effective sales force

Efektivita prodejních aktivit: novýstrategický imperativ

Ivo Sulovsky,

Director Consulting Services, IMS-Health

Špindlerův Mlýn, 13. května 2006

2

Agenda

• Current Situation

• Prevailing market shifts

• Emerging Trends around Sales Forces

• Practical Approaches

3

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

4

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

R2 = 0,4208

-20.000

-10.000

-

10.000

20.000

30.000

40.000

50.000

60.000

0 200 400 600 800 1000 1200

Spanish Representatives

(€T

hous

ands

) In

crea

se in

sal

es fr

om

prom

oted

pro

duct

s

Source: IMS Spain market analysis

5

Source: IMS National Sales Perspective and Integrated Promotional Services, March 2006. US market only

50.000

60.000

70.000

80.000

90.000

100.000

1997

1998

1999

2000

2001

2002

2003

2004

2005

(e)

SALES

REPS

US Sales force size(Top 30 Companies)

Growth of Detailing Productivity

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

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

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

2005

2004

2003

PRODUCTIVITY GRWTH

6

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.”

7

Drivers 7 - 14

Source: Ranking based on IMS-Management Consulting Sales Force Check 2005; survey among leading pharmaceutical companies in Germany (n=41)

Compensation

Training & Coaching

Sales force structure

Sales force culture

Monitoring

Sales force size

Territory structure

Tools & data

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

Motivation

Sales force competence

Targeting

Customer segmentation

Analysis & Diagnosis

Communication

Top 6 Drivers

8

A shift from the SoV paradigm to an intelligence driven organization leads to revenue gains

Possible Revenue Gains Through Selected Sales Force Effectiveness Drivers

5 - 15 1 - 50 - 3 5 - 20

2 - 15

2 - 52 - 10

2 - 15

2 - 10

Targeting Increase of call

frequencies

Increase of detailing

time

Optimize SF

structure

Optimize territory structure

Enhance detailing impact

Align sales & marketing strategy

SF tools &

data

Enhance SF culture &

motivation

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

9

The relevant SFE issues have been addressed by companies around Central EuropeanExamples 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

10

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

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

Source: IMS UK-Xponent Data

0%

20%

40%

60%

80%

100%

0% 20% 40% 60% 80% 100%

% of doctors

% of Rx

Total Mkt Diovan Teveten Olmetec

Micardis Cozaar Aprovel Amias

11

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

0

500

1,000

1,500

2,000

2,500

3,000

0 (n

=57

32)

1 (n

=33

26)

2 (n

=22

07)

3 (n

=24

86)

4 (n

=25

4)

5 (n

=83

0)

6 (n

=64

1)

7 (n

=49

5)

8 (n

=38

0)

9 (n

=23

9)10

+ (n=

882)

Non Target Target

Source: IMS UK-Xponent Data

12

Pote

ntial:

Mark

et

Valu

e

Performance: Product A Market Share

High

HighLow

...and segmentation of doctors/ hospitals/pharmacies into four basic segments

DefendInvest

MaintainIgnore

13

Source: IMS Consulting Longitudinal Performance Management

Share of Voice

MessageContent

Peer to Peerinterventions Exposure to

Journal AdsExposure to DTC

Patientinterventions

Pharmacyinterventions

Internet SearchesPayorinterventions

All MedicalConferences

Specialty

Physician PrescribingHistory

Pharma Detailing

Pharma Sampling

Physician Region/Geography

Monitored Medical Conferences

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

14

Pote

ntial:

Mark

et

Valu

e

Performance: Product A Market Share

High

HighLow

Maximise

Revenue or

Profit

Investigate

Influence &

Attitude

Optimise

Sales Effort

Check for

Influencers

The “New Thinking” in Segmentation and Targeting is more complex

15

The impact of relative channels are studied in more detail


70% 70%75%

46%

34%

0%

10%

20%

30%

40%

50%

60%

70%

80%

Pharma Patient Peer Payor Pharmacist

Relative Impact of Channelon Rx Intentions

16

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

0

10

20

30

40

50

60

70

No positiveinfluence

Positive hospitalonly

Positive PCO only Positive hospitaland PCO

Average Rx per GP

GP not called on GP called on

Impact of rep activity


17

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

P(v) = f O(p),A(p),I(p)

Prescribing value is a function of the Opportunity to prescribe plus

Attitude to prescribing plus Influence on prescriber

Opportunity

Share

Influence & Attitude

18

Source: IMS Health SMR Team Analysis, Multiple publications & websites, as of March 2004

Number Of Blockbusters

44

82

23%

77%

40%

60%

0

10

20

30

40

50

60

70

80

90

2000 2002 2004

Primary Care Specialist Care

Specialist sales force will become more important due to market shifts towards specialty products

19

Increase Impact of Calls

Whileadaptingto

Challenges in Sales Force Effectiveness are drivingchange towards Precision Sales & Marketing

Right relationship with right prescriber

Published(IMS Health)

21.4 Bn

Pharmacyexport

Pharmacydiscounts

Manufacturerclaw-back

Net ex-manufacturer

Growth ratesM8/05

+6% 15% 0% +8%

20.06 Bn

-21%

Ex-man

WholesalerExport

Measure Results of Sales Call Activity

Speciality drives Sales Force Design

Dynamic Customer Understanding

Dynamic Market Understanding

Increasing SalesProductivity

Increasing MarketComplexity

20

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

More effective utilizationof other promotional

channels in concert withthe field force

Increased spending on competitive intelligence and re-structuring field

forces

Using technology more effectively

Roles and representatives are changing with evolving

models

21

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

Right-sizing:removal of mirrored field

forces

Smaller field forces:one rep that sees 30-40 prescribers more often

Key Account Mgt:relationship rep can call in specialized personnel as

needed

Account based selling:managing groups of

prescribers based on % effort and not R&F

22

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

How many reps should we have in our sales force?

What is the optimal number of

sales teams?

Which products in which detail

position should we include per team?

How should we structure the

management of our sales force ?

How does our structure impact

our desired coverage and

frequency targets?

How can we best manage the

change involved in sales force

deployment?

Which scenarios should we consider and which future eventsshould we take into account?

23

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

24

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

25

First StepPrescribing concentration, segmentation & targeting

100%

100%

Cumulative Prescribers

Cum

ula

tive P

rescriptions

26

Using Your Segmentation

• If you are using a multiple segmentation strategy, clearly identify the number of targets in each segment

A18,000

A24,000

B112,000

B26,000

Untargeted70,000

Penetration

Pote

ntial

27

2) Determining Frequency

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

Frequency

Results

28

Return on Calls

• If you know the S-curve and your target potential, you can calculate the return on frequency

Sale

s /

Cost

Frequency

Total cost

Sales

Negative return

Positive return

29

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

30

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

31

At which point in the profit curve do you find your optimum balance between costs & profit?

Incremental Sales

Effort (Reps, €, etc)

Calculated Optimum

Contributionx

Area of Recommendation

Actual

€

Cost

Too much riskMediumLow

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.

32

IMS supported Resource Optimization process involves five key phases

Initiate Sales

Resource Optimization

Project

Gather and Analyze Data (Prescribing Knowledge

Base)

Develop Promotion Response models

Analyze Brand/Portfolio

Optimization and Develop

Recommendation

Closeout Project and Plan Next

Steps

ProjectActivities

Internal project kick-off

Client kick-off Base Case Data Gathering Promotional response review

Meetings/Workshops

Final Analysis

ImplementationPlanning


Historical Data Review Market Dynamics/ Scenarios

Prelim. Analysis

Close/ImplementationPlanning

33

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

This company faces up a difficult situation because their two main products are affected seriously by the current regulation and the rest of the products in the portfolio are playing in decreasing or very competitive marketsThe company has recently launched a new product but its sales potential is not as high as expected and the next launch is not expected until 2008. The company needs to “bridge” their way through to 2008 when their launches were taking placeTaking into account all these points this company asked IMS for advise to analyze what an optimal size and structure could be and how to make it “implementable”

Situation

IMS developed a model to study the optimal sales force size and structure for that company at that moment. The model is composed by two parts:

First, the optimum per product is calculated, considering carry-over, response curves, concentration curves, …

After that, it is necessary to combine the different products to obtain the portfolio optimum

Approach

Client Midsized international Pharmaceutical company (study conducted in Spain)

Results & Client Benefits

• The outcome of the project consisted not only on the development of the sales force size and structure and its profitability in the scenarios considered but also on the portfolio design per specialty for the following four years, coverage, frequency and deployment

• 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%

Client Case Study

34

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

• Local prescribing knowledge

• Local market knowledge

• Local information sources

• Local consultancy teams

• Local relationships

Global capability with common

methodologies

LocalKnowledge

Highest

possible

level of

precisionutilizing

lowest level

of

information

granularity

available

per country

35

Strategy Development

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

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

People/Methodologies: Global consistency with local knowledge and understanding

Planning Implementation

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

Sales Models OrganizationalStrategy

Performance &Compensation

Information & Infrastructure

SalesStrategyEvaluation

Profiling, SegmentationTargeting

Promo Response


CallPlanning

TerritoryAlignment

TerritoryMgmt.

Perf & CompAdmin

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

effective sales force

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