The Changing Ecosystem of

Pharmaceutical Sales and Marketing

WHITE PAPER
Sponsored by: Oracle
www.healthindustry-insights.com

Er ic N e wm ar k
Fe br u ar y 2 0 10

EXECUTIVE SUMMARY
The pharmaceutical sales and marketing landscape is undergoing
dramatic change. Expiring drug patents and weakening product
pipelines have placed increasing pressure on sales and marketing
F.508.988.7881

teams to drive revenue growth, while tightening regulation and shifting

operational models surrounding healthcare delivery add additional
challenges. Primary care–driven sales are now evolving toward an
increasing mix of specialty sales, and sales operations are moving
away from frequency-based sales interactions to more strategy-based
P.508.935.4445

sales models.

To support life science companies in this changing dynamic, Oracle

has developed a wide range of solutions that enable life science
companies to remain agile and best capitalize on new market
Global Headquarters: 5 Speen Street Framingham, MA 01701 USA

opportunities as they arise. Oracle CRM On Demand Life Sciences

Edition R17, set for release in early 2010, contains a broad set of new
features designed specifically to enhance life science sales and
marketing capabilities. Enhancements to Oracle CRM On Demand
Life Sciences Edition R17 include enhanced sales planning and
execution, deeper sample management, and integrated closed loop
marketing (CLM) and are accompanied by two new Oracle
applications, CRM On Demand Offline Client for Life Sciences
Edition and Personalized Content Delivery (PCD).

To improve sales and marketing intelligence, forward-thinking

pharmaceutical companies are adopting IT solutions that help
automate, simplify, and enhance sales and marketing tasks. These
solutions include customer relationship management (CRM) with
enriched analytics, sales force automation (SFA) with customer-
centric-designed screen flow and improved mobility, and CLM tightly
integrated with both CRM and SFA. These three technology areas, in
combination with increased efforts around aggregate spend
compliance and physician targeting optimization, are helping leading
pharmaceutical companies better compete in today's changing sales
and marketing landscape.

February 2010, Health Industry Insights #HI222015

SITUATION OVERVIEW

The pharmaceutical sales and marketing landscape has changed

dramatically over the past few years. Expiring drug patents and
weakening product pipelines have placed increasing pressure on sales
and marketing teams to drive revenue growth on existing product
portfolios while maximizing market penetration for each new drug
brought to market. However, field sales representatives face increasing
difficulty due to reduced physician availability, tightening regulation
in the industry, and shifting operational models surrounding healthcare
delivery.

Broad challenges exist, spanning both operational and data-centric

aspects of the business. For example, the American Medical
Association's (AMA's) Prescription Data Restriction Program now
allows doctors to opt out of sharing their prescriber information with
pharmas, making it more difficult for sales teams to identify targets
and track success. At the same time, a barrage of new industry
regulations surrounding promotional spend is forcing sales teams to
alter their operating tactics to remain compliant. Historically,
pharmaceutical sales reps have leaned a great deal on soft-dollar
promotional spend to help create influence and capture physician
attention, especially as physician availability has continued to grow
more scarce. But beyond just distributing free pens and notepads, sales
reps have relied on taking physicians out to lunches, dinners, and
offsite meetings to create an environment where they could discuss
products and have the physicians' undivided attention. However, new
national and state-level regulations are beginning to make these
meetings obsolete.

For example, in July 2009, Massachusetts enacted regulations

prohibiting gifts for physicians and a large majority of all soft-dollar
marketing spend on physicians, along with new rigid reporting
guidelines. Some of the restrictions set forth by the new regulations
include a ban on all free meals, entertainment, and coverage of travel
expenses, conference fees, and costs associated with attending
continuing medical education (CME) events. Further, to improve
transparency in the healthcare system, companies are now required to
report all payments to physicians in excess of $50, even for legitimate
consulting fees, to the Massachusetts Department of Public Health
(DPH). Come July 2010, a database with this information will be freely
searchable by the public through the DPH Web site. This is just one
example of a state-level mandate, but all of the aforementioned national
regulations place limits in a similar fashion. With potential fines of
$5,000 per infraction, pharmas can't afford to risk noncompliance.

Securing face time with physicians, which had already been difficult,
has now become significantly more challenging for pharmaceutical
companies. Consequently, pharmas are seeking ways to increase the

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efficiency and effectiveness of their sales and marketing organizations
to better utilize each physician interaction, bolster their ability to
influence physicians, and expand the use of information captured
during physician visits. While some gains are possible through
business process modification, much of the needed improvement will
be obtained ultimately through better utilization of sales and marketing
technology.

FUTURE OUTLOOK

To manage the growing challenge of educating and influencing

physicians, pharmaceutical firms need to capture more effectively new
information from physicians because traditional avenues are quickly
going away. This includes higher-quality data capture during physician
interactions, as well as improving communication with physicians
through online mediums. Better utilization of existing data to drive
strategic and actionable decisions is also equally important. According
to the IDC Health Insights 2009 Life Science Sales and Marketing IT
Benchmark Guide, increasing data connectivity across sales and
marketing to improve strategic decision making is a top-priority area
for investment during 2010.

To improve sales and marketing intelligence, forward-thinking

pharmaceutical companies are adopting IT solutions that help
automate, simplify, and enhance sales and marketing tasks. These
solutions include CRM with enriched analytics, SFA with customer-
centric-designed screen flow and improved mobility, and CLM tightly
integrated with both CRM and SFA. These three technology areas, in
combination with increased efforts around aggregate spend
compliance and physician targeting optimization, are helping leading
pharmaceutical companies better compete in today's changing sales
and marketing landscape. These initiatives are discussed in greater
detail in the following sections.

Next-Generation Sales Force Automation

Most pharmaceutical companies already utilize some form of SFA

technology, but many are seeking enhancements that streamline
reoccurring sales tasks and directly improve interactions with
physicians. According to an IDC Health Insights study that collected
information representing more than 26,000 United States–based
pharmaceutical sales representatives (more than 25% of the current
workforce), the following five improvements were most desired:

● Cross-team intelligence. Sales representatives often switch off

visiting specific doctors with colleagues but have little visibility
into their teammates' activities. Increased teamwide visibility is
essential to improving overall team performance.

©2010 Health Industry Insights, an IDC Company #HI222015 Page 3

● Affiliation management. The ability to associate physicians with
organizations, associate multiple doctors in a practice, and
document relationship networks is an important part of relationship
management. Affiliation management enables sales teams to
identify which key influencers should be most highly targeted.

● Single-click signature capture. During product meetings with

sales reps, physicians regularly get pulled away midvisit and
another doctor must provide the signature for the samples. The
ability to toggle between multiple doctors in a location on the
signature screen with a single click can save valuable seconds and
help prevent doctor frustration.

● Associative call notes. During sales presentations for multiple

doctors, sales representatives typically need to cut and paste related
call notes into each doctor's profile, which is very time consuming.
As a result, many simply enter information under one doctor, or
not at all. The ability to enter call notes once and associate them
with several physicians would save time and encourage
information capture, resulting in improved data quality.

● WiFi capabilities. Most sales teams in the United States now use
tablet PCs and/or smartphones/PDAs and want the option to
operate in an always-on connectivity mode. This helps eliminate
nightly synchronizations, reduce data connectivity issues, increase
management visibility from daily reporting to real-time tactical
assessment, and provide a platform for management to quickly
disperse information to an entire sales force via instant
networkwide alert messages. However, field sales also need the
option to operate in a disconnected mode, such as in hospitals, and
still have advanced functionalities available to them.

Closed Loop Marketing

Pharmaceutical companies achieved only moderate success with

edetailing during its infancy in the late 1990s because companies
mistakenly delivered the same information in electronic form that
physicians had already been receiving through traditional channels.
Simply digitizing information into multimedia formats did not
provide any additional value for doctors. More recently, however,
market-leading pharmaceutical companies have realized that the
integration of edetailing, SFA, and CRM tools can provide the ability
to dynamically customize messaging based on physician feedback,
behavior, and segmentation, leading to the delivery of personalized
content more closely aligned with physicians' wants and needs.
CRM is meant to be a tool that helps physicians and consumers
progress through the customer life cycle, from brand education to
brand customer, and ultimately aids in customer retention. Therefore,
integration between edetailing and CRM is vital to sales and marketing

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success. This integration strategy has become central to what the
industry today refers to as closed loop marketing, which is currently
employed by leading pharmaceutical companies.

Online delivery of drug information is quickly becoming a large piece

of the pie for pharmaceutical sales and marketing organizations, but
in-person detailing is not going away. Most physicians greatly value
the relationship with and the information provided to them by their
sales rep, as well as the convenience of in-person interaction. Industry
surveys have shown that any loss of in-person interaction would
negatively affect drug sales and also make doctors less likely to seek
out information online because sales reps play a large part in driving
physicians to online information. In today's economy and in the
changing pharmaceutical sales environment, conducting efficient CLM
has become critical to corporate growth. CLM initiatives can literally
make or break marketing campaigns, including simply sustaining or
growing market share and the introduction of new products. Proper
execution of CLM across global affiliates enables pharmaceutical
companies to achieve higher-quality physician interactions that
improve market share, obtain vital customer insight in a real-time
manner, and drive significant cost reductions in marketing and
administration. Consequently, CLM is increasingly important to brand
success and is a valuable tool that complements the efforts of today's
field sales operations.

Aggregate Spend Compliance

Due to the cumulative effect of the new PhRMA code, combined with
OIG regulations, the Physician Payment Sunshine Act, and state-by-
state mandates that have been creeping up across the country, virtually
all soft-dollar sales tactics are becoming obsolete. This is placing
tremendous pressure on pharmaceutical companies to redefine the way
they approach and interact with physicians, and companies are
scrambling to implement software solutions that will help them
manage these issues. This is driving increased spending around data
integration work and business intelligence applications to help
companies gain visibility into all financial touch points with
physicians across the organization.

However, implementing proper reporting and dashboards to monitor

spend and become compliant are just the first steps. Leading companies
are embracing the opportunity to go a step further and gain proactive
capabilities. For example, some states place limits on how much
companies can spend on each physician, some as low as $50 per year.

Therefore, beyond gaining visibility into where money is spent,

pharmaceutical companies need to be able to strategically decide
where funds should be spent to maximize spending impact with each
physician. If a company has multiple brand teams all targeting the

©2010 Health Industry Insights, an IDC Company #HI222015 Page 5

same physician, strategic decisions need to be made around which
brand team should use the allotted $50 in promotional activity. Should
it be split equally across brands? Should the newest brand utilize more
of the funding? CRM systems with enhanced business intelligence and
analytics capabilities provide substantial value in helping
organizations make these decisions.

Physician Targeting Optimization

When a new product receives FDA approval and is introduced, it is

critical to properly execute product launch and generate maximum
uptake by the market. However, product success is highly dependent
upon physicians choosing to prescribe the drug, which makes
physician targeting, promotion, and education of vital importance.

Traditionally, when generating physician target lists in primary care

markets, brand teams have principally looked at which physicians
prescribe the most in a particular market, how many prescriptions they
write, and how many patients they see with the condition relative to
the drug. These are useful metrics, but predictive modeling tools can
provide insight that far exceeds this level of examination by including
many additional variables. If a pharmaceutical firm is launching a drug
that treats Crohn's disease, physician prescribing habits in other areas
such as diabetes and asthma might seem irrelevant, but in actuality
they may have a negative correlation, which would be important to
identify. If physicians prescribe in several markets, they likely follow
new products in several markets and have dozens of sales reps
regularly visiting their office. Physicians focusing more uniquely on
Crohn's disease may have only two or three sales reps visiting them
and might choose to prescribe that particular pharmaceutical firm's
product much quicker. Such insights are common benefits of
predictive modeling utilization.

For example, a leading pharmaceutical company recently launched a

new drug to treat hepatitis C. Based on its initial launch assumptions
using existing data from market proxies, the company chose to target
14,000 primary care physicians (PCPs) and 10,000 gastroenterologists
prescribing related drugs as well as 11,000 gastroenterologists who did
not prescribe any products yet in the related market. By performing
analytical exercises every two weeks during the first few months after
drug launch, the company realized that most physicians writing
prescriptions for the product were not on its target list. The company
also discovered that asthma and diabetes — both unrelated markets —
were negative predictors to adopting new hepatitis products, so PCPs
prescribing these products were poor targets. Conversely, female
physicians or physicians who had adopted other products quickly were
identified as better targets than those who had simply prescribed
products from related areas. Overall, the target optimization exercise,
performed just three weeks after product launch, generated a 43% lift

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in physicians writing prescriptions. The company's analysis over the
entire six-week period showed that the optimized list generated 50%
more revenue than the original target list.

CRM On Demand Life Sciences Edition R17

The life science sales model is evolving from primary care–driven

sales to an increasing mix of specialty-driven sales. At the same time,
sales operations are moving away from frequency-based sales
interactions to more strategy-based sales models. To support life
science companies in this changing dynamic, Oracle offers solutions
with flexible deployment options, including on-demand or on-premise,
or a combination of both, so that life science companies can remain
agile to best capitalize on new market opportunities as they arise.

Oracle CRM On Demand Life Sciences Edition R17, set for release in
early 2010, contains a broad set of new features designed specifically
to enhance life science sales and marketing capabilities. Enhancements
to Oracle CRM On Demand Life Sciences Edition R17 focus on three
main areas: enhanced sales planning and execution, deeper sample
management, and integrated closed loop marketing. Many of these
capabilities are delivered through two new modules for CRM On
Demand — CRM On Demand Offline Client for Life Sciences Edition
and Personalized Content Delivery — as software as a service (SaaS).

CRM On Demand R17 also provides integrated analytics and business

intelligence capabilities, including real-time reporting and analysis for
objects and functionality across multiple subject areas (subject areas
based on prebuilt and integrated data warehouse). Further, life science–
specific subject areas exist for call history analysis, medical education
event history analysis, and personalized contact delivery analysis.

● Enhanced sales planning and execution builds on top of existing

basic functionality by offering extended customer profiles, state
license tracking, the ability to examine best call times per location,
and enhanced call reporting to track promotional items dropped.
New business planning features have been added as well. This
allows sales teams to define business plans, set objectives, and
track accounts, contacts, and activities against those objectives to
monitor performance. Team planning is also supported, enabling
multiple reps to track teamwide execution against goals.

● Deeper sample management allows sales reps to track personal

inventory, do interim audit reports, execute compliance reporting,
and perform inventory period closeouts. Compliance is also
improved through increased control and oversight of samples.
Product allocations can be assigned from a sample administrator to
a sales rep, acknowledgment of product transfer can be
documented, and sales teams can track returns, losses, and thefts.

©2010 Health Industry Insights, an IDC Company #HI222015 Page 7

● Integrated closed loop marketing increases detailing quality by
streamlining content distribution to reps for physician
presentations, ensuring relevant message delivery and quickly
measuring response. Clickstreams are tracked, stored, and reported
back to core CRM for closed loop marketing analysis.

CRM On Demand Offline Client for Life Sciences Edition

Field sales reps manage their territory and weekly schedule in CRM on
Demand, but when they go offline, they need a mobile application that
will provide them with core task execution capabilities in the field.
Oracle has developed its CRM On Demand Offline Client for Life
Sciences Edition application specifically for this purpose, to provide
an intuitive, easy-to-use mobile application optimized for use on tablet
PCs by reps in the field. Signature capture and edetailing are two main
aspects of SFA where the application needs to be visually shown to the
physician, so it's important to harness those few moments of
guaranteed attention from the doctor to show the most relevant and
visually enticing information possible. Speed of execution is also
critical. CRM On Demand Offline Client for Life Sciences Edition
enables reps to quickly guide a physician through an edetailing
presentation, skipping slides if necessary, but still tracking what
actually is shown to the physician for CLM analysis. Reps can quickly
switch between physicians, add samples, and access the signature
capture screen all in a streamlined fashion. CRM On Demand Offline
Client for Life Sciences Edition also provides key opinion leader
(KOL) tracking, schedule and route planning, and affiliations
management capabilities. Oracle carried out nine iterations of usability
design with its user experience team (consisting of end users) to make
sure the CRM On Demand Offline Client for Life Sciences Edition's
screen flow and flexibility were optimized to mimic realistic sales
situations. CRM On Demand Offline Client for Life Sciences Edition
has a Web 2.0–style interface and drag-and-drop features for
scheduling and physician calls, and it can be easily personalized by
reps through the use of favorites and tags.

Personalized Content Delivery

Launched directly from within CRM On Demand Offline Client for
Life Sciences Edition, Oracle PCD is a fully integrated CLM solution
with a standards-based architecture. Out-of-the-box integration
between CRM, SFA, and CLM on the Siebel platform allows Oracle
users to extend their CLM solution to easily tie into other efforts,
including campaign management, marketing segmentation, event
management, and broader companywide business intelligence. PCD
also provides open authoring, delivering increased flexibility by
allowing users to import and display content built in other native
applications (e.g., Flash, Photoshop). This provides easy access for
third-party organizations, such as ad agencies, to work with content
outside an Oracle environment.

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Oracle PCD has four main components:

● Asset Management. The Siebel literature file system is used to

store and tag digital assets, identify legal and marketing approvals,
identify control groups, execute message plan assembly, distribute
content to specific reps, and swap in and out component files to
avoid large legal reapprovals.

● Message Planning. Driven by a Web 2.0 user interface, approved

digital assets are used to create a storyline, add detailed
information (reference background information such as clinical
reprints), designate role-based access to message plans, and set go-
live and expiration dates on content.

● Interactive Detailer. Sales reps can mark up the screen during a

detailing presentation, present in full-screen mode to maximize
viewing area, and add physicians on the fly (track the presence of
other physicians joining to view a detail, but not ask who they are
until the session has ended).

● Metric Tracking. This component captures the sequence in which

information is presented, the duration of the presentation, and
additional perceived responses (i.e., reps can comment on which
slides physicians reacted to most favorably).

ESSENTIAL GUIDANCE
The healthcare ecosystem is rapidly changing, and pharmaceutical
companies need to adjust proactively their sales strategies to remain
competitive in today's marketplace. Each moment with a physician
captured by sales teams is becoming critically important because
reduced doctor availability, tightening industry regulation, and the
increasing use of generics are making these physical interactions
shorter and more infrequent. Increasing the quality, duration, and
persuasiveness of these interactions through personalized targeted
messaging is vital to a company's success.

To achieve these goals, leading pharmaceutical companies are

investing in IT enhancements that maximize their ability to interact
with, educate, and influence the physician community. IDC Health
Insights recommends that pharmaceutical companies consider the
following items in assessing their sales and marketing readiness:

● If your current SFA system is more than two years old, consider
upgrading or, at a minimum, evaluate recently released competing
solutions. Enhancements have been made to SFA systems that
significantly improve the effectiveness and efficiency of field sales
through streamlined workflow and enhanced message delivery.

©2010 Health Industry Insights, an IDC Company #HI222015 Page 9

● CLM should be an integral piece of your sales and marketing
strategy. Tight integration between CRM, SFA, and edetailing
applications is a requirement for CLM success.

● Aggregate spend compliance is the biggest challenge facing sales

and marketing organizations today. Beyond becoming compliant,
companies should seize the opportunity to invest in analytical
capabilities that increase proactive planning and execution
intelligence for promotional spend.

● Performing exercises around physician targeting optimization is

currently very underutilized. Too many companies rely on status
quo assumptions when creating physician target lists. Proper
employment of analytical tools has been shown to boost
prescriptions in some instances nearly 50%.

● Pharmas struggle to maintain ties with patients once their

conditions improve. Increased consumer-driven marketing
initiatives focused on patient compliance and disease management
can dramatically affect end users. It is important that companies
not only maintain a product-focused view of the market but also
act as a nonsales medical education resource by developing health
management programs, outreach programs, and online tools such
as caloric intake calculators, exercise plans, and related opt-in
newsletters.

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Copyright 2010 Health Industry Insights, an IDC company.

Reproduction without written permission is completely forbidden.
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