Making an Impact:

Effective Sales and Marketing With Reduced Costs

Leveraging offshore resources to do more with less
Manish Gupta, BTech, MBA Rajesh Nair, MBBS, MBA
Director, Indegene Lifesystems President and CEO, Indegene Inc.
Making an Impact: Effective Sales and Marketing with Reduced Costs Page 1 of 13
 Background
The pharmaceutical industry relies heavily on the sales and marketing function
to maximize organizational returns. Over the last few years, the existing sales
and marketing model, especially in developed markets, is under tremendous
pressure due to:

99 Absence of blockbusters

99 Patent expiries and competition from generics

99 Stricter regulatory environment

99 Changing customer/market dynamics

99 Challenges in managed care and reimbursement

Pharmaceutical Sales and To add to the woes, pharmaceutical companies are being compelled to reduce
the sales and marketing spends while trying to maintain the same effectiveness to
Marketing – New Market Realities deliver historical levels of profitability. On one hand, a difficult and more competitive

Call for New Operating Models marketplace is increasingly demanding sharper strategies and smarter tactics, and
on the other reduced budgets continue to make execution difficult.

The last 10 years have seen a seismic shift in the dynamics of pharmaceutical
sales and marketing. The return on investment in sales force expansion is shrinking,
causing almost all major pharmaceutical companies to reduce their head counts.
Further, it is increasingly evident that the market and regulators are interested in
new therapies that address an unmet need rather than yet another product in an
existing class of molecules with little or no clinical or economic benefit.
This paper explores how pharmaceutical companies, as part of their restructured
sales and marketing partnership model, can leverage the advantages of offshore
delivery to ensure sales and marketing effectiveness and meet reduced budget
targets, while maintaining existing levels of service quality and efficiency.

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 The Changing Scenario
Between 1996 to 2005, the total pharmaceutical promotion spend increased from
USD 11.4 billion to USD 29.9 billion.1 During the same period, the strength of
sales force increased from 35,000 to 100,000.2 The total promotional spend, as a
percentage of sales, increased from 14.2 to 18.2 during the same period (Table 1).

Table 1. Annual Spending on Direct-to-Consumer Advertising and Promotion to Health Professionals, 1996-2005. (Source: Donohue JM, Cevasco M, Rosenthal MB. A decade of
direct-to-consumer advertising of prescription drugs. N Engl J Med. 2007 ;357:673-681. http://content.nejm.org/cgi/content/full/357/7/673. Accessed September 18, 2009.)

Variable Annual Spending

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
Direct-to Consumer advertising
Total spending (millions of $) 985 1,301 1,578 2,166 2,798 2,954 2,864 3,478 4,160 4,237
Percentage of sales 1.2 1.5 1.6 1.8 2.1 2.0 1.9 2.2 2.5 2.6
Professional promotion
Total spending (millions of $)
Detailing 3,747 4,093 4,861 5,064 5,447 6,055 6,731 7,364 7,585 6,777
Journal advertising 571 621 597 551 549 469 474 476 516 429
Percentage of sales 5.4 5.4 5.6 4.7 4.6 4.5 4.8 5.0 4.9 4.4
Free samples
Total retail value (millions of $) 6,104 7,358 7,910 8,476 9,021 11,539 12,928 14,362 16,404 18,438
Percentage of sales 7.6 8.4 8.1 7.1 6.9 8.0 8.6 9.1 9.9 11.2
Total promotion
Total spending (millions of $) 11,407 13,373 14,946 16,257 17,815 21,018 22,997 25,680 28,664 29,881
Percentage of sales 14.2 15.3 15.3 13.7 13.6 14.6 15.2 16.3 17.2 18.2
*Data on promotional spending are from IMS Health (www.imshealth.com); data on sales are from phRMA’s annual report. All data were adjusted to 2005 dollars, according to the Consumer Price index.
Spending on free samples for 2005 was estimated on the basis of growth and spending rates from previous 3 years.

The rapid increase in promotional spending as a percenage of sales was

accompanied by distortions across processes, structures, and mind-sets, which
adversely impacted cost structures and operational efficiencies. Some examples
include:
99 Decoupling of sales and marketing from R&D. Relatively few inputs from
the “market” went into the R&D process, leading to increased late-stage
attritions, suboptimal labels vis-à-vis competitor products, and long
periods of “data-gaps,” severely impacting promotional effectiveness.
The success of the blockbuster model covered up not only the
inefficiencies but also the lack of market feedback process between
marketing and R&D.

99 Increase in sales force numbers. The reduction in physician free time,

due to increasing paperwork and managed-care regulations, challenges
the efforts of companies to have more rep visits. Although doctors started
perceiving less value from rep visits, the direct sales spend continued
to increase.

99 Inefficient market sourcing with large pharmaceutical companies having

upwards of 50 service agencies providing the same service, and individual
brand teams working with agency/agencies they were more comfortable
with. Duplication of efforts, strategies working at cross purposes, and
highly variable cost structures were tolerated since the return on the sales
activities justified all operational inefficiencies.

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 Weak pipelines, patent expiries of flagship products, increased FDA vigilance,
reimbursement challenges, and formulary issues have been adding pressure on
pharmaceutical companies’ revenues and profitability. What started in 2005 as a
trickle of early adopters looking to explore options to preserve margins through
reducing sales and marketing budgets have recently morphed into a powerful
rush of top 20 companies striving to fundamentally transform the sales and
marketing model.

It is expected that around USD 81.5 billion worth of branded products will go
off-patent between 2009 and 2015 (Figure 1). This impending patent cliff is
translating to an even higher pressure on pharmaceutical companies to reduce
costs in the next couple of years.
$20.9
$18.5

$15.0

$9.3
$7.3
$6.5
$4.0

2009 2010 2011 2012 2013 2014 2015

(in billions)

2009: Adderall, Prevacid, Topamax, Valtrex

2010: Effexor XR, Flomax, Cozaar, Hyzaar

2011: Lipitor, Actos, Protonix, Zyprexa, Levaqun, Aricept

2012: Plavix, Singulair, Seroquel, Lexapro, Diovan, Avandia

2013: Cymbalta, Celebrex, Aciphex

2014: Nexium, Vytorin, Zetia, Lyrica, Nasonex

2015: Abilify
Figure 1. Top Brands That Will Go Off-patent Between 2009 and 2015 (Source: Prescription for success
in sales. Feb 19, 2007;85(8). Chemical & Engineering News.)

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 The pharmaceutical industry has started responding positively to
these challenges by:

99 Integrating market feedback and competitive realities into the R&D

process. Different companies are achieving this through different
structures, but the end goal is to pull-in the market early through
knowledge management and other systems to share insights on unmet
clinical needs, competitive strategies, competitive claims, as well as better
understanding of doctor and patient behavior.

99 Effecting significant reduction in force. As per a ZS Associates prediction,

the number of pharma sales reps would reduce to 75,000 in 2012, down
from 102,000 in 2007.

99 Exploring alternate sales and marketing models and channels by

integrating online closed-loop marketing, sales force activities, as well as
nonpersonal promotions to enhance physician coverage.

99 Sourcing optimization and vendor rationalization. Service providers are

being optimized through structured processes to drive efficiencies of scale
and guarantee optimal pricing.

While these activities are important steps toward reducing costs by enhancing
operational rigor, the quantum of benefits and the time period in which these
benefits can be achieved may be accelerated dramatically by leveraging the
offshore delivery model.

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 The New Model
Compared with other industries, the pharmaceutical sector has been a bit late
to the offshoring and global resourcing game. Globalization has developed over
multiple waves, with focus shifting from raw material and intermediate sourcing,
manufacturing, and clinical trials offshoring before focusing on sales and marketing
activities and budgets.

While it is an interesting conundrum that sales and marketing teams, despite facing
tremendous budget pressures, have been the slowest to adopt and take advantage
of offshoring as a business practice, there may be many reasons for this scenario.

A. Local “touch-and-feel”: This is critical for promotional medical education and

strategic communication programs. Tight integration between strategy and
execution and the need for multiple iterations demand “local” presence.
Today, the benefits of offshoring go B. “Lost-in-translation” issues: Many brand teams feel that a pure production
much beyond a pure cost model, approach by remote teams working thousands of miles away may miss the
forest for the trees and will end up sacrificing creativity, innovation, and market
enabling Pharma companies to impact. A constant refrain is “how will these people understand my unique
compete more effectively in the market challenges?”

marketplace. C. Local regulatory, medicolegal, managed care, and creative guidelines:

It takes tremendous efforts to bring an agency up-to-speed on the brand
strategy, tactics, and trajectory. A simple offshore production approach may not
do justice to the complex web of iterative interactions that is so much a part of
today’s promotional program execution process.

In spite of the above ‘received wisdom’, there are a few early adopter companies
that have driven offshoring for sales and marketing activities quite aggressively.
Within these companies, multiple functional groups including strategic marketing,
commercialization, brand management, product management, and sales training
teams are increasingly recognizing and gaining the benefits of offshoring.

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 Several activities under the sales and marketing budget have been successfully
offshored. Some examples of the types of activities are shown in Table 2.

Table 2. Examples of Offshored Sales and Marketing Activities Organized by Function

Function Type of Activities

Promotional medical education programs, online interactive

Brand and
platforms for physician engagement, patient adherence programs,
therapy teams
e-Marketing programs.

Scientific communications, publication support and editorial services,

medical information management, augmentation of medical service
Medical affairs
liaisons (MSLs) for engaging with physicians, and assisting in
medicolegal reviews.

Launch and ongoing product and disease training programs,

Training managing and repurposing training/digital assets for
multiple markets.
Deeper understanding of competitors’ goals and strategies
through secondary research and analysis, brand surveillance,
Competitive
medical meetings/conference coverage and analysis, war-gaming
intelligence
preparation, online patient and physician blog monitoring, and key
opinion leader research and analysis.
Online market research, message recall, physician decision
Market research
mapping, qualitative market research, positioning, sales, forecasting,
and analytics
sales force excellence, and market assessments.

PRO research, global dossiers, epidemiologic assessment,

Pricing and
compliance and persistence analysis, burden of disease evaluation,
reimbursement
cost-effectiveness model support.

The typical benefits of using an offshore delivery model include:

99 Cost reduction in the range of 40% to 60%.

99 Resource availability and quick ramp-up. Ability to build in production

buffers to cater for “peak” loads without adversely impacting the
overall budget.

99 The flexibility to run programs currently not budgeted or with low budgets.
Critical initiatives for risk reduction, revenue enhancement, or higher share
of voice in the marketplace currently sacrificed or triaged due to want of
budget can be resurrected through the offshore model.

99 Significant knowledge capture and learnings within the dedicated offshore

team that quickly mitigate the initial apprehensions regarding the ability of
the team to understand strategic and tactical nuances.

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 While companies typically approach offshoring initially from cost-benefit perspective,
the true offshore dividend goes beyond cost. There are different evolutionary stages
for offshoring that provide a range of cost and other important strategic benefits as
shown below.

Phase I: Cost Benefits Phase II: Value Addition Innovation

Predominantly Production–based Work Increasing Integration and True Offshore Dividend

99 Creative production
99 Content development
99 Database management
99 Program and platform management
99 Training and e-learning programs
99 Medical information management
99 Marketing support: dashboard
creation, presentation support,
scientific and KOL
Identification of Value
99 Global asset managements and
waste minimization via focused
content repurposing
99 Strategizing and conceptualizing
brand plans, intelligence needs,
etc integrated with execution
99 Integrated global MedEd
programs leveraging
resources worldwide
99 Global insight teams integrated
with onsite activities –
surveillance, benchmarking, etc.
99 Innovative software tools to solve
critical challenges
99 Alternate sales and marketing
models and channels for
physicians/patient engagement.
99 Global patient adherence programs
99 Transformational platforms
integrated with services for
end-to-end life cycle management

The New Model: How Does It Work?

There is indeed a true offshore “dividend,” a scenario where the industry can focus
on innovations, efficiency, and profitability by taking advantage of proven global
models to fundamentally transform the sales and market activities.

Many companies have tried multiple approaches starting from shifting over simple
cost-saving production work to offshore vendors to setting up dedicated captive
centers that aim to replicate in-house teams.

Some of these activities have been delivered through a “direct execution model”
where all the resources are offshore-based, while other more complex initiatives
like executing integrated MedEd programs and operating CoEs for multiple
stakeholders require a “hybrid delivery model” that includes both local and offshore
delivery components.

A hybrid global delivery model comprising local teams in combination with offshore
teams, when executed well, results in improvement of overall efficiency and client
satisfaction. There are always activities that need to be executed locally, while
there are others that can be offshored. By harmoniously balancing the onshore and
offshore components as a seamless process, substantial cost benefits, operational
scalability, and client satisfaction can be guaranteed.

Managing this distributed execution requires strong program management skills

and process rigor. Best practices and success stories from a host of industries
and functions are readily available to be successfully leveraged by the
pharmaceutical industry.

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 There are some activities that could be completely offshored, and companies could
gain significant advantages by leveraging the model (Case Study 1).

Case Study 1: Evaluating and Designing Sales Training

Curricula for a Mid-sized Biopharmaceutical Company

A midsized biopharmaceutical company, with first-in-class therapeutics and

a rich research pipeline, acquired a pharmaceutical firm, which focused on
specialized areas such as Oncology and Critical Care. As part of integrating
and streamlining the sales training process, the company wanted to evaluate
its current sales training materials and periodically assess the new sales force
across multiple countries. This was a significantly complex task, requiring
experience and expertise for developing training curricula, managing learning
platforms, and running assessment programs on a global basis.

With postacquisition savings and synergy goals in place, the company decided
to explore an offshore model for delivering this work. The focus of this
model was to

99 Evaluate the existing training materials, identify gaps vis-à-vis the

latest scientific developments and update them, and launch the final
curricula on a user-friendly hosted learning platform.

99 Develop an Internet-based solution for the periodic assessment of the

field force based in 5 EU countries.

99 Develop reporting capabilities in the platform to evaluate performance

by geography, language, and topic.

The net result of the offshore strategy was that the company got the platform
up and running in a period of 7 months and at costs that were 50% lower than
those of the local service providers.

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 There are other activities where a combination of offshore and onsite resources is
the best option, primarily to avoid any communication risks as well as to maintain
continuity. In this case, besides direct communication with stakeholders in the
pharmaceutical company, the onsite resources also do similar work as the offshore
resources (Case Study 2).

Case Study 2 : Dedicated CoE for Oncology Intelligence Providing

Scientific and Competitive Intelligence Across a Portfolio of Brands
A global top-tier US-based pharmaceutical company had undertaken a
significant cost rationalization initiative and had reduced internal staff. The
various brands within the company had an ongoing need for a series of
deliverables throughout the year including congress coverage, competitor
and landscape analysis, pipeline surveillance and ad hoc projects. Reducing
the internal staff risked sacrificing the level of services needed by the internal
teams and missing key market information. Furthermore, the company had a
clear corporate mandate to manage on tight budgets. Given this scenario, the
company decided to explore the offshore model for competitive intelligence for
the strategic marketing groups.

The offshore partner was required to have professionals with deep oncology
expertise with experience across multiple tumor types and in various other
areas, including desktop research, congress coverage, clinical surveillance, and
benchmarking of new launches.

A dedicated center of excellence (CoE) composed of a multidisciplinary team

with the right mix of clinical and pharmaceutical marketing expertise and a
strong understanding of oncology was set up. It addressed all competitive
intelligence requests from the client’s oncology franchise and maintained
internal platforms, libraries, and global congress intelligence. Given the large
number of stakeholders, there was an onsite program manager working out of
the company’s office to maintain communication, channel requests, and respond
quickly to very short turnaround requests. The focus of the engagement was to

99 Deliver clinical and marketing insights relevant to company’s assets in

a cost–effective way

99 Provide an accurate perspective of emerging targets, treatment

modalities, KOLs, and practice guidelines in oncology

99 Suggest areas of scientific and business analytics based on

emerging data

The company was able to set up a team of 15 specialists with deep oncology
expertise within 60 days and save both costs (benchmarked at approximately
$1 million) as well as gain significant service efficiency.

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 There are other complex activities like running promotional MedEd programs where
a combination of offshore and onsite resources is critical. In these cases, there are
certain roles the onsite resources have to execute, which cannot be done offshore.
Organizing meetings, participating in medico-legal reviews, and interacting and
working with KOLs are responsibilities onsite resources have to manage besides
enabling seamless communication and providing comfort to sponsors (Case Study 3).

 ase Study 3 : Design and Development of an Innovative Virtual

C
Center for Sustained Physician Engagement for a Specialty Brand

A global top-tier pharmaceutical company wanted to counter serious threats

from a competing brand, which was about to be launched in the market. The
company identified compelling education and high impact alternate engagement
models and activities as essential elements to expand access and use of their
brand. In order to do so, an innovative virtual education center was designed to
serve as the nucleus of a multi-year alternate engagement model for physicians
and other healthcare stakeholders.

Given the competitive scenario as well as the cutting edge nature of the
initiative, the company had to roll out this ambitious platform within tight
timelines while working under tight budgetary limitations. The company
decided to accomplish this by taking advantage of the hybrid global model.

The development of the virtual center involved the following activities:

99 Conceptualize the platform and build the overall technology and

content architecture.

99 Create a KOL advisory panel to understand physician needs, following

which the company’s existing assets had to be audited to identify and
map content gaps. To bridge this gap, a series of value-added content
assets such as interactive cases, KOL videos, and patient education
materials had to be created.

99 Integrate the overall platform within the constraints of the medicolegal

review requirements as well as corporate IT guidelines.

While the KOL meetings, brand strategizing and brainstorming as well as

coordination and logistics had to be done locally, content development,
technology, and creative development were done using a mix of onsite and
offshore resources. This required strong program management processes and
systems.

The final product was built at less than 40% of the normal local costs, resulting
in savings of more than $1 million in a short turnaround period of 9 months.
The service provider also proved to be a one-stop-shop, drastically reducing the
vendor management time which would have been high if the project elements
were handled by multiple vendors.

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 Conclusion
The pharmaceutical sales and marketing leadership has been rather slow in
embracing the advantages of offshoring. However, driven by cost considerations,
more companies have started experimenting with offshoring. Increasing market
pressures and initial successes are enabling them to rapidly move to the next level of
global execution where they are starting to offshore work that is likely to provide them
with significant competitive advantage.

Early movers among the pharmaceutical companies as well as service providers

have acquired significant learning and experience on the execution model to mitigate
risks. This is likely to translate into a sustainable competitive advantage in the
coming years.

Offshoring helps pharmaceutical The pharmaceutical industry at large can take advantage of this window of
opportunity to leverage these learnings and quickly internalize the mantra —to do
companies ensure that their more with less.
sales and marketing teams meet
References
budgetary reduction targets while 1. Donohue JM, Cevasco M, Rosenthal MB. A decade of
maintaining existing levels of direct-to-consumer advertising of prescription drugs. N Engl J Med. 2007
service quality and efficiency. ;357:673-681. http://content.nejm.org/cgi/content/full/357/7/673. Accessed
September 18, 2009.
2. Prescription for success in sales. Feb 19, 2007;85(8).
Chemical & Engineering News.

About the authors

Manish Gupta, BTech, MBA

Manish has more than a decade of experience in managing operations and large teams in various industries
including banking and financial services, and software and pharmaceutical services. Manish has a BTech degree in
Mechanical Engineering from IT BHU, Varanasi and an MBA from the Indian Institute of Management (IIM), Ahmedabad.
Manish was the head of a project team in engineering services in Infosys Technologies. At Indegene, he is responsible
for general management, finance, HR, strategy, and M&A initiatives.

Rajesh Nair, MBBS, MBA

Rajesh has more than 15 years of experience in clinical medicine and in the global pharmaceutical industry.
He started his career as a physician, working across primary as well as tertiary care settings before becoming
the first doctor in India to graduate from the Indian Institute of Management (IIM), Ahmedabad. He has held
positions in corporate and marketing strategy, market research, mergers and acquisitions, and general management.
Rajesh is the President and CEO of Indegene.

Write to us at bd@indegene.com to know how we can

help you make an impact at reduced costs

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About Indegene
Indegene is a scientific partner to life science companies to enhance the commercialization and marketing success of their products

Overview

Services Solutions

Indegene’s suite of scientific content, media, and technology
services are at the heart of our clients’ regulatory, communica-
tion, and education initiatives. Our services span the product life
cycle and help clients reach out to key stakeholders with greater
impact.
Scientific Competitive Intelligence Services
Regulatory Writing and Safety Services
Learning Solutions
Medical Communications and MedEd Programs
Indegene’s proprietary solutions cover a range of critical
unmet client needs
TrialPedia – a revolutionary clinical trial benchmarking platform
Therapy Area Intelligence Center – dedicated therapy area
surveillance system
Physician Engagement Platforms – virtual promotional and
integrated ‘push-pull’ solutions
Patient Support Platforms – patient adherence and disease
management solutions
MedCampus – enterprise-wide virtual learning solutions

Insights

We provide scientific, clinical, and competitive insights to help

align the business development, licensing, clinical develop-
ment, and marketing activities of our clients to current and
future market needs. Our insights help answer key intelligence
questions at every stage in the product life cycle
99 Assessment of unmet market needs

99 Status and potential of novel products and

technologies

99 Pipeline and competitor landscaping

99 Clinical trial analytics

The Indegene Advantage

Legacy
A Leader in the New Pharmaceutical Services Model: Preferred global partner to more than 15 of the top 20 pharmaceutical companies worldwide
Experience and Track Record: Ten-year industry experience delivering more than 3000 solutions worldwide across more than 15 therapeutic areas.

Scientific Expertise
A Scientific Core: A team of more than 275 full-time professionals that include 150 PhDs, MDs, pharmacologists and life science graduates bringing
scientific expertise across the range of our services and solutions.
Worldwide Networks: Strong partnerships with academic centers and medical associations and a rich network of clinicians and KOLs across
the globe.

Partner for Transformation

Reduced Costs: Significantly reduced cost through a unique tried and tested scalable global delivery model
Global Partner: Global footprint through a network of 11 offices across 4 continents to enhance your integrated global activities
Solutions for Today’s Challenges: Proprietary platforms and innovative solutions that address critical challenges in an evolving marketplace
Leader in Processes: Best-in-class operational processes to ensure consistent quality and timeliness with ISO 27001/ISO 9001 certification

To know more about us, write to bd@indegene.com or visit www.indegene.com

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