectively manage risk and seize opportunities in this new health landscape, biopharm must consider other partners who can help them share risk and provide access to the data they need, particularly when relating to patients.
For launch and mature brands, an evaluation of the optimal promotional mix to communicate to key stakeholders should be regularly made in order to maximize the value from the fixed costs deployed. These life cycle strategies should be viewed within two key dimensions — the toolkit required to support a product (traditional and novel channel strategies) and the timing of deployment, the latter ‘hotspot’ deployment being particularly effective and valuable. The traditional sales model will not work in the new health landscape, and those companies quick enough to respond will be in a strong position to take advantage of the changing relationships with patients, prescribers, payers and stakeholders as we enter this new era.