Matt Bartels: I’m your host here, Matt Bartels. We’re here at Alexander Group Insights series, and I’m joined by Craig Ackerman. He’s here to share with us some of the latest research from our biotech and pharma commercial studies. Thanks, Craig, for being here.
Craig Ackerman: Thanks, Matt. It’s great. Great to be here! Great to be talking about this great subject.
Matt Bartels: So tell us a little bit about the study. What were the main objectives and give us the overarching findings.
Craig Ackerman: So the main objectives was of the study were we wanted to go out there and inventory commercial practices. We also wanted to inventory how physicians wanted to interact with the industry, predominantly the reps and other resources that interact with the physicians from the industry. So we surveyed over 50 biotech and pharma companies across different therapeutic areas, different revenues, different stages of development. And so we inventoried their practices. What was interesting is the commercial model within the industry has changed significantly over the years. And when I when I say over the years, I’ve been doing this for about 20 years here at Alexander Group. The complexity of the industry has grown tremendously. So we have these very, very complex products and diagnostics coming to market. And as such, we really need to rethink our commercial models and make sure that we’re continually evolving those commercial models. And that’s really why we do this research to understand in the market what are companies doing? What’s the advanced thinking in regards to commercial models? And then how are folks actually implementing these models?
Matt Bartels: Yep, that’s what we do here at the Alexander Group. We help organizations and leaders optimize the go to market model. So from the research you mentioned that there were four different types of commercial models. Tell us a little bit about those and how do they differ.
Craig Ackerman: As far as commercial models? We went and set course and said, can we categorize the different commercial models that exist today? So we have the first one, which we call really the classic model. It’s your traditional model that’s been in the industry pretty much forever, certainly over my time with the Alexander Group. And certainly, well before that. Where you basically rely predominantly on reps and sales manager who are responsible for selling to selling to prescribers, basically influencing their prescribing behaviors and habits. There’s been a lot of talk in the industry over the years around the patient centric model. So we have the first model is what I call the classic. With the talk of the patient centricity over the years, we had the emergence of what was called the patient centric model. So the patient centric model, you start seeing roles such as patient educators, case managers, clinical educators. It’s really dedicated to providing patient centric support and education. This model is found in about 17% of companies. There’s also another model that says we’re payer focused. And really what this means is we’re putting a greater emphasis on reimbursement and market access.
In this model, you start seeing roles such as managed care specialists, key account managers, payer account manager, reimbursement specialists, health economics and outcomes research. Really, there’s a large focus in the commercial model on building relationships and influencing payers to influence formulary placement. You see that this is about 21% of companies. The remaining companies fall into what I call the modern models, about 42% of companies. And so this merges everything together. It also starts introducing marketing digital omni channel. So you have elements of obviously the classic model because the sales rep is very, very important. That’s where we started this conversation. You have elements of the patient centric model. You have elements of the payer focused model that all culminates in the modern model. And for the advanced therapeutics that we’re seeing coming to market, this is really the model that over the next, call it 3-5 years, we expect more and more companies to be in this model and this will be the prevalent model. Currently, only about 42% of companies are using the modern model.
Matt Bartels: Interesting. So we got. So let me see if I can sum up. So we got the classic model. We got a patient centric model. We got about 17% of orgs using that. We got a payer focused model. And then we have this modern model that people are, you’re saying are going to be gravitating towards and is the future. What’s the difference? Why would you choose one over the other, or is one model more successful than the others?
Craig Ackerman: I’m not going to make a judgment on any one model. I think in today’s world everyone needs some type of payer focus just because the payers are so vastly important in the influence of prescribing habits. So we need some element of payer, but you don’t need to go all the way towards the payer focus to have that. So a lot of it depends on your therapeutic. How new is it to market? How known is the therapeutic? Is it a broad based therapeutic? Is it a fairly narrow market therapeutic? Are you a small biotech who’s trying to commercialize on your own, or are you a large, well-established pharma company? All of these play into what type of model you should drive towards. So there’s no right or wrong answer here. It’s really just situational and what are we trying to drive as a company. And that’ll identify which model is best. Quite frankly, many organizations start with the classic model and then over time evolve into the modern model as the business grows, especially with complex products, it’s really, really hard to make a business case in some cases to say, we’re going to build out the entire modern model in 1 big bang.
So many start with start smaller and build up, and also make sure I think another key component I mentioned before how very, very important they are. I will also mention everyone talks about patient centricity. Very few people actually do this really, really well. There’s very few, in my opinion, very few models that are purely patient centric. I’ve had discussions with colleagues in the industry around this over time. Um, it’s a hard model to build. It can be built and it can be part of the modern model. We’ve actually helped build many of these models. And what was interesting about those builds is those builds occurred over 7 to 10 years, and there was a lot of experimentation. And so that’s where you pick up on what are the advanced practices. Lots of piloting, because the therapeutics become more complex, there’s going to be more unknown. We’re going to have to try new things as a as an industry.
Matt Bartels: Sounds like a biotech and pharma industry is going through a lot of very exciting and dynamic times. Sounds like there’s a lot of opportunities and challenges for companies to grow and differentiate themselves. This research sounds like it’s really laying out some very good information for leaders. What are the other elements that are in the research? Just to summarize, we can talk about those on in a later conversation. And then what would you say are the keys to success of making sure that you’re truly aligning your commercial model to the customer needs?
Craig Ackerman: Some other other a couple other points around moving to modern models and patient centric models are good for business. So we find those employing modern models and patient centric models are actually growing at a rate of 50% more than their peers. And their productivity is about 25% higher. So there’s significant benefits in looking at these models. We always recommend at the Alexander Group to look at your model every year and say, if we were to start from scratch, what would our model look like that can provide you with a true North that you want to try to drive to over? Maybe not a 12 month period, maybe over 18 to 24 month period, but you always have to have that true north saying, where do we want to head to? So if we’re in a classic model today, we want to head to a modern model. And how do we get there is a good question to ask yourself on almost an annual basis. You also have to look at your therapeutics launch is really, really important. This is an industry that’s really just there’s new product launches almost daily. You read about them in the press. We talk to clients. A lot of our work involves new product launches. So how do new product launches also influence your design of a commercial model? As far as other things in the research? Obviously, sales compensation is always an important topic. We do a lot of research around productivity. We also do a lot of research around how physicians want to interact with not only reps, but other roles within the commercial model. So I think in the future, Matt, you and I can touch on some of this other research, but if you have any questions about the research we’ve conducted or if we can help in any way, even if you just want to bounce ideas off of us, please let us know, because this is what we do every day. We help companies create and evolve their commercial models.
