Sales force effectiveness in pharmaceutical

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Sales Force Effectiveness in Pharmaceutical
Moch Kurniawan

Globalization, consumerism and prosperity are the
major trends that will impact healthcare in SEA
Globalization
ConsumerismProsperity
Globalization:
• World is becoming smaller: cheap air- travel, connectivity,
internet, medical tourism
• Increased healthcare awareness because of multiple media
Consumerism:
• Increased self medicating behaviour; ease of access (online)
• Increased expression of consumer individuality through brand
choices
Prosperity:
• Increasing disposable income, financial independence leading to
exploring more choices
• Increased health awareness has led to consumers spending more
on health prevention and OTC
2 3
1
Source: Frost & Sullivan
INFRASTRUCTURE

APAC among the fastest growing economies over the next 5 years
31.1
20.0
4.9
1.7 0.9 0.3
40.5
21.0
6.2
2.3 1.1
0.3
50.9
23.3
7.9
3.0
1.5
0.4
CAGR
5.1%
CAGR
1.5%
CAGR
5.0%
CAGR
5.7%
CAGR
5.1%
CAGR
2.5%
0
10
20
30
40
50
60
Singapore Brunei Malaysia Thailand Indonesia Vietnam
GDPpercapita(US$thousand)
Southeast Asia
2006 2010 2016
CAGR
3.3%
CAGR
12.0%
CAGR
5.5%
0
10
20
30
40
50
Hong Kong China India
Asia
2006 2010 2016
CAGR
4.8%
CAGR
0.7%
CAGR
1.9%
CAGR
-1.2%
CAGR
1.7%
0
10
20
30
40
50
60
Developed Economies
2006 2010 2016
Source: Data in the above charts were based on GDP per capita data in the respective country’s national currency as sourced from the WEO online database. The data above was converted to US
dollar based on the currency conversion rate for the respective years. Analysis by Frost & Sullivan
CAGR
2.9%

Diverse population structures with varying levels
of purchasing power
1.3%
0.5%
1.2%
1.5%
2.7%
2.3%
0.5%
1.6%
0.9%
-0.5%
1.0%
2.1%
-0.2%
2.6%
0.2%
3.9%
0.9%
-0.1%
-0.2%
0.7%
0.4%
0
200
400
600
800
1,000
1,200
1,400
Population(million)
2006 2010 2016
Asia Pacific Mature markets
CAGR (2006-2016F)
Sources: World Economic Outlook (WEO), World Bank and countries data. CAGR data is for 2006 to 2016
Increasing consumer power
•Rural population, low income, relies on
government support.
•Upwardly growing middle class, living in tier 2
cities, educated, can pay for some level of
healthcare
• High income category, first adopters of new
technology, services, private HC

Patient Protection and Affordable Care Act (PPACA) Highlights
Source: Ernst & Young LLP

NEW GLOBAL CENTER IN
ASIA-PAC
DOCTORS LESS CENTRAL IN
HEALTH
GLOBAL
SYSTEMS
IN CRISIS
PAYERS
FIRMLY
IN CONTROL
1 2 3 4
CUSTOMER
NEAR
UNIVERSAL IPAD ACCESS
HIRING
THE
COMPETITION
FEAR
OF THE
CLOSING DOOR
5 6 7
TRENDS OVERVIEW
TALENT
STRATEGY
THE NEW
REP-RELIANT BLOCKBUSTER
DISCONNECTED DIGITAL
TOOL SET
DETAILING
FOR THE
DOUBLE YES
WORKING
WITH NEW PREFERENCES
8 9 10 11

Relevant Trends in Indonesia
• Middle class to rise from 19% of Asian population in 2009 to 30% by
2014
• Indonesia has a young population, where 44% are below 24 years old
Growing wealth of middle class to drive demand
Source: CLSA Mr & Mrs Asia Moving up the J-curves – Spring 2010

Toddler
10%
Kids
10%
Teens
9%
Teens
adult
9%
Young
adult
8%
Early
jobber
9%
Young
Parent
8%
Parenthoo
d
8%
Mature
18%
Ageing
well
11%
Age Group Population
Source: sp2010.bps.go.id
Indonesian population per 2010 national census grew at 1.1% YoY. The population pyramid has shown a shift to a bigger young to middle
age group – which resulted to the increasing productive age group between 24 to 54 y.o. The split between Male:Female is almost equal,
except a slightly higher in Female Ageing Well group
Population % based on total age group % based on Gender
Grouping Age Range # of Population Male Female ALL Male Female ALL
Toddler 0-4 22,678,702 10% 9% 10% 51% 49% 100%
Kids 5-9 23,253,480 10% 10% 10% 51% 49% 100%
Teens 10-14 22,671,081 10% 9% 10% 51% 49% 100%
Teens adult 15-19 20,880,734 9% 9% 9% 51% 49% 100%
Young adult 20-24 19,891,633 8% 8% 8% 50% 50% 100%
Early jobber 25-29 21,310,443 9% 9% 9% 50% 50% 100%
Young Parent 30-34 19,830,685 8% 8% 8% 50% 50% 100%
Parenthood 35-39 18,505,131 8% 8% 8% 50% 50% 100%
Mature 40-54 42,127,155 18% 18% 18% 50% 50% 100%
Ageing well 55+ 26,492,282 11% 12% 11% 48% 52% 100%
Total 237,641,326 100% 100% 100% 50% 50% 100%

Relevant Trends in Indonesia
Demographic
Indonesian population by Generation Group 2010-2016 (in ‘000)
40,988 41,118 41,247 41,377 41,498 41,595 41,673
103,127 103,233 103,317 103,369 103,353 103,271 103,311
49,305 50,294 51,251 52,192 53,103 53,997 54,893
40,058 41,686 43,360 45,076 46,862 48,708 50,461
-
50,000
100,000
150,000
200,000
250,000
300,000
2010 2011 2012 2013 2014 2015 2016
Gen Z (age 0 - 9) Gen Y (age 10 - 34) Gen X (age 35 - 49) Baby Boomers (age 50 - 75+)
2010 vs 2016
Growth
26.0%
11.3%
0.2%
1.7%
• From the chart above, baby boomers and retire (>54) population have the biggest growth until
2016
 people’s life expectancy longer  people’s health awareness higher
• Productive people (25 – 54) (gen X and partial gen Y) also growing around 11.3%
Source: Data Statistik Indonesia

Indonesia Socio Economic Class - Nielsen & BCG report
Nielsen, the leading global market data provider company, publishes yearly consumer segmentations, called Socio Economic Class (SEC) and the single
measure/ criteria is heavily based on routine Monthly Household Expenditure (MHE). It’s widely used by consumer goods company or any marketer
which targeting consumer/ patient base. It shows the level of economic buying power, from the lowest E class (those who spends MHE below IDR 700K
per month to the highest A class (> IDR 3mio per month). From the past 3 years consecutive data below, it tells us that Indonesian middle economic
classes (AtoC1) are increasing at +6% average, correlates to the economic growth at +6% yoy. This is also aligned with the latest Boston Consulting
Group’s (BCG) report and World Bank’s report on Indonesian middle class
8% 8% 14%
18% 16%
25%
23% 23%
28%
25% 27%
22%
17% 14%
8%9% 12%
3%
2010 2011 2012
Year
E IDR < 700.000
D IDR 700.001 -
1.000.000
C2 IDR 1.000.001 -
1.500.000
C1 IDR 1.500.001 -
2.000.000
B IDR 2.000.001 -
3.000.000
A IDR > 3.000.000
+6%
+9%
+5%
Nielsen’s SES
BCG’s Report
World Bank’s Report –
from the economist.com

Population in Indonesia, income demographics 2012 vs 2020
Source: Statistics Indonesia

Pharmaceutical and medical technology firms are
not alone in the race

• Per capita healthcare expenditure is far below
global average (lowest is Vietnam and
Indonesia).
• Shortage of healthcare professionals in both
countries.
• Efflux of medical tourists seeking treatment in
other countries; 400,000 Indonesians patients
travel annually.
Market Restraints
• Growing middle-class population in Indonesia;
per capita income expected to grow from
$2,580 in 2011 to $3,500 by 2015.
• Rise in non-communicable disease incidence,
cardiovascular disease will account for 31
percent of total number of deaths in Indonesia
by 2030, followed by other chronic diseases at
28 percent.
• Vietnamese government intervention to
enhance healthcare workforce by 2020.
Market Drivers
Total Indonesia Healthcare Market Size
Healthcare Industry: Revenue Forecast Indonesia 2011–2015
Source: Frost & Sullivan analysis.
0.0
2000.0
4000.0
6000.0
8000.0
10000.0
12000.0
2011 2012 2013 2014 2015
Indonesian Healthcare Market Size
Year
Indonesia 5549.30 6016.30 6515.90 7072.10 7742.50
$ (Billion)
CAGR
8.7%

3,119
3,453
3,816
4,187
4,755
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
5,000
2009 2010 2011 2012 2013
SalesValueTrade
OKUYEN(IDR10,583,333,333/OKUYEN)
Nutrition
OTC
ETHICAL
TOTAL MARKET42%
58% 61%
39%
39%
61%
40%
+4%
+9%
+15%
+15% +11%
+13%
+11%
+11%
+14%
39%
61%
+15%
+11%
+12%
60%
Exchange rate: Constant IDR10,583,333,333/OKU YEN
Source: IMS Plus 2013-Q2
Indonesia Pharmaceutical Market – MAT 2013Q2
• Indonesia is a big potential market for pharmaceutical industry, with total market size at OKU YEN 4,755 in MAT 2013Q2
• And the pharmaceutical market in Indonesia has grown rapidly at growth +12% in last year, driven by OTC sector growing +15% in
2013Q2 .
• In overall the pharmaceutical market growth is outperforming economic growth (6%).
• The market growth is expected to continue at the same rate for 2012-2015.

Decrease new product launch in Indonesia
Source: IMS: ITMA-Ethical Only MAT 4Q10
0
50
100
150
200
250
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Number of Products Launch per Year
Foreign Ethical Foreign OTC Local Ethical Local OTC
Avg : 150
Avg : 63
Avg : 33
Avg : 9

Most companies have ambitious growth targets - combined
with and increasing complexity in their business model
2013 – Commercial Excellence Forum

Indonesia—Healthcare System

Indonesia—Healthcare Indicators
Healthcare Indicators: Indonesia, 2007–2011
Key Features
• The population of the country as of 2010 stands at 238.0 million people. It is recorded as the fourth most
populous country in the world.
• The population of the country is expected to grow at a consolidated pace of 1.0 percent for the 2010‒2015
period.
• Life expectancy at birth has increased by 16 months per person from 2007 to 2011, and decreasing mortality
rates are a result of improving healthcare services.
Healthcare Indicators 2007 2008 2009 2010 2011
Population (Million) 226 229 232 238 245
Population Growth Rate (%) 1.3 1.3 1.3 1.07 1.04
Birth Rate (per 1,000) 19.65 19.24 18.84 18.10 17.76
Mortality Rate (per 1,000) 6.90 6.85 6.80 6.28 6.26
Life Expectancy (Female) (years) 72.7 73.1 73.4 74.0 74.3
Life Expectancy (Male) (years) 67.6 68.0 68.3 68.8 69.1
Source: IMF, CIA World Fact Book, Indonesian Department of Health, Frost & Sullivan analysis.

Disease Information – Major Causes of Death
Cardiovasc
ular
31.0%
Cummunic
able
13.0%Other
Chronic
28.0%
Cancer
18.0%
Others
10.0%
Major Causes of Death, 2030
Cardiovasc
ular
30.0%
Cummunic
able
25.0%
Other
Chronic
21.0%
Cancer
13.0%
Others
11.0%
Major Causes of Death, 2010
Source: Indonesian Association of Medical Doctors (Ikatan Dokter Indonesia, or IDI)

Three dimensions of coverage
Increasing coverage of
41.7% (2005) to 63.2% (2012)
Comprehensive benefit
package
(2012)
No cost sharing
(Jamkesmas)
Ahmad Fuady Health Economics, Policy and Law Erasmus University Rotterdam The Netherlands 2013

Three dimensions of coverage
• Less coverage, compared to neighboring countries
• A low coverage to formal workers group
3%

Indonesia Social Security and Healthcare Programs Up Date
Member
• 142.711.701 (24/4/15)
Healthy Facilities
• Central of Healthy
People 9798
• Army Clinic 750
• Police Clinic 570
• Basic Clinic 2712
• Hospital D Class 1675
• Primary Clinic 79
• Pharmacy 1679
• Optic 870
Doctor
• Dentist 1050
• Private Practice 4222

Indonesia—Health Care Delivery System
Healthcare System
Public Private
MOH
Hospital
Provincial
Hospital
District
Hospital
Puskesmas
Pustus and
Mobile
Clinics
Specialty
Private
Hospital
General
Private
Hospital
Private
Clinics
Source: Ministry of Health and Frost & Sullivan analysis

Indonesia—Hospital Categorization
Hospitals (General and
Specialty)
Public Hospital
Private Hospital
Class A (>400 beds) = 10
Class B (100-400 beds) =
120
Class C (50-100 beds) =
250
Class D (<50 beds) = 126
Extensive specialist medical services +
extensive sub specialists
Extensive specialist medical services +
limited sub specialists
Has minimum of four basic specialist
medical
services
Provides basic medical facilities
Priority
General medical services + specialists and
sub-specialists
Madya
Pratama
Minimum four specialists medical services
General medical service
Source: Indonesian Department of Health, Frost & Sullivan analysis

Indonesia—Hospital Classification
Public
(Ministry of
Health)
36%
Public
(Military)
8%
Public (State
or other govt
dept-owned)
5%
Private
51%
Percentof Hospitals by Type and
Sector, Indonesia, 2010
Mental
15.3% Leprosy
6.6%
Pulmonary
TB
3.0%
Eye
3.9%
Maternity
19.5%
Pediatric
32.1%
Others
19.5%
Percent of Specialist Hospitals Split
by Specialty, Indonesia, 2010
Source: Indonesian Department of Health, Frost & Sullivan analysis
Hospital Classification by Type Hospital Classification by Specialty

Number of Hospitals: Regional Spread
Source: Ministry of Health, Indonesia
Bali
No. of hospitals:
34
Sumatra Selatan
No. of hospitals:
34
DKI Jakarta
No. of hospitals:
124
Sumatra Utara
No. of hospitals:
130
Sumatra Barat
No. of hospitals:
41
Sulawesi Selatan
No. of hospitals:
62
Jawa Barat
No. of hospitals:
144
Jawa Tengah
No. of hospitals:
162
Aceh
No. of hospitals:
35
Jawa Timur
No. of hospitals:
171
Hospitals are concentrated in major cities in the Sumatra and
Java province, such as Jakarta, Surabaya, Medan.

Why look at hospital channel today
Know thy customer: Winning in the hospital channel, Copyright © April 2015 McKinsey & Company

three key actions a company must take to drive growth in this channel today
Develop a deeper
understanding of the
changing hospital
customer segments,
including their unique
needs and willingness to
engage with
pharmaceutical companies
Expand team/account-
based sales model and
build new capabilities and
supporting processes and
tools to better meet the
needs of select hospital
customers
Broaden and tailor your
value propositions to
address hospitals’ evolving
cost, quality/outcomes
and patient satisfaction
priorities

Pharmaceutical companies focus
Source: PricewaterhouseCoopers, Pharma Vision 2020

Availability
Availability of trained health care professionals and their
salaries.
• Problem of data validity and reliability
• Lack of health care professionals
• Problem of deployment policy and unclear
decentralization policy
• Without domestically competitive salary

National Health Strategic Plan: Infrastructure Targets
• Aim to increase the number of community health centers from 9,133 in 2010 to 10,856 in 2014
• Develop hospitals to achieve a ratio of 1 bed per 1,000 population in 2014
• Indonesia also aims to achieve sufficient numbers of medical professionals:
Source: Indonesia Human Resource for Health; Development Plan, 2010 Regional Health Forum, 2006

Key mega trends impacting Indonesia
Low Probability of Success
DegreeofImpactLowHigh
High
Urbanization
Generation Y
Increase in Working
Age Population
“She-conomy”
The Middle Bulge
Wealth
Watchers
Future
Economic
Growth
Space
Jam
Connectivity
Innovating to
Zero
E-Mobility
Future Infrastructure
Top Industries of
the Future
“Value for Many”
Business Model
Health, Wellness and
Well Being
Future Energy Power
Generation
Private public
partnerships
E-Governance
“Click-n-Connect”
Mobile users

What’s Trending for Indonesia Between 2012 and 2015
Indonesia’s per capita expenditure on pharmaceuticals is expected to remain below the US $30 mark by 2015 as
patients continue to be responsible for the bulk of their medical bills
Indonesian health ministry established a supervisory body, the Indonesian Hospitals Supervisory Agency (BPRSI),
in Nov 2011
The University of Indonesia is constructing a new hospital at its Depok campus; the Japan International
Cooperation Agency will provide a loan of $158.0 million to the university to establish UI Hospital
Indonesian Q3 GDP growth came in at a strong 6.5 percent year-on-year for 2011
As of December 2011, the Indonesian health insurance program for the poor, Jamkesmas, covered 76.4 million
people
The goal of JKN is to merge Indonesia’s from 122 million people in 2014 become 257.5 million in 2019
19 % of total healthcare expenditure will be attributed to pharmaceuticals
92 % of drugs on the Essential Drugs List will be low-cost generics
Growth is forecasted to rise to 12% in 2015 and to continue through 2018
200 pharmaceutical manufacturers, of which 70 % are domestic companies and 30 % are multinational
companies
95 % of Indonesia’s drug volume comes from domestic companies
75 % of the industry’s value comes from domestic companies and 25 % comes from multinationals
Source: Frost & Sullivan analysis

Examples of investments into Indonesia
Philips supplied most of $140m in
medical equipment for the first
dedicated cancer research centre and
the biggest hospital in Indonesia. Philips,
which has group sales of $32bn and
120,000 employees, has set up a
regional headquarters in Singapore with
almost 300 staff with a view to
increasing its share of the medical and
home healthcare products in Indonesia,
the Philippines and Vietnam.
Singapore-based Invida Group, a specialty
biopharmaceutical company announced a joint
venture with the local Indonesian drug
manufacturer PT MUGI Laboratories. Under the
terms of the agreement, Invida will seek to
expand its operations in Indonesia to include the
importation of raw materials and auxiliaries and
the manufacture of pharmaceutical products.
A state pharmaceutical company PT Bio Farma announced that it is to
spend USD 60 million on a facility to produce blood plasma products,
including albumin and Factor IX. The plant will be the first of its kind in
Indonesia and will be built using assistance from South Korean and
Australian pharmaceutical companies, based on guidelines stipulated by
the WHO.
Sources: Company websites, Frost & Sullivan
Siemens in Indonesia has provided support to public and
private hospitals by installing computed tomography, magnetic
resonance imaging systems, and angiographic systems, as well
as conventional x-ray units and life support systems. Siemens
supplied the first 128-slice computed tomography (CT)
Somatom Definition AS+ in Indonesia.

Pharma 3.0 From drugs to healthy outcomes
Ernst & Young – Global Life Sciences Center, Pharma 3.0 Life Sciences Network Basel, 20 May 2010

We need to look at the situation from different perspectives…

…but at the same time make sure that we have a common
focus

Our sales teams are faced with
Less physician
face-to-face
time
Older
products
Fewer new
‘blockbuster’
brands
Increasing
competition –
both generic
and branded
Managed
care and
market access
challenges
Less ‘new’
clinical data
being
provided by
their
companies
Customers’
increasing
use of digital
media to
source
product
information
The 2014 Guide to Improving Your Field Force Coaching Process, www.acoach.net

The consumerization of business buying
More
social
More real-
time
More
modular
Do you really understand how your business customers buy? Copyright © 2015 McKinsey & Company. All rights reserved

Three priorities for reshaping the sales organization
Charting decision
journeys by customer
segment and drilling
down on customer
expectations and needs
at each stage of the
journey
Tackling the difficult
process of reallocating
sales and marketing
resources to the
activities most likely to
influence decisions
Changing organizational
structures to ramp up
collaboration between
marketing and sales
Do you really understand how your business customers buy? Copyright © 2015 McKinsey & Company. All rights reserved

Insight in customer needs makes it possible for us to
identify the right actions and target the execution

There are many customer segmentation methodologies – but we
work with four key methodologies

There are many customer segmentation methodologies – but
we work with four key methodologies

Customer insight is the driver for both customer
segmentation and building your value proposition

Segmentation is needed to drive higher profitability through understanding
customer needs and delivering on those needs
Meet Exceed
Relationship
Development
Retain and
develop
Manage
Customer Expectations
Cherish
and tailor
Numberofindividuals
Few
Many
Low HighValue per individual
Unprofitable Marginally
profitable
More
profitable
Very
profitable
Segmentation is an important tool in becoming customer-centric. It is a key enabler of CRM.
“Recognise me, remember me, value me.”
Typically customers are not created equal ..and different “segments” need different
customer strategies to exploit their value
20-30%
40-50%
20-30%

The operational segmentation help prioritization of time and resources
and understand what to offer to who at what price/discount level

Yesterday: Today & Tomorrow:
Targeting Mass customisation Differentiation
Focus Acquisition Retention
Approach How big is my list? Test and learn
Company KPIs Volume targets Value targets
Marketing KPIs Sales volumes Segment objectives (KPIs)
Propositions Sell to all Customer-needs driven
Using segmentation for a ‘Customer Driven Organization’

Criteria for ABC Classification
The accumulated
revenue of the customer
within a defined period
of time. By default, the
period of time begins
with the beginning of
the previous year and
ends at the current
date.
The total revenue of all customers
within the same period of time
Defined percentages of
the total revenue, which
are used as thresholds
for the classification. By
default, the thresholds
are defined as 80%,
15%, and 5%.
The classification is based to the following criteria:
PUBLIC © 2014 SAP SE or an SAP affiliate company. All rights reserved

Customer Behavior In Indonesia – 9 Trends
Marketeers Dinner Seminar|Customer Insight Tools | Feb 27-29 2012

The foundation for organic growth, is a strong value differentiation which is
perceived valuable by the customers

The value curve can be used to design the customer experience
Finding the Consumer value Curve

The key metrics for measuring FFE effectively
understand
demand
master product
knowledge
communicate
business benefits
use account plans
use differentiated
metrics
www.mentorgroup.co.uk

Business Challenges: The Selling Environment
Competition is intense
Customers are more sophisticated, knowledgeable and demanding
Acquiring new customers and opening new channels were reported as
increasingly important to growth strategies
Profitability has replaced revenue growth as a critical focus of sales
organizations
Commoditization/shrinking markets was a theme in most industries
The roles of sales representative and sales manager are described as
more complex and demanding
How Sales Forces Sustain Competitive Advantage Research Report© 2008 IIR Holdings, Ltd

3 sales skills correlated significantly with performance
Sales Skills

The correlations of the three sales management skills with
performance
Sales Management Skills

Sales Effectiveness Landscape

Sales Force Effectiveness Metrics

5 Steps to Pharmaceutical Sales Force Effectiveness
Performance Measurement & Management

Sales Performance Metrics – Current and Future State
Example
Source: L.E.K. Consulting

Package sale
Dynamic calls
Affiliate
“labs”
2013/142015/beyond
On-the-go
learning
Navigators of
new data
NEW OPPORTUNITIES FOR REP EXPERIENCE
The new, compelling experiences we
can build position reps as quick-
access experts and leverage our
individual affiliates to improve global
strategy.

All the
answers
(in best-fit
media)
Influencer
call plans
and content
Flexible
contact
model
Reconnect
marketing
and sales
Feature-rich
engagement
s
REP EXPERIENCE 2015 BEST PRACTICES
Tools, experiences, and expectations
designed to stand out in a crowded
marketplace—or even just a crowded
waiting room

Summary and Conclusions
It takes an organization, not just skilled individuals

How loyal are
your customers?

Roles & responsibilities

Sales force effectiveness in pharmaceutical

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