EVANSTON, Illinois, June 16 /PRNewswire/ --

- Increasing power of public health care payers drives need for significantly revamped sales models in Europe -

Despite rampant downsizing in the pharmaceutical industry, pharmaceutical companies in Europe cannot rely solely on sales force reductions to drive future success. Instead, they must break with tradition and change how they sell to Europe's increasingly powerful public health care payers.

These are among the conclusions of a new report by global management consulting firm ZS Associates and eyeforpharma, a leading provider of pharmaceutical business intelligence and conferences.

According to Drivers of Change to Pharmaceutical Commercial Models, European health care payers' growing influence over physician-decisions will force pharmaceutical companies to adapt their sales strategies to serve the needs of the various influencers driving local health economies in Europe. Further, they'll need to respond more quickly in Europe than they will in the United States.

A lack of blockbuster new products will reduce revenue growth during the next five years, and drugmakers in Europe are looking for ways to maximize performance and cut costs, said Rohan Fernando, managing principal for ZS Associates Europe and co-author of the report. While many pharmaceutical companies have already cut their sales forces, we expect them to shed at least another 30 percent over the next five years. Yet, this act alone will not lead companies to success. Executives also must change the way they market and sell to public health care payers who strive to provide their constituents the best drugs at the lowest possible cost. Pharmaceutical companies that embrace this new reality and adapt their sales strategies will perform the best in the future.

Payer Restrictions in the U.S. versus EU

In much of Europe, government-funded payers such as the Primary Care Trusts (PCTs) in the United Kingdom administer most health care budgets. During the last five years, many of these payers have increased their influence over physician behavior by penalizing those who prescribe drugs that fall outside of increasingly restrictive formularies. They often use a combination of financial rewards and penalties to tightly control prescribing.

This stands in stark contrast to the United States, where managed care organizations and government-led health care initiatives remain more fragmented and less influential. Failing to obtain a favored spot on a drug formulary may hurt sales for a U.S. pharmaceutical firm, but physicians and patients can often make exceptions to formulary choices.

Though the U.S. health care system has plenty of problems of its own, its patchwork payer landscape allows the traditional physician-focused direct sales model to remain effective and largely intact. As a result, changes to the U.S. pharmaceutical sales model need not be as drastic or as immediate as the changes confronting European affiliates today, said Chris Wright, principal and leader of the pharmaceutical practice at ZS Associates. Wright also is a co-author of the Drivers of Change to Pharmaceutical Commercial Models report.

Evolving Sales Models Across Europe

Several companies in Europe, primarily in the United Kingdom, the Netherlands, Italy, Spain and Germany, have already changed their selling strategies to meet the needs of payers. And while there is no blueprint for strategies that will work for every European country, the report does identify some common features of effective changes to the sales model.

1. Acquire the skills to manage new stakeholders effectively, and integrate sales strategies that previously functioned separately. This includes blending account management with regional health care payers, stakeholder management with key opinion leaders and continuing traditional promotion with physicians. 2. Design flexible, regional strategies that address the differences between local health economies. This can be a complex undertaking since most pharmaceutical companies in Europe are set up to implement standard, national-level strategies. Further, many companies that seek this flexibility will increasingly make a move towards contract sales forces. 3. Create stronger, mutually beneficial relationships with regional payers. Focus not just on product features and benefits, but also on product value by explicitly tying outcomes to costs. 4. Approach each country differently. While many countries are changing the way they manage health care delivery and reimbursement, they are not all moving in exactly the same direction or at the same pace. France, for example, remains much more centralized than Germany or the United Kingdom.

The Pharmaceutical Sales Rep is Safe - for Now

Despite frequent news stories about the imminent demise of pharmaceutical sales people, the Drivers of Change to Pharmaceutical Commercial Models report suggests that while the rep function will not disappear in the near future, sales representatives will need to adapt.

The report also addresses select, long-term trends that are likely to have a dramatic influence on the future of the sales representative position. Among them: the development of personalized medicine, which would lead to multiple versions of a branded product and allow doctors to prescribe drugs that best align with a given patient's genetic makeup. Such a fundamental shift in the branding and marketing of pharmaceutical products could render the pharmaceutical sales representative irrelevant in the future. The report stresses, however, that the impact of personalized medicine won't likely be felt in the next decade.

For more information, or to request a copy of the Drivers of Change to Pharmaceutical Commercial Models report (English only), please contact ZS Associates at +1-847-492-3602 or visit http://www.zsassociates.com/pharmaceutical_commercial_models_report.

About ZS Associates

ZS Associates is a global management consulting firm specializing in sales and marketing consulting, capability building and outsourcing. Founded in 1983 by Andris A. Zoltners and Prabhakant Sinha, professors at Northwestern University's Kellogg School of Management, the firm today is comprised of four affiliated legal entities with more than 1,100 professionals in 17 offices around the world. It has assisted more than 700 clients in 70 countries.

As the largest global consulting firm focused on sales and marketing, ZS Associates has experience across a broad range of industries, including pharmaceuticals, biotechnology, medical products and services, financial services, transportation and high-tech. ZS consultants combine deep expertise in sales and marketing with rigorous, fact-based analysis to help business leaders develop and implement effective sales and marketing strategies.

For more information on ZS Associates, call +1 847.492.3602 or visit www.zsassociates.com.

About eyeforpharma

A leading global source of information for the pharmaceutical industry, eyeforpharma's reputation is built on quality, in-depth conferences that have distinguished themselves from competitors by the depth and breadth of research they put into each conference to ensure it is covering the hottest and most pertinent issues of the industry. Eyeforpharma also provides a fortnightly newsletter to over 11,000 leading executives from every major pharmaceutical company in the industry, in addition to consultants, sponsors and academics.

Visit www.eyeforpharma.com to find out more.

Available Topic Expert(s): For information on the listed expert(s), click appropriate link.

Chris Wright https://profnet.prnewswire.com/Subscriber/ExpertProfile.aspx?ei=81277 Rohan Fernando https://profnet.prnewswire.com/Subscriber/ExpertProfile.aspx?ei=89205

Greg Austin of ZS Associates, +1-617-557-5834, greg.austin@zsassociates.com; or Anahita Wadia, +1-312-541-9300, ext. 104, awadia@reynoldsgroup.com, or Mack Reynolds, +1-312-541-9300, ext. 105, mreynolds@reynoldsgroup.com, both of The Reynolds Communications Group, for ZS Associates