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Transcript of Barriers in promotional regulations and their implications on your business model - Poland’s...
Barriers in promotional regulations and their implications on your business model- Poland’s learnings on sales force promotion -
Milevcic Nikola, GM IMS Healths Russia/CIS
Russia Business Briefing Meeting • 9th December, 2009
Agenda
• Regulatory changes in Poland - characteristics
• Short- and long-term market reaction
• Key take-aways
Russia Business Briefing Meeting • 9th December, 2009
On 21st November 2008 new, stricter promotional regulations were introduced in Poland
2006 2007 20082006 2007 2008 1 XII 08 2009 2010 2011+2009 2010 2011+1.XII.2008
Promotion to general public:
− Stricter regulations regarding warning info included in the commercial
− More detailed and stricter restrictions on the shape, length and size of the info warnings
− Promotion in pharmacies limited to defined areas, not influencing the every day ‘usual’ operations of the pharmacy
Promotion to prescribers:
− ZOZ Management approval for detailing
− Appointment booked in advance
− Appointment outside physician’s working hours
Source: IMS Health analysis
Russia Business Briefing Meeting • 9th December, 2009
As usually, the letter of law was not completely clear for the practitioners
Intentions behind the regulation
Questions and uncertainties arising
Management’s approval for detailing necessary
•In order to control the overall amount of detailing and pharmacos’ activities
•Who is responsible for authorisation?•How often are approvals needed?•What’s the escalation process?
The need to book appointment in advance
•In order to prevent excessive number of calls in a day limiting the standard of doctors performance
•How much ‘advance’ is needed?•Is it in advance to the first visit or to all of them?
Appointment outside physician’s working hours
•In order to prevent the reps from ‘stealing’ the time dedicated to patients
•How should ‘working hours’ be defined? By strict hours brackets, whole ‘on premises’ time or is ‘between patients’ allowed?•Is the lunch break within working hours?
Source: IMS Health analysis
Promotion to prescribers regulations
Russia Business Briefing Meeting • 9th December, 2009
Uncertainty has led to serious anxiety on the market, typical in the ‘hard to predict’ environment
If the doctor cannot meet the rep within his office hours, why should he ask his management for approval for private time activities then? – inquires Tomasz Korkosz, press officer of the Physicians Council
„We adjust to this new situation” – says Krzysztof Jakubiak from Polpharma. „In order to support the relations with the doctors we utilise our own telemarketing centre, with the capacity of a few hundred calls per day”
„The number of calls per specialist especially from large clinical hospitals decreased significantly. Maintaining relations there became hard, sometimes impossible” - said Jerzy Garlicki, Astra Zeneca president
„Approx. one out of ten sales force workers has been laid off already among 3-4 thousand employed in pharma industry” – anonymous pharma company employee
„(…) it can be concluded that restrictions on access hold only in the time which doctor dedicates usually to patient. Between these periods doctor could, assuming management approval, host rep’s visits in the medical centre” - Katarzyna Bondaryk, Hogan & Hartson Partner, responsible for pharmaceutical law and biotechnology
This law, despite original positive motivation, hinders building clear and professional relation between pharma industry and the physicians. It praises private meeting outside working hours with less formality and rules employed - Paweł Sztwiertnia general director of Infarma
Reps must apply in advance for call opportunity. In most of the cases the meetings are organised in the afternoon - Jerzy Sokołowski, Zespół Publicznych Zakładów Zdrowia in Otwock vice Director
Source: Press search by IMS Health
Russia Business Briefing Meeting • 9th December, 2009
In the short term, pharma companies have undertaken a number of “corrective” actions to their promotional strategies
Strategy 1Instead of ‘promoting’reps perform other
duties e.g. gather information
on side effects
Strategy 2One joint management
approval for all appointments
and reps
Strategy 3Reps relocated from
physicians’ offices to pharmacies
Strategy 4New regulations stay „on paper”, no changes to every day practices of
the market
Strategy 1• Risk of hostile reaction of the
physicians/ patients/ ZOZ Management
• Extended monitoring requirements towards
IT systems
Strategy 2• Will of ZOZ
Management needed• Problem of ban
on detailing within doctor’s working
hours still unsolved
Strategy 3• Limits of business
justification• Competency fit as a challenge
Strategy 4• Constant risk of
regulator’s reaction - administrative
fines
Short-term
strategies
Requirements
and risks
Hybrid modelIncorporating all Strategies’ elements
Source: IMS Health analysis
Pharma companies focused on the operational excellence
• No matter which market scenario prevails – operational excellence brings positive results
• If the regulatory changes were to prove temporary or stay theoretical only – the company would benefit anyway
• If the access restrictions were to be imposed strictly – operational excellence actions would facilitate choosing the best pharmacies and doctors and balancing representatives’ territories
• Companies realized that any loss of contact with the prescribers favours ‘top of minds’ and limits their chances to influence the status quo - targeting was usually the first step of the optimisation process, followed by territory alignments
• IT/ new media initiatives have been another venue: reporting/ monitoring systems on one hand and tools for alternative physicians access on the other
• Uncertainty and anxiety has not caused dramatic sales force cuts – despite limited number of calls a ‘stay through’ approach dominated and reps were kept busy getting the paper work done
Operational improvement in focus
Source: IMS Health analysis
Russia Business Briefing Meeting • 9th December, 2009
Source: IMS PromoTrack 11/2009, Calls Main; 20 corporations
Following a significant drop in promotional activity in the early days of the new regulations, it bounces back as of late second quarter 2009
Number of calls Short term adjustment period
• Short term promo strategies adjustments• ‘Paper work’ preparation• Waiting for the dust to settle
• New regulations around the corner• Increased interest in New Commercial Models
Operations coming ‘back to normal’
„We were so busy adjusting to the new situation and getting all the paper work done across country that we haven’t had time to cut the salesforce. And glad we are, as for now as we have all the papers filed, it seems business is back to normal for good” Top 5 copany, an IMS client for the NCM work
Russia Business Briefing Meeting • 9th December, 2009
Changes in number of Representatives: Q4 2008, Q1 2009, Q3 2009
Number of representatives - Q4 2008
Sales force sizes haven’t been impacted and reasons for changes have been otherwise
(+/-) SFS: Q4 2008 – Q3 2009
(+/-) SFS: Q4 2008 – Q1 2009
Changes observed in the last year do not differ from the standard annual adjustements
Russia Business Briefing Meeting • 9th December, 2009
Despite little lasting effect of the regulatory changes to date, there is an anticipation for another implementation attempt following the general trend for stricter regulations of the market
Restrictions already in place:• Advertisement directed to general public must contain warning regulated by law
• People of medical profession (or perceived as such by public) cannot star advertisement
• It is forbidden to add new wholesale activity to retail or the other way round
• Medical devices stores have to be staffed with trained personnel and the whole range of products reimbursed by NFZ has to be stored on site
Planned restrictions:• Any form of vertical integration is forbidden, even within capital group
• Fixed wholesale and retail margin instead of maximal margins
• Total ban on pharmacies advertisement
• „Doctors access #2”• … ?
Despite differences in restrictions level and type across countries – changes in Poland fit well into international trendSource: IMS Health analysis
Russia Business Briefing Meeting • 9th December, 2009
Lessons from other European countries prove that although further restrictions on access can be expected – significant decrease of the doctors should stay in focus
Countries
Restriction level
low
high
Relevance of institutional customers & decision makers
Economic mindset of
decision maker
weak
strong
low high
Restrictions level on access to physicians
Significance of decision makers other than physicians
Source: IMS Health analysis
Russia Business Briefing Meeting • 9th December, 2009
Decision-makers matrix - Europe
existing new
weak
powerful
Payers
Physicians
Distribution(incl. pharmacies)
Patients
Players
Significance
Companies increasingly realize that physicians’ influence in decision making process decreases
Decision-makers matrix – Poland
Source: IMS Health analysis on the basis of IMS Global Promo.Track
existing new
weak
powerful
Physicians
Distribution(incl. pharmacies)
Patients
Players
Significance
Payers
Russia Business Briefing Meeting • 9th December, 2009
To some extent the Swedish lesson could serve as an example of what happens when the access limitations are seen through
1. Each meeting of the physician and the rep has to be pre-approved by medical centre management
2. Invitation for training/conference is directed to the management which points the most suitable doctor to attend
3. Group meetings prevail. Individual meeting with the physician requires special justification
4. All the training/conference etc has to be co-financed by the doctor (50% minimum)
5. Cap on gratification for consultancy, clinical research and all other cooperation forms has been set
(reforms were introduced in 2004/05)
Rules regulating contacts between pharma industry and the physicians Pharmaceutical industry actions
• Gradual sales force size reduction – partially lay-offs, partially departments re-shuffle
• Reps with established relationship keep visiting doctors during lunch breaks (1-2 daily maximum)
• Establishing the „rules of conduct” with the key medical centres management
• Increasing significance of the tools such as: e-learning, mailing, educational programmes
• Shifting balance from promotional activity to relationship sustaining
Source: IMS Health analysis
Russia Business Briefing Meeting • 9th December, 2009
Patients
Politicians
Wholesale
HospitalsPatients
associationsNFZ
Doctors
The companies in Poland have begun to notice wider spectrum of the system stakeholders…
…therefore new commercial models started being considered
Producer/ importer
Limited access to physicians
Further limitations planned
Increasing substitution
More educated patients
Influencing doctors’ decisions
Pharmacies
Source: IMS Health analysis
Russia Business Briefing Meeting • 9th December, 2009
PayorDistribution
PatientProducer/ importer
One integrated commercial strategy, addressing all decision chain elements, will be the most appropriate answer to the market changes in the long term
• Which doctors to target?
• What promotional mix is optimal?
• How should sales be organised?
• How to reach key decision makers in each group?
• What rep number will be optimal in the medium- and long-term?
Physician
Source: IMS Health analysis
Russia Business Briefing Meeting • 9th December, 2009
What are the lessons learnt for the industry on the basis of the Polish case?
In the short term rapid actions (reductions) are not recommended
Operational improvements and adjustments are good to focus on
Go beyond the immediate regulatory challenge and understand the underlying market trends
Anticipate the actual power shifts and get ready for the future changes reshaping the industry
In the long term it is advisable to reconsider the commercial model
Source: IMS Health analysis