As the pandemic ends, B2B companies are investigating how commercialization practices have been turned upside down over the past year and assessing what to keep or discard. However, there is a longer-term perspective. What are the options for a real transformation of your commercialization model – one that cuts costs while increasing sales?
One of the pharmaceutical companies shows how it works. Imagine shifting focus to what your business sells while managing a transformation of your commercialization model. During the pandemic, several thousand field workers will be switched to virtual engagement. Then imagine doing all of this while you keep growing the business. It’s daunting, and yet Novo Nordisk has achieved it in the US
Novo Nordisk is a Denmark-based company valued at around $ 20 billion with roots dating back to 1923. It has led the global insulin market with a historic focus on this critical drug. However, as competition from biosimilars and other market pressures emerged, the company took a long-term approach to be sustainable. It fully wanted to see how the potential of newer molecules and its innovative pipeline can lead to solid growth. That made products beyond diabetes, other aspects of metabolism, and ultimately other types of disorders, a critical focus. And so it came about that the company was planning one of its key drug launches in January 2020 – the first oral drug to regulate GLP-1, a vital metabolic enzyme – and would get headlong into the pandemic.
In order to achieve this strategic change, it was necessary to honestly examine how the largest and most important capital could be used for the largest market of the global company: sales representatives. Ultimately, the number of salespeople was reduced from around 5,000 in 2017 to 4,200 by 2020. In an industry where typical pharmaceutical salespeople have fully utilized costs of $ 250,000 to $ 300,000 per year. The decision to downsize during a product launch during a global pandemic was a difficult one, but it was part of how Novo Nordisk is proactively addressing rapidly changing industry dynamics. In addition, the company needed to modernize internal functions such as marketing, operations, and analytics to better support commercialization. On top of these important changes, add the impact of the pandemic on a sales model that hasn’t changed dramatically in decades. Business-as-usual was out of the window.
To find out how the company did this, I spoke to Doug Langa, president of US subsidiary Novo Nordisk Incorporated. He identified three key steps the company was taking.
1. Root it all in a deep understanding of the customer. Langa was ruthless in his assessment of what the company needed to transform from. “In 2016 we had a model that didn’t change our approach to sales in the US. We treated the country as a large conglomerate that we knew wasn’t.” The company lacked important regional dynamics such as the different levels of competition between health systems in different markets and the extent to which those health systems had consolidated decision-making. It reached out to doctors based on factors like the types of patients the doctors saw and what drugs they prescribed, but lacked critical contextual factors – or, as we would say, jobs to be done – that determine how doctors do actually make decisions.
The challenges didn’t stop there. Langa says, “We only used this old algorithm for the number of calls you can make to a doctor to change behavior. So we had the old school model of sending as many salespeople as possible, getting a big footprint, and chopping away. “That has changed. Langa explains: “We have chosen a more systematic, algorithmic view of health care in the US and the use of our resources.”
By combining a deep customer understanding with mathematical models, the company was able to gain qualitative insights into how decisions are converted into very actionable data about how many visits a doctor would get and what format was the best way to include them. Langa tells how this pursuit was brought to life. “It was all about analytics – getting the right message to the right doctor with the right amount of samples. We really understood the doctors and their contexts, individual and group practice, the population group they served, and much more. “With this information, the company was able to quickly allocate the right resources to specific campaigns, including new drug launches or new ways to hire doctors, as the ability to conduct face-to-face visits was limited.
Commercial transformation requires understanding new vectors for innovation as well as granular, … [+]
2. Reevaluate the profile and skills the employees need. Novo Nordisk knew that part of its transformation would be reducing the number of salespeople due to the significant cost, and recognizing that many group practices and health systems still have strict limits on the representatives who visit doctors in their offices before Covid met her. From 2017 to 2020, the number of repetitions dropped from around 5,000 to almost 4,200. The redesign wasn’t just about downsizing, however.
Langa explains, “The agent’s role is more complex today because it’s not just about making a certain number of calls and getting the message across. It’s about using the right digital tools that we make available. It’s also about meeting stakeholders where they are. If doctors need to meet our representative at 8 p.m., we will. The flexibility aspect is really important as these representatives continue to be one of our most important and powerful assets, especially when we are launching a new medicine. “
And so the company has adopted flexibility – not only because of the requirements of the market, but also because of a more diverse product portfolio than in the past. This places new demands on employees and requires new skills. Langa says: “We have to be agile in how we use our resources. We could ask a group of repetitions to do something and then switch things over and they have to consent to us doing that. The world won’t stay the way it was. “
The company looked to see if a contract sales organization – an outsourced sales group – would help achieve this flexibility and decided against it. Langa explains how they called. “They cost a lot less, but there is also a risk. We believe it is still vital to have a highly developed representative with the right level of clinical expertise and B2B engagement. These are important dialogues we have with doctors and they require a higher level of expertise. We actually had some groups in the company that got bigger, like diabetes advisors and medical contacts. We believe that the passion and purpose of our people is a competitive advantage. “In other words, while the company has tried to cut costs and compromise, it has recognized that employee expertise is a core competency. So it has doubled there and focused on quality rather than quantity.
3. Change how customer loyalty takes place. Long before Covid hit, Novo Nordisk was diversifying its interactions with doctors and other medical decision-makers, but the pandemic has boosted those efforts. Langa recalls: “We learned that we can do the things we traditionally did in person – like speaking programs, customer calls, and providing samples – virtually. The attendance at speaking events in 2020 had actually increased because people realized that it was easier than going to a restaurant. “He summarized:” We have learned to meet doctors where they are. ” It’s about understanding the customer and then tailoring the experience to this differentiated point of view.
Transformation must be rooted in customer orientation.
Doug Langa, Novo Nordisk
The old model isn’t entirely gone. Rather, hybrids will now prevail. “We did some things that will stay after Covid, but we have to stay razor sharp to get personal again. There will inevitably be a mixture of personal and non-personal behavior. As time goes on, there is a life cycle for products, and there is one component of the personal relationship at startup that will be less later on. “As with the entire sales model, it’s about matching the right approach to the right product with the right customer with the right message.
Lessons for other leaders: Langa reflects on his experiences through this transformation and generalizes his lessons beyond the pharmaceutical industry. He has three important pieces of advice. First he says, “Have a vision. We made it very clear to the organization what we wanted to do, and it was crucial that we got that back on track. Second, he has a point about what the organization can do to keep that vision true. “Think long-term. My job is to think quarterly, honestly every Monday, because that’s when I get my numbers. But we need to know where we are going to get there. “Finally he says:” Be transparent. If we win we will celebrate. But we will also have challenges and the need to recognize them and correct them quickly. It’s just our culture. “It is this transparency – and how it manifests itself in a market leader as authenticity – that enables the flexibility that underlies much of the company’s transformation.
With every transformation, and especially in a crisis like the pandemic, it is important to anchor a company’s steps in “meeting customers where they are”. The pandemic turned current practices upside down, but Novo Nordisk had already stolen a march to transform commercialization. Thanks to its deep customer understanding and flexible work practices, the company was able to handle this wave of villains with agility. These practices can put a B2B company in a strong position no matter how choppy the water may be.