The Evolution of Sales Models in the Indian Pharma ... - IMS Health

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Different companies have adopted different strategies, but the key reason cited for adapting these changes remains the same: to provide better customer focus and targeting, enhance efficiencies, facilitate expansion to newer business areas (both therapies and geographies), and increase accountability of the resources. One of the executives surveyed said, “We created multiple structures to expand coverage to new markets and therapy areas in line with growth expectation, support new launches, and strengthen key markets & institutional sales.” For specialty products driven companies, task forces account for nearly 15% of the total sales force. Key determinants of adapting these models are therapy focus, width of product portfolio and target doctor specialties. Interestingly, responses of those companies having mature products tending to an OTX profile suggest that channel management has already made inroads into pharma sales, accounting for nearly 20% of sales forces, second only to traditional sales force. Geography also emerges as one of the key determinants of sales model adoption, which shows that companies are also looking at realigning their sales model around the varied need of various geographies. An industry executive contacted by OPPI-IMS said “A new BU was created in our company to tap the opportunity in the lower town classes. The BU contribution to the overall business is close to 20%.” Another executive said, “Emerging and untapped business in the Class 3 or 4 towns and rural sector will impact the future selling model,” thus Figure 5: Key benefits and challenges with various sales structures Account management Channel management hospital management task force structure Cso Benefits • high Customer focus • Customer management • Wider reach and frecuency • helpful in managing large portfolio • high focus on potential hospitals • high productivity for speciality business • high impact and productivity • service to focus customers • geographically better reach • flexibility in operation & reduces managerial cost acknowledging the seriousness around rural consumers. MNCs like Novartis, Sanofi-Aventis, Pfizer are actively expanding to Tier IV cities and below, creating profitable business models around rural geographies. Extra-urban geographies require different sales models in addition to a different strategy in terms of portfolio, distribution, pricing and promotion. It has also been observed that many companies have adopted a multi-pronged commercial model to target specific needs of the various customer sets. One of the industry executives said, “We adopted multiple strategies, like divisionalization in different therapy segment to bring better focus on field implementation, creation of channel management to manage late life cycle brands, launch of an extra urban division to increase reach, and launch of super specialty division like Derma & Cardio.” Previous studies from IMSCG suggest that this is not an isolated case, but is now a common practice followed by both Indian and MNC players. No one model fits all. As seen in Fig.5 below, different models have their share of benefits and challenges; innovative sales structures increase customer focus, but with additional investment. Hence, one needs to study financial feasibility of a adopting a new commercial model. While a few companies have started to reassess their selling model, many players still rely on traditional promotional channels, where doctor coverage, call frequency, and working days still define the KPIs for the sales force. Challenges • high investment • delay in payments • lower margins • resource constraint for the wider reach • price war • formulary listing for new products • scattered geography • Cost of operation • Compliance and quality of operations • tough to coordinate and align Cso to parent company 6
A closer look at current models show that these models, though they would have provided an edge to the players, have largely focused around single stakeholder, primarily doctors. A study by IMSCG shows that decision making power of other stakeholders, including patients, hospitals, payers, and insurance companies, has Figure 6: Influential Weak International Scenario Doctors Media Promotion Payors Consumers Patient Groups Distribution channels Existing New Moreover, there are fundamental differences in stakeholder evolution between Western and Indian markets, which to an extent explains the difference between commercial models in the West and in India. While doctors are still the center of healthcare in India, the West has seen an emergence of consumers, payers, private insurance and patient groups as strong stakeholders in healthcare management. With Westernization of the Indian healthcare market, newer stakeholders are been on a steady rise in recent years. Rising influence of new stakeholders in deciding treatment pathway will force the market players to look at newer touch points with new stakeholders and hence the promotional channels. KPIs for the sales team need to evolve to include these new key stakeholders. Influential Weak Indian Scenario Doctors Distribution channels Consumers Media Promotion Insurance Patient Groups Existing New likely to gain more importance, and thus will be the need for newer ways and means of targeting them. Leading MNCs like Sanofi-Aventis, Roche, Lilly, MSD, and GSK have already started engaging newer stakeholders (patients) to maintain their leadership in the market. Awareness campaigns, as adopted by MSD for Gardasil or by GSK for its vaccine portfolio or by Sanofi-Aventis for its top end brands have helped route the patients to their products. 7
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