New Commercial Models in the Pharma Industry

The pharmaceutical industry is experiencing many challenges, including growing costs, new regulations, more provider consolidation, evolving operating models, and a volatile business environment. Traditional sales and marketing strategies, such as the sales rep model, is declining. This means that pharma companies may lose access to patients and healthcare providers. Many of them have started trying new commercial models (NCMs) to counter this.

NCMs Used by Pharma Companies

Although many NCMs are prevalent today, pharma companies have not found a single universally successful model. Rather than a single model, pharma companies are using a combination of many new approaches to attract customers. These approaches have new channels to interest them and new content to retain their attention.

The new channels are clinical sales forces, digital tools, portals for patients and physicians, social media marketing, key account management (KAM), and dynamic channel management. The new content includes product-specific customer services; collaborative research and analysis with payors and providers; disease management; and customer-centric pricing and contracts.

  • No pharma company has completely veered away from the personal selling or sales rep model. Instead, they are trying to develop better, more customer-focused versions of it by incorporating digital tools.
  • Many are interested in the budget impact analysis of the product, which analyzes its effect on patient groups.
  • Some are trying to understand customers’ potential and preferences and allocate the right channels to the right customers at the right time by international segmentation and geotargeting.
  • Some others are implementing sales territory alignment to encourage high performance from sales teams.
  • Some life science companies have entered into partnerships. They are engaged in a complex multi-stakeholder model involving partners, physicians, patients, payers, and providers.
  • Many companies, such as Novartis, Merck, AstraZeneca, and Roche, have adopted a multichannel approach. They try to deliver more personalized interaction with all healthcare stakeholders to drive mutually beneficial relationships.
  • Many pharma companies, such as Bristol Myers-Squibb, Abbott, and GlaxoSmithKline (GSK), have become leaner and more focused. They have divested non-core assets, changed their portfolio mixes, and are focusing on expensive specialty drugs, their overall outcomes, and disease management.
  • Some pharma companies, including Novartis, Roche, Pfizer and Merck, have adopted KAM. They now recognize the range of customers’ business drivers and needs and try to deliver maximum value to the most important ones among them.

Some companies, such as Abbott, Eli Lilly, Bayer, GSK, Merck, JNJ and Sanofi, have a mix of health-related businesses under one big umbrella organization. Others, including AbbVie, AstraZeneca, Bristol-Myers Squibb, Pfizer and Roche, are pure play pharma companies. Regardless, all of them have had to rethink their strategies to remain competitive.

Impact of NCMs in the Pharma Industry

NCMs are affected by external challenges, such as regulatory restrictions and pricing pressures, and internal barriers, including lack of understanding of new elements, patent expiration and rising expenses. This has made their impact equivocal.

For example, despite being touted to have great potential, digital tools have not seen much success. Similarly, although they are more expensive and have lesser reach, KAM tactics for institutional healthcare providers have been quite successful. The increase in specialist sales forces has also been fruitful.

Successful NCM Implementation

Take notes from every NCM applicable to you to develop your own based on your audience, offering, and channel. Audience defines the customers you engage; offering, the value you provide; and channel, the media you use to create customer experiences.

The following will help ensure the success of any commercial approach you choose.

  • Identify critical care systems and key decision-makers.
  • Understand the dynamics within such systems.
  • Identify what constitutes value, with reference to your product/service, and enhance it.
  • Create new offerings based on feedback from customers.
  • Use ideas, technologies, and partnerships with companies outside the pharma industry.
  • Encourage partnerships, collaborations, and patient-support initiatives.
  • Participate in online forums to create awareness and exchange information.
  • Invest in training programs and new technologies.
  • Aid all your stakeholders by being agile, dynamic, and adaptable.

As the healthcare ecosystem continues to evolve, you will have to adapt to it to grow and be profitable. You should create a commercial model that focuses on customer-centric, value-based health outcomes, rather than sales, to do so.