In the early days of the COVID-19 pandemic, biopharmaceutical companies responded with forceful and robust actions: They pulled back on promotional efforts, strengthened supply chains, and expanded customer and patient support programs. As the U.S. continues to reopen, biopharma companies will need to carry these early efforts forward while also addressing the demands of the “business unusual” phase. How companies choose to navigate the next 18 to 24 months will determine which ones achieve the most success when the industry eventually enters the “new normal.”
By all indications, COVID-19 will have the greatest impact on the healthcare sectors that were held captive by the global standstill, but biopharma still will feel its effects. ZS estimates that across the industry, biopharma’s 2020 revenue will be up to 11% lower than previously projected, and individual companies’ results will vary based on their therapeutic portfolios. But the impact on pharma won’t just be financial. The COVID-19 crisis will usher in fundamental, long-term changes to pharma’s business environment.
Many companies will be tempted to make incremental adjustments until the dust settles, and then revert to some version of the “old normal.” But that would be a mistake. Biopharma has an opportunity to create new approaches in areas where innovation has been lacking for decades. We’re already seeing changes to biopharma’s business environment, many of which will endure in the new normal. Whether these changes are completely new effects of the crisis or accelerations of trends that were already underway, they point to the wide-ranging transformation that’s needed. We’ve identified four lasting structural changes to the market that biopharma will need to adapt to in order to win in the future:
1) Individual treatment journeys will be fluid and diverse. In pharma’s old world, a disease area could be universally understood through the lens of a patient’s journey through awareness, diagnosis and treatment. While there might have been different segments of patients and providers, the experience generally was similar across markets. But the pandemic has led to greater variation in most therapy areas.
When, where and how patients seek and receive treatment has changed, and as re-entry unfolds, each decision that stakeholders make will affect the patient journey. Institutions will need to decide which services to offer at each site of care and how to transition more care to patients’ homes and alternative sites. Patients will need to decide where they’re willing to go for care, what tests or risks they’re willing to take, and what treatments are necessary and urgent. Economic and cultural factors, along with a region’s success or failure in containing the coronavirus, will exacerbate geographic heterogeneity. Each region’s economic activity and recovery path will look different, driving even greater variation across patient groups.
2) Customers will set the terms of engagement. We’ve seen the COVID-19 crisis drive an explosive surge in telehealth. Despite years of investment in the technology by many health systems, adoption always lagged the hype and potential. Until March 2020, telehealth was held back by physician licensing restrictions, reimbursement limitations and other typical challenges to new technologies. Now that the crisis has knocked down most of telehealth’s barriers, many physicians and patients say that they’ll continue to enjoy telehealth’s convenience in the new normal.
Pharma’s commercial model has seen similar adjustments: With the in-person sales model disrupted, many field interactions have transitioned to virtual channels, augmented by on-demand education offerings and interactions with providers and patients via webinars, YouTube videos, “find a doc” partnerships, and more. This new, more on-demand approach to engagement will continue to be required of biopharma’s commercial and medical teams after the crisis as consumers have come to expect convenient, online and on-demand access to a wide variety of services and products. Patients and providers likely will continue to demand and expect the same level of convenience, responsiveness and flexibility in the new normal.
3) Economic and care delivery challenges will open the door to innovation. During the pandemic’s acute phase, innovation happened out of necessity: Regulators and payers removed barriers to access and traditional competitors established partnerships to quickly advance treatments and prevention measures. The need for innovation is likely to persist. Economic analysts predict imminent state budget shortfalls, while providers are suffering dramatic financial consequences and payers anticipate challenges as care volumes rebound faster than the economy.
These conditions will bring increased scrutiny on pharma pricing. But they also offer an opportunity to re-envision pharma’s role—and its value—in the healthcare system. Health systems will need to manage more patients with fewer resources. Payers will want to better understand the value of their treatment options. Patients will want education about their medicines’ potential interactions with coronavirus. And regulators, having seen the benefit of allowing room for innovation, will continue to be receptive to new ideas that can benefit patients and the rest of the healthcare system. These compelling needs will make pharma’s stakeholders receptive to new ideas about how the industry can provide even better value going forward.
4) Decision-making really will be more centralized. The corporatization and consolidation of U.S. health systems will continue, and likely accelerate, during the new normal due to the economic impact on many institutions. The crisis has also called out challenges related to sourcing policies, site of care prioritizations and others. Control of decision-making will fall more to central administrators, who with the increasing aid of information technologies, analytics and artificial intelligence will continue to push value controls and other measures to support organizational objectives and economics.
The pace and depth of these changes will vary by location. Regardless of how each change unfolds, it will be significant enough to require companies to modify how they operate.
For the biopharma industry, commercial model innovation has long been hindered by a prevailing theory of “first-mover disadvantage,” or the perception that unless everyone changes, those who innovate too far from the norm will carry more risk than reward. Long investment cycles, an intense regulatory and compliance environment, and a firm industry-wide consensus around go-to-market strategies reinforce conservatism in commercial pharma organizations.
But the COVID-19 crisis and subsequent response have created a moment of equality regarding innovation and disruption. It has presented an opportunity for change, coupled with a clear need to do so.
Moving forward without acknowledging these changes could alienate customers. Regardless of whether a company is accustomed to driving disruption or adjusting its approach to suit future needs, here are four “no-regret moves” that need to be built now to meet customers’ needs in the new normal:
No-regret move No. 1: Develop a local insights generation capability. As patient journeys become more diverse, pharma companies will need to better understand patients’ needs and identify the right points of engagement. The pace of change is high, so this understanding can’t be achieved through lagging annual or project-based research, or via anecdotal feedback from the field or advisory boards. Therefore, companies need to develop a rich and complete real-time understanding of patient, physician, provider and payer needs as they emerge and evolve.
The solution requires AI-enabled local intelligence engines that can identify and predict shifts in treatment dynamics; ongoing integration of opt-in “voice of the customer” data-gathering mechanisms; increasingly formal CRM systems that can aggregate field-generated, cross-functional intelligence in a usable form; more comprehensive and nimble primary research methods focused on key markets; and the ability to integrate these programs to inform strategic decisions. For many companies, this will require dramatic improvements to their insights organizations to enable better understanding of these local needs and points of engagement.
No-regret move No. 2: Reimagine marketing from “push” to “pull.” The crisis has taught pharma’s customers to expect a better, more responsive industry. They want companies to adapt to their present needs (e.g., the dramatic focus on patient services during crisis mode) and to be flexible based on their channel preferences This is counter to the very nature of the pharma marketing model to date, which has centered on “push” messages controlled by channel and frequency. As customers find their way forward in new healthcare delivery models and experiences, they will dictate where and how biopharma fits into their world. The new mission of marketing must be to create the “pull” and drive an experience worth engaging with.
In the long run, pharma needs to aspire to deliver a coordinated, well-timed and meaningful customer experience regardless of the channel. The future will require companies to further adapt their promotional plans by quickly adjusting to changing local needs, employing more digital tactics, designing an office-centered approach to be led by key account managers, and offering more and better solutions and services.
Once companies have strengthened their customer insights capabilities, they’ll have a rich, complete understanding of customer needs and how those needs have evolved. Reimagining marketing means building on the insights through three core capabilities:
- Meaningful interventions at speed. Pharma largely has been focused on message development and common program interventions like patient support programs. Leveraging design thinking against an insight to prototype services and solutions to customers’ real needs requires a different mindset and skillset. Companies must design, deploy and learn, while also developing a process to approve and implement quickly. Leading companies are already thinking through plans to develop an incubator construct, assemble a cross-functional team and establish a process to enable rapid deployment.
- Adaptive content development. Historically, most content was built for personal detailing use and then adapted for digital and other channels. With this approach, content changes often were made at key moments such as the availability of new data or to adjust to a strategy shift. Instead, an end-to-end content development and management process allows for storytelling across channels in more modular segments. Before COVID-19, some leading-edge pharma companies had begun to build A/B testing capabilities. This type of adaptive content development will be needed in the new normal to move customers along the inherently unique patient journey.
- Always-on marketing. Although pharma’s push engagement approach has been enhanced in recent years with predictive and affinity analytics to enable some customization, most marketing interventions still are tied to annual planning updates or event-based actions and reactions. Marketing needs to function like a perpetual launch room, nimbly reacting to insights to create and sustain a valuable relationship with customers. This approach requires companies to have the right infrastructure, analytics and cross-functional team in place to make the right shifts at the right moment. With personalization and localization as dominant themes in the new normal, having the agility to meet customers where they are is no longer optional.
No-regret move No. 3: Modernize the customer engagement model during re-entry. Traditionally the dominant channel in pharma’s commercial model, the sales force has experienced declining access to physicians over the past decade. But during the COVID-19 crisis, nearly all healthcare providers cut off physical access to sales reps. In fact, ZS research found that more than 40% of primary care providers and about one-third of specialists preferred to stop all contact with pharma sales reps. Access will remain limited and unstable during the next 18 to 24 months, but even in the new normal, ZS research suggests that reps will have access to 20% to 30% fewer physicians than before the crisis.
Redesigning the marketing approach as outlined in no-regret move No. 2 will help ensure pharma’s relevance to its customers, both in personal interactions and across other channels. But to further transform the go-to-market approach, companies need to reimagine the field force and the roles that need to come together to add value in a different way as customers’ needs evolve.
Today, the sales force acts as the most effective and persistent “push” channel, and training traditionally has focused on delivering risk-averse, planned messages. To become a responsive and effective “pull” channel in the future, companies will need to make significant changes to sales reps’ roles, activities, skills and capabilities. Companies now need to arm salespeople with the right resources and tools and empower them to listen carefully to customer needs. Then they need to deploy resources to meet those needs with the right combination of in-person and virtual details, and across other channels. Companies need to enable sales reps to form cross-functional collaborations with other field roles and effectively partner and “boundary span” to stretch and meet the complex needs of provider groups and institutions—whether they need help triaging patients, establishing new services or understanding clinical data.
Designing the rep of the future and implementing cross-functional changes to the go-to-market strategy likely will be the hardest changes for pharma. Policymakers continue to show increased openness to innovation and ideas that help pharma companies add valuable services and programs for customers, and ultimately for patients. Now is the time for pharma companies to envision how field deployment can create more value and identify the changes needed to start the process.
No-regret move No. 4: Rebalance the effort across all customers. Pharma has been engaging with an expanded set of customers including, payers, patients, organized providers and other stakeholders. But with limited exceptions, most sales and marketing investments have remained focused on physicians and their colleagues and staff. However, by rebalancing the customer approach, pharma will be more equipped to provide solutions that will stick 18 to 24 months from now.
In the new normal, customer-led engagement could help pharma companies partner with providers on population health initiatives and create field responsibilities that contribute to patient successes—and other activities that might have been risky in the past due to stringent regulations. It’s clear that large healthcare systems will come out of the crisis with more control and tighter margins. But they’ve also expressed more willingness to partner with manufacturers. For example, an IDN executive who participated in a ZS survey said, “Pre-COVID, I would rate our willingness to partner with manufacturers at a four [out of seven]. Now we’re at a six. I’m curious how creative manufacturers can be.” COVID-19 has forced biopharma companies to diversify its services and solutions—and quickly. We expect that momentum and the asks across customer types to continue. In fact, we’ve already seen it in the partnerships that pharma has established to pursue alternative sites of care.
Inertia has kept organizations squarely focused on the physician and satisfied with simply piloting small initiatives—and that could continue to be the case if innovation doesn’t become a priority now. Real change requires deep investments in talent and energy. It requires more direct engagement and sophisticated capabilities in B-to-B engagement, co-creation and account management. And it requires internal speed, collaboration and agility to create evidence-based approaches to improve outcomes and value. Companies that have the space and mandate to design innovative and effective solutions in this approach will see a greater return on investment and create true differentiation.
Biopharma has responded admirably to the more acute demands of the COVID-19 crisis. As it manages through the “business unusual” phase in the next 18 to 24 months, there is a choice to be made: adjust or transform. First-mover disadvantage is down, and the opportunity exists to advance the capabilities now that will be needed to win in the new normal. But that means driving real change—the kind of change that can only happen through building capabilities, developing partnerships, recognizing the new skills, talent and mindset needed, and exploring innovative solutions. After all, the goal is to create value for the customers.