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New commercial landscape

Marketing will be the main focus of any changes made to companies' commercial approaches

The term 'new commercial model' has become a catchphrase for pharmaceutical companies operating in the US market, referencing a variable range of changes.  The model is generally described as broken, however, this is not necessarily the case. The TGaS Advisors New Commercial Landscape benchmark found that for most companies, the imperative for radical transformation remains distant on the horizon.

The fact-based peer-set benchmark is the result of a systematic look at the drivers of change, changes undertaken or planned and viewpoints about capabilities required for the future of the industry's commercial models. TGaS Advisors conducted in-depth, in-person interviews and surveys with senior-level operations executives at 21 companies, including eight large-tier, eight mid-tier and five speciality businesses. Interviews were supplemented with information from TGaS Advisors' extensive benchmark data across sales, marketing, managed markets and other areas, as well as publicly available information.

Results of the benchmark are summarised in The New Commercial Model: Reality or Rhetoric? and may be accessed at The highlights of the TGaS Advisors New Commercial Landscape analysis were:

  • Only three companies of the 21 had recently undertaken substantial reorganisation involving strategy, structure and process
  • A third of the companies envision a completely different organisation by the end of 2012
  • About half the companies anticipate more modest, evolutionary change, particularly in ways of working and commercial model approaches.

We found that organisational structures and fundamental commercial approaches will, for the most part, remain stable in the near-term. While profound change is limited to a relatively small set of companies anticipating or navigating rough seas, virtually all companies fully expect to develop new capabilities within a three-year horizon. Most change is expected to occur within the marketing discipline, with the next wave of innovation to customer relationship marketing (CRM) capabilities and the adoption of new approaches and channels for engaging with customers.

Although many companies perceive the strategic intent to increase customer focus as an important driver, this factor was not as strongly correlated with the extent of change undertaken or committed to compared with other factors. For most companies further out on the change curve and in the midst of significant challenge to the bottom line, the need to improve efficiency and profitability is the emphatic first-order driver.

Based on our extensive database and senior-level experience with commercial operations, we developed five imperatives for leaders:

  1. Justify and deliver value on CRM investments
  2. Challenge thinking on readiness to select, hire, train and develop for future capabilities
  3. Assist business leaders in setting realistic expectations and dedicating needed support to enable new capabilities
  4. Expect that 'tried-and-true' approaches will work where the pipeline is robust
  5. Monitor competitor and peer progress.

In these evolutionary times, commercial operations teams have a unique vantage point for understanding what it takes to master the complex transformations needed to propel and prepare the pharmaceutical industry for the future. Like TGaS Advisors, these teams are able to take an enterprise, versus franchise or business unit, view of their companies' needs and are therefore well-situated to help business leaders make pragmatic decisions about change implementation.

The Authors
Anna McClafferty
, vice president and Stephen Gerard founder and president at TGaS Advisors

22nd July 2011


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