Efektivita prodejních aktivit: nový

strategický imperativ
Ivo Sulovsky,
Director Consulting Services, IMS-Health

Špindlerův Mlýn, 13. května 2006

Agenda

• Current Situation

• Prevailing market shifts

• Emerging Trends around Sales Forces

• Practical Approaches

2
Market pressures today are directly impacting
sales strategy and execution

• Healthcare Cost Containment

• Pressure on Growth and Productivity

• Product Uptake & Safety

• Understanding and Measuring the Market

• Prescribing influence networks

• Portfolios shifting towards specialty products

3
Some companies are under great pressure to
deliver top and bottom line results
60.000

50.000
(€ Thousands) Increase in sales from

40.000
R2 = 0,4208
promoted products

30.000

20.000

10.000

-
0 200 400 600 800 1000 1200

-10.000

-20.000

Spanish Representatives

Source: IMS Spain market analysis

4
The incremental return on details has been
declining in the US for two years

US Sales force size Growth of Detailing

(Top 30 Companies) Productivity
100.000

90.000 2003
SALES REPS

80.000

2004
70.000

60.000

2005
50.000
97

98

99

00

01

02

03

04

)
(e
19

19

19

20

20

20

20

20

05
20

-30,0% -20,0% -10,0% 0,0% 10,0% 20,0% 30,0%

PRODUCTIVITY GRWTH

Key question: How many PSRs does a company really need and how should
the sales force be structured?

Source: IMS National Sales Perspective and Integrated Promotional Services, March 2006. US market only
5
Numerous recent press announcements illustrate
the relevance of SFE measures
• Pfizer: “Pfizer plans to reorganize its domestic sales force of 11,000 employees to
shrink individual sales territories and reduce the number of sales representatives
calling on each doctor. But it said Pfizer isn't planning for widespread layoffs although
there could be some reductions through attrition.”

• GlaxoSmithKline: “We do believe there is an arms race out there in terms of

sales forces and that if you were to redesign the system from scratch you would end
up with smaller sales forces…The number of representatives promoting rival
medicines has now reached the level where physicians are becoming overwhelmed
and it would make much more sense to divert some of the marketing spend to more
productive areas.”

• Wyeth: “We are looking to change the way our sales force operates…We are
looking at delivering medication in a more effective manner.”

6
Management of leading companies rate SF
competence, targeting and customer
segmentation as TOP future drivers
Top 6 Drivers

Sales force competence

Drivers 7 - 14

Targeting Training & Coaching

Sales force culture
Customer segmentation Tools & data
Motivation Compensation
Communication
Monitoring
Analysis & Diagnosis
Sales force structure
Sales force size
Territory structure

Source: Ranking based on IMS-Management Consulting Sales Force Check 2005;

survey among leading pharmaceutical companies in Germany (n=41)
7
 A shift from the SoV paradigm to an intelligence
driven organization leads to revenue gains

Possible Revenue Gains Through Selected Sales Force Effectiveness Drivers

2 - 10

2 - 15
2 - 10
2-5

2 - 15

5 - 20
0-3
5 - 15 1-5

Targeting Increase of Increase of Optimize Optimize Enhance Align sales & SF Enhance SF
call detailing SF territory detailing marketing tools & culture &
frequencies time structure structure impact strategy data motivation

Source: Experience values from over 50 IMS-SFE projects in Europe

8
The relevant SFE issues have been addressed by
companies around Central European
Examples of IMS SFE experience in other CE countries

• Austria
− „early adopter“ – majority of the industry has engaged in SFE
projects since 2004

• Poland
− Numerous companies have started Targeting & Resource
Optimization projects
− Pharmacy segmentation was first in focus, doctor segmentation
and sales rep targeting education are „booming“ now

• Hungary
− Targeting/Sales Force Sizing activities in up-take
− First projects on the market at the end of 2005, activities of
companies raising in 2006

9
The main focus of SFE-projects has been on
understanding the market concentration...
100%

80%
% of Rx

60%

40%

20%

0%
0% 20% 40% 60% 80% 100%
% of doctors

Total Mkt Diovan Teveten Olmetec

Micardis Cozaar Aprovel Amias

− For the market 20% of the doctors account for c55% of sales

Source: IMS UK-Xponent Data

10
...as well as the impact of call frequency...

3,000

2,500

2,000
Revenue

1,500

1,000

500

)
)

)
)

2
2

9
6

8
3

3
2

8
7

2
3

=
=

=
5

2
3

2
=

=
=

(n
(n

(n

(n

(n

(n

(n
(n

(n
(n

(n

+
4

9
0

2
1

0
1
Non Target Target

Source: IMS UK-Xponent Data

11
...and segmentation of doctors/
hospitals/pharmacies into four basic segments
Potential: Market Value High

Invest Defend

Ignore Maintain

Low High

Performance: Product A Market Share

12
 New markets challenges make it necessary to
dive “beneath the surface”

Physician Region/
Pharma Detailing Geography
Pharma Sampling Specialty
Monitored Physician Prescribing
Medical Conferences History

Pharmacy
interventions Share of Voice

Payor Internet Searches

interventions

All Medical
Conferences
Message
Content
Peer to Peer Exposure Patient Exposure to
interventions to DTC interventions Journal Ads

Source: IMS Consulting Longitudinal Performance Management

13
The “New Thinking” in Segmentation and
Targeting is more complex
Potential: Market Value High

Investigate Maximise
Influence & Revenue or
Attitude Profit

Check for Optimise

Influencers Sales Effort

Low High

Performance: Product A Market Share

14
The impact of relative channels are studied in
more detail
Relative Impact of Channel
on Rx Intentions

80%
75%
70% 70%
70%

60%

50%
46%

40%
34%
30%

20%

10%

0%
Pharma Patient Peer Payor Pharmacist

Source: IMS Consulting Longitudinal Performance Management

15
Example: Measured Impact of Primary Care
Organizations, Hospital and Pharma Activity on
Prescribing in UK
70

60
Average Rx per GP

50 Impact of rep
activity
40

30

20

10

0
No positive Positive hospital Positive PCO only Positive hospital
influence only and PCO

GP not called on GP called on

Source: IMS Consulting Longitudinal Performance Management

16
“Influence & Attitude” become the third
dimension to Segmentation and Targeting
Opportunity

P(v) = f O(p),A(p),I(p)
Influence & Attitude

Share

Prescribing value is a function of

the Opportunity to prescribe plus
Attitude to prescribing plus
Influence on prescriber

17
Specialist sales force will become more important
due to market shifts towards specialty products
90
80 82
Number Of Blockbusters

70
40%
60
50 44
40 23%

30
60%
20 77%
10
0
2000 2002 2004
Primary Care Specialist Care
Source: IMS Health SMR Team Analysis, Multiple publications & websites, as of March 2004
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Challenges in Sales Force Effectiveness are driving
change towards Precision Sales & Marketing
Increase Impact of Calls Right relationship with right
prescriber
Dynamic Customer
Understanding

Increasing Sales
Productivity

While
adapting
to
Speciality drives Sales Force Design Measure Results of Sales Call
Activity
21.4 Bn

Increasing Market 20.06 Bn

Complexity

Dynamic Market Ex-man Published Pharmacy Net ex-

discounts manufacturer
Understanding (IMS Health)
Wholesaler Pharmacy Manufacturer
Export export claw-back
Growth
rates +6% 15% 0% -21% +8%
M8/05

19
Increased market intelligence and usage of
alternative channels belong to the main SFE
trends in Europe

Increased spending on
Roles and representatives
competitive intelligence
are changing with evolving
and re-structuring field
models
forces

More effective utilization

of other promotional Using technology more
channels in concert with effectively
the field force

20
Sales Organization models are changing, right
sizing/structuring of the team is the main issue

Account based selling:

Smaller field forces:
managing groups of
one rep that sees 30-40
prescribers based on %
prescribers more often
effort and not R&F

Right-sizing: Key Account Mgt:

removal of mirrored field relationship rep can call in
forces specialized personnel as
needed

21
Resource Optimization answers key questions to
allow for deployment of an optimal sales force

Which products in
How many reps What is the
which detail
should we have in optimal number of
position should we
our sales force? sales teams?
include per team?

How does our How can we best

How should we
structure impact manage the
structure the
our desired change involved in
management of
coverage and sales force
our sales force ?
frequency targets? deployment?

Which scenarios should we consider and which future events

should we take into account?

22
Optimizing Sales Resources follows four basic
steps, but frequently gets very complex

Just follow four steps:

1. Determine the target population and segmentation

2. Determine the desired frequency on the different

segments

3. Determine the capacity of each rep to deliver frequency

4. Calculate: Targets x Frequency / Rep Capacity = Size

23
1) Determining Target Population

• Segmentation is a discussion all its own, but in the end you

must determine:
− How much of the population you wish to cover
− Which segments you want to approach

• In the simplest case, you can consider the entire population

on a concentration curve

24
First Step
Prescribing concentration, segmentation & targeting

100%
Cumulative Prescriptions

Cumulative Prescribers 100%

25
Using Your Segmentation

• If you are using a

multiple segmentation
strategy, clearly A1 A2
8,000 4,000
identify the number of

Potential
targets in each segment
B1 B2
12,000 6,000

Untargeted
70,000

Penetration

26
2) Determining Frequency

• We begin with the response curves. Over longer periods, they can
resemble an S, although often they look more logarithmic:
Results

Frequency

27
Return on Calls

• If you know the S-curve and your target potential, you can calculate
the return on frequency
Total cost
Sales / Cost

Positive return Sales

Negative return

Frequency

28
3) Determining Sales Force Capacity

• How many calls can a rep deliver in a year?

Days in Field x Calls per day

• This means that you have two levers to increase rep call capacity:
− Increase days in field
• Reduce meetings, increase satisfaction
− Increase calls per day
• Better route planning, review territory alignment, increase satisfaction

29
4) Calculating Size

• Annual Rep Capacity = #Days In Field x #Calls per Day

• Σ(Number of targets per group x desired frequency per target group)
/ annual rep capacity = needed reps
• Factor in turnover
• This should be done for each product to determine the total details
needed
• Factor in relative detail position factors to determine total number of
reps
• Adjust for salesforce coherence

30
At which point in the profit curve do you find
your optimum balance between costs & profit?
Area of
Recommendation
€ Incremental Sales

Calculated Cost
Optimum

x
Contribution
Actual

Effort (Reps, €, etc)

Low Medium Too much risk

The optimization of sales-force size should be based on quantitative analysis,

but overlayed with management judgement – thereby taking realistic and
practical possibilities for change into account.

31
IMS supported Resource Optimization process
involves five key phases

Initiate Gather and Analyze

Develop Closeout
Sales Analyze Data Brand/Portfolio
Project Promotion Project and
Resource (Prescribing Optimization and
Activities Response Plan Next
Optimization Knowledge Develop
models Steps
Project Base) Recommendation

Resource Optimization Implementation

Planning

Meetings/ Internal project kick-off

Workshops

Client kick-off Promotional response

Base Case Data Gathering
review
Market Dynamics/
Historical Data Review
Scenarios

Prelim. Analysis

Final Analysis
Close/
Implementation
Planning

32
Strategy design to reach 2008 in optimum shape
for new launches without damaging short-term
profitability
Client Case Study

Client Midsized international Pharmaceutical company (study conducted in Spain)

Situation Approach

This company faces up a difficult situation because their two IMS developed a model to study
main products are affected seriously by the current regulation the optimal sales force size and
and the rest of the products in the portfolio are playing in structure for that company at that
decreasing or very competitive markets moment. The model is composed
by two parts:
The company has recently launched a new product but its sales
potential is not as high as expected and the next launch is not First, the optimum per product
expected until 2008. The company needs to “bridge” their way is calculated, considering carry-
through to 2008 when their launches were taking place over, response curves,
Taking into account all these points this company asked IMS for concentration curves, …
advise to analyze what an optimal size and structure could be After that, it is necessary to
and how to make it “implementable” combine the different products
to obtain the portfolio optimum

• The outcome of the project consisted not only on the development of the sales force size
Results and structure and its profitability in the scenarios considered but also on the portfolio
& Client design per specialty for the following four years, coverage, frequency and deployment
Benefits • In the first year after project completion, the company has reached the sales and profits
forecasted in the selected scenario: sales increase of 6%; cost decrease of 12%

33
IMS has the highest level of local knowledge
covering European markets and the prescribers
contained within them

Local Highest
Knowledge possible
level of
• Local prescribing knowledge precision
• Local market knowledge utilizing
lowest level
• Local information sources
of
• Local consultancy teams information
• Local relationships granularity
available
Global capability with common per country
methodologies

34
IMS is ready to support you with our Sales
Force Effectiveness Framework!
Strategy Development

Organizational Information & Performance &

Sales Models
Strategy Infrastructure Compensation

Planning Implementation

Sales Profiling,
Promo Resource Territory Call Territory Perf & Comp
Strategy Segmentation
Response Optimization Alignment Planning Mgmt. Admin
Evaluation Targeting

Change Management, Training & IM: Define, manage, implement and monitor the transition

People/Methodologies: Global consistency with local knowledge and understanding

Analytics: State-of-the-art analytical platforms powered by SAS

Information: Developing and leveraging world class information assets globally and locally

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