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•	 Cognizant 20-20 Insights




A Framework for
Commercial Transformation
Facing daunting hurdles, pharmaceuticals companies are leveraging
a combination of efficiencies, effectiveness, agility and innovation
to cut costs, increase speed, reduce risk and improve revenue.

    Executive Summary                                    That is, potentially profitable niche and
                                                         late - lifecycle brands and molecules are
    The pharmaceuticals industry’s litany of business
                                                         marginalized, with some brands under- or
    challenges is all too familiar: patent expirations
                                                         non-promoted, while too many resources
    and loss of exclusivity and revenues; declining
                                                         are allocated to old customer engagement
    R&D and commercial innovation; continued
                                                         and marketing models. Traditional marketing
    pricing pressures; regulatory uncertainty;
                                                         infrastructure also is largely unsuited to the
    increasing competition, particularly from
                                                         inevitable retooling required to market more
    generic manufacturers (see Figure 1).
                                                         individualized products and therapies to new
    What may be less familiar is how pharmaceuticals     industry players such as accountable care
    companies’ commercial organizations should           organizations (ACOs).
    correlate each of these challenges to a concrete
                                                         The results: Lost revenue opportunities,
    corporate finance benchmark: revenues,
                                                         challenging cash flows, greater operating
    operating costs and capital investment.
                                                         costs and little financial or process flexibility
    For example, commercial teams need to
                                                         available to support innovation. This indicates
    wring more revenue out of mature brands
                                                         a clear need to transform commercial
    and new molecules. That objective is achieved
                                                         strategies and operations to align with today’s
    in part by reducing operating costs, shifting
                                                         realities and improve the top and bottom line
    investment to support the best opportunities
                                                         while remaining nimble.
    and launching new products faster and more
    effectively. Simultaneously, steps toward            To accomplish this transformation, leading
    greater efficiency, effectiveness and innovation     pharmaceuticals companies are applying a set
    also help prepare commercial teams for               of powerful value generation levers — agility,
    dealing with other major industry shifts, such       efficiency, effectiveness and innovation — to
    as marketing to smaller targeted populations.        their commercial operations. The results
                                                         transform not just commercial operations, but
    Yet many commercial models remain entrenched
                                                         the entire enterprise.
    in traditional views of product lifecycles.




     cognizant 20-20 insights | july 2012
Industry Business Challenges

                      •  n 2011 (through September 30), just 31 NME applications were submitted to the
                        I
    Pipeline:           FDA for approval. 1
    Declining
                      •  1% fewer drugs approved between 2006-2011 than in preceding five years. Only
                        1
    Approvals           five blockbuster launches expected by EOY 2012.



                      •  95 billion at risk to generic competition in the U.S. by 2014. 2
                        $
   Generics:
 Loss of Market       •  pending on generics, which now account for 80% of all dispensed prescriptions,
                        S
                        increased $5.6 billion in 2011; retail prescriptions declined on average 1.1% and
  Exclusivity           fell more than 3% in 10 U.S. states. 3


  Missed Brand        •  iche market brands being marginalized.
                        N
  Opportunities       •  on-promoted brands common.
                        N



    Misaligned        •  15 billion in ineffective promotional spending. 4
                        $
   Promotional        •  011 spending using all classes is $29.3 million; $15.7 million is spent on detailing.
                        2
      Spend           •  raditional models align with outmoded view of product lifecycle.
                        T




Figure 1


Empowering Value Creation                                     disaggregates the end-to-end value chains
                                                              performed by a single company into a
Efficiency, effectiveness, innovation and agility
                                                              networked collaboration, in which each
all create value by reducing operating costs,
                                                              collaborator contributes its core specialties.
increasing cash flows and improving revenue,
                                                              The most common approach today is referred
while minimizing risk and capital investment.
                                                              to as business process as a service, or BPaaS.
Mapping brands, business practices and challenges
                                                              Virtualization reduces capital expense and
to these value-creation levers helps commercial
                                                              provides the company with a predictable cost
operations identify where their key value-
                                                              model related directly to core operating
generation opportunities exist (see Figure 2).
                                                              metrics. In addition, BPaaS solutions enable
• 	 Reducing costs is typically the first lever
                                                             companies to remain technologically current,
   applied to the core commercial processes. By               to collaborate more effectively with internal
   identifying and addressing inefficient spend               and external parties and to support continuous
   in terms of labor, technology and process,                 improvement through very well-defined
   companies can free funds to reinvest in other              service level agreements.
   aspects of their operations where they can
                                                         • 	Revenue growth is achieved with the
   derive incremental commercial value.
                                                              innovation lever, using capabilities such as
• 	 ncreasing effectiveness (speed) is generally
    I                                                         advanced analytics to identify and exploit new
   the second value driver deployed by                        market opportunities, new marketing campaigns
   commercial teams. By establishing clear                    that use digital and social media channels to
   and transparent performance metrics and                    create a more intimate customer connection and
   improvement goals, companies create a                      optimized sales deployment and call patterns.
   culture of continuous improvement. Strong                  Through increased efficiency, effectiveness and
   collaboration between employees and their                  agility, companies free investment to pursue
   business partners results in improved quality,             innovations that drive top- and bottom-line
   reduced cycle time and optimized spend.                    financial results.
•	Reduced risk with improved agility is
   achieved through virtualization. Virtualization



                      cognizant 20-20 insights            2
Opportunities to Enhance Brand Value
• 
  Decouple competing                                                                                                           • Align resource
                                                                                                                                
    brand resources.                                                                                                             utilization with
                                                                                                                                 promotional lifecycle.
• 
  Strategic “best practices”                                                 Reduce Risk
  partner model.                                                               AGILITY                                         • Drive top line while
                                                                                                                                
                                                                                                                                 optimizing costs.
• 
  Sustainability in a
  dynamic environment.                                                                                                         • 
                                                                                                                                 Extend promotional
                                                                                                                                 lifecycle.
                                                                                                                               • LoE and niche market
                                                                                                                                
                                                                                                                                 launch capabilities.

                                                                           Reduce CapEx,
                                                                         Improve Utilization




                                    Impact on Business




                                                                                                            Improve Revenue
                                      Effectiveness




                                                                                                               Innovation
                                                                          Brand
                                                                        management
                                                          Flexibility                        Bottom-line
                                                         of Resource    Reduce Operational Impact, Market
                                                         Allocation,       Expenditure      Opportunity
                                                            Quality

• 
  Establish
  best practices.

• 
  Improve compliance.                                                                                                         • 
                                                                                                                                One-sourcing
                                                                                                                                agency model.
• Leverage product
                                                                          Reduce Cost                                      • Optimize lifecycle
                                                                                                                               
  lifecycle insights.                                                         Efficiency                                        stage spend.
• Reassess KPIs across
                                                                                                                           • Variabilize for peak
                                                                                                                               
  targeted brands.                                                                                                              support requirements.



Figure 2

The Commercial Value Chain                                                          future, the end -to-end value chain can be
                                                                                    segmented into information activities, service
Creating a roadmap is critical to deriving maximum
                                                                                    activities and insight activities (see Figure 3).
value from transformation while managing risks.
In mapping the current state and the desired

Activities Comprising the Commercial Value Chain
     INFORMATION ACTIVITIES                                      SERVICE ACTIVITIES                               INSIGHT ACTIVITIES

       D
        ata Strategy and                                      O
                                                                perations                                   esource Optimization:
                                                                                                            R
       Management:                                             Field Support:                                  •  ultichannel Optimization.
                                                                                                                 M
        •  ata Acquisition Strategy.
          D                                                      •  eporting Operations.
                                                                   R                                           •  ales Force Size
                                                                                                                 S
        •C
          ustomer Master Design                                • ncentive Compensation
                                                                   I                                             and Structure.
          and Management.                                          Administration.                             •  ajor Alignments/
                                                                                                                 M
        •M
          aster Data Management.                               •  lignment Management.
                                                                   A                                             Realignments.

                                                               Reporting (Performance                       R
                                                                                                             evenue Generation:
                                                               and Execution):                                 • nnovative Customer
                                                                                                                 I
                                                                 •  arketing.
                                                                   M                                             Engagement Models.

                                                                 •  ales.
                                                                   S                                           •  ayor Contracting
                                                                                                                 P
                                                                                                                 Strategies.
                                                                 • Managed Markets.
                                                               Performance Management:
                                                               
                                                                 •I
                                                                  ncentive Compensation
                                                                   Plan Design.
                                                                 •  uotas and Objectives.
                                                                   Q
                                                               Tactical Planning:
                                                               
                                                                 •  argeting/Call Planning.
                                                                   T
                                                                 •  ultichannel Coordination.
                                                                   M


Figure 3



                               cognizant 20-20 insights                             3
Efficiency opportunities usually arise in                                                        Integration often takes place along multiple
high-cost information activities. Effectiveness                                                  dimensions simultaneously within companies
opportunities abound among the services                                                          (see Figure 5). For example, some companies
activities that typically include significant                                                    created global approaches to sales resource
manual intervention and handoffs; efficiency                                                     optimization more than a decade ago while
opportunities definitely exist here as well.                                                     doing end-to-end value chain integration within
Insight activities drive innovation opportunities                                                just their U.S. affiliate. Others have implemented
with new ideas from advanced analytics to                                                        multichannel optimization approaches across
help shape sales and marketing strategies.                                                       their portfolio while “vertically integrating”
Virtualization can occur in any part of this                                                     across just their sales channel.
end-to-end stack of activities, referred to as                                                   In today’s U.S. pharmaceuticals environment,
“vertical integration” (see Figure 4).                                                           where significant differences have risen across
In addition to reexamining the end-to-end                                                        geographies, the trend is to support local
commercial value chain, leading companies also                                                   strategies using back-end, integrated platforms
consider the integration (and sometimes the                                                      that can be customized efficiently and effectively
standardization) of activities across channels,                                                  to address local needs.
brands and the emerging dimension of geography.


Virtualizing the Activity Stack
    Successful “vertical” integration is a critical success factor of analytics… virtualization can
    reduce risks.

                                                                                Revenue/Value

                                                                                  Optimization
            Each activity can move along the
               virtualization dimension.




                                                                                    Planning         Insight activities typically move along the
                                                                                                     innovation dimension.
                                                                                  Performance
                                                                                                     Service activities typically move along the
                                                                                                     effectiveness dimension.
                                                                                   Reporting
                                                                                                     Information activities typically move along
                                                                                   Operations        the efficiency dimension.

                                                                                  Data Mgmt.

                                                                                        Data

Figure 4


A Globally Distributed Value Chain
 … and the value of analytics increases significantly when one integrates across channels, brands
 and geography.




                                                                              Brand D
                                                                              Brand C
                                                                              Brand B
                                    Digital
                                               Tele-Sales
                                                            Service
                                                                      Sales




                                                                              Brand A


Figure 5



                                                              cognizant 20-20 insights           4
Opportunities for Value Creation                          issues and enable the collaboration and
                                                          quality data flows required for innovation.
Immediate opportunities for improving
efficiency, effectiveness, agility and innovation         Each of the areas offers opportunity for
exist across the spectrum of commercial                   improving revenues and reducing costs. The
information, services and insights activity.              key to achieving these benefits is mapping
New operating models in six areas in                      each solution and its components to the
particular — virtual brand management (VBM),              value-driving levers, understanding how
virtual sales operations (VSO), managed                   one lever affects another and developing a
markets (MM), multichannel management                     transformation roadmap that outlines what
(MCM), digital marketing (DM) and knowledge               value levers will be most effective over time
and insight (KI) — address current market                (see Figure 6). Concrete metrics for each
challenges, from reducing costs to squeezing              lever enable the commercial organization
more revenues from maturing brands. They                  and its trusted third-party service provider to
also can flex to encompass future industry                track results and adjust tactics.


Key Value Drivers

                                                                                         Value Drivers
 Opportunity                            Business Need
                                                                                    Innov.   Effic.   Effect.

                  A strategic brand management solution that offers an efficient
      VBM             model to promote mature or under-promoted brands to
                                 maximize financial contribution.


                  An end-to-end sales operations solution, enabling the client to
      VSO           optimize its cost structure while improving performance.


                   Contract administration operations and analytics support to
       MM                    ensure effective contract management.


                    Plan, execute and monitor promotional campaigns across
      MCM            channels and customer segments to maximize financial
                                    contribution of a brand.

                  Capabilities to help the marketing team to effectively leverage
       DM          digital channels to promote their brands and collaborate with
                                         HCPs and patients.

                    Technology platform that provides access to critical market
       KI        intelligence to improve performance in an increasingly complex
                                      and competitive market.

      Primary
      Secondary

Figure 6




Virtual Brand Management                                  maximize the commercial potential of a given
                                                          brand. To achieve those goals, they are turning
Though best practices for mature market brand
                                                          to virtual brand management (VBM). This allows
management are limited, leading pharmaceutical
                                                          these companies to virtualize brand planning and
companies want more efficient and effective
                                                          management using hosted solutions, thereby
approaches to managing their brands from
                                                          reducing operating costs and “variabilizing”
launch through and beyond patent expiration to
                                                          fixed costs while effectively managing revenue.
exploit competitive advantages and ultimately


                      cognizant 20-20 insights             5
Virtual Sales Operations                                    sales planning, deployment, reporting, data
                                                            management and analytics (see Figure 7).
Fragmented IT and business solutions
                                                            Virtualizing these operations via the cloud
characterize most pharma sales operations,
                                                            reduces costs, eliminates redundancy and
leading to higher costs and reduced
                                                            waste and cuts cycle time. VSO also supports
effectiveness. Leading companies are responding
                                                            continuous innovation to respond to market
by implementing virtual sales operations (VSO).
                                                            changes by leveraging technology, new business
This concept leverages the power of cloud-
                                                            models and enterprise-wide collaboration.
based platforms to integrate and streamline

VSO at a Glance
            Program                      Project                     Data                        Back Office
           Governance                  Management                  Mgmt/MDM                       Support



                                                     Sales
                                                    Planning

                                                 Targeting, Tactical
                                                  Effort Allocation,
                        Reporting             Incentive Compensation         Deployment


                       Dashboards,                                      Alignments, Alignment Mgmt,
                  Performance Measures                                 Field Force Collaboration, CRM
                                                     Virtual            Implementation, Call Center,
                                                    Sales Ops               Sample Management
                                                    Solution
                    Value-Added                                                 Data
                      Services                                               Management

                   Sales Force Analytics,                                    Data Warehouse, Data
                     Aggregate Spend                                    Governance, Data Management,
                                                                        Affiliations Mgmt. and Support

             Alliance                          Samples and Fleet Mgmt., SF Training, Speaker Programs

Figure 7

Managed Markets                                             Multichannel Management
With managed and accountable care markets poised            As industry leaders deploy marketing campaigns
to grow, and the fact that one or two managed care          across multiple channels, they require a new
contracts can have disproportionate effects on sales,       approach to managing, measuring and optimizing
top pharmaceutical companies are adopting                   results across all those channels simultaneously.
management strategies that span the managed market          Using an integrated multichannel management
contract lifecycle — from contracting strategies            approach offers them end-to-end capabilities
and account planning to contract execution,                 that encompass the entire campaign manage-
performance measurement and collaboration                   ment space, from strategic planning, segmentation
with sales and marketing operations.                        and targeting refinement through evaluation
                                                            activities such as channel optimization and ROI
This approach enables companies to devise and               (see Figure 8).
execute effective account-level plans, monitor
                                                            The companies gain efficiencies by eliminating
their implementation and measure their perfor-
                                                            or reducing unproductive channels and offerings,
mance across payers, physicians and patients. It
                                                            including digital, leading to reduced or re-
improves contract administration and payment
                                                            optimized spend, and by applying standardized
processes, even under complex contract structures.
                                                            processes across brands. The multichannel
Further, it provides insights into rebate strategies,
                                                            management program leverages a forward-
revenue capture and performance
                                                            thinking approach to market events and business
                                                            changes to arrive at solutions based both on past
                                                            data and future expectations.



                          cognizant 20-20 insights           6
Modern Multichannel Management

       Face to Face
       Interactions (inc. Details)


       Meetings                                                        Multichannel
       and Conventions                                                   Customer              Capture and analyze
                                        Delivering designed             Analytics              data continuously to
       Call Center                   campaigns in an integrated                               inform segmentation,
                                      fashion across channels.                                    messaging and
                                                                                                   channel mix.
       Starters


       Speaker Events                     Customer                                            Brand Planning
                                         Interaction
                                                                    MultiChannel                 Campaign
                                         Enablement                 Management                 Management
       E-Marketing
       E-Detailing


       Relationship                  Creating consistent digital
       Marketing                     and paper-based creative
                                      content and messaging                                     Conducting customer
                                          for all channels.            Digital Content
       Product and                                                                           segment-based planning with
                                                                         Management          customizable messaging and
       Disease Sites
                                                                                              segment-based marketing
                                                                                                objectives for brands.
       Social and Professional
       Networks (Social CRM)



Figure 8

Digital Marketing                                                  Knowledge and Insights
Innovative pharmaceuticals companies are                           The ability to extract and disseminate insight from
realizing the full potential of digital and social                 data and then rapidly move from insight to action
media channels by using powerful solutions to                      is a crucial competitive differentiator. Building on
improve data access, integration and analysis.                     an integrated model of primary research, secondary
“Big data” platforms delivered via the cloud                       data sources and sophisticated analytics provides
provide cost-effective, flexible ways to conduct                   an array of information advantages applicable
advanced data experimentation and modeling                         across the commercial value chain, from new
to uncover formerly unattainable insights about                    product development to designing a multichannel
online consumer behaviors. This flexibility also                   campaign to measuring ROI. With solid knowledge,
enables more rapid prototyping and modeling                        data and insights, pharmaceuticals companies
to correlate the business effects of increasing                    can quickly create more effective messages
digital activity.                                                  customized to more specific targets disseminated
                                                                   through the most appropriate channels.
These rich data interactions enable pharmaceutical
companies to get near-real-time feedback                           Discovering the insights fueling these advantages
about competitive developments, potential risks                    is an increasingly complex process. New marketing
and general market trends. Companies can more                      channels generate vast quantities of data. Yet
effectively target audiences and improve efficiencies              gaps exist in these “big data” domains. To close
by integrating promotion, competitive intelligence,                these gaps, leading pharmaceuticals companies
market research, etc. by customer segments instead                 are turning to trusted third parties to conduct
of traditional functional silos. They can increase the             primary research and combine it with analysis
reach and engagement of online initiatives                         of secondary data to understand behaviors and
efficiently by partnering with digital and social                  attitudes. Virtualizing primary research, data
media channels that customer targets already                       analysis and delivery via the cloud and global,
use. Further, they can drive customer-centric                      always-available resources lowers the cost of
engagement models by understanding online                          data management while shortening the time to
behaviors and interactions across customer                         gaining insight.
segments and the information required to drive
business transactions.


                           cognizant 20-20 insights                7
Two Approaches to Generating Value                         life sciences companies choose to transform
                                                           gradually; others engage all four value levers
How pharmaceuticals companies engage the
                                                           simultaneously across a range of functions
value levers depends on corporate culture,
                                                           for rapid transformation (see Figure 9). The
familiarity with using third-party service
                                                           following cases reflect these two very different
providers and comfort levels with emerging
                                                           but equally valid approaches.
tools, technologies and business models. Some


Exploring Value Creation Options
                                          Intermediate State
                                                Agility




                          Effectiveness                              Innovation



                Current State                                                 Future State
                   Agility                                                       Agility



                                                                   Ex
                                                  Efficiency




                                                                    te
                                        e
                                      iz




                                                                       nd
                                     im
                                  pt
                                  O




Effectiveness                             Innovation       Effectiveness                         Innovation




                     Efficiency
                                                                                  Efficiency



                                             Enabling Capabilities


Figure 9




Case Study The Evolutionary Transformation

A top-five life sciences company initially chose           its entire commerical planning cycle. Analytics,
to focus on commercial cost reductions, or the             data management and capability development
efficiency lever, partnering with a third-party            have all been virtualized. The service provider
service provider to deliver sales force                    partners in strategy development, planning
size and structure assessments (SFSS) and                  and execution across business processes,
other brand and sales analytics services.                  applications and infrastructure. Results include:
The service provider enabled the company
to further reduce its costs and risks while                •	Operating cost reduction through the managed
improving effec tiveness by identifying                       services delivery model. Analytics costs
cases for vir tualizing selec t commercial                    alone were reduced by approxima tely 30%
operation ser vices .                                         per annum.

The service provider was also able to help identify,       •	The life sciences company deployed a variety
evaluate, implement and monitor innovative                    of tools, delivered as hosted services, which
ways to increase revenue opportunities (see                   reduced sales and marketing costs while
Figure 10 on next page). Now the llife sciences               improving the effectiveness of sales tactics
company teams with the service provider across                with timely flows of more accurate information.


                      cognizant 20-20 insights                 8
Transforming While Performing
     Multichannel                 Subnational SOV           CLM Impact                Information
  Promotional Planning           Impact Assessment     Differential Messaging    Dissemination Framework




  Subnational Rx Driver           Digital Preference   Key Influencer Impact          Brand Launch
      Assessment                    Segmentation            Assessment                 Dashboards




Sample of commercial transformation initiatives that improved efficiency, effectiveness and innovation
while minimizing risks.

Figure 10

• 	The company is growing revenues while optimizing its marketing spend on midlife and mature
   brands by shifting away from the traditional creative agency model and using its service provider
   as a strategic sourcing partner for digital asset and brand management services, from creative
   development through execution. The provider hones the creative strategy and tactics through its
   market research and analytics capabilities as well as its intimate knowledge of the life science
   company’s platforms and tools.



Case Study Rapid Transformation

A global top-10 pharmaceutical company needed          expertise alongside its managed services. The
more flexibility to respond to industry pressures.     pharmaceuticals company and its provider have
Its internal costs were high, driven by inefficient    collaborated to generate value across the
systems, high internal system maintenance              balance sheet:
expenses and an array of vendors delivering a
                                                       • 	Rapid cost savings are achieved by virtualizing
variety of functions. Managing multiple vendors
                                                           n o n co re a c tivities by entrus tin g th e
was inefficient; the combination of costs and
                                                           service p rovid er. This has ena b le d th e
ineffectiveness made it difficult to deliver
                                                           pharmaceuticals company to scale down its
innovation. Yet creating an internal solution
                                                           internal resources, quickly reduce operating
would be capital intensive and risky.
                                                           costs and standardize across platforms.
With the division president’s sponsorship, the             Where the company previously struggled
pharmaceutical company was determined to                   to provide timely, concise and actionable
virtualize all of its U.S.-based commercial                insights to its 5,000-member sales force,
operations to eliminate the company’s high fixed           it now uses an online reporting platform,
costs and to increase cash flow and agility.               developed with its service provider. This tool
To go beyond cost savings and generate revenue             has cut the number of dashboards and
opportunities through innovation, yet minimize             reports from 64 to 32, delivered via one
capital expense, the company needed its trusted            tool instead of 14 and reducing total cost of
partner to offer mature business consulting                ownership by 50%.


                          cognizant 20-20 insights     9
• 	Savings and efficiencies enabled the company                              service provider, the company is designing and
   to pursue greater innovations in applying                                  measuring the impact of new customer
   analytics to sales planning that spanned                                   interaction models, including how to compress
   technology and business functions. For new                                 the time to make a go/no-go decision on
   product launches, performance models more                                  scaling pilots. For a newly created sales force
   quickly determine the activities and behaviors                             being deployed in a new market, the company’s
   that differentiate high performing territories.                            service provider is deploying a mobile account
   In addition, a territory planning and collaboration                        profiling and planning platform to drive rapid
   system was customized and deployed across                                  understanding of patient flows and influence
   the entire sales force within six months,                                  networks.
   enabling the organization to respond more                             • 	The risk of the strategy is greatly reduced
   quickly to changing market conditions.                                     by transferring much of it to a trusted
   Standard, automated functions have been                                    third-party service partner.
   incorporated across business units, from
   refining call plans to improving account                              Evaluating Opportunities for
   affiliations to efficiently cascading marketing                       Commercial Transformation
   spend down to the territory level.
                                                                         Whether a company chooses to engage one
• 	New revenue generation opportunities are being                       or two value levers in a single commercial
   created through new customer engagement                               operations solution like VBM or implements a
   models supported by more effective processes                          comprehensive transformation, it’s important
   and use of “millennial generation” tools such as                      to identify the value creation opportunities that
   tablet computers, smartphones and “anytime,                           align with overall goals and generate roadmaps
   anywhere” data availability. Working with its                         that achieve that value (see Figure 11).

Value Generation Assessment Framework
     Scope Definition                Strategic, Financial,
                                                                           end state                    Final recommendations
          Data                          Operational
                                                                           definition                   and roadmap creation
       Collection                          Analysis


                                                              DIAGNOSTIC
            X Weeks                       X Weeks                   X Weeks                 X Weeks                   X Weeks

     Scope Definition                     Data Collection                Cost Benefit Analysis             End State Definition




Conduct executive level              Conduct interviews,                Conduct cost-benefit analysis    Define level of framework
meetings to understand               workshops and gather data on       of the recommendations and       for each identified activity,
priorities and define the            business objectives, operations,   define a go-forward plan.        including optimization, strategy
scope.                               revenue expectations, profit                                        and risk-sharing approaches.
                                     expectations and pain points.

                                                                                            Final Recommendations 
                   Assessment                        Contribution Comparison
                                                                                                Roadmap Creation




            Conduct a contribution                   Compare the spend on                  Noncore recommended framework
            assessment of core vs.                   noncore activities across             and implementation roadmap.
            noncore activities.                      the portfolio.


Figure 11



                            cognizant 20-20 insights                     10
Understanding the commercial organization’s               and enable sales professionals to participate
priorities is the first step in identifying and           in virtual teams.
defining the scope of transformation activities.
                                                     Trusted Partner Abilities
In particular, defining “core” vs. “noncore”
processes and brand activities and assessing         •	Broad and deep industry expertise.
the resources devoted to these is critical.          	Creating new revenue streams means
“Core” activities and brands are those that            partnering with a managed services
directly generate competitive advantage for the        provider who fully understands life
pharmaceutical company. Comparing projected            sciences processes from a clinical as well as
revenues and returns of noncore activities with        commercial perspective to help generate
the resources allocated to them often helps            and anticipate internal and industry
identify areas that can be managed by a trusted        innovation (see Figure 12). For example, a
service provider, thus quickly reducing costs and      service provider should understand how
improving quality. Concurrently, the commercial        RD, pharmacovigilance and commercial
organization has more resources freed to focus         activities will increasingly intertwine as
on core brands and activities.                         payers demand lower costs and higher
                                                       therapeutic value and safety.
As specific functions reveal value creation
opportunities, it’s important to consider            •	Compelling value proposition.
these factors in determining how and when to         	What bottom line impact will the service
exploit them.                                           provider create through efficiencies,
                                                        effectiveness, agility and innovation? The
Evolutionary vs. Radical                                provider should be comfortable assigning
Transformation Models                                   metrics to its assumptions so results are
• 	Assessing holistic value                            measurable and apparent.
   optimization opportunities.                       •	Partnership capabilities.
	Where do commercial processes overlap              	 fu n c ti o n s e a m l e s s l y w i th a pharma-
                                                       To
  with brand marketing and business technology            ceuticals company, as well as identify
  functions? Applying broader virtualization              opportunities for savings and growth,
  in such areas can net greater savings and               trusted providers must understand
  efficiencies than a gradual approach.                   how life sciences companies operate–
•	Maturity in understanding core                         their cultures, project management and
   competencies and functions.                            emerging best practices — and integrate
	The readiness to entrust noncore activities             this understanding into existing processes
  to an experienced third party is key to                 and templates.
  the speed with which a transformation              Reshaping balance sheets with stronger cash
  strategy generates cost savings and                flows, reduced costs and increased revenues
  enhances revenues.                                 by transforming commercial operations is a
•	Progress in segmenting commercial                 critical requirement for today’s pharmaceuticals
   business support functions to develop a           companies. Traditional commercial models
   global services partnership framework.            are ineffective in the face of existing and
                                                     emerging industry pressures. While transformation
	More life sciences leaders are adopting
                                                     itself can be challenging, experienced service
  new commercial structures easily adaptable
                                                     providers offer the technology, tools and
  to working with trusted third parties.
                                                     practices today to enable companies to
•	Acceptance of connected, mobile,                  embrace it. Further, the power of virtual,
   collaborative technology platforms.               cloud-based managed solutions greatly
	Such technology is proving vital to successfully   reduce the risk associated with adopting
   marketing brands and therapies to smaller,        powerful new ways of extending brand value
   tougher-to-reach audiences, whether physicians,   and positioning for future marketing challenges.
   managed accounts or consumers. Adopting           Whether evolutionary or immediate, now is
   this technology requires a willingness to         the time to choose transformation.
   embrace new customer engagement models




                      cognizant 20-20 insights       11
Factors when Assessing Service
Providers to Transform Commercial Operations



            STRATEGIC PARTNER FOR COMMERCIAL OPERATIONS OUTSOURCING



  Partnership Capabilities                 Value Proposition                             Expertise




                                                                                 Pharma Commercial
      Solution Flexibility                   Risk Mitigation
                                                                                      Domain


                                     •  cale, Experience  Commitment
                                       S
•  usiness Process
  B                                                                          •  ultichannel Sales  Marketing
                                                                               M
                                     •  rogram Management,
                                       P
•  onsulting, Operations
  C                                                                          •  izing, Alignment, Targeting, etc.
                                                                               S
                                       Governance
•  taffing Model
  S                                                                          •  rimary Research
                                                                               P
                                     •  tability: Skills, Depth, Turnover
                                       S




             Soft Skills             Effectiveness  Efficiency                          Analytics



                                     •  ost (Cognizant,
                                       C
• Cultural Awareness                                                         •  pproaches, Tools  Templates
                                                                               A
                                       Internal, Third Party)
• Project Management                                                         •  ata Integration, Reporting
                                                                               D
                                     •  nhanced Capabilities
                                       E
• Communications                                                             •  ulti-industry Exposure
                                                                               M
                                     •  trategic Partnerships
                                       S




    Transition Capability                       Innovation                         Data/Technology




• Experience                         • Thought Leadership                    •  harma Data Management
                                                                               P
• Processes                          • Innovation Process                    • nfrastructure
                                                                               I
• Tools  Templates                  • Implementation Capabilities           •  pplication Development
                                                                               A




Figure 12




                        cognizant 20-20 insights            12
Footnotes
1
    http://www.fda.gov/downloads/AboutFDA/CentersOffices/ OfficeofMedical Product sandTobacco/CDER/UCM282984.pdf
2
    http://ncpo.hdma.net/pdfs/long.pdf
3
    “The Use of Medicines in the United States: Review of 2011, IMS Institute for Healthcare Informatics.”
    http://www.imshealth.com/portal/site/ims/menuitem.d248e29c86589c9c30e81c033208c22a/?vgnextoid=81c63fc68b87631
    0VgnVCM10000076192ca2RCRDvgnextchannel=3e382115cc4be210VgnVCM10000071812ca2RCRDvgnextfmt=default
4
    “2011 U.S. Pharma Company Promotional Spending, Cegedim Strategic Data, February 2012.”
    http://www.google.co.in/rct=jq=cegedim%202011%20pharma%20spend%20ussource=webcd=5ved=0CEIQFjAEurl=ht
    tp%3A%2F%2Fwww.forums.pharma-mkting.com%2Fattachment.php%3Fattachmentid%3D223%26d%3D1331748428ei=xN
    N6T7IV0cytB_flyaACusg=AFQjCNGOdzX4atLOT7IvmlUIShjQIDVwYAcad=rja




About the Authors
Bob Gabruk, Practice Leader, Cognizant Enterprise Analytics Practice, North America, leads a global team of consulting
and analytics experts. His professional experience spans over 20 years, with specific interests in strategic consulting
and quantitative analysis. Mostly recently, Bob has focused on analyzing and influencing key buyer decision-making
processes to create competitive advantage and leveraging transformational change — particularly strategic
marketing, promotional resource planning, selling effectiveness and business development. He has also aligned
human capitalmanagement to business strategy through organization design and process reengineering. Prior to
Cognizant, Bob worked at Deloitte Consulting within its life sciences practice and Titan Research  Technology
in its statistical analysis and stochastic modeling group. He holds an M.B.A. from New York University as well as
a B.S. and an M.S. in mechanical engineering from Virginia Tech. He can be reached at Robert.Gabruk@cognizant.com.


Don Otterbein is a Cognizant Vice President in the Life Sciences Business Unit, leading its Sales and Marketing
Practice. He is responsible for the development, launch and promotion of new, innovative offerings to support the
sales, marketing and managed markets functions within life sciences companies. Don has more than 20 years of
experience in a variety of global leadership roles spanning consulting and services; offerings development; marketing;
and operations within Fortune 500 companies supporting the life sciences industry. He holds a B.S. degree in
computer science from Villanova University. He can be reached at Don.Otterbein@cognizant.com.




                              cognizant 20-20 insights                  13
About Cognizant’s Enterprise Analytics Practice
Cognizant’s Enterprise Analytics Practice (EAP) combines business consulting, in-depth domain expertise, predictive
analytics and technology services to help clients gain actionable and measurable insights and make smarter
decisions that future-proof their businesses. The practice offers comprehen­ ive solutions and services in the
                                                                                s
areas of sales operations and management, product management and market research. EAP’s expertise spans
sales force and marketing effectiveness, incentives management, forecasting, segmentation, multichannel marketing
and promotion, alignment, managed markets and digital analytics. With its highly experienced group of consultants,
statisticians and industry specialists, EAP prepares companies for the future of analytics through its innovative
“Plan, Build and Operate” model and a mature “Global Partnership” model. The result: solutions that are delivered
in a flexible, responsive and cost-effective manner. http://www.cognizant.com/enterpriseanalytics.




About Cognizant’s Life Sciences Practice
Cognizant’s Life Sciences Practice partners with 27 of the top 30 global pharmaceuticals/biotech organi­ ations,
                                                                                                             z
in addition to serving companies in the medical devices, CRO and life sciences product sectors. Whether
it’s driving process improvements to your clinical operations, increasing sales and marketing effectiveness, meeting
regulatory requirements or enhancing drug safety, we are redefining the way companies benefit from and
experience global services. We enable business transformation by delivering consulting, analytics, IT and business
process support to fuel innovation and competitive advantage. http://www.cognizant.com/life-sciences.




About Cognizant
Cognizant (NASDAQ: CTSH) is a leading provider of information technology, consulting, and business process
outsourcing services, dedicated to helping the world’s leading companies build stronger businesses. Headquartered
in Teaneck, New Jersey (U.S.), Cognizant combines a passion for client satisfaction, technology innovation, deep
industry and business process expertise, and a global, collaborative workforce that embodies the future of work.
With over 50 delivery centers worldwide and approximately 140,500 employees as of March 31, 2012, Cognizant is a
member of the NASDAQ-100, the SP 500, the Forbes Global 2000, and the Fortune 500 and is ranked among the
top performing and fastest growing companies in the world.
Visit us online at www.cognizant.com for more information.

                                         World Headquarters                  European Headquarters                 India Operations Headquarters
                                         500 Frank W. Burr Blvd.             1 Kingdom Street                      #5/535, Old Mahabalipuram Road
                                         Teaneck, NJ 07666 USA               Paddington Central                    Okkiyam Pettai, Thoraipakkam
                                         Phone: +1 201 801 0233              London W2 6BD                         Chennai, 600 096 India
                                         Fax: +1 201 801 0243                Phone: +44 (0) 207 297 7600           Phone: +91 (0) 44 4209 6000
                                         Toll Free: +1 888 937 3277          Fax: +44 (0) 207 121 0102             Fax: +91 (0) 44 4209 6060
                                         Email: inquiry@cognizant.com        Email: infouk@cognizant.com           Email: inquiryindia@cognizant.com

©
­­ Copyright 2012, Cognizant. All rights reserved. No part of this document may be reproduced, stored in a retrieval system, transmitted in any form or by any
means, electronic, mechanical, photocopying, recording, or otherwise, without the express written permission from Cognizant. The information contained herein is
subject to change without notice. All other trademarks mentioned herein are the property of their respective owners.

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A Framework for Commercial Transformation

  • 1. • Cognizant 20-20 Insights A Framework for Commercial Transformation Facing daunting hurdles, pharmaceuticals companies are leveraging a combination of efficiencies, effectiveness, agility and innovation to cut costs, increase speed, reduce risk and improve revenue. Executive Summary That is, potentially profitable niche and late - lifecycle brands and molecules are The pharmaceuticals industry’s litany of business marginalized, with some brands under- or challenges is all too familiar: patent expirations non-promoted, while too many resources and loss of exclusivity and revenues; declining are allocated to old customer engagement R&D and commercial innovation; continued and marketing models. Traditional marketing pricing pressures; regulatory uncertainty; infrastructure also is largely unsuited to the increasing competition, particularly from inevitable retooling required to market more generic manufacturers (see Figure 1). individualized products and therapies to new What may be less familiar is how pharmaceuticals industry players such as accountable care companies’ commercial organizations should organizations (ACOs). correlate each of these challenges to a concrete The results: Lost revenue opportunities, corporate finance benchmark: revenues, challenging cash flows, greater operating operating costs and capital investment. costs and little financial or process flexibility For example, commercial teams need to available to support innovation. This indicates wring more revenue out of mature brands a clear need to transform commercial and new molecules. That objective is achieved strategies and operations to align with today’s in part by reducing operating costs, shifting realities and improve the top and bottom line investment to support the best opportunities while remaining nimble. and launching new products faster and more effectively. Simultaneously, steps toward To accomplish this transformation, leading greater efficiency, effectiveness and innovation pharmaceuticals companies are applying a set also help prepare commercial teams for of powerful value generation levers — agility, dealing with other major industry shifts, such efficiency, effectiveness and innovation — to as marketing to smaller targeted populations. their commercial operations. The results transform not just commercial operations, but Yet many commercial models remain entrenched the entire enterprise. in traditional views of product lifecycles. cognizant 20-20 insights | july 2012
  • 2. Industry Business Challenges • n 2011 (through September 30), just 31 NME applications were submitted to the I Pipeline: FDA for approval. 1 Declining • 1% fewer drugs approved between 2006-2011 than in preceding five years. Only 1 Approvals five blockbuster launches expected by EOY 2012. • 95 billion at risk to generic competition in the U.S. by 2014. 2 $ Generics: Loss of Market • pending on generics, which now account for 80% of all dispensed prescriptions, S increased $5.6 billion in 2011; retail prescriptions declined on average 1.1% and Exclusivity fell more than 3% in 10 U.S. states. 3 Missed Brand • iche market brands being marginalized. N Opportunities • on-promoted brands common. N Misaligned • 15 billion in ineffective promotional spending. 4 $ Promotional • 011 spending using all classes is $29.3 million; $15.7 million is spent on detailing. 2 Spend • raditional models align with outmoded view of product lifecycle. T Figure 1 Empowering Value Creation disaggregates the end-to-end value chains performed by a single company into a Efficiency, effectiveness, innovation and agility networked collaboration, in which each all create value by reducing operating costs, collaborator contributes its core specialties. increasing cash flows and improving revenue, The most common approach today is referred while minimizing risk and capital investment. to as business process as a service, or BPaaS. Mapping brands, business practices and challenges Virtualization reduces capital expense and to these value-creation levers helps commercial provides the company with a predictable cost operations identify where their key value- model related directly to core operating generation opportunities exist (see Figure 2). metrics. In addition, BPaaS solutions enable • Reducing costs is typically the first lever companies to remain technologically current, applied to the core commercial processes. By to collaborate more effectively with internal identifying and addressing inefficient spend and external parties and to support continuous in terms of labor, technology and process, improvement through very well-defined companies can free funds to reinvest in other service level agreements. aspects of their operations where they can • Revenue growth is achieved with the derive incremental commercial value. innovation lever, using capabilities such as • ncreasing effectiveness (speed) is generally I advanced analytics to identify and exploit new the second value driver deployed by market opportunities, new marketing campaigns commercial teams. By establishing clear that use digital and social media channels to and transparent performance metrics and create a more intimate customer connection and improvement goals, companies create a optimized sales deployment and call patterns. culture of continuous improvement. Strong Through increased efficiency, effectiveness and collaboration between employees and their agility, companies free investment to pursue business partners results in improved quality, innovations that drive top- and bottom-line reduced cycle time and optimized spend. financial results. • Reduced risk with improved agility is achieved through virtualization. Virtualization cognizant 20-20 insights 2
  • 3. Opportunities to Enhance Brand Value • Decouple competing • Align resource brand resources. utilization with promotional lifecycle. • Strategic “best practices” Reduce Risk partner model. AGILITY • Drive top line while optimizing costs. • Sustainability in a dynamic environment. • Extend promotional lifecycle. • LoE and niche market launch capabilities. Reduce CapEx, Improve Utilization Impact on Business Improve Revenue Effectiveness Innovation Brand management Flexibility Bottom-line of Resource Reduce Operational Impact, Market Allocation, Expenditure Opportunity Quality • Establish best practices. • Improve compliance. • One-sourcing agency model. • Leverage product Reduce Cost • Optimize lifecycle lifecycle insights. Efficiency stage spend. • Reassess KPIs across • Variabilize for peak targeted brands. support requirements. Figure 2 The Commercial Value Chain future, the end -to-end value chain can be segmented into information activities, service Creating a roadmap is critical to deriving maximum activities and insight activities (see Figure 3). value from transformation while managing risks. In mapping the current state and the desired Activities Comprising the Commercial Value Chain INFORMATION ACTIVITIES SERVICE ACTIVITIES INSIGHT ACTIVITIES D ata Strategy and O perations esource Optimization: R Management: Field Support: • ultichannel Optimization. M • ata Acquisition Strategy. D • eporting Operations. R • ales Force Size S •C ustomer Master Design • ncentive Compensation I and Structure. and Management. Administration. • ajor Alignments/ M •M aster Data Management. • lignment Management. A Realignments. Reporting (Performance R evenue Generation: and Execution): • nnovative Customer I • arketing. M Engagement Models. • ales. S • ayor Contracting P Strategies. • Managed Markets. Performance Management: •I ncentive Compensation Plan Design. • uotas and Objectives. Q Tactical Planning: • argeting/Call Planning. T • ultichannel Coordination. M Figure 3 cognizant 20-20 insights 3
  • 4. Efficiency opportunities usually arise in Integration often takes place along multiple high-cost information activities. Effectiveness dimensions simultaneously within companies opportunities abound among the services (see Figure 5). For example, some companies activities that typically include significant created global approaches to sales resource manual intervention and handoffs; efficiency optimization more than a decade ago while opportunities definitely exist here as well. doing end-to-end value chain integration within Insight activities drive innovation opportunities just their U.S. affiliate. Others have implemented with new ideas from advanced analytics to multichannel optimization approaches across help shape sales and marketing strategies. their portfolio while “vertically integrating” Virtualization can occur in any part of this across just their sales channel. end-to-end stack of activities, referred to as In today’s U.S. pharmaceuticals environment, “vertical integration” (see Figure 4). where significant differences have risen across In addition to reexamining the end-to-end geographies, the trend is to support local commercial value chain, leading companies also strategies using back-end, integrated platforms consider the integration (and sometimes the that can be customized efficiently and effectively standardization) of activities across channels, to address local needs. brands and the emerging dimension of geography. Virtualizing the Activity Stack Successful “vertical” integration is a critical success factor of analytics… virtualization can reduce risks. Revenue/Value Optimization Each activity can move along the virtualization dimension. Planning Insight activities typically move along the innovation dimension. Performance Service activities typically move along the effectiveness dimension. Reporting Information activities typically move along Operations the efficiency dimension. Data Mgmt. Data Figure 4 A Globally Distributed Value Chain … and the value of analytics increases significantly when one integrates across channels, brands and geography. Brand D Brand C Brand B Digital Tele-Sales Service Sales Brand A Figure 5 cognizant 20-20 insights 4
  • 5. Opportunities for Value Creation issues and enable the collaboration and quality data flows required for innovation. Immediate opportunities for improving efficiency, effectiveness, agility and innovation Each of the areas offers opportunity for exist across the spectrum of commercial improving revenues and reducing costs. The information, services and insights activity. key to achieving these benefits is mapping New operating models in six areas in each solution and its components to the particular — virtual brand management (VBM), value-driving levers, understanding how virtual sales operations (VSO), managed one lever affects another and developing a markets (MM), multichannel management transformation roadmap that outlines what (MCM), digital marketing (DM) and knowledge value levers will be most effective over time and insight (KI) — address current market (see Figure 6). Concrete metrics for each challenges, from reducing costs to squeezing lever enable the commercial organization more revenues from maturing brands. They and its trusted third-party service provider to also can flex to encompass future industry track results and adjust tactics. Key Value Drivers Value Drivers Opportunity Business Need Innov. Effic. Effect. A strategic brand management solution that offers an efficient VBM model to promote mature or under-promoted brands to maximize financial contribution. An end-to-end sales operations solution, enabling the client to VSO optimize its cost structure while improving performance. Contract administration operations and analytics support to MM ensure effective contract management. Plan, execute and monitor promotional campaigns across MCM channels and customer segments to maximize financial contribution of a brand. Capabilities to help the marketing team to effectively leverage DM digital channels to promote their brands and collaborate with HCPs and patients. Technology platform that provides access to critical market KI intelligence to improve performance in an increasingly complex and competitive market. Primary Secondary Figure 6 Virtual Brand Management maximize the commercial potential of a given brand. To achieve those goals, they are turning Though best practices for mature market brand to virtual brand management (VBM). This allows management are limited, leading pharmaceutical these companies to virtualize brand planning and companies want more efficient and effective management using hosted solutions, thereby approaches to managing their brands from reducing operating costs and “variabilizing” launch through and beyond patent expiration to fixed costs while effectively managing revenue. exploit competitive advantages and ultimately cognizant 20-20 insights 5
  • 6. Virtual Sales Operations sales planning, deployment, reporting, data management and analytics (see Figure 7). Fragmented IT and business solutions Virtualizing these operations via the cloud characterize most pharma sales operations, reduces costs, eliminates redundancy and leading to higher costs and reduced waste and cuts cycle time. VSO also supports effectiveness. Leading companies are responding continuous innovation to respond to market by implementing virtual sales operations (VSO). changes by leveraging technology, new business This concept leverages the power of cloud- models and enterprise-wide collaboration. based platforms to integrate and streamline VSO at a Glance Program Project Data Back Office Governance Management Mgmt/MDM Support Sales Planning Targeting, Tactical Effort Allocation, Reporting Incentive Compensation Deployment Dashboards, Alignments, Alignment Mgmt, Performance Measures Field Force Collaboration, CRM Virtual Implementation, Call Center, Sales Ops Sample Management Solution Value-Added Data Services Management Sales Force Analytics, Data Warehouse, Data Aggregate Spend Governance, Data Management, Affiliations Mgmt. and Support Alliance Samples and Fleet Mgmt., SF Training, Speaker Programs Figure 7 Managed Markets Multichannel Management With managed and accountable care markets poised As industry leaders deploy marketing campaigns to grow, and the fact that one or two managed care across multiple channels, they require a new contracts can have disproportionate effects on sales, approach to managing, measuring and optimizing top pharmaceutical companies are adopting results across all those channels simultaneously. management strategies that span the managed market Using an integrated multichannel management contract lifecycle — from contracting strategies approach offers them end-to-end capabilities and account planning to contract execution, that encompass the entire campaign manage- performance measurement and collaboration ment space, from strategic planning, segmentation with sales and marketing operations. and targeting refinement through evaluation activities such as channel optimization and ROI This approach enables companies to devise and (see Figure 8). execute effective account-level plans, monitor The companies gain efficiencies by eliminating their implementation and measure their perfor- or reducing unproductive channels and offerings, mance across payers, physicians and patients. It including digital, leading to reduced or re- improves contract administration and payment optimized spend, and by applying standardized processes, even under complex contract structures. processes across brands. The multichannel Further, it provides insights into rebate strategies, management program leverages a forward- revenue capture and performance thinking approach to market events and business changes to arrive at solutions based both on past data and future expectations. cognizant 20-20 insights 6
  • 7. Modern Multichannel Management Face to Face Interactions (inc. Details) Meetings Multichannel and Conventions Customer Capture and analyze Delivering designed Analytics data continuously to Call Center campaigns in an integrated inform segmentation, fashion across channels. messaging and channel mix. Starters Speaker Events Customer Brand Planning Interaction MultiChannel Campaign Enablement Management Management E-Marketing E-Detailing Relationship Creating consistent digital Marketing and paper-based creative content and messaging Conducting customer for all channels. Digital Content Product and segment-based planning with Management customizable messaging and Disease Sites segment-based marketing objectives for brands. Social and Professional Networks (Social CRM) Figure 8 Digital Marketing Knowledge and Insights Innovative pharmaceuticals companies are The ability to extract and disseminate insight from realizing the full potential of digital and social data and then rapidly move from insight to action media channels by using powerful solutions to is a crucial competitive differentiator. Building on improve data access, integration and analysis. an integrated model of primary research, secondary “Big data” platforms delivered via the cloud data sources and sophisticated analytics provides provide cost-effective, flexible ways to conduct an array of information advantages applicable advanced data experimentation and modeling across the commercial value chain, from new to uncover formerly unattainable insights about product development to designing a multichannel online consumer behaviors. This flexibility also campaign to measuring ROI. With solid knowledge, enables more rapid prototyping and modeling data and insights, pharmaceuticals companies to correlate the business effects of increasing can quickly create more effective messages digital activity. customized to more specific targets disseminated through the most appropriate channels. These rich data interactions enable pharmaceutical companies to get near-real-time feedback Discovering the insights fueling these advantages about competitive developments, potential risks is an increasingly complex process. New marketing and general market trends. Companies can more channels generate vast quantities of data. Yet effectively target audiences and improve efficiencies gaps exist in these “big data” domains. To close by integrating promotion, competitive intelligence, these gaps, leading pharmaceuticals companies market research, etc. by customer segments instead are turning to trusted third parties to conduct of traditional functional silos. They can increase the primary research and combine it with analysis reach and engagement of online initiatives of secondary data to understand behaviors and efficiently by partnering with digital and social attitudes. Virtualizing primary research, data media channels that customer targets already analysis and delivery via the cloud and global, use. Further, they can drive customer-centric always-available resources lowers the cost of engagement models by understanding online data management while shortening the time to behaviors and interactions across customer gaining insight. segments and the information required to drive business transactions. cognizant 20-20 insights 7
  • 8. Two Approaches to Generating Value life sciences companies choose to transform gradually; others engage all four value levers How pharmaceuticals companies engage the simultaneously across a range of functions value levers depends on corporate culture, for rapid transformation (see Figure 9). The familiarity with using third-party service following cases reflect these two very different providers and comfort levels with emerging but equally valid approaches. tools, technologies and business models. Some Exploring Value Creation Options Intermediate State Agility Effectiveness Innovation Current State Future State Agility Agility Ex Efficiency te e iz nd im pt O Effectiveness Innovation Effectiveness Innovation Efficiency Efficiency Enabling Capabilities Figure 9 Case Study The Evolutionary Transformation A top-five life sciences company initially chose its entire commerical planning cycle. Analytics, to focus on commercial cost reductions, or the data management and capability development efficiency lever, partnering with a third-party have all been virtualized. The service provider service provider to deliver sales force partners in strategy development, planning size and structure assessments (SFSS) and and execution across business processes, other brand and sales analytics services. applications and infrastructure. Results include: The service provider enabled the company to further reduce its costs and risks while • Operating cost reduction through the managed improving effec tiveness by identifying services delivery model. Analytics costs cases for vir tualizing selec t commercial alone were reduced by approxima tely 30% operation ser vices . per annum. The service provider was also able to help identify, • The life sciences company deployed a variety evaluate, implement and monitor innovative of tools, delivered as hosted services, which ways to increase revenue opportunities (see reduced sales and marketing costs while Figure 10 on next page). Now the llife sciences improving the effectiveness of sales tactics company teams with the service provider across with timely flows of more accurate information. cognizant 20-20 insights 8
  • 9. Transforming While Performing Multichannel Subnational SOV CLM Impact Information Promotional Planning Impact Assessment Differential Messaging Dissemination Framework Subnational Rx Driver Digital Preference Key Influencer Impact Brand Launch Assessment Segmentation Assessment Dashboards Sample of commercial transformation initiatives that improved efficiency, effectiveness and innovation while minimizing risks. Figure 10 • The company is growing revenues while optimizing its marketing spend on midlife and mature brands by shifting away from the traditional creative agency model and using its service provider as a strategic sourcing partner for digital asset and brand management services, from creative development through execution. The provider hones the creative strategy and tactics through its market research and analytics capabilities as well as its intimate knowledge of the life science company’s platforms and tools. Case Study Rapid Transformation A global top-10 pharmaceutical company needed expertise alongside its managed services. The more flexibility to respond to industry pressures. pharmaceuticals company and its provider have Its internal costs were high, driven by inefficient collaborated to generate value across the systems, high internal system maintenance balance sheet: expenses and an array of vendors delivering a • Rapid cost savings are achieved by virtualizing variety of functions. Managing multiple vendors n o n co re a c tivities by entrus tin g th e was inefficient; the combination of costs and service p rovid er. This has ena b le d th e ineffectiveness made it difficult to deliver pharmaceuticals company to scale down its innovation. Yet creating an internal solution internal resources, quickly reduce operating would be capital intensive and risky. costs and standardize across platforms. With the division president’s sponsorship, the Where the company previously struggled pharmaceutical company was determined to to provide timely, concise and actionable virtualize all of its U.S.-based commercial insights to its 5,000-member sales force, operations to eliminate the company’s high fixed it now uses an online reporting platform, costs and to increase cash flow and agility. developed with its service provider. This tool To go beyond cost savings and generate revenue has cut the number of dashboards and opportunities through innovation, yet minimize reports from 64 to 32, delivered via one capital expense, the company needed its trusted tool instead of 14 and reducing total cost of partner to offer mature business consulting ownership by 50%. cognizant 20-20 insights 9
  • 10. • Savings and efficiencies enabled the company service provider, the company is designing and to pursue greater innovations in applying measuring the impact of new customer analytics to sales planning that spanned interaction models, including how to compress technology and business functions. For new the time to make a go/no-go decision on product launches, performance models more scaling pilots. For a newly created sales force quickly determine the activities and behaviors being deployed in a new market, the company’s that differentiate high performing territories. service provider is deploying a mobile account In addition, a territory planning and collaboration profiling and planning platform to drive rapid system was customized and deployed across understanding of patient flows and influence the entire sales force within six months, networks. enabling the organization to respond more • The risk of the strategy is greatly reduced quickly to changing market conditions. by transferring much of it to a trusted Standard, automated functions have been third-party service partner. incorporated across business units, from refining call plans to improving account Evaluating Opportunities for affiliations to efficiently cascading marketing Commercial Transformation spend down to the territory level. Whether a company chooses to engage one • New revenue generation opportunities are being or two value levers in a single commercial created through new customer engagement operations solution like VBM or implements a models supported by more effective processes comprehensive transformation, it’s important and use of “millennial generation” tools such as to identify the value creation opportunities that tablet computers, smartphones and “anytime, align with overall goals and generate roadmaps anywhere” data availability. Working with its that achieve that value (see Figure 11). Value Generation Assessment Framework Scope Definition Strategic, Financial, end state Final recommendations Data Operational definition and roadmap creation Collection Analysis DIAGNOSTIC X Weeks X Weeks X Weeks X Weeks X Weeks Scope Definition Data Collection Cost Benefit Analysis End State Definition Conduct executive level Conduct interviews, Conduct cost-benefit analysis Define level of framework meetings to understand workshops and gather data on of the recommendations and for each identified activity, priorities and define the business objectives, operations, define a go-forward plan. including optimization, strategy scope. revenue expectations, profit and risk-sharing approaches. expectations and pain points. Final Recommendations Assessment Contribution Comparison Roadmap Creation Conduct a contribution Compare the spend on Noncore recommended framework assessment of core vs. noncore activities across and implementation roadmap. noncore activities. the portfolio. Figure 11 cognizant 20-20 insights 10
  • 11. Understanding the commercial organization’s and enable sales professionals to participate priorities is the first step in identifying and in virtual teams. defining the scope of transformation activities. Trusted Partner Abilities In particular, defining “core” vs. “noncore” processes and brand activities and assessing • Broad and deep industry expertise. the resources devoted to these is critical. Creating new revenue streams means “Core” activities and brands are those that partnering with a managed services directly generate competitive advantage for the provider who fully understands life pharmaceutical company. Comparing projected sciences processes from a clinical as well as revenues and returns of noncore activities with commercial perspective to help generate the resources allocated to them often helps and anticipate internal and industry identify areas that can be managed by a trusted innovation (see Figure 12). For example, a service provider, thus quickly reducing costs and service provider should understand how improving quality. Concurrently, the commercial RD, pharmacovigilance and commercial organization has more resources freed to focus activities will increasingly intertwine as on core brands and activities. payers demand lower costs and higher therapeutic value and safety. As specific functions reveal value creation opportunities, it’s important to consider • Compelling value proposition. these factors in determining how and when to What bottom line impact will the service exploit them. provider create through efficiencies, effectiveness, agility and innovation? The Evolutionary vs. Radical provider should be comfortable assigning Transformation Models metrics to its assumptions so results are • Assessing holistic value measurable and apparent. optimization opportunities. • Partnership capabilities. Where do commercial processes overlap fu n c ti o n s e a m l e s s l y w i th a pharma- To with brand marketing and business technology ceuticals company, as well as identify functions? Applying broader virtualization opportunities for savings and growth, in such areas can net greater savings and trusted providers must understand efficiencies than a gradual approach. how life sciences companies operate– • Maturity in understanding core their cultures, project management and competencies and functions. emerging best practices — and integrate The readiness to entrust noncore activities this understanding into existing processes to an experienced third party is key to and templates. the speed with which a transformation Reshaping balance sheets with stronger cash strategy generates cost savings and flows, reduced costs and increased revenues enhances revenues. by transforming commercial operations is a • Progress in segmenting commercial critical requirement for today’s pharmaceuticals business support functions to develop a companies. Traditional commercial models global services partnership framework. are ineffective in the face of existing and emerging industry pressures. While transformation More life sciences leaders are adopting itself can be challenging, experienced service new commercial structures easily adaptable providers offer the technology, tools and to working with trusted third parties. practices today to enable companies to • Acceptance of connected, mobile, embrace it. Further, the power of virtual, collaborative technology platforms. cloud-based managed solutions greatly Such technology is proving vital to successfully reduce the risk associated with adopting marketing brands and therapies to smaller, powerful new ways of extending brand value tougher-to-reach audiences, whether physicians, and positioning for future marketing challenges. managed accounts or consumers. Adopting Whether evolutionary or immediate, now is this technology requires a willingness to the time to choose transformation. embrace new customer engagement models cognizant 20-20 insights 11
  • 12. Factors when Assessing Service Providers to Transform Commercial Operations STRATEGIC PARTNER FOR COMMERCIAL OPERATIONS OUTSOURCING Partnership Capabilities Value Proposition Expertise Pharma Commercial Solution Flexibility Risk Mitigation Domain • cale, Experience Commitment S • usiness Process B • ultichannel Sales Marketing M • rogram Management, P • onsulting, Operations C • izing, Alignment, Targeting, etc. S Governance • taffing Model S • rimary Research P • tability: Skills, Depth, Turnover S Soft Skills Effectiveness Efficiency Analytics • ost (Cognizant, C • Cultural Awareness • pproaches, Tools Templates A Internal, Third Party) • Project Management • ata Integration, Reporting D • nhanced Capabilities E • Communications • ulti-industry Exposure M • trategic Partnerships S Transition Capability Innovation Data/Technology • Experience • Thought Leadership • harma Data Management P • Processes • Innovation Process • nfrastructure I • Tools Templates • Implementation Capabilities • pplication Development A Figure 12 cognizant 20-20 insights 12
  • 13. Footnotes 1 http://www.fda.gov/downloads/AboutFDA/CentersOffices/ OfficeofMedical Product sandTobacco/CDER/UCM282984.pdf 2 http://ncpo.hdma.net/pdfs/long.pdf 3 “The Use of Medicines in the United States: Review of 2011, IMS Institute for Healthcare Informatics.” http://www.imshealth.com/portal/site/ims/menuitem.d248e29c86589c9c30e81c033208c22a/?vgnextoid=81c63fc68b87631 0VgnVCM10000076192ca2RCRDvgnextchannel=3e382115cc4be210VgnVCM10000071812ca2RCRDvgnextfmt=default 4 “2011 U.S. Pharma Company Promotional Spending, Cegedim Strategic Data, February 2012.” http://www.google.co.in/rct=jq=cegedim%202011%20pharma%20spend%20ussource=webcd=5ved=0CEIQFjAEurl=ht tp%3A%2F%2Fwww.forums.pharma-mkting.com%2Fattachment.php%3Fattachmentid%3D223%26d%3D1331748428ei=xN N6T7IV0cytB_flyaACusg=AFQjCNGOdzX4atLOT7IvmlUIShjQIDVwYAcad=rja About the Authors Bob Gabruk, Practice Leader, Cognizant Enterprise Analytics Practice, North America, leads a global team of consulting and analytics experts. His professional experience spans over 20 years, with specific interests in strategic consulting and quantitative analysis. Mostly recently, Bob has focused on analyzing and influencing key buyer decision-making processes to create competitive advantage and leveraging transformational change — particularly strategic marketing, promotional resource planning, selling effectiveness and business development. He has also aligned human capitalmanagement to business strategy through organization design and process reengineering. Prior to Cognizant, Bob worked at Deloitte Consulting within its life sciences practice and Titan Research Technology in its statistical analysis and stochastic modeling group. He holds an M.B.A. from New York University as well as a B.S. and an M.S. in mechanical engineering from Virginia Tech. He can be reached at Robert.Gabruk@cognizant.com. Don Otterbein is a Cognizant Vice President in the Life Sciences Business Unit, leading its Sales and Marketing Practice. He is responsible for the development, launch and promotion of new, innovative offerings to support the sales, marketing and managed markets functions within life sciences companies. Don has more than 20 years of experience in a variety of global leadership roles spanning consulting and services; offerings development; marketing; and operations within Fortune 500 companies supporting the life sciences industry. He holds a B.S. degree in computer science from Villanova University. He can be reached at Don.Otterbein@cognizant.com. cognizant 20-20 insights 13
  • 14. About Cognizant’s Enterprise Analytics Practice Cognizant’s Enterprise Analytics Practice (EAP) combines business consulting, in-depth domain expertise, predictive analytics and technology services to help clients gain actionable and measurable insights and make smarter decisions that future-proof their businesses. The practice offers comprehen­ ive solutions and services in the s areas of sales operations and management, product management and market research. EAP’s expertise spans sales force and marketing effectiveness, incentives management, forecasting, segmentation, multichannel marketing and promotion, alignment, managed markets and digital analytics. With its highly experienced group of consultants, statisticians and industry specialists, EAP prepares companies for the future of analytics through its innovative “Plan, Build and Operate” model and a mature “Global Partnership” model. The result: solutions that are delivered in a flexible, responsive and cost-effective manner. http://www.cognizant.com/enterpriseanalytics. About Cognizant’s Life Sciences Practice Cognizant’s Life Sciences Practice partners with 27 of the top 30 global pharmaceuticals/biotech organi­ ations, z in addition to serving companies in the medical devices, CRO and life sciences product sectors. Whether it’s driving process improvements to your clinical operations, increasing sales and marketing effectiveness, meeting regulatory requirements or enhancing drug safety, we are redefining the way companies benefit from and experience global services. We enable business transformation by delivering consulting, analytics, IT and business process support to fuel innovation and competitive advantage. http://www.cognizant.com/life-sciences. About Cognizant Cognizant (NASDAQ: CTSH) is a leading provider of information technology, consulting, and business process outsourcing services, dedicated to helping the world’s leading companies build stronger businesses. Headquartered in Teaneck, New Jersey (U.S.), Cognizant combines a passion for client satisfaction, technology innovation, deep industry and business process expertise, and a global, collaborative workforce that embodies the future of work. With over 50 delivery centers worldwide and approximately 140,500 employees as of March 31, 2012, Cognizant is a member of the NASDAQ-100, the SP 500, the Forbes Global 2000, and the Fortune 500 and is ranked among the top performing and fastest growing companies in the world. Visit us online at www.cognizant.com for more information. World Headquarters European Headquarters India Operations Headquarters 500 Frank W. Burr Blvd. 1 Kingdom Street #5/535, Old Mahabalipuram Road Teaneck, NJ 07666 USA Paddington Central Okkiyam Pettai, Thoraipakkam Phone: +1 201 801 0233 London W2 6BD Chennai, 600 096 India Fax: +1 201 801 0243 Phone: +44 (0) 207 297 7600 Phone: +91 (0) 44 4209 6000 Toll Free: +1 888 937 3277 Fax: +44 (0) 207 121 0102 Fax: +91 (0) 44 4209 6060 Email: inquiry@cognizant.com Email: infouk@cognizant.com Email: inquiryindia@cognizant.com © ­­ Copyright 2012, Cognizant. All rights reserved. No part of this document may be reproduced, stored in a retrieval system, transmitted in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the express written permission from Cognizant. The information contained herein is subject to change without notice. All other trademarks mentioned herein are the property of their respective owners.