How pharma is empowering key account managers to serve a changing customer base
Key account management (KAM) has become increasingly important to pharma companies as payers and other stakeholders have begun to exert more influence over the products physicians prescribe
By on Feb 7, 2024Key account management (KAM) has become increasingly important to pharma companies as payers and other stakeholders have begun to exert more influence over the products physicians prescribe. Having previously served a fragmented customer base of individual physicians, companies now need to foster relationships with big strategic accounts to drive the commercial success of medicines.
KAM is a process companies use to manage partnerships with their most important customers with the goal of driving long-term growth. The concept is well established—a paper published in 1995 said it has “long proved popular”—but it was slower to take off at branded pharmaceutical companies than in other industries.1 Even today, Diana Woodburn, Chairman of the Association for Key Account Management, calls branded pharma the “last bastion of the massive sales forces.”
Those large sales forces enable companies to reach the physicians who prescribe their products. Yet, in many major markets, the physician is just one of the stakeholders who determine whether a particular medicine is used. Pharmacy benefit managers in the US, local formulary groups in the UK and equivalent organizations in other countries influence whether a product is available for a physician to prescribe. The presence of such organizations is a key determinant of whether KAM is an effective approach.
“You're putting a significant amount of resources into a specific relationship with a specific organization. If you've got a very fragmented marketplace, then it's likely no individual or organization is going to repay that much investment of your time and other resources,” Woodburn said. “You'd be looking at more concentrated markets, but there are a lot of countries that have that.”
In concentrated markets, Woodburn sees value in “talking to the people who run the organizations, who make a lot of those decisions about what will be prescribed and how it will be prescribed.” That model is already established in the generic drug industry, where there is “more focus on the customer as opposed to the product,” Woodburn said. Generic drug companies typically have larger portfolios of lower-margin products than their branded counterparts, making them particularly well suited to KAM.
Support KAM through change
Companies need to support the KAM function to achieve the best results. While the concept has a long history in other industries, its adoption is a relatively recent phenomenon in the branded pharmaceutical sector and companies are still finding their way. Other industries have formed best practices but pharma, with its specific legal and regulatory considerations, cannot necessarily adopt them without adaptation.
At large companies, KAM maturity can vary from market to market and discussions with local teams are needed to understand what capability development and resources, such as best practice case studies and account segmentation tools, they require.
Support and education could help KAM navigate a period in which technology is changing the function. Artificial intelligence is a hot topic. While the ultimate impact of AI on the function remains uncertain, there is potential for the technology to affect supply, procurement and value proposition while enabling predictive analytics that help managers prepare for talks and negotiations.
The vision of AI helping KAMs prepare for interactions with key accounts suggests the technology could support the broader shift toward more mobile, self-sufficient managers. As Woodburn explained, key account managers, like their clients, are “becoming a bit more divorced from their office” and need to be more independent than in the past.
“Managers don't go to their office as much as they did and they probably have to do more stuff on their own. In the past, they'd go back to the office and say, ‘Can you give me an analysis on this?’ Now, people may have the capabilities to do it themselves,” Woodburn said.
AI could further empower KAMs to work independently. Yet, there may be limits to what AI can achieve in a function that is built on building relationships with other people. KAMs currently spend months and years building relationships and gathering information. AI may be able to identify patterns in information but is only as good as the data it can access.
Shifting from products to customers
Specifics such as the impact of technology on KAM remain uncertain but the direction of travel appears to be clear. Physicians are now just one of the stakeholders who determine if a product is a commercial success. KAM is a response to that fact, and could become ever-more important in the years to come. To thrive in that environment, companies may need to rethink their commercial focus.
“Branded pharmaceutical organizations are built on a product basis. Their people are built on a product basis. All business units are built on a product focused basis. Whereas generics is looking more at the customer side. What you really want in key account management is a balance between the both, but that's not easy to achieve, of course,” Woodburn said.
References
1. Millman, T. & Wilson, K. From key account selling to key account management. Journal of Marketing Practice: Applied Marketing Science 1, 9–21 (1995).