A report from __PricewaterhouseCoopers claims that “today’s army of sales representatives, the billions of dollars in free drug samples and the millions spent on TV advertising and aggressive marketing” will soon no longer a sustainable model for drugmakers.
The report says that the traditional sales force will be replaced by a new model over the next ten years as the industry shifts from a mass-market to a target-market approach. The focus will move from “pushing pills to demonstrating through products and services that it can promote health, improve quality of life and reduce healthcare costs”, PwC claims.
The analysis notes that one in five doctors now refuses to see any sales reps and “there is increasing resistance from doctors and regulators and growing public scrutiny over the interaction between pharma companies and healthcare professionals”. Between 1996 and 2005, the number of US reps nearly doubled to 100,000, although the number of practising doctors rose by just 26%.
By the end of 2008, big pharma had announced plans to shed over 60,000 jobs globally, many of them in sales and marketing, and PwC believes that sales force of the future “will be dramatically smaller, more agile and require new skills, including an education in science or health, greater understanding of specific complex diseases and the ability to negotiate with powerful payers and medical specialists”. Its focus will “no longer be just selling products”, but will involve services such as health screenings, compliance programmes and nutritional advice.
Steve Arlington, global pharmaceutical and life sciences advisory leader at PwC, said that if the industry succeeds in bringing “bold, brave changes to the current model it will be in a much better position to ensure that the billions of dollars it invests in R&D are wisely spent”. It will also “eliminate the need to spend massive sums persuading increasingly sceptical doctors to prescribe medicines whose clinical superiority may be questionable”, he added.
Mr Arlington also noted that the pharma industry will be able to “slash its expenditure on sales and marketing by selling products and services that the market will pay a premium price for”.
The PwC report also notes that” for years, pharmaceutical companies have decided what their products were worth and priced them accordingly, investing little effort in understanding the payer’s perspective or what the market was willing to buy”. Now the payers, including governments and private insurers are becoming the ultimate arbiters of pricing and value, reimbursement and prescribing decisions”. Drugmakers need to start thinking about product pricing earlier in the development phase, it adds.
PwC concludes that the current blockbuster model was designed to promote mass-market treatment of common diseases such as hypertension, diabetes and high cholesterol. However, 65% of these drugs are now sold generically in the USA (70% in central and eastern Europe) and in the next ten years, “only drugs considered truly innovative will be financially rewarded with a premium price”.
This in turn will lead to more specialised drugs, the global market for which accounted for 44% of worldwide prescription drug spending in 2008. It could be twice the size of the current market for all ethical pharmaceuticals by 2020, according to PwC.
