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Health Care Reform May Force U.S. Pharmaceutical Companies to Overhaul Sales Strategies, Says New Report From ZS Associates and eyeforpharma

-- U.S. Pharma can learn from its counterparts in Europe --

EVANSTON, Ill., June 16 /PRNewswire/ -- While President Obama's push for a larger government role in health care and the prospect of a European-style health care model developing in the United States may worry some pharmaceutical companies, all should share a more immediate concern: the growing influence of payers over physician prescription decisions in the United States.

According to a new report by global management consulting firm ZS Associates and eyeforpharma, a leading provider of pharmaceutical business intelligence, this changing payer landscape will force companies in the United States to change their sales models much like pharmaceutical companies in Europe who must adapt today to serve the needs of the various decision-makers and influencers driving their local health economies. Still, this change won't happen in the U.S. as quickly as in Europe.

"Though U.S. health care has plenty of problems of its own, the lack of central decision-makers, as are common in much of Europe, allows the traditional practice of pharmaceutical representatives calling on physicians to remain effective and largely intact -- for now," said Chris Wright, principal and leader of the pharmaceutical practice at ZS Associates and co-author of the "Drivers of Change to Pharmaceutical Commercial Models" report. "Over the next several years, however, U.S. pharmaceutical companies should trim another 15-20 percent of their sales forces and prepare to do what many in Europe are doing today. They must modify their direct-selling strategies and prepare to sell to an increasingly diverse group of health insurance companies, government payers like Medicare and Medicaid and other opinion leaders who will increasingly influence prescription decisions."

Payer Restrictions in the U.S. versus EU

The fragmented nature of managed care organizations and government-led health care initiatives limits their influence over physician prescription decisions in the United States. So even if a pharmaceutical company fails to obtain a favored spot -- and the concomitant smaller co-pay -- for its drug on a payer's formulary in the United States, physicians and patients still can opt for the drug.

This contrasts with Europe, where 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 control prescribing.

"Unlike in the United States, pharmaceutical executives in Europe must immediately change the way they market and sell to increasingly powerful public health care payers who strive to provide their constituents the best drugs at the lowest possible cost," said Rohan Fernando, managing principal for ZS Associates Europe and co-author of the report. "Pharmaceutical companies in the United States should watch carefully the changes taking place in Europe to prepare for a future when they face similar challenges."

Lessons from Europe

Several companies in Europe, primarily in the United Kingdom, the Netherlands, Italy, Spain and Germany, have begun to make meaningful changes to their selling strategies to meet the needs of public payers. While there is no blueprint for strategies that will work for every European country, the "Drivers of Change to Pharmaceutical Commercial Models" report identifies some common features of effective changes to the sales model -- changes that could be relevant for companies in the United States in the near future:

  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 many pharmaceutical companies are set up to implement national-level strategies. Many companies that seek this flexibility will make a move towards contract sales forces.
  3. Create stronger, mutually beneficial relationships with regional health care payers. Focus not just on product features and benefits, but also on product value by explicitly tying outcomes to costs.

The Pharmaceutical Sales Rep is Safe -- for Now

Despite frequent news stories about the imminent demise of pharmaceutical sales people, the 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, please contact ZS Associates at +1 (847) 492-3602 or visit

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

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 to find out more.

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

Chris Wright

Rohan Fernando

SOURCE ZS Associates
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