sales force effectiveness- uncovering how pharmaceutical companies serve the u.s. hospital...

Sales Force Effectiveness: Uncovering How Pharmaceutical Companies Serve

the U.S. Hospital Marketplace

Best Practices, LLC Benchmarking Report

Copyright © Best Practices®, LLC

1

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


2

Project Methodology and Study Objectives

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

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.


3

List of Participating Companies

Lundbeck

Boehringer-Ingelheim

Covidien

Pfizer

Johnson & Johnson Health Care Systems

Medtronic

Abbott Laboratories

LabCorp

GlaxoSmithKline

Fresenius Medical Services, North America

Eisai

Roche

Executives from 12 leading pharmaceutical organizations participated in this

benchmarking study. The following companies are included in this class:

Pfizer

Johnson & Johnson Healthcare Systems

Guardian Technologies International

Novartis Oncology

Schering-Plough

Procter & Gamble

Ortho McNeil Janssen

AstraZeneca

Sanofi-Aventis

Eli Lilly

Abbott

Cubist Pharmaceuticals

Wyeth

Axcan Pharma

Ortho-McNeil Neurologics, INC

TAP Pharmaceuticals

GlaxoSmithKline

Bayer Healthcare LLC, Diagnostics Division

2011 2008


4

Range of Career Levels Lend Insight

Thirteen executives and managers from 12 companies took part in this study. There titles

are listed below.

• Director of Sales & Marketing

• Executive Director, Institutional Specialty Sales

• Director, Commercial Analytics & Portfolio Management

• Sales Director

• Vice President Institutional Sales

• Director, Institutional Business

• Sr. DCM

• Sr. Manager, Account Management Training

• Executive Vice President

• Director(2)

• MSE

• Sr. Manager leadership training

• Associate Director, Hospital Sales • Associate Director, Institutional Sales • Director of Marketing • Director of Planning & Coordination • Director of Sales, Hospitals • Director of Sales Effectiveness • Director of Sales, Health Systems • Director, Corporate Accounts • Director, Sales Force Effectiveness • Executive Director of Training, Oncology • Zone Director, Sales • Exec. Dir., Commercial Operations Hospital • Executive Director, Hospital Division • 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)

2011 2008


5

Definitions

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.

This study employed the following definitions to help standardize reporting and structure

research.


6

For the purposes of this study, the hospital marketplace is divided into several market

segments. Those are as follows:

Hospital Market Segments

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.


7

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.

Hospital Key Decision Makers/Influencers

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.


8

Hospital sales forces can be aligned/organized to meet the needs of market segment and

customer type.

Hospital Sales Force Alignment

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.


9

Hospital sales forces can be structured to meet the needs of market segment and

customer type.

Hospital Sales Force Structure

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.


10

9%

92% 82%60%

91%100%

18%40%

8%

83% 83%64%

32%

86%

13%36%

68%

14%17%

Community

Hospitals

Regional

IDN/IDS

Multi-State

IDN/IDS

AMC VA

Hospitals

Yes 2011 No 2011 Yes 2008 No 2008

N2011=10

All Hospital Segments Targeted Now

Q. Which hospital market segments does your hospital sales group service?

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.

Segments 2006 %

Comm. Hospital

80%

Regional

IDN/IDS

80%

Multi

IDN/IDS

60%

AMC as Separate

33%

VA Hosp 93%


11

10%

0%

10%

0% 0%

4%

9%

0%

13%

4% 4% 4%

13%

10%

30%

20%

20%

26%

<50 51-

100

101-

150

201-

250

251-

300

301-

350

401-

450

451-

500

>500

2011 2008

N2011=10

Hospital Sales Force Staffing Trends to Extremes

Q. How many total FTEs (sales people) make up your U.S. hospital sales force?

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.

Segments 2006 %

<50 14%

51-100 07%

101-150 14%

251-300 21%

301-350 07%

401-450 07%

451-500 07%

>500 00%


12

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

Makers/Influencers:

Hospital Health Care

Professionals Key Decision

Makers/Influencers:

N=20

28%

44%

28%

44%

28% 28%

31% 31%

38%

31% 31%

38%

Brand

Focus

Disease

Focus

Portfolio

Focus

Brand

Focus

Disease

Focus

Portfolio

Focus

2008

2006


13

N2011=10

Companies Focus on Many Training Modules

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

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.


14

GPO Relationships & GPOs Targeted (FTE):

Q. Do you target GPOs with your hospital sales force? If you answered YES, how many GPOs do

you target?

Yes,

56%

No, 44%

GPO Relationships:

80%

20%

2 5 or more

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.


15

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

[email protected]

www.best-in-class.com

About Best Practices, LLC

sales force effectiveness- uncovering how pharmaceutical companies serve the u.s. hospital...

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