Predictions suggest that the Pharmaceutical industry needs to cut $36 billion in Selling, General and Administrative costs by 2017 to maintain an operating margin similar to 2012. Expiring patents, increased government regulation, declining physician access and reducing out of pocket expenditures have shifted the balance of (buyer) power to payors and providers. WNS DecisionPointTM estimates that the rising influence of payors and providers has eaten up around 3.6 percentage points of the top 10 players’ average gross margins from 2009 to 2014 and is expected to hurt them more going forward.
Currently, many pharma companies are focused on containing sales and marketing expenses as a strategy to combat shrinking profit margins, but doing so is likely to hurt their bottom line in the long run. Without strong sales and marketing efforts, demand for their products is bound to decrease. Rather than sacrificing headline growth by cutting down investments in robust sales force and reducing marketing spend, pharma companies could turn to analytics to improve their existing sales force effectiveness and improve marketing return on investment. Analytics can help companies:
Study data related to claims, patient, physicians, payors and providers to generate useful insights around launch action plans and create a distinct positioning thereby ensuring maximum usage post launch
Draft market entry and expansion strategies
Understand patients’ needs, competitors’ strategies, and stakeholder expectations early in the drug development process to aid delivering an acceptable return on investment (ROI)
Tailor promotional messages, understand affinity of channels for various stakeholders, monitor sales force metrics, reduce administrative time to improve selling & marketing efficiency and effectiveness
To learn more about the challenges facing the pharmaceutical industry and strategies to overcome them, read the full report.
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