The pharmaceutical industry is seeing a squeeze on profitability. This has been driven by several factors, including declining top line growth, with many major companies now reporting single digit growth; push back from payers on pricing and increasing discounts, particularly in the US, and continued growth of R&D costs. As a result, SG&A spending is under pressure and has declined as a percentage of sales for most large pharmaceutical companies.
Meanwhile, the launch environment is becoming increasingly active and competitive. The number of new active substances (NAS) launched in the last five years has increased in all of the top 8 developed markets compared to the previous five years. In the US, the number of NAS launched annually is expected to average 40-45 to 2021. Furthermore, these launches are often sophisticated products entering competitive specialty therapy areas – two specialty therapy areas, oncology and autoimmune, contributed over 35% of all value growth in 2016, driven predominantly by developed markets. As launches are a key focus of promotional activity, companies must support their launches promotionally, even in a context where SG&A spending is generally being cut,. The commercial model is therefore at a crucial point: demand is high but funds are not.
Meanwhile, technological change, with the rise in digital channels of communication and social media engagement, means that opportunities to innovate on the commercial model are higher than ever before. Technology will drive multiple opportunities for innovative engagement between stakeholders in healthcare provision- from the rise of wearables which will give much better insight into the real outcomes and experiences of patients to ever more seamless and convenient communications between pharma and healthcare professionals. Technology driven expansion of the volume and types of data collected about healthcare provision and outcomes extends, of course, far beyond the commercial model, to the potential to drive efficiencies and improvement in clinical development and healthcare provision. However, the broadest view of the technology opportunities to transform the commercial model must not be ignored.
The established commercial model is becoming less tenable and fundamental change is required, meaning the customer-facing team must evolve accordingly. At the core of pharma’s customer-facing team is, of course, the sales rep. The pharmaceutical industry has had a remarkably consistent model for decades, where large sales teams visiting individual doctors has been front and centre of the promotional model. This asset has been tremendously valuable, allowing pharma to have direct relationships with doctors, providing important information on drug innovation and collecting feedback and insight. It will continue to be a key element of any customer facing model. However, it will also change. The customer team of the future will be more diverse in terms of roles, and individuals within it will also require a broader set of skills. It will also, crucially, be a team, interacting to address the whole system, not individual silos.
Face to face detailing by reps has long been the central pillar of promotion in the pharma industry, mainly because the power of this channel to inform and educate healthcare practitioners (HCPs), about products. Our ChannelDynamics™ data shows that in 2016, across all audited HCPs, 59% of face to face details in the top 7 developed markets (US, Japan, Germany, France, Italy, UK, Spain) resulted in HCP conversion, compared to only 32% for non-face to face channels, where conversion is an increase in reported intent to prescribe, or an intent to remain at the same level of prescribing for already frequent prescribers. Nevertheless, as doctors, and the pharmaceutical industry, transition into a multichannel environment it is important to note that the real-world effectiveness of any multichannel promotional model will need to be viewed as the combined effectiveness of all the channels within it, whether face to face or remote, personal or non-personal, digital or traditional.