Old Commercial Values No Longer Enough
Posted: 06/01/2010 12:00:00 AM EDT
As a European, I found it difficult to understand the fervour created by President Obama’s health reforms. Why would the American people not embrace “free healthcare”? It was only after mature reflection that I began to realise that whilst Americans paid large amounts for healthcare, they also got the best quality of care; the best drugs; diagnostics; surgery; and hospital environment. For most Americans the cost of their health was paid for by their employer so to did not impact on their salaries.
In Europe however there is a social system of health and the payers are governments. What this means is that they take a more interventionist view and demand “value for money”, the result of which is that very often patients in Europe get second best. Yes it’s free at the point of need, but instead of the top brand, they get a generic version of an “old” drug which is rarely as good as the newer medicines. The same applies to surgery and other areas of healthcare. So in a real sense US citizens have a lot to lose by having a free service. But now with health reform looming, the US will be in the same situation as Europe.
Industry Facing Serious Threat
The threat of commoditisation is arguably the most serious threat faced by the pharmaceutical industry since its inception. On every side and in every country there is pressure to reduce prices, especially from governments who face increasing health costs from; an aging population; higher expectations and improvements in technologies.
The Health landscape as we knew it has changed forever and the genie cannot be put back in the bottle so industry has to adapt or die.
No wonder then that the industry is examining the potential for new models of going to market such as “Market Access” and “Key Account Management”, but is market access fully understood and do we have the mechanisms/models to make the most of the opportunities presented by the emerging health Landscape?
Pharmaceutical company success, like any other business, depends on its ability to acquire and retain customers. Prescribing decisions are consolidating and competitors are increasing their investment in their sales strategies. Added to this, internal forces are driving managers to constantly seek out better processes for engaging its customers.
Change is difficult, but necessary in response to today’s rapidly evolving health systems. The redesign of pharmaceutical field operations is probably one of the most strategically important and difficult tasks of senior executives.
New Sales Models
Market Access and Key Account Management are two strategies that are being implemented as new models to go to market. Market Access however is a regulatory process focusing on getting “approval” through HTA (Health Technology Assessment) processes and cannot really be considered as the answer to the problem. Key Account Management is also being feted as the new sales tool for marketing to replace selling to clinicians.
Neither of these strategies will be able to address the changes in the marketing environment. Market Access is too focused on a specific silo of activity, whilst key account management has not developed to the level seen in other industries and is still little understood by the pharmaceutical industry.
Customer Value Management is a comprehensive method of combining market access, key account management and other disciplines in a process focused on the customer and will elevate the industry to new heights. Perhaps in the new “paradigm” industry can truly become partners in health.
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