In the past few years, Contract Sales Organizations (CSOs) have seen increased uptake by Life Sciences companies as cost pressures and lower provider access squeeze the traditional Life Sciences field force model. At the same time, Life Sciences companies have broadened how they employ and engage with CSOs, expanding beyond traditional touch-points in the product lifecycle.
Capgemini Consulting believes that CSOs will have an important and growing role to play in how Life Sciences companies interact with patients, providers, and payers.
Pressures on Life Sciences Companies
Life Sciences companies are experiencing several changes in their environment, forcing them to transform the traditional commercial model:
- Multi-billion dollar patent cliffs and intensified pricing competition due to generic entry
- Regional distinctions in how healthcare is delivered and reimbursed together with an increasing consolidation of major players such as hospitals and care networks
- Increased scrutiny of healthcare costs, with a focus on proving economic benefits
- The expansion of pharmaceutical sales into emerging markets, leading to a change in terms of pricing, business model and commercial strategy
Due to all these pressures, Life Sciences companies are trying to change how they employ one of their most resource heavy functions – the field force. Mutations in how the industry is looking to improve field force efficiency are already underway, the most promising change being how they engage Contract Sales Organizations (CSOs) beyond traditional touch-points in the product lifecycle.
Usage of CSOs has grown over time and is expected to continue.
The global CSO market is growing as Life Sciences companies seek to cut the fixed costs associated with sales forces and leverage the flexibility of sales forces deployed on demand.
Source: “Strategic Outsourcing Across the Pharmaceutical Value Chain” Cepton Strategies, Nov 2009; “Managing the Middle” Nancy Lurker, Pharma Exec, July 2010; “The global contract sales organization market,” Business Insights, 2010; “The Evolving Pharmaceutical Sales Organization” Emerging Models, PDI, 2010.
What are Contract Sales Organizations?
Contract Sales Organizations (CSOs) are third-party organizations that can be contracted to create a non-permanent field force. CSOs can also offer other marketing support services such as contact centers, analytics, eDetailing, and other non-personal promotion services.
Advantages of Contract Sales Organizations over the traditional field force
- Cost effectiveness – CSOs offer opportunities to lower costs per field representative thanks to their business model where the management cost and other overheads get distributed among multiple clients.
- Use of digital technology – There has been a dramatic increase in the usage of digital technology by providers, creating an opportunity to utilize digital technology to maintain stakeholder relationships, reduce costs and improve targeting. CSOs are implementing closed loop marketing technology and equipping their sales representatives with tools that link their provider networks to digital channels.
- Flexibility in staffing – CSOs are especially well suited for specific business situations such as seasonal products or products in the launch phase where flexibility in staffing is needed to cover peaks and troughs, e.g. surge capacity, vacancy coverage.
- Adaptability to changing market conditions – CSOs are demonstrating their capacity to adapt to new market conditions in some cases faster than in-house sales forces as they are recruiting experienced representatives who understand the business and the industry.
Evolution of Contract Sales Organizations
CSOs have been evolving to keep up with industry needs and innovations and have developed capabilities able to help Life Sciences companies address some of the main industry challenges.
- CSOs are beginning to sub-specialize along with the industry – We predict that some CSOs may create divisions that deeply specialize in specific therapeutic areas in order to develop sales forces that can engage with physicians who work, for example, only in breast cancer.
- CSOs are establishing field forces to target stakeholders outside of traditional healthcare providers – We predict that as the role of both non-physician providers and payers increases, CSOs will increasingly train their field forces to target a broader audience such as NPs/PAs, KOLs and Payers.
- CSOs are providing Key Account Management services – Provider consolidation is moving decision making from physicians to administrative personnel who make the decision on how in-house physicians treat patients, for example decisions on formulary position and pathways. CSOs are starting to provide Key Account Management services to address this trend.
- CSOs are expanding into emerging markets – The growing focus of the industry on emerging markets will spur the growth of existing CSOs into those markets or see new emerging-market focused CSOs surface.
Working with Contract Sales Organizations in Life Sciences
While there are several advantages of working with CSOs, there are also some risks/ potential disadvantages that companies need to be aware of, such as losing control over their field force, loss of internal expertise, hidden costs associated with vendor selection & management, and operational cost control in the long run.
Companies need to undertake a comprehensive due diligence, including both strategic and operational elements, when engaging a CSO. Some of the elements of this due diligence are:
- Assessing the capabilities offered by the CSO – Selecting the most appropriate CSO depends on its ability to cover targeted territories and to manage channels and services.
Identifying the right channel mix (personal/ non-personal) in light of the overall product or portfolio strategy and assess if the CSO can provide the appropriate mix.
Sample services offered by CSOs
Sales force expertise can range from basic-level Life Sciences experience to highly trained medical professionals. There is also a division between personal promotion activities and non-personal promotion activities. Source: Company websites and RFP due diligence
Determining the required level of field force dedication to the product – The primary tradeoff between these models is cost versus focus and skill level.
Sales Force Dedication to Product: Impact and Limitations
Source: Capgemini Consulting internal analysis
- Defining the required field force expertise, which can vary depending on the complexity of messages delivered, the perceived value of the CSO field representatives and the cost per touch-point.
- Assessing the cost of the relationship and the options needed – Costs for CSOs can vary significantly according to the expertise needed, the sale vehicle used (personal vs. non personal promotion) and the type of touch points considered.
- Identifying potential synergies with other brands in the company.
- Preparing and managing the implementation - Establish reporting requirements and milestone communications / reviews, prepare to train the CSO field force on product(s), compliance and internal “rules of the road” for call protocols, align communication plans and governance across the team the same way you would do it with your internal sales force.
How Capgemini Consulting can help
Capgemini Consulting has worked on several CSO strategy and implementation engagements, both within and outside the US.
Recently, Capgemini Consulting helped a mature brand within a large biotech company in selecting and implementing a CSO Field Force:
- The goal of the brand team was to reduce the overall costs associated with the Field Force and find a flexible call solution suited to the seasonal nature of the business.
- Capgemini Consulting started with evaluating the brand situation and strategy to better understand the context and needs.
- This analysis was extended to an assessment of the different Field Forces models to evaluate their ROI and compatibility with the brand’s strategy.
- This initial work helped creating an RFP for all the CSOs who met all the defined criteria. Once the CSO was selected, Capgemini Consulting also helped the team with the integration process.
Thanks to this structured approach, the brand was able to select the best suited CSO for its strategy and performed a seamless integration of the external sales force within the organization. Also, the total cost of ownership was significantly reduced and the sales activity was better adapted to the seasonal context.
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