What's Worrying Sales?

Better to ask, What isn't? A new survey of leading executives in commercial operations forecasts 2008 as a year of tough choices and big changes.
Oct 01, 2007

These are challenging times for senior operations executives who support sales, marketing, and managed markets. The pipeline shortfall, drug-approval delays, and increasing regulatory complexity have squeezed budgets while raising revenue targets. The Medicare Modernization Act (MMA) has caused some of the most far-reaching changes in the sales and marketing landscape, as government purchasing power creates both new opportunities and greater restrictions. In addition, traditional modes of selling have saturated the market, and the sales model the industry knows and loves is no longer so effective.

Managed Markets Skill Sets
In this tough new climate, operations executives must ramp up competencies quickly to meet the demand for change, while at the same time, they are under constant pressure to do more with less.

A bellwether for the industry because of their experience—most average 25 years or more—commercial ops execs are inherently pragmatic. Fortunately for pharma, their on-the-ground perspective is invaluable in dealing with today's pressures—rapid changes in managed markets, reduced effectiveness of traditional sales models, and the resulting challenge to marketing to take a more balanced approach.

Sales Force Skill Sets
To measure this perspective more accurately, we developed a benchmark—a comprehensive dataset of blinded, objective information that shows how companies in similar circumstances are managing these issues; in effect, a sophisticated gap analysis. The benchmark is based on in-depth one-on-one interviews with commercial operations executives at 15 of the top 35 US-based drugmakers, representing $62 billion in revenue. Our goal was to get the execs' take on current challenges and what they most urgently need in order to meet them. We also asked them about their priorities for sales, marketing, and managed markets organizations over the next three years. The execs themselves are responsible for a total of $5.5 billion in total spending and manage 2,500 professionals. Benchmark interviews—which consisted of 40 questions, both quantitative and qualitative—were conducted by senior TGaS Advisors personnel.

Marketing Skill Sets
Many executives spoke of the coming year as a critical time for innovation. While all cited the need for new models and enhanced competencies, none spoke about areas they could see cut or reduced. But the urgent need for change came through loud and clear, making 2008 a Year of Tough Choices for these seasoned decision makers.

Size Matters in Outlook

Several findings were of particular interest. First, executives expressed mixed views about the future, with execs at mid-tier firms far more optimistic about, and confident in, their own company than the industry as a whole. But all share a deep concern for the ongoing viability of information sources, as legislative bodies and professional societies increasingly limit access to prescriber data; some are developing their own proprietary data as a result.

Industry reputation is also key. Respondents agreed that the single-most-important issue to focus on over the next three years is "public perception of the industry." The number-two priority is "managed markets' perception of the industry."

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