Sales force effectiveness Japan: Getting relationships right
In the run up to Sales Force Effectiveness Japan on July 27-28 in Tokyo, Ursula Sautter examines why relationships between reps and physicians are critical in the Japanese market
By on Jul 5, 2011For many years, selling pharma in Japan must have been a dream. You worked in a market that operated in a protectionist environment and grew strongly due to a state-funded healthcare system that was, in turn, bolstered by a booming private sector.
This cushy scenario has come to an end, however.
The country's economy is stagnating. Its population—already the oldest in the world—is graying fast, robbing the labor force of young people.
As a result, the debt-strapped government is desperately trying to cut its healthcare bills by upping the pressure on the domestic pharma industry to reduce drug prices and lowering trade barriers for international players to boost competition.
There are other factors that, although Japan's pharma market still is the second largest in the world after the US, are now beginning to give managers nightmares.
Like Western nations, Japan has a huge army of sales reps recruited to keep driving sales, yet the ROI on this strategy has been steadily diminishing.
Moreover, with medicine becoming increasingly complex and specialized, physicians are demanding more and better product information instead of the courteous small talk and end-of-day entertainment that often used to be the chief rep sales strategy.
Saving the relationship-based sales model
There is good news, too, though. If Japan's sales reps and their bosses are willing to learn from their counterparts in the EU and US, a lot can be done to reduce sales costs and continue growth in the depressed pharmaceutical market.
And this doesn't involve the wholesale jettisoning of the traditional, relationship-based sales model that has served the industry well for so long.
"I would like to see a scientific model based on the strong relationships with doctors that, especially in the GP segment, remain a key success factor for medical representatives (MR) in Japan," says Torsten Kanisch, executive director, business operations at Bristol-Myers Squibb (BMS) Japan.
Kanisch’s belief in the value of strong personal relationships between physicians and reps is ultimately founded in the idiosyncrasies of the Japanese health system, where patients are free to consult any primary care or specialist doctor and doctors are free to decide which therapeutic regimen they prescribe.
In such a market, where payers do not dictate treatment choice, "relationships between reps and physicians are critical," concurs Jorge Capello, head of BU General Medicine at Bayer Yakuhin Ltd. Japan.
Given this, Japan's reps should make better use of the time they spend per detail.
After all, doctors are increasingly pressed for time and are unlikely to continue granting an average 9 minutes for each visiting rep.
Compare that to the measly 1.5 minutes or less the average detail lasts in the US.
"It will become difficult to access customers," predicts Masanobu Kambara, vice president of the CNS Business Unit, Commercial Affairs, at Janssen Pharmaceutical K.K.
In future, he thinks, physicians will rather meet with only a limited number of MRs, with whom they build deeper relationships.
Beyond simple sales promotion
Instead of devoting this vast amount of time mainly to personal topics, argues Andree Bates, president of Eularis, an international company that applies analytics to ascertain the sales impact of marketing programs, reps should also work on their detailing skills and know-how.
"The need for improvement in sales force effectiveness is profound," she says.
At the moment, MRs tend to give "scattershot and unmemorable" messages about the products they are touting.
But it is crucial for them to go beyond simple sales promotion and appropriately share information that has value for doctors in making diagnoses. (For more analysis from Andree Bates, see Dr. Bates’ Talkback: Sales force effectiveness in the Japanese market.)
To gain that specialized knowledge and increase sales effectiveness, however, pharma firms would do well to reconsider the organization of the sales force. Many have already done so.
Typically, sales forces in Japan are "structured on a regional basis with very little specialization by either customer type or therapy area," maintains a Business Insights report.
As a result, MRs will usually "detail the company's entire marketed portfolio to a wide range of hospital, specialist and primary care physicians."
The consequence? They are not only compelled "to focus only on the best-selling products as it is not possible to detail the entire product range in a single physician visit," but are also hard pressed to ingest and memorize the flood of data about all the individual drugs in their care.
"Segmentation, targeting and sales force sizing are also going to be critical" to reduce MR sales costs and increase sales effectiveness, says BMS’s Kanisch, "especially for small- and medium-sized companies with a lower coverage rate.”
Segmentation, segmentation, segmentation
According to healthcare research company IMS Japan, most of the targets identified by the typical Japanese pharma company will be doctors who should actually be non-targets.
On average, 70 percent of resources are focused on doctors that make up the bottom 20 percent of the market potential.
To change that, enterprises should motivate their reps to complement their detailing activities by systematically collecting and evaluating information about the individual physicians they visit.
Added to available market data such as quintile data, this will allow for the inexpensive segmentation of Japan's 260,000 doctors regarding marketability.
This may include such basic information as which departments doctors work in and from which universities they graduated to the number of prescriptions they write and the influence they have in the drug selection process.
Yet convincing already busy reps to collect and analyze such data may be a slow process.
"Client segmentation and targeting based on SFS is really important," says Janssen’s Kambara.
"But it is difficult to change the sales reps' minds. They see their role of visiting customers as that of a postman." (For more on new selling strategies in Japan, see Podcast: Multi-channel strategies and the Japanese pharma market.)
While his firm is eager to collect data on MR activities to improve targeting, he admits "this is quite a journey."
Better targeting and segmentation will also improve reps' and managers' ability to determine the right frequency with which physicians should be targeted.
At the moment, says Andree Bates, "the number of calls per year on a given doctor ranges, for a typical company, anywhere from two to 200."
Yet each high-potential segment of doctors, IMS has found, has its corresponding optimal call frequency.
Here, too, a little time invested in collecting and evaluating MR data will reap great rewards.
Train the trainers
All too often, though, Japanese sales reps lack the support to build such detailing efforts, Bates argues.
Very frequently, Kambara points out, DMs in Japanese pharma companies, who are also super sales reps, "are not coaching their SRs" in targeting, segmentation or general selling skills.
"Super reps are promoted to managers without being evaluated sufficiently for people management, leadership, big-picture thinking, area strategy building or coaching skills,” says Kanisch.
“Training favors knowledge over skills. We need to build more consistent back-office support functions, processes and incentives to promote a real coaching culture that builds selling skills."
And recruiting sales reps isn't easy in the first place. "It is very challenging for us to hire highly talented staff and train them effectively," admits Kambara.
"We have a retaining issue in general, especially with high and low performers."
Making the transition from the traditional sales approach will require time.
"The ‘old’ selling model will continue at least for the next three to five years," forecasts Kanisch.
The reason: "For many domestic players, the challenge lies in the changing environment that favors innovative medicines. Pipeline building and buying will be critical. The ‘old’ model is the only protector for companies without a pipeline, so many companies will cling to it."
Slow though it may be, change will come.
After all, the Japanese created the concept of kaizen—gradual, continuous improvement.
For more on SFE in Japan, join the sector’s other key leaders at Sales Force Effectiveness Japan on July 27-28 in Tokyo.
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