Accounting for the Impact of Managed Markets on Sales Training Landscape-altering events are becoming almost commonplace in the pharmaceutical market, and some are changing the nature of the sales environment. Many of the most dramatic recent changes have involved managed markets in some form, whether it be the passing of the Medicare Modernization Act, the implementation of Medicare Part D, or the evolution of pharmacy benefit managers and managed care organizations. These events have affected the dynamics of many markets and products. This is illustrated by the fact that 84% of spending on prescription drugs in 2007 is expected to be managed by third-party payers compared with 75% in 2004, according to the Centers for Medicare & Medicaid Services. From a strategic standpoint, companies that do not stay abreast of these major changes and shift their marketing and selling strategies accordingly are unlikely to enjoy the commercial success of their products, but having a good strategy is meaningless without a well-prepared sales organization capable of operating within this new environment. Sales training departments are aware of these changing dynamics and recognize the need to address them through training, programs, and support. In fact, in a recent benchmarking study of 15 pharmaceutical and biotech companies, it was found that concerns over the changing managed markets environment was the second-most cited industry trend that training departments were concerned about, behind changes to the selling environment — two issues that arguably are directly linked to one another. With these dynamics at hand, the most significant challenges for sales training departments lie in how best to bring new and tenured representatives, as well as district managers, up to speed as quickly as possible while also identifying ways to deal with the complexities of the managed markets environment. To navigate in this challenging environment, representatives need to know about the market and there need to be training programs to fill sales professionals’ knowledge and skill gaps and strategies for making this training actionable. What Do Sales Reps Need to Know? The National Business Environment for Their Own and Their Competitors’ Products Sales representatives first need a detailed understanding of the national business environment that exists for a rep’s own products and their competitor’s products. This knowledge will help reps to understand how their product stacks up against the competition in the overall marketplace. Building a business understanding entails numerous components that are specific to each product in a company’s portfolio. Below is a list of some of the elements of a product’s business environment that reps should understand — and ask themselves — for each of their products. • Clinical Positioning: Is the product the gold standard treatment with significant differentiation or is it similar to or clinically disadvantaged compared with other products? • Pharmacoeconomic Positioning: Does the product cost providers, payers, and patients more or less than other products in terms of time and money? • Current and Future Competitive Environment: Are there likely to be new entrants or generic substitutes entering the market, and what does this mean for the product today and tomorrow? • Product Channels: What types of providers and payers are involved in the prescribing decisions, and what do you need to know for these different stakeholders? The Local Business Environment for Reps at both a Territory and a Provider Level In addition to understanding the global business environment for products in their bag, reps must understand and be prepared to address situations that may be unique for every customer. Companies must train and prepare their reps to conduct two critical activities to address these customer-specific situations. • First, reps need to be able to leverage territory data, account data, and brand strategies to paint a true picture of each customer’s unique situation. • Second, reps need to be able to customize their sales call based on a combination of customer situation analysis, information they obtain from office staff, and opportunities they identify during discussion with the customer. Effectively training representatives to be able to understand and constantly address both the national and the local environment is extremely challenging because of the multiple variables involved. For instance, the messages that will resonate for each product will be different for each region/state, territory, customer segment, and customer situation. This combination of variables makes it difficult for sales training executives to develop a broad, overall training strategy with consistent tactics across the sales organization. The challenges facing training departments in developing a managed markets curriculum are amplified by a number of variables including: • Different products in the portfolio • Number and type of products competing in the marketplace • Differences in the formulary positioning of plans and the number of different payers at the national, regional, and local levels • The mix of patients, with different plans for each customer • The level of customer knowledge and support needs • The influence of managed markets on individual customers The situation, while complicated, is not hopeless. In fact, the pharmaceutical and biotechnology companies that can effectively prepare their salesforces to sell in a managed-markets-heavy environment will more than likely gain a competitive advantage. Resource Allocation is Critical It is critical that training departments invest in building the capabilities to train on both national and local managed markets topics, while enlisting the entire organization to assist in training, reinforcing, and coaching these topics locally. These actions will enable the organization to establish and maintain a high level of salesforce expertise on a complex, constantly changing subject. In summary, the key takeaway for training departments is to ensure that managed markets topics become, and remain, high organizational priorities and receive the necessary time and resources. In so doing, the training department can help drive the overall performance and effectiveness of the entire sales organization. Campbell Alliance , Raleigh, N.C., is a specialized management consulting firm that serves the pharmaceutical and biotechnology industries, helping clients develop strategic and operational plans, as well as improve the efficiency of their internal operations. For more information, visit campbellalliance.com. May 2007 VIEW on Sales Training George Schmidt VP, Sales Practice Howard Brock Practice Executive, Sales Practice

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