The Twin-Track Challenge for Biopharma Executives

Being an executive in the biopharmaceutical industry has never been tougher. The sector’s business model is under tremendous pressure—internal as well as external—and that pressure is not about to abate. What’s more, the go-to-market model itself has to change; relying on traditional approaches is no longer enough. Field sales forces, still biopharma companies’ biggest investment on the commercial side, must also find ways to do more with less.

The external pressures, such as onerous regulations designed to limit health care costs, are all too familiar. The internal pressures are even more painful: witness the struggles to replace blockbusters whose patents are about to expire, the unsolved question of the industry’s sagging R&D productivity, and the collisions with investors’ requirements. (See Can R&D Be Fixed? Lessons from Biopharma Outliers, BCG Focus, September 2011.) Biopharma companies are having some success with promising new drugs, but these products generally address very small customer segments, often just niches—which means that many more products must be manufactured to produce the amount of revenues generated by the big winners of the past. And thus far, few companies can boast of compelling new growth stories; fewer still are close to meeting their shareholders’ expectations for profit margins.

The good news is that companies can blunt the edge of these challenges by significantly improving the efficiency and effectiveness of expenditures on customer-facing resources. According to research by The Boston Consulting Group (BCG), biopharma companies that have adopted a disciplined approach to customer excellence have seen productivity gains of 10 to 25 percent. The gains can be taken as cost savings or reinvested for growth: some companies have saved hundreds of millions of dollars in costs, while others have achieved revenue growth of more than 7 percent annually. As a result of their go-to-market makeovers, these organizations’ customer-facing functions are spending more productive time with more receptive customers. And at the best companies, these wins are not temporary; mechanisms are put in place to ensure that the improvements are maintained and can be built upon.

For many biopharma companies, however, customer excellence is not a high enough priority. The prevailing mindset is that today’s go-to-market model is not rocket science and that the sales side of the model has been tweaked and tuned as much as possible. (See “Could This Be Your Company?”) Another line of thinking—equally closed-minded—is that the time-honored go-to-market model is obsolete and that, these days, sales is all about an entirely new model.

We argue that those beliefs must make way for what we think of as a twin-track mindset—one that recognizes the value of getting more out of the current go-to-market model while, at the same time, working to develop a new one. This mindset, which should be held consistently across the executive team, rejects both the “we've already done this” mentality and the idea that dazzling new go-to-market models will save the day. It is a grittier perspective that accepts the reality of the hard work required to revamp the current model. It also embraces the notion that customer excellence provides a competitive edge, and thus is worth investing in, and recognizes that pursuing customer excellence is a continuous effort that delivers high impact both in the short term and in the long run.