More Revenue. Made Simple.

As a leader of Industry Solutions at Model N, James works with our customers and partners to propose, architect and deliver transformational revenue management initiatives. He has over 15 years of experience in consulting, product management and sales roles.

Presenter Slide

James Robinson

Director of Industry Solutions, Europe

E: jrobinson@modeln.com

A Value-Based Connection!

Aligning Commercial Strategy with Sales Execution

Presentation Topics

Market readiness for value-adding services and partnerships

Two dimensions of executing on value

Sources of “value-gaps” in the chain Principles of a holistic approach

Embedding value and revenue

maximization into the organization

The Market is in Transition...

Independent Buying

Group Negotiation

Integrated Purchasing

Power Selling

Independent Selling

Corporate Accounts

Manufacturer Customer

• Highly Differentiated, New Products

• Pricing power = pricing consistency

• Limited analysis of competitive or consumer behavior

• Physician/Surgeon Preference • Sophistication often prized over

Efficacy • Purchasing lock-ins with

established vendors

• Focus on Cost = price erosion • Voluntary utilization = non-

compliance • Dual/Multi-Source = loss of mkt.

share • Returns for ‘Sole-Source’ • Utilization mandated and monitored • Partnership Contracting approach

with win-win approach to structuring deals

• Relationships extend value beyond sourcing to ‘other areas e.g. operational excellence’

• ‘Price’ is not the starting Point

• Commoditization of Products and customer relationships = loss of customer loyalty

• Runaway Rebates and Discounts to meet demands ‘for higher return = margin erosion’

Fragmented Buyers Rise of the Aggregators

The Partnership Model

Increasing Commercial Complexity & Controls

+ 3-5 years

…sometimes “Value” isn’t for Everyone!

“Anti-Value” Payer Purchasing Practices

International Reference Pricing

Procurement via Tenders

Some Recent Statistics…

32% of organizations believe they fail to consistently communicate value.

52% of organizations agree that value & services are the full package

43% of organizations believe end user attach importance to value added services – the remainder still feel price prevails

Creating Value in the New World….

Old World New World

Comparative analysis vs

reference drugs

Negotiate once

Higher burden of proof

Drive to transfer risk

away from the payer

Payment related to

outcomes

Revisit and review

Dominated by clinical benefits Wider definition of value

Pre-launch trials

Economic studies and

quantification of outcomes

As evidenced by…

Planned budget increases / decreases in marketing instruments - Booz & Co (2009)

Challenges to Execution are Two-Fold

The two most important challenges to resolve before implementing Value-Based Initiatives are dominance of conventional methods of pricing and up-skilling sales team’s ability to sell value

- Macdivitt & Wilkinson (2012)

Part 1: Translating Strategy into Sales Execution

STRATEGY

EXECUTION

VALUE Creation, training

and communication Results, feedback and adjustment

Marketing

Sales

Components of Value

Value

RPG

RPG: Revenue or Performance Gain CR: Cost Reduction EC: Emotional Contribution

CR EC

Better patient outcomes

I like you! It costs me less overall

RPG

EC CR

The Value Triad A Unique Customer Combination

Communication & Alignment

Marketing Sales Buying Unit

Patient

Fails to translate into local setting

Created “top-down”

Defaults to type (PRICE)

Value not maximised

Blames product or market conditions

Builds mistrust Goes back to the drawing

board?

How do we “sell” and “capture” this added value?

Part 2: The missing link in Value Delivery…

VALUE Creation, training

and communication Results, feedback and adjustment

Marketing

Sales

STRATEGY

EXECUTION

STRATEGY

EXECUTION

Part 2: The missing link in Value Delivery….

VALUE

Marketing

Sales

PRICING CONTRACTS

Segmentation, targets and commercial best practice

Performance measures, exception approvals

Contract Planning and Development for Value

Discounting Rules

Pricing Approaches

Performance Criteria

Links to Product Strategies

Customer Targeting

Goals & Objectives

Contracting Strategies

1 2

3

4 5

6

The financial and non-financial objectives the organization hopes to achieve

Specific customers with whom the organization wishes to develop a contracting relationship

Consistency of overall brand strategies to

contracting strategies regarding pricing, competitor focus,

customer focus and product portfolio

management

The types of discounts and value-added services offered

in contracts

The amount of discounts and value-added services

offered in contracts

The contractual performance

requirements that customers and

suppliers must meet

Working at “The Sharp End”….

• What is the best deal strategy to use for this offer? – What matters to this stakeholder

– How should I bundle products and services?

– What commercial structures should I use?

• Where should I create and set

the performance thresholds? – How can we ensure a win-win?

– ….and change behaviours

• What discount / incentive for

each commitment? – On and off-invoice

– Ancillary performance obligations

….requires an Integrated End-to-End Process

Value Management

Life-Cycle

Performance Measurement

Agreement Settlements

Deal Management

Financial Compliance

Analytics

$¥€ Value & Price Strategy

Embedding Value Management

Annual Operating

Plan

Quarterly Business Review

Strategic Plan

Quarterly Business Review

Review Cycle

Monthly Contract Reporting Global Value Policy

Committee

Overcome internal barriers

Track results and refine strategy

Advise on best practices

Put in place controls

Disciplined Process Analytics Account Engagement

Redressing the Balance

The Innovator • Cash-flow to invest in R&D

• Predictability of revenues

• Access to emerging markets

• Appropriate price differentiation

• Fair return on capital

The Customer(s) • Make budgets stretch further

• Value for money

• Equality of access to healthcare

• Patient centric solutions

• Support and education for clinicians

Thank You!

More Revenue. Made Simple.