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Pharmaceuticals Apply CRM to Changing Health Industry
Traditionally, pharmaceuticals sales reps have a dubious reputation - but the software applications now exist to bring better and deeper analysis to the sector.
Posted Jun 2, 2000
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Dr. Andrew Herd's experience with pharmaceutical salespeople should sound a warning note to anyone involved in customer relationship management.

"They come in shoals. It is not unusual for different contract forces marketing the same product to hit an area in quick succession, resulting in disorienting deja vu for those of us whose memories haven't been totally addled by the sheer impact of modern sales pitches."

True, pharmaceutical vendors face some pretty unique challenges in selling and promoting their products, not least that they have no influence over their end-consumer--the patient. They also have restrictions placed on what information they can get back to gauge sales effectiveness.

But despite Dr Herd's experience, the pharmaceutical industry itself believes it has automated sales operations in an informed and organized fashion, using territory management systems from vendors like Oxygen Solutions. CEO John Paterson says: "Five years ago these companies were technological innovators. They were some of the first to roll out sales force automation (SFA) systems. But two things have happened since then: CRM and e-business. Now they're catching up."

Where a lot of work is currently going on is in pulling together information from different sales forces, which, especially at smaller companies, might be contracted to a third party such as Innovex, and having a single view of the customer across the SFA system, the medical helpline and the marketing effort. However, the mind-bending initial dilemma remains: "Who is the customer?"

Jim Dougans is sales support system manager at Searle, the pharmaceuticals arm of Monsanto. Searle sells to wholesalers, physicians, hospitals and pharmacies. Dougans agrees that things are moving on. "The market has been changing over the past five to ten years. When I first started, the rep saw the doctor and persuaded him to use his product. Now there's a hierarchy of people influencing a purchase, so you have to pick off a range of people."

The Shape of the Market
With regulatory changes in the health care industry and the emergence of HMOs and PPOs, more budget-conscious buyers have emerged. They're not just concerned with what's cheapest, but want to be shown a product that is cost-effective, both for the practitioner and the secondary care organization. "If you're dealing with more than one budget, you have to show not just that it works and it's safe, but that it's cost effective."

This has resulted in pharmaceutical companies establishing complex data models and setting up integrated teams of salespeople. "This is a challenge for the whole industry," says Dougans. Searle implemented Oxygen's sales automation tool across its 200-person sales force four years ago and Dougans admits it involved some difficult changes. "The whole process of implementing a system is tortuous. We told ourselves it would be hard, but until we did it we didn't realize how hard."

For Searle it was the cultural changes involved in sharing information that were difficult. One of the key changes is the creation of a communications group at headquarters, which then feeds information down to the regional reps. "We're not saying general practitioners aren't important, but there are 40,000 of them. So we've lumped it all into a communications group operating at a more influential level."

A key benefit the system has brought is better communication. "We've always known who to influence. But instead of one, there are five people in the same area, so there's an issue about communication."

Growth by Merger
Part of the difficulty for pharmaceutical companies looking to implement such a system has had to do with their formation and history. Many of the large companies have grown by mergers and the sales forces they inherited used different systems. This raises not just IT integration issues but also difficulties in shipping data from one to the other. However, that problem is hardly unique. What is different is the traditional tendency to outsource parts of the sales and marketing operation.

Early bureau services were pretty basic. Dougans remembers several years ago collecting contact sheets from regional offices and posting them with a third party, which would collate them and produce reports. Since then, others have outsourced the whole operation to third-party contract sales operators (CSOs). Part of CSO Innovex's supposed advantage is its proprietary territory management system, which can provide field sales staff real-time access to information. It has also implemented extranets for some of its customers, running Business Objects reporting and query software.

While pharma companies have always had ways of getting round the restrictions placed on their sales information gathering, the modeling of that is certain to become more of a focus. Companies like Siebel Systems, which has a dedicated pharmaceutical unit, have built special vertical functionality onto the system to allow it to take syndicated data feeds.

The focus for many companies is now the Internet, according to Paterson. "Even if they've done something on the Net, they've not tied it into the CRM database," he says.

How far electronic means of communication will replace face-to-face marketing remains to be seen. Given the scorn with which pharmaceutical reps and their practices are often viewed, it could not do much worse. Dr Herd concludes: "A good rep does not ask tired doctors patronizing questions about their clinical practice, doesn't slavishly adhere to company dogma and should be able to engage in objective critical discussion. Above all, they should recognize that doctors have to work for a living, and should get in and out quickly when the place is humming."

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