Pharmaceutical Commerce - May/June 2011 - (Page 7)
New Commercial Model:
motional effectiveness and efficiency prospects are changing. This may be purely a function of how leaders conceive the order of these factors. For example, declining effectiveness of promotional approaches could be a “first order” driver, with customer focus as an underlying “second order” driver. Regardless, it is revealing to see the different orientations that companies take. A very small group of companies clearly holds customer focus as the most important factor and has undertaken significant change plans. The theme of customer alignment and dramatic commercial model transformation needs separates these companies from their peers. 4. Evolution toward greater decentralization of the sales force is a myth. FALSE. While it is true that no company represented plans to implement decentralization models of the Regional Business Unit (RBU) with P&L accountability and aligned functions “hardwired” into the RBU leadership, most companies expect to create or maintain planning, decision-making, differential allocation of resources and differential strategies and tactics at the sub-national level. At the same time, very few expect that brand marketing approaches and materials or managed care account responsibility will be accorded to regional sales leaders. 5. The commercial model is broken. TRUE and FALSE. It depends on the company, tier or business unit within the company. Generally speaking, specialty companies or specialty business units find their models to be relatively well evolved to align with the customer and to support the commercialization of products generally perceived to deliver value. The former or existing model for products, business units, companies that are predominantly focused on non-specialty and/or largely undifferentiated products, however, is not viable. Product value appears to be far more important than the structures, processes, ways or working or technologies that a company brings to bear. Companies are attacking commercial model change with different strategies and approaches and at different paces. Studying others, learning from innovators and cautious players alike and keeping an eye on competitor companies, particularly those implementing substantial commercial model changes, provides a critical perspective for a company’s decisions about commercial model evolution.
ABOUT THE AUTHOR Anna McClafferty, Vice President, Management Advisor, oversees Marketing Sciences, Global Marketing and Executive Commercial Operations practices at TGaS Advisors (East Norriton, PA; 610 233 1210; tgas.com). She brings 25 years of pharmaceutical marketing, marketing sciences, commercial operations and general industry experience to TGaS Advisors and its clients. McClafferty was most recently a senior leader at GlaxoSmithKline where she led a wide range of shared service and center of excellence functions, supporting US business units and the managed markets division.
Fact Vs. Fiction
Belief that today’s commercial model is “broken” elicits a wide range of responses from industry
Anna McClafferty, TGas Advisors, division of KnowledgePoint 360
As part of its ongoing analysis of trends in commercial operations in bio/ pharma, TGaS Advisors has recently completed indepth interviews and study of a broad cross-section of industry players, ranging from multinational pharmacos, to regional mid-size companies, to emerging biotechs. This investigation was focused on the evolution toward “new commercial models” in life sciences today (Pharmaceutical Commerce, July/Aug, p. 1). Industry observers invariably describe the bio/pharma’s commercial model as “broken,” highlighting the need for the industry to adapt new practices and alternative methods of delivering products to market. TGaS Advisors’ work, however, shows that while many companies are undergoing changes, relatively few have undergone dramatic transformation. Some companies are changing very little. The major points of this study are published in a white paper, “The New Commercial Model: Reality or Rhetoric?” available on the TGaS Advisors’ website. Here, a few of the “fact vs. fiction” findings regarding new commercial models. 1. Across the industry, organization structures have recently undergone and will continue to undergo significant reconstruction.
FALSE. Only three of the 21 companies studied had undergone significant structural change in the past year, and only one anticipates significant structural change in the coming year. The key word here is “organizational structure.” While many of the companies have initiated or completed downsizing, integration efforts or some change to specific functions, all but three have maintained their fundamental commercial structures. 2. Profound change to commercial models is limited to a very few companies. TRUE. Significant change has and will continue to play a forcing role for a few companies who either 1) are facing daunting challenges to their sales and profitability in the immediate term, OR 2) wish to radically challenge existing ways of working or the business model. 3. Intense focus on the customer is the key driver of current and anticipated commercial model evolution. FALSE, technically. Customer focus is one of many perceived drivers of commercial model change. However, this perceived driver is not highly correlated to commercial model changes that have been completed or undertaken, especially when compared to other factors such as pipeline and growth prospects, payer influence and the extent to which pro-
Fixing the Disjointed World of Marketing Operations
A supply chain perspective on marketing operations can reduce cost and complexity while improving results
Mike Moroz, Archway Marketing Services, Inc.
ly, so a high level of demand planning and a print-on-demand solution also needs to be integrated into marketing operations. With all of these moving pieces in combination with a disjointed and under evaluated supply chain, how do you begin to bring discipline to the process? How do we close the supply chain loop? Executing the Strategy To begin to evaluate the marketing supply chain, companies need to get executive sponsorship. With many pharmaceutical companies managing anywhere from three to 10 vendors, there are too many touch points to evaluate without some kind of executive sponsorship. The next step is to construct a roadmap or overview of current processes. This roadmap will help pinpoint redundancies and wasted effort. An updated marketing supply chain could take many forms, but any version should include two key principles: 1. Strive for visibility, so that events and patterns in one part of the supply chain are communicated to other parts. 2. Look for scale and flexibility, by employ-
ing providers that can scale along with you, and leverage purchasing power while flexing with your business. As we’ve assessed many top pharmaceutical companies over the past few years, we’ve discovered significant waste where processes were built around filling a gap, not optimizing a process. This is a trend that spans across many industries, but in such a highly regulated industry like pharma, it is surprising how many companies are limited by this perspective. The pharma industry deserves better.
The pharmaceutical industry has been very good at driving down costs on manufacturing and the marketing strategy, but it is behind in evaluating the processes that actually execute campaigns—and is missing out on key ways to eliminate waste and cut costs. At Archway, we’ve observed the changes the pharmaceutical industry has undergone in the past few years, identified the special marketing operations challenges pharmaceutical companies face, and will share what marketers can do to streamline their marketing execution programs and finally shed unnecessary costs. Even through the consolidation of companies, and reorganizations of sales forces, the pharmaceutical marketing supply chain
has largely stayed the same—fragmented. With many mom-and-pop shops handling fulfillment of marketing materials and boutique shops handling sample distribution, efficiencies are being missed in the supply chain—leaving valuable dollars on the table that could be applied to marketing strategy. Other industries have consolidated their marketing supply chain to provide marketing materials and samples from a single source. The pharmaceutical industry has stuck to what has worked in the past, but how much longer will the status quo be viable? Consolidating samples and marketing materials isn’t that simple. The pharmaceutical market is highly complex, and requires specialized handling requirements, climate control, security, version control and a highly controlled chain of command. Materials and literature can become obsolete very quick-
ABOUT THE AUTHOR Mike Moroz is the President of Archway Marketing Services, Inc. where he is responsible for the company’s growth, innovation and the delivery of customized solutions and service to Fortune 1000 clients, including fulfillment services, printing, consumer promotions, business intelligence and decision support tools. Archway recently acquired Corporate Services Inc. (CSI) to further build upon its pharmaceutical capabilities.
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Table of Contents for the Digital Edition of Pharmaceutical Commerce - May/June 2011
Pharmaceutical Commerce - May/June 2011
Table of Contents
Business / Finance
Supply Chain / Logistics
Meetings and Editorial Index
Pharmaceutical Commerce - May/June 2011