Key account management

With Nev Skelton, IMS Health

1. Why are pharma sales models moving towards key account management and away from traditional frequency and coverage models?

The frequency and coverage model has been around a long time and until recently it was true that adding more sales reps to detail products and brands has increased sales revenue. But two major shifts in the marketplace are causing sales models to change, or begin to change.

Firstly, the cost of healthcare continues to rise and governments have begun to take steps to try and curb further cost growth. A number of those measures have been targeted at standardising prescribing to some degree – trying to make sure that the most cost effective branded or generic drugs are used to treat particular diseases.

In some ways, this flies in the face of the accepted norm for doctors – namely, complete freedom to prescribe what they think is the most appropriate drug for their patients – so there has been growing tension between governments and physicians.
Government instruments, such as Primary Care Organisations (PCOs) in the UK, have been put in place largely to make sure that the right level of healthcare is delivered to patients for an acceptable cost. And we’ve seen the rise of practices, groups, clinics or poly-clinics, sick funds, and PCOs as a means of achieving that goal. Formularies of drugs and products are created where the first preference for treating a particular disease is brand A, product A or generic A.

Only in certain circumstances would a different product be prescribed. Secondly, much of the industry’s R&D activity has increasingly been focused on more specialist areas, like oncology. Consequently, many products now being launched are specialty products. Characteristically, these products tend to be differentiated and command higher prices.

So again, as pharma companies shift increasingly towards the specialty sector, there is less of a need for large sales forces because a lot of these products will not be prescribed through primary care. Many will be prescribed by hospital- or office-based specialists, creating a need for more specialist sales forces covering more specialist prescriber groups.

Those are the two big changes – government controls and a shift in the pipeline of most of the major pharma companies.

2. Does key account management only apply to secondary care products or can it be applied in the primary care world as well?

Pharma companies are now treating doctor practices as a single “account” where a rep talks about the therapy areas, drugs and diseases that apply to the practice as a whole rather than to individual doctors. That’s not to say they don’t see individual doctors – they clearly do – but their real aim is to try and make sure that the practice understands the drugs in the company’s portfolio and that these become the treatments of choice. This applies across the spectrum of healthcare from primary care to hospitals.

3. How is the skill profile of the rep changing with the move to key account management?

Traditionally, reps have had to know a lot about a small number of drugs. They have been very product focused. They know about a product in terms of clinical trials and efficacy and they will talk about cost benefits and health outcomes.
They may not be experts in the disease area and typically won’t be experts in other disease areas and other drugs.
What’s changing is the need for pharma to start building relationships with these practices or PCOs. It’s becoming much more relationship focused as opposed to brand focused or product focused. You could say this is a shift from share of voice to share of relationship.

As a rep, if I have a unique product – a unique drug with a unique profile – then it’s very easy to talk about that to a practice or an individual doctor or prescriber.

But I may have a different message for the doctor than the nurse. Even around an individual product, the messages I’m giving to someone within a particular account must be varied. I have to know who I am talking to and have a good sense of their respective interests.

Treatments such as smoking cessation and diabetes follow-ups are increasingly dealt with by practice nurses rather than doctors.
Therefore the rep may need a specific message for practice nurses abouthelping with patients’ lifestyle changes, such as diet, etc. For doctors they might give a different kind of message, about why the drug is more cost effective than another drug in the marketplace. Key account managers need a wider understanding of the drugs they have in their company’s portfolio and how they might apply to a particular practice. They need to understand the patient population of that practice, the needs of the professionals within it and how to relate their products to those needs. So these key account managers are the business owners of the P&L in their region, including other sales reps in their team, and therefore they need a much higher level of business and team building skills than product reps.

4. What does this mean for future sales force models compared to those of today?

This means that instead of having 10 products in the portfolio, for example, with 10 or more individual sales reps detailing the doctor with 10 different brands, there will now be perhaps one or two reps – possibly therapy area focused – who go and talk about the needs of that practice. We are going to see companies move away from an individual product-focused sales force to a sales force that’s going to have multiple skills and multiple products in its portfolio. What that means in terms of the sales force model is a move away from the armies of product reps towards a focus on managing relationships with an account or a practice, or a set of practices within a geographic territory. The key questions are whether a company needs as many reps in this case and how they can right size the sales force and ensure they have appropriate team roles in place.

5. How will compensation schemes change to accurately measure key account managers’ performance?

IMS has done a lot of work in this area, investigating what physicians, doctors and prescribers value in their interactions with the pharmaceutical industry and pharmaceutical reps. We’ve found that reps need to spend more time understanding doctors issues and needs. Get to grips with their key concerns. Identify what would be of value to them. Determining whether doctors have particular patient issues that would benefit from information researched by the pharma company. This means that pharma companies must be able to measure what their customers think of them. How are they perceived by the physicians? How do the nurses rate the company, its reps, messages, and the level of added value being attained?

6. What different types of reward systems can be used?

Pharma reward systems are going to start including qualitative measures such as “are we individually adding value to that account?” In other words, does a particular practice believe it is getting value from us? Are we seen to be reactive and providing the right information that’s helping them to treat their patients? In the case of groups of reps and the account managers – are they seen in that particular area to be adding value? Are they perceived to be a supporting mechanism for the healthcare professionals? Or are they considered to be still promoting their products without very much extra value and support?

We are going to see reward systems that are not only account-driven, based on feedback from those accounts, but also team reward selling systems that say “Overall we’ve managed to get our product onto the formulary in this particular area of the country. We’ve managed to make sure that it’s on the formulary of all the hospitals that prescribe our products. We’ve got good relationships with these consultants and they tell us we’re adding value. We’ve got very good relationships with the practices and doctors in practices or practice nurses and we’re getting good feedback.” All of these will contribute to the bonus of the rep or the group of reps, and we will see far more team-based reward systems put in place as a result.

7. How quickly will the change to key account management take place?

It’s happening in some countries faster than in others. To give you an example, there are some changes in legislation taking place in Germany right now that we predict will mean a fairly rapid move towards key account management because of the way the healthcare system will run. In other major developed countries we’re seeing that shift already. The UK and Belgium have moved very quickly and we’re going to see more of that in other countries also, like Germany, France, and the Nordic areas.

8. How should pharma be preparing?
If we are talking about a big pharma company that’s had many sales reps promoting individual brands, the question as they move to account management and as their portfolio moves towards speciality, is what other kinds of skills do their reps need and what kind of structure and organisation is required to support that account management and speciality product move?

Some of the smaller companies that may have more niche products have probably been taking more of this approach anyway. They've not had the reach and coverage frequency to see every doctor, so for some it will be more about making sure they have the right skills and people to influence the formularies, the practice leads, and the key opinion leaders.

I think there is an opportunity for some of the smaller companies, which lack the strength of sales force depth, to have much more of a share of mind and share of relationship with some of the key providers and key doctors in the healthcare marketplace.

Nev Skelton is Group Vice President, Sales Force Effectiveness at IMS Health, leading the development and marketing of services, applications and data that help clients improve the effectiveness of their sales operations. He has extensive international pharmaceutical industry and consulting experience, with a particular focus on sales force effectiveness, supply chain management, clinical trials process re-engineering and knowledge management. During the course of his career, Nev has lived and worked in Belgium, California, Germany and the UK in roles spanning sales, marketing, strategic planning and business consulting. He is in regular demand as a keynote speaker at major SFE conferences and has authored a number of papers on the topic.