The Three Pillars of Pharma’s New Commercial Model

Saby Mitra, Managing Principal, Global Head of Digital Customer Experience Practice, ZS

Healthcare is indisputably in a new era of commercialization, creating an urgent need for the pharmaceutical industry to modernize its go-to-market models and stay ahead by using digital-forward strategies. The industry has been on a journey to personalize customer engagement models for at least the first half of this decade. We have seen progress on key dimensions such as analytics-driven experience optimization, digital operating models, and customer data infrastructure.

At the same time, we’ve observed that brands are realizing a wide range of results depending on the degree of personalization embedded in their customer engagement models. To understand what differentiates the top performers from the average brands, we’ve identified three commercial priorities that can deliver significant business outcomes:

1. Product launch performance

The life sciences industry is expecting more than 400 new product launches and microlaunches in the next five years. However, 40% of launches from 2019-2023 failed to meet analyst expectations. Our research indicates that the industry has significant experience in launching blockbuster products with a field-heavy go-to-market model where digital is not fully harnessed for speed, decisioning, and personalization. Few companies have used innovative artificial intelligence approaches at product launch to deliver high-impact use cases. Such approaches include dynamic targeting for the field force and content personalization to elevate performance. Promotion can drive up to 50% of sales at launch, making the personalization of engagements at launch a far more critical business imperative today than ever before.

2. Revenue acceleration

The leading brands differentiating themselves from the pack are moving toward a portfolio-based customer strategy, using AI-driven decision engines to drive significant reach and scale in customer coverage and deliver highly orchestrated experiences tailored to each individual customer. This is particularly beneficial in product portfolios where there is a significant customer overlap across brands.Some brands have realized commercial upside of 4%-8% by deploying individualized, orchestrated, and dynamic customer engagement journeys.

3. Promotional spend optimization

Life sciences’ selling, general, and administrative expenses (SG&A) can range from 25%-40% of revenue, with marketing and sales contributing to 85% of SG&A. Leaders are rethinking their promotional spend and identifying optimization opportunities across the field, media, and content. For example, one major brand reduced its overall TV spend by 30% and moved a portion of this spend from its linear TV investments to a more modern channel—connected TV—which enabled stronger targeting and measurement capabilities. This strategy ultimately drove up to a 30% increase in revenue from TV. Some companies have been more deliberate in pivoting toward a digital-only go-to-market model for aging products to fund commercialization of new indications.

While the industry has demonstrated success in evolving its customer engagement models, companies are poised to continue making progress across three key frontiers. First, embed digital thinking and personalization in product launches to reach peak revenue faster. Second, dial up the degree of customer orchestration—both in sophistication and scale. Finally, invest smartly, as organizations will expect to achieve more while spending less on commercialization.

Saby Mitra is Managing Principal, Global Head of Digital Customer Experience Practice, at ZS