Karan Dhundia co-wrote this blog post with Jude Konzelmann.
Today, commercial organizations in the biopharmaceutical industry face a number of challenges that are forcing them to adapt. The first challenge is that as their customers—the physician practices, hospitals, insurers and provider networks that deliver healthcare—have consolidated and evolved, they’ve done so in a very uneven way across geographies. This leaves healthcare delivery in Salt Lake City operating very differently from healthcare delivery in Miami, as an example.
In fact, ZS analysis has uncovered 104 local healthcare markets—which we call LHMs for expediency’s sake—that are defined by the manner in which healthcare is consumed in the local population. Fundamentally, companies need to change their orientation to be much more aligned with these local healthcare markets rather than aligned around brands and national sales teams as they are today. The only way to enable true customer centricity will be by letting go of the brand-centric way in which many organizations operate today.
The second challenge is variation, not just across geographies but across therapy areas, too: For example, key influencers in a particular geography who are working to control the utilization of biopharmaceutical products within the mental health space might operate differently when working to control products in the cardiovascular space. Understanding the influence map may only be relevant for one therapy at a time.
The third challenge is that the way in which these different stakeholders define value isn’t consistent in the source of value or in the period of time over which it’s measured. A physician may still be concerned primarily with clinical benefits, but a provider system may concern itself with organizational benefits and population health. As sources of value differ, it becomes very difficult to define and communicate the benefit to the customer.
Addressing these challenges will require several changes to the way that commercial organizations work. First, organizations will need to gain a deeper understanding of their customers, especially with respect to the way that they are connected within provider networks and how influence happens within the network. Second, companies have to ensure that they’re creating or tailoring value propositions that will resonate strongly with those customers. Third, companies will need to change the way that their commercial organizations are set up in the field. Finally, all of these changes must be supported through efficient implementation and operations enabled by technology.
The next-generation commercial organization will involve changes to customer-facing resources, headquarters, marketing and everything in between. This calls for a shift to cross-functional collaboration both internally (headquarters) and externally (the field). The external change—which involves the reorganization of field-based commercial personnel—is a sizeable shift in the way that most organizations operate today, but it will address some pain points that companies are already feeling: namely, proliferation of roles in the field and pressure to reduce the cost of sales. We’ve developed a four-part transition framework to enable this change:
- Deployment: Move from a national to local team mindset
- Roles: Move from few general purpose roles to diverse and specialized roles
- Structure: Move from reporting structure to an agile operating structure
- Marketing: Move from push to collaboration
Here’s the first step, and we will outline the others in future posts:
Deployment: Moving From Uniform to Localized Approaches
Many commercial organizations in biopharmaceuticals today have been set up and maintained in a fairly uniform manner with nationally determined team structures and responsibilities. Of course, companies have all used techniques to adjust and balance the size of geographies and customer lists to account for different sales potential in different areas of the country. Still, the setup of many teams—which products to focus on and which activities to deliver to which customer groups—is the same across the country. This model served the industry very well for decades and still can make sense in cases where customers and local markets are fairly homogeneous. This approach has also been favorable thanks to its ease of implementation and maintenance. For example, it’s efficient to develop just one incentive plan or one set of resource allocation rules per team.
However, in those environments where markets exhibit a lot of variety—which is becoming far more common—the uniform approach has become outdated and ineffective, and companies must think differently. Some companies have handled extreme situations (such as rep access challenges in Boston or Minneapolis) as exceptions, but the existing solutions and processes are not scalable. We strongly advise that companies orient themselves much more locally and have an ability and a willingness to customize their approach from market to market.
For example, let’s say the average market employs 16 traditional sales reps, one reimbursement specialist, two provider-focused account managers and one medical science liaison focused on physician key opinion leaders. In Utah’s local health market, we have a large integrated payer-provider network operating with high control over prescribing decisions, so our typical mix of personnel will not make sense. Instead, Utah should have 12 traditional reps rather than 16 and a single key account manager focused on the payer-provider network. Instead of a reimbursement specialist, it should add a research specialist focused on local health economics outcomes. Also, it should keep the physician-based medical science liaison and add another who focuses on payers. In total, resource levels would go from 20 to 16, but the way that they’re focused would be better customized to the way that Utah’s local health market operates, ultimately driving greater impact.
Change in the industry has been and will continue to be a constant. Embracing local differences and organizing commercially to reflect the local influence structure will help organizations thrive in the face of that change.
Stay tuned for the second part of this blog series, in which we’ll outline the next step for adapting your commercial organization to the new biopharmaceutical environment.