Academic journal article The McKinsey Quarterly

Making More of Pharma's Sales Force: Pharmaceutical Companies Have Lost Their Focus on Doctors. the Key to Higher Sales Is Regaining It

Academic journal article The McKinsey Quarterly

Making More of Pharma's Sales Force: Pharmaceutical Companies Have Lost Their Focus on Doctors. the Key to Higher Sales Is Regaining It

Article excerpt

US pharmaceutical companies have for decades relied on the "pinball wizard" sales model: sales representatives bounce from one doctor's office to another in hopes of catching a few moments with physicians and influencing which drugs they prescribe. The model has without doubt been successful, increasing the physician's awareness of the range of medicines available and providing pharmaceutical companies with rising sales and the highest margins of any mainstream industry. But in recent years the changing dynamics of the business have prompted a massive expansion of sales forces. The resulting system is costly, inefficient, and rife with dissatisfaction. (1) Sales representatives complain that they are undertrained and underrewarded; district managers are overburdened; physicians feel under constant assault; and drug companies face escalating costs. On top of all that, medical-ethics committees and the media criticize sales practices such as taking physicians to dinner or to the theater and underwriting weekend s at resorts as training seminars.

For these reasons, pharmaceutical companies are considering what can be done to transform their sales model. The solution, we believe, lies in one that reemphasizes the importance of forming lasting relationships with physicians. At some point--as the portfolio of drugs expanded, competition intensified, and sales forces expanded to cope with these changes--the focus on doctors was lost. It could be regained if physicians were to be segmented in a way that helped the sales force deliver the information they want and if the district manager's role were reorganized. With the spotlight back on physicians and their needs, companies would be better placed to capture more market share and pull ahead of competitors.

Diminishing satisfaction

Great changes have taken place in the pharmaceutical industry in the past few years. Both competition from generic drug producers and the rise of managed care in such forms as health maintenance organizations (HMOs) have increased pricing pressure and therefore made it more urgent to boost market share. Blockbuster drugs, such as the painkiller Celebrex and the erectile-dysfunction drug Viagra, have become an important means of achieving that aim but have also made it more necessary for reps to sell particular products. Meanwhile, a flurry of mergers and acquisitions-a total of 18 major deals since 1989-introduced other concerns, notably confusion among doctors about which companies were marketing this or that drug. And with many companies attempting to piggyback on the success of their competitors' drugs by marketing similar ones, the differences among products have become blurrier. The industry's response to these problems was simply to throw more reps at physicians. From 1995 to 2001, the number of reps do ubled, to 80,000-an influx that has had repercussions for the entire industry.

As matters stand, a rep is responsible for selling a lead drug and perhaps two secondary drugs, and one rep's lead drug will be another's secondary. As a result, when reps with a different lead drug call on the same physician, they usually compete to sell the same products; the theory is that at least one rep will eventually win over the physician. In the process, it is thought, the development of relationships with physicians will encourage them to prescribe a range of the company's products and, at the same time, diminish the value of competitors' relationships. This model succeeded for a long time. But now, with the sharp rise in the number of reps, it is less effective.

For a start, they find it increasingly difficult to see doctors. Our study suggests that a rep gets an opportunity to speak with a physician in only one out of five office visits (Exhibit 1)-and then for less than two minutes. Moreover, reps are often poorly informed. Most are less experienced than reps were even five or six years ago, and many complain about a lack of training. …

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