Doing more with less in 2013

File under: Pharma innovation

The need to “do more with less” has been a recurring theme during 2013 pharma brand planning. Pull back the curtain, however, and you’ll see that it’s not that simple. While there has been a growing acknowledgement of the need to reduce costs, pharma is an industry that has never been known for its cost management expertise, and cost cutting is not always done in a strategic manner.

Sales representative headcount has been reduced over the past few years, but that represents only a fraction of total headcount. Look for even more judicious outsourcing of key activities to established partners in the areas of R&D, market research and sales and marketing.

Even in the midst of budget pressure, however, brand teams still need to meet their sales goals. Marketing tactics that can’t demonstrate ROI above an aggressive hurdle rate are at-risk, and agencies that have long dodged outcome measurement will no longer enjoy fat year-over-year budgets. Senior product managers will look for agency account teams that understand and care about the performance of a brand’s financials. Partners who don’t will be held on a short accountability leash, with the need for better data integration, real-time reporting and in some cases, even shared risk.

To accomplish “more with less,” pharma may consider reevaluating their business relationships with their agencies. Some will even begin to explore the types of risk-sharing partnerships that pharma has developed with CROs. Agencies will need to acknowledge the new environment and rethink their revenue model away from the traditional fee-for-service vendor relationship towards outcomes-based compensation. Just like what everyone else is doing in healthcare today…