22 May 2019
The pharmaceutical industry is in the midst of unprecedented change. Product portfolios are diversifying from mass market medications to include highly specialized therapies. Reimbursement is becoming more complex and successful commercialization means targeting multiple stakeholders before a prescription is even written.
In response, the pharmaceutical industry is exploring new sales and marketing models to meet these modern challenges. Traditionally, Contract Commercial Organizations (CCOs) have provided a flexible, cost-effective way for the pharmaceutical industry to adjust the implementation of its strategy. However, given the current state of flux, just how relevant can CCOs be in helping the pharmaceutical industry manage such major change?
Despite the exceptional and mostly unique challenges within its business environment, the pharmaceutical sector has sustained growth in recent decades while continually adjusting throughout this period. One area that has seen major change has been in pharmaceutical sales where the number of field reps has shrunk dramatically. In the US alone, the number of pharmaceutical sales reps was reduced by 32,000 between 2005 and 2017. A simultaneous drop in access to health care providers has exacerbated difficulties, where only 46% of US physicians were considered accessible for pharmaceutical reps in 2017 - a drop from 80% in 2008. These challenges have and continue to be major drivers in reliance on CCOs with pharmaceutical companies increasing demand for representatives on more flexible contracts and more sophisticated, often digital-led and integrated sales campaigns. CCOs also can offer innovative approaches to sales coverage, such as rapid response teams to cover a particular outbreak or competitive threat and field service teams providing brand impact for mature and end-of-life cycle brands.
Increasingly, CCOs are playing a major role in helping pharmaceutical companies adapt to change, enabling them to rapidly optimize levels of sales resources and mitigate the risks associated with building permanent in-house teams. In the future, as pressure on the pharmaceutical industry to operate ever more effectively and efficiently escalates, outsourcing of field sales is certain to increase. Pharmaceutical businesses will soon be making long-term commitments to addressing the commercialization needs of the sector via trusted CSO partners.
Given that many in the life sciences sector are currently diversifying product portfolios to incorporate highly specialized, often personalized therapies not subject to primary care pricing restraints, the inherent agility of CCOs is essential.
Speed, flexibility and risk mitigation are the primary drivers for engaging with CCOs, best known for providing knowledgeable salespeople at short notice, in large numbers, for specific campaigns. CCOs enable their clients to be agile, deploying staff more quickly on urgent projects and realizing more opportunities.
They also provide the ability to cut costs rapidly, without liability, when a new product doesn’t sell to expectation, and to delay financial commitment to particular new products, thereby mitigating risk. In both these scenarios, the CSO partner absorbs all of the risks involved in engaging and disengaging staff for short periods, in addition to the standard head count costs such as health benefits.
As access to HCPs falls, so does the need for traditional face-to-face reps – but not to the point where they are no longer a key part of a brand’s campaign. There remains a number of scenarios where outsourcing face-to-face interactions is an attractive solution.
• The most familiar is the deployment of an outsourced rep team at the beginning of a product’s life cycle. At this point, it is vital to quickly engage as many HCPs as possible, requiring a temporary ramping up of sales team personnel. There may also be a need for multi-country launches and exploration of new markets (both therapeutic and geographical). In these cases, it may make sense to delay a long-term financial commitment particularly when a start-up biotech or pharmaceutical company doesn’t have sufficient financial resources. A well-positioned CSO is likely to be at least present, if not well established, in these desirable markets, making the launch a simpler, more efficient endeavor.
• Outsourced reps are particularly relevant when a pharmaceutical company is entering a new therapy area and addressing a new customer segment. The prevalence of more personalized medicines and increased attention on rare and orphan indications is making this an increasingly common concern. Pharmaceutical companies will have to speak to different HCP groups and patients themselves in some instances. It’s also important to consider the differences or evolution in prescribing practices where prescribed treatments are made available over the counter requiring details to pharmacists. Good CCOs understand this nuance and can offer support appropriately.
The partnership scenarios with outsourcing providers are now a familiar and well-established practice among most pharmaceutical businesses. To deliver on short-term projects, contracted commercial providers must get the basic, foundational elements right and establish trust by rapidly deploying and retaining reps with the appropriate skill set for the engagement. But, there is an unmet need for more fundamental change in go-to-market healthcare models, and the pharmaceutical industry is ready for CCOs to be more proactive and collaborative with their strategies.
As such, there is a growing focus on ‘strategic sourcing’ which involves developing partnerships instead of using contract services as a buffer at intermittent points of a campaign. Strategic sourcing in essence is the outsourcing of a substantial percentage of non-core services, with the aim of enabling a pharmaceutical company to focus internal efforts on business-critical objectives or other priorities. A common example is the outsourcing of day-to-day sales while the pharmaceutical company pays attention to the development and marketing of its brands.
This approach can significantly reduce headcount, and therefore the time that leaders have to commit to performance management, recruitment and training. Perhaps more importantly, it creates a leaner, nimbler organization that retains the necessary capabilities via a strategic partner.
Moving from commoditized services to strategic partnerships can realize a greater mutual value, but it requires a long-term approach from both CCO and pharmaceutical businesses. Co-determination of marketing, pricing and access strategy would likely be central considerations of any such model, followed by everything from marketing communications to sales force sizing, candidate profiling, targeting methods, call lists, sales training and sales materials. Both parties would need to be involved in recruitment specifications, training, measurement and reward-system design. A successful roll-out and the ongoing partnership would require buy-in and constant engagement from senior stakeholders in both organizations with a focus on day-to-day operational quality.
To be seen as strategic partners, CCOs need to challenge businesses with new ideas. Drawing on the sector-wide information generated by their business analytic systems, they could position themselves as increasingly proactive by showcasing best practices, identifying new market opportunities or demonstrating added value. Given their focus on sales models, CCOs could also consider advising on new, integrated commercial models and helping their customers to implement them. There also needs to be some consideration for pricing models as traditional flat rate arrangements will need to give way to models based on shared risk and reward.
Outsourcing by the pharmaceutical industry has been changing over the past three decades, becoming more strategic with little sign that it will slow any time soon. As contract providers grow, developing their reach and capabilities, and pharmaceutical businesses push for leaner operating costs, it is possible that integration will eventually be replaced by the outsourcing of all commercial and customer-facing functions for a particular brand or franchise.
Everything from clinical trials, research, manufacturing, back-office processes and a large proportion of commercialization activities are already being outsourced while ideas about what capabilities should remain core are in flux. It is up for discussion as to what cannot be outsourced, with some believing that the purpose of a brand is the only thing that is truly ‘core’. This is already the case for many virtual businesses and there is no reason this mindset could not be adopted by larger organizations. For contract commercial providers, this means going beyond offering services, to becoming true partners – sharing risk and reward, guiding strategy and forming decade-long relationships.
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