Consulting’s Best Kept Secret is No Longer Secret

Pharma, Biotech, and MedTech. As revenue targets rise year after year, it becomes increasingly difficult to continue achieving success in such a competitive environment.

This begs the question: What are successful companies doing?

A surveyed  sample of 200 senior life science sales executives from a breadth of pharmaceutical, biotech, and medical technology companies across the US and EU (Figure 1). The healthcare companies covered a span of therapeutic areas ranging from oncology to dermatology, and medical technologies from in-vitro technologies to hospital supplies (Figure 2). We characterized the Sales Champions, those who hit their revenue targets last year, and identified what they did that led to success.


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Figure 1: Demographics
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Figure 2: Subsector/therapeutic area breakdown

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Key questions

What differentiates a Sales Champion from the rest of the pack? We explored the following key questions to identify and prioritize the most important factors that drive year-over-year sales growth.

  1. What opportunities do companies who are reaching and exceeding their revenue targets prioritize?
  2. Which challenges do they care about (Figure 3)?
  3. Where do they spend their time and resources?
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Figure 3: Companies that hit annual revenue targets face different challenges than those that do not

Four notable areas offer the most opportunity for other companies to improve performance and company philosophy to realize greater sales growth: Focusing on key market trends, prioritizing high-value customers, optimizing sales rep time, and investing in customer retention.

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Photo by Hunters Race / Unsplash

1. Focus resources on key market trends: Three top trends today are digitalization, selling products as a service, and personalized medicine  

Successful companies differentiate themselves by identifying changes in the market and capitalizing on opportunities that drive the biggest gains. We provided respondents with seventeen potentially impactful trends occurring in the life science industry. When asked which of the options they perceived as most important, Sales Champions in MedTech, Pharma, and Biotech alike listed innovative trends for their respective industries (Figures 4, 5). Less successful companies selected trends that did not focus on shifts in customer needs, but rather trends related to strengthening foundational processes - like key account management and managing regulatory challenges.

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Figure 4: MedTech trends

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Figure 5: Pharma and Biotech trends

Market Trend #1: Digitalization

Life science companies in all industries are facing a shift towards highly digitalized processes. More patients expect their personal health experience to have connected capabilities, and companies are being forced to adopt these processes in order to stay competitive. Across all companies surveyed, 43% of stakeholders in successful organizations identified the trend of increasing digitalization as one of the two most important market trends. Less successful companies placed this trend in the bottom half of the available options.

One example of this shift towards digitalization by market leaders can be seen in a leading medical device manufacturer, which traditionally sold standalone capital and consumables. The company was seeking to identify a comprehensive set of digital features to build a next-generation connected medication platform (Figure 6). Multiple stakeholders from product development, marketing, and sales functions worked together to craft a suite of potential digital features. This prioritized list was then validated with key hospital decision makers to understand how each feature or how combinations of features drive adoption of the platform. After aligning the findings with their strategic goals, the company found itself in a prime position for leading the movement towards digitalization with enhanced ROI.

Beyond selecting the most innovative digital features for products and platforms, it is also critical to develop and target effective messages that articulate value to key decision-makers. When a leading pharmaceutical company was seeking to better understand the value of its medication adherence solution, it was unclear who the key stakeholders would be in each country the company would operate in. After developing several potential communication strategies and validating them with customers, the company was able to successfully bring the digital solution to market.

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Figure 6: Connected medication delivery platform

Market Trend #2: Selling products as a service (or solution selling)

One strong pressure felt specifically by many medical technology companies is the need to sell products as a service or solution selling. In addition to using solution selling as a way to escape price wars, sales leaders report an increased focus on health economics, creating a need for outcomes-based contracting with MedTech providers (Figure 7).

For successful MedTech companies, this is even more fundamental as a market trend than digitalization. 46% of successful MedTech companies consider incorporating solution selling into their business and sales models as a top trend. The transition to solution selling is viewed as an important opportunity to create value for customers. It enables price model transition from upfront investment to operational expense, reducing purchasing barriers.

Examples of solution selling are often seen in companies that offer both capital and consumables. One laboratory diagnostics company had challenges with selling analyzers that required an upfront capital investment, offering separate service contracts and pricing reagents without a direct link to quality of outcomes. The company developed a strategy for performance-based contracting and pricing focused on reportable results delivered within a predefined turn-around time. With this new outcomes-based agreement, customers were more willing to adopt the platform because they felt protected against potential risks (e.g., quality, etc.) and that the total cost of ownership decreased due to the shift from high capital costs to direct costs.

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Figure 7: Increased focus on health economics is creating a need for outcomes based contracting in solution selling

Market Trend #3: Personalized medicine

For Pharma and Biotech, the leading trend is personalized medicine. Disease manifestation is varied, so treatment approaches should be, as well. Successful Pharma and Biotech companies agree that this is one of the top 2 trends that demands attention and investment, second only to increasing digitalization.

Within personalized medicine, gene therapy has been a rapidly growing space. As much as gene therapy is a customized solution for patients, companies should also think about a customized approach for engaging key stakeholders along the patient journey. A successful launch depends heavily on an effective stakeholder engagement strategy (Figure 8). The patient journey begins with disease awareness and continues through the stages of screening, diagnosis, referrals, treatment, and management. For example, one rapidly growing biotech company invested in developing a sales approach designed to target each of the stakeholders along the patient journey. The company knew that without awareness and support along the entire chain, the product would not be able to achieve broad adoption.

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Figure 8: Stakeholders along the patient journey for gene therapy

2. Don’t just segment customers—prioritize

Across MedTech, Pharma, and Biotech, successful sales leaders reported that they performed “very well” in prioritization of customer segments, while those who did not reach their targets sat only just above the “neutral” rating. In spite of this, even the successful companies must grapple with problems in this area to an extent; unprompted, they cited difficulties in addressing “varied customer needs” and in the “identification of growing customer segments.” For these companies, investing time into better understanding the customer base and where the real opportunities lie can mean the difference between hitting your targets and exceeding them.

One leading MedTech company in imaging needed to improve its account prioritization strategy to accelerate revenue growth. The company found that there were certain key drivers of purchasing behavior that mattered more to particular groups of stakeholders (Figure 9).

Through iterative cluster analysis of validated customer responses, the company was able to identify insights specific to its customer base, which were used to develop customer segments. “Product Champions” were very loyal to the product and believed in its superior efficacy, “Active Supporters” cared most about the price-value relationship, and “Cost-conscious Accounts” were mostly financially driven, looking for reasonable prices. With this information, the company developed a customer profiling tool that would continue to prioritize future accounts based on the key behavioral drivers. In the end, the streamlined methodology increased sales force efficiency and accelerated revenue growth.

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Figure 9: Prioritization of high potential customer segments

3. Know how your sales reps spend their time

Successful companies are investing resources in minimizing unnecessary non-selling activities (such as administrative tasks) and tend to perform strongly on this point. In addition to being the lowest overall performance rating for companies who did not hit their targets, balancing sales rep time between selling and non-selling activities is something that the majority of these companies said they were not addressing at all.

Optimization of sales rep time expenditure can be implemented within a very short time frame, as it requires little overhaul, and is a classic quick win for companies looking to boost their revenue numbers.

One leading manufacturer of surgical consumables was looking to optimize the effectiveness of its sales force, with a focus on balancing the time the sales team spends on activities such as pre-sales, sales, account servicing, customer training, and administrative tasks (Figure 10). After aligning its sales goals for each product with the types of activities that generate the highest return on investment, the company re-allocated its resources to generate an additional ~2% in revenue and set itself up for future success.

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Figure 10: Balancing selling time

For Pharma and Biotech, leading manufacturers typically have sales teams focused on one product for one or two indications, depending on the size of the market and the nature of its dynamics. Here, the important criterion to evaluate is the effectiveness of each stakeholder call (Figure 11).

The sales team may be detailing physicians, purchasing admins, and/or KOLs, and it is critical to spend time effectively in terms of quantity and duration of calls. One example is from a leading pharmaceutical company facing increasing competition. Its blockbuster drug had enjoyed clinical and financial success since its release, but it was beginning to compete with a new wave of treatments that endangered its market position. Along with territory realignment and redefining roles and responsibilities of the sales team, the company reallocated resources based on the optimal number of calls that would activate a customer. Moreover, customers were prioritized such that the selling time could be tailored to each stakeholder to maximize returns.

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Figure 11: Sales response curves for segments A and B

4. Invest in customer retention, not just acquisition

Successful companies invest in retention of customers, and thus they are able to capitalize on much more of their customers’ lifetime value down the line. Unprompted, the most commonly cited challenge for companies that did not hit their annual targets was maintaining customers over time. Customer retention received the second lowest overall performance rating for these respondents compared with performance on other sales challenges. Regardless of how well sales reps can acquire new customers, if a steady flow of existing customers continues to defect to competitors, the net amount of customers will stagnate or even decline.

To successfully maintain customers over time, companies must invest in understanding their customers and closely monitor any changes in behavior or perception that might occur.

One MedTech service provider developed a customer segmentation and retention strategy that ensured there were targeted approaches for each prioritized segment. Then, marketing and sales budgets were allocated such that more valuable customers received more resources. This comprehensive methodology reduced churn rates by ~28%.

A leading Pharma manufacturer with a blockbuster drug aimed to minimize disruption of its customer relationships while ensuring team efficiency and maximum revenue growth. After running a number of potential scenarios, the company ultimately used an innovative territory alignment and resource allocation methodology that protected these key accounts while exceeding growth targets by ~5%.

Future outlook

Overall, Sales Champions continue to achieve revenue targets year over year by:

  1. Focusing on key market trends, like digitalization, solution selling, and personalized medicine,
  2. Prioritizing customers and not just segmenting them,
  3. Keeping track of how sales reps spend their time, and,
  4. Investing in customer retention.
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