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Sales Force Effectiveness- Uncovering How Pharmaceutical Companies Serve the U.S. Hospital Marketplace Research Summary
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Sales Force Effectiveness- Uncovering How Pharmaceutical Companies Serve the U.S. Hospital Marketplace Research Summary
1.
Sales Force Effectiveness: Uncovering
How Pharmaceutical Companies Serve the U.S. Hospital Marketplace Best Practices, LLC Benchmarking Report
2.
Table of Contents
Study Overview 2 Universe of Learning 4 Definitions 7 Summary of Key Insights 13 Hospital Sales Force Structure, Alignment And Support 17 Targeting Key Decision Makers and Influencers 23 Community Hospitals 35 Regional IDN/IDS 41 Multi-state IDN/IDS 47 Academic Medical Centers 53 VA Hospitals 59 Hospital Sales Force Staffing 65 Hospital Sales Force Training 72 GPO Focus 76 Lessons Learned 79 Copyright © Best Practices®, LLC 1
3.
Project Methodology and
Study Objectives Best Practices®, LLC conducted this 2011 benchmark study to understand the variables in developing an effective sales force to service the hospital marketplace -- to get products on hospital formularies. Initial research was done in 2008 and where appropriate, comparisons are made to that research. This study was designed to provide strategic insight into the optimal sales strategy, structure and resources - by market segment and customer profile - for the hospital marketplace. Key study objectives Hospital Segments Serviced Importance of Key Decision Makers/Influencers in Making Formulary Decisions Hospital Sales Force Alignment Hospital Sales Force Structure Hospital Sales Force Support Hospital Sales Force Training Hospital Sales Force Staffing GPO Targeting and Sales Force Size Copyright © Best Practices®, LLC 2
4.
List of Participating
Companies Executives from 12 leading pharmaceutical organizations participated in this benchmarking study. The following companies are included in this class: 2011 2008 Lundbeck Pfizer Wyeth Boehringer-Ingelheim Johnson & Johnson Axcan Pharma Covidien Healthcare Systems Ortho-McNeil Neurologics, Pfizer Guardian Technologies INC Johnson & Johnson Health Care International TAP Pharmaceuticals Systems Novartis Oncology GlaxoSmithKline Medtronic Schering-Plough Bayer Healthcare LLC, Abbott Laboratories Procter & Gamble Diagnostics Division LabCorp Ortho McNeil Janssen GlaxoSmithKline AstraZeneca Fresenius Medical Services, North Sanofi-Aventis America Eli Lilly Eisai Abbott Roche Cubist Pharmaceuticals Copyright © Best Practices®, LLC 3
5.
Range of Career
Levels Lend Insight Thirteen executives and managers from 12 companies took part in this study. There titles are listed below. 2011 2008 • Director of Sales & Marketing • Associate Director, Hospital Sales • Executive Director, Institutional Specialty • Associate Director, Institutional Sales Sales • Director of Marketing • Director, Commercial Analytics & Portfolio • Director of Planning & Coordination Management • Director of Sales, Hospitals • Sales Director • Director of Sales Effectiveness • Vice President Institutional Sales • Director of Sales, Health Systems • Director, Institutional Business • Director, Corporate Accounts • Sr. DCM • Director, Sales Force Effectiveness • Sr. Manager, Account Management • Executive Director of Training, Oncology Training • Executive Vice President • Zone Director, Sales • Director(2) • Exec. Dir., Commercial Operations Hospital • MSE • Executive Director, Hospital Division • Sr. Manager leadership training • Manager of Global Operations • National Sales Director • Sr. Director, National Hospital Sales Senior Manager Strategic Initiatives • Strategic Marketing Manager • Vice President, Business Development • Vice President Sales(2) Copyright © Best Practices®, LLC 4
6.
Definitions This study
employed the following definitions to help standardize reporting and structure research. Full Time Equivalent (FTE): An "FTE" is defined as a unit of measure which is equal to one filled, full-time, annual-salaried position - in relation to the number of hours an employee is expected to work per week. For example; if full-time employees are expected to work 40 hours per week that equates to 1.0 FTE. Twenty hours per week is half-time or .50 FTE. GPO: Group Purchasing Organization; An organization that provides access to group purchasing services and programs. Can be associated with any market segment. Service Line: The service line looks at services provided by therapeutic areas such as cardiology or women’s health as opposed to traditional hospital management structure where care is organized by skill, such as lab, imaging, medicine or surgery. Copyright © Best Practices®, LLC 5
7.
Hospital Market Segments
For the purposes of this study, the hospital marketplace is divided into several market segments. Those are as follows: Community Hospital: A stand-alone private or public hospital that is not part of an IDN/IDS. Regional IDN/IDS: Integrated Delivery Network, Integrated Delivery Service; A regional network or system of hospitals and or clinics that operate within a state or major metropolitan area. Multi-State IDN/IDS: Integrated Delivery Network, Integrated Delivery Service; A network or system of hospitals and or clinics that operates across multiple states. AMC (Only applicable if targeted separately from a regional IDN/IDS): Academic Medical Center; A hospital affiliated with an academic institution (university) that provides medical education, including fellowship and residency programs. VA Hospitals: Hospitals administered by the Veterans Health Administration. These facilities include outpatient clinics, hospitals, medical centers and long- term healthcare facilities. Copyright © Best Practices®, LLC 6
8.
Hospital Key Decision
Makers/Influencers The U.S. hospital marketplace is also characterized by a range of customer types that influence formulary decisions and purchasing processes. For the purposes of this study hospital customers will be divided into three distinct groups to create a framework for analysis. IDN Key Decision Makers/Influencers: Senior administrative personnel who make and influence formulary decisions for regional IDNs, multi-state IDNs, AMCs or VA Hospitals. Local Hospital Key Decision Makers/Influencers: Local administrative personnel who make and influence formulary decisions for a community hospital or a unit of a regional IDN, multi-state IDN, AMC or VA medical facility. Hospital Health Care Professional (HHCP) Key Decision Makers/Influencers: Local medical personnel who make and influence formulary decisions for a hospital. Copyright © Best Practices®, LLC 7
9.
Hospital Sales Force
Alignment Hospital sales forces can be aligned/organized to meet the needs of market segment and customer type. Brand Focus: is defined as a single product approach. Disease State: is defined as an approach in which multiple brands are linked to a common therapeutic area, e.g., neuroscience, oncology, etc. Portfolio Focus: is defined as an approach in which sales people sell a company's product offerings across brands and therapeutic areas. Copyright © Best Practices®, LLC 8
10.
Hospital Sales Force
Structure Hospital sales forces can be structured to meet the needs of market segment and customer type. Traditional sales representative: model targets health care professionals. The sales force is narrowly focused on representing clinical and prescribing characteristics of products to physicians. Account executive: model targets senior decision makers as well as physicians. The account executive controls access to hospital customers and accesses organizational resources such as brand, therapeutic and portfolio specialists when required. Hybrid: model is defined as a blended structure where both the “traditional sales representative" and the "account executive" approaches are employed. Copyright © Best Practices®, LLC 9
11.
All Hospital Segments
Targeted Now Benchmark participants continue to target community hospitals and IDN/IDS organizations, as well as VA Hospitals in 2011 as compared to 2008. Significant growth has been noticed in targeting Regional and Multi-state IDN/IDS. Q. Which hospital market segments does your hospital sales group service? Segments 2006 % Comm. 80% 8% 17% 13% 9% 18% 14% Hospital 36% 40% 68% Regional 80% 100% IDN/IDS 92% 83% 83% 91% 82% 86% 64% 60% Multi 60% 32% IDN/IDS AMC as 33% Community Regional Multi-State AMC VA Separate Hospitals IDN/IDS IDN/IDS Hospitals VA Hosp 93% Yes 2011 No 2011 Yes 2008 No 2008 N2011=10 Copyright © Best Practices®, LLC 10
12.
Hospital Sales Force
Staffing Trends to Extremes The FTE allocation of hospital sales groups still varies depending on the focus of the biopharmaceutical company, but the greatest growth was seen in sales staffs of less than 50, 51-100 reps and more than 500 reps. Q. How many total FTEs (sales people) make up your U.S. hospital sales force? Segments 2006 % <50 14% 30% 51-100 07% 101-150 14% 20% 251-300 21% 26% 20% 301-350 07% 10% 13% 13% 401-450 07% 9% 10% 10% 4% 4% 4% 4% 0% 0% 0% 0% 451-500 07% <50 51- 101- 201- 251- 301- 401- 451- >500 100 150 250 300 350 450 500 >500 00% 2011 2008 N2011=10 Copyright © Best Practices®, LLC 11
13.
Hospital Segment In
2008: Community Hospitals Although Brand focus was less important alignment strategy in 2008, benchmark partners have seen growth in this strategy while aligning from the administrative to the healthcare provider level . Hospital Segment: Community Hospitals Q. How is your hospital sales force aligned to meet the needs of each market segment and customer type - by brand, disease state or portfolio? Local Hospital Key Decision Hospital Health Care Makers/Influencers: Professionals Key Decision Makers/Influencers: 44% 44% 38% 38% 31% 31% 31% 31% 28% 28% 28% 28% 2008 2006 Brand Disease Portfolio Brand Disease Portfolio N=20 Focus Focus Focus Focus Focus Focus Copyright © Best Practices®, LLC 12
14.
Companies Focus on
Many Training Modules Benchmark class emphasizes more on providing specialized training for their hospital sales forces. This training continues to be focused on skills that allow sales people to better understand how to operate within the hospital network. Q. If you provide specialized training to your hospital sales force, what additional training modules or subject areas are added to your standard sales training syllabus? Additional Training Curriculum: •Account management of a hospital or integrated healthcare system •Strategic Account Management •Managed Care: Coding and Reimbursement Formulary •Updates on health economy & political situations •Negotiation techniques – Pharmaeconomics •Negotiation skills, facilitation skills, consultative selling techniques •Strategic Thinking, Influencing, Profitability and Finance Training N2011=10 Copyright © Best Practices®, LLC 13
15.
GPO Relationships &
GPOs Targeted (FTE): More than 40% of the benchmark class do not combine the hospital and GPO market segments. For those that do, 80% of benchmark class target 5 or more GPOs. Q. Do you target GPOs with your hospital sales force? If you answered YES, how many GPOs do you target? GPO Relationships: GPOs Targeted (FTE): 80% No, 44% Yes, 56% 20% 2 5 or more Copyright © Best Practices®, LLC 14
16.
About Best Practices,
LLC Best Practices, LLC is a research and consulting firm that conducts work based on the simple yet profound principle that organizations can chart a course to superior economic performance by studying the best business practices, operating tactics and winning strategies of world-class companies. Best Practices, LLC 6350 Quadrangle Drive, Suite 200, Chapel Hill, NC 27517 919-403-0251 best@best-in-class.com www.best-in-class.com Copyright © Best Practices®, LLC 15
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