Why A Flexible Operating Model Is Essential For Pharma Organisations

The current operating model needs updating

The success of pharma sales and marketing in the past have elevated their functional importance to pharmaceutical businesses, and with 50% of top global CEOs coming from a commercial background, crucial functions like Medical and Digital were often side-lined. Yet, recent studies looking to characterise and quantify the benefits of these other functions show that they have incredible potential to generate value for stakeholders and businesses alike. The answer, it seems, lies in taking full advantage of what you already have.

The need for a flexible operating model has been highlighted by the pandemic, with field-based teams unable to conduct face-to-face meetings with customers due to the restrictions. As such, the pharma companies with more flexible operating models have been able to quickly evaluate how they interact with customers, mobilise the resources to react quickly, and put together hybrid engagement strategies maximising their use of digital functions and capabilities.

A flexible pharmaceutical operating model will unlock greater value

In healthcare, there are multi-disciplinary teams in place to diagnose, treat and manage patients’ conditions. It should be the same model for pharmaceutical companies, with the functions of Medical to Sales balanced against the needs of the business and its customers. Such multi-faceted organisations are better able to recognise the requirements of helping patients and meet those requirements by utilising the skillsets best positioned to deliver them. By deploying a business model that nurtures the value of patient engagement, and Medical and Digital functions, pharmaceutical companies overcome traditional structural restrictions and unlock cross-functional value without dramatically increasing costs.

To deliver increased value and successfully differentiate against competitors, the pharmaceutical operating model must better incorporate the untapped value of patient engagement, and Medical and Digital functions.

Key benefits of a flexible operating model

1. Customisability: Engage with your customers in a way that is relevant to them and see your key customer relationships develop significantly as a result.
2. Preparation for the next generation: Make yourself launch-ready for the new decade’s NME (new molecular entity) rich landscape.
3. Greater colleague engagement: When roles become better suited to their skillsets, people get more enjoyment in their work, and generate better results.

A flexible operating model can pull through the untapped value of patient engagement, medical and digital functions

The Flexible Operating Model is a departure from fixed models of the past. Traditionally, organisations have locked capabilities such as Digital, Patient Engagement or Service Development into commercial/non-commercial siloes. Digital capabilities were mostly extensions of the marketing team, for example.

Figure 1: The current operating model (left), and an illustrative alternative (right) that employs rotating layers of functions to select and match the most appropriate skillsets to the customer or business needs. The strategic core comprises functions such as Finance, Insights & Analytics, CRM, Supply Chain.

The new model, however, acknowledges the need for all functions to have access to these capabilities – whilst also recognising that the relative importance of these functions should be defined by the precise needs of the customer or the business. The rotating layers provide key functions, with access to different functions and skillsets in a flexible structure, to fit with pharma’s cross-functional brand team structure. The flexible operating model will also stimulate creativity and agility as new teams gain a better understanding of what colleagues in previously siloed functions do, and the skills they bring to the table. As a result, there is less reliance on traditional decision-making channels to get things done.

What are the benefits of unlocking patient engagement and digital functions?

Incorporation of patient engagement into business planning ensures that the unmet needs of the patient are at the forefront when decisions are being made and products/services developed. Doing this is crucial to ensure that key decisions are informed by the needs of the customers, and therefore optimised to deliver success in the form of patient satisfaction and uptake of services.

Empowering the Digital function has significant benefits for interconnected teams. For example, a Marketing function that is driven by Digital has significant advantages - such as a faster ability to produce and deploy digital marketing messages - compared to an analogue one. Cross-functional access to digital teams can improve the ability to personalise content in a cost-efficient way that would not be possible with traditional analogue channels. Unlocking digital capabilities also allows you to measure performance, impact and customer behaviour with agility, flexibility and level of detail that will further inform decision-making.

Combining digital capabilities and patient engagement together allows you to unlock a powerful tool in dialogue with HCPs. Effective patient engagement generates real world data, which, when combined with digital capabilities, can then be measured and communicated to prove the value of pharma’s interventions, be they services or otherwise.

Underpinning all the above, to drive the most value from these functions, you also need to have an advanced, integrated data analytics and governance and insights capabilities to ensure that you really understand what is going on, and to “predict” customer and patient needs. That way you can plan for highly personalised and timely marketing, as well as “next best actions”.

What does the flexible operating model look like in practice?

Picture the launch of a new biologic for a common disease. Medical teams lead on the definition and dissemination of key messages to target customers. These targets are guided by Marketing and Account Management (AM) teams, who create campaigns and then allocate specific tactics around awareness to Sales teams. Later in the launch process, the AM team will identify areas of focus for developing account maturity, and then engage value-adding teams such as Patient Engagement to support this development. Meanwhile, the Digital team handles reactive problem-solving for patients and HCPs, the sophistication of which will increase as more services are developed and more data is collected.

This is not about cost, it is about identifying your sources of value and making sure they are configured correctly. There are three key principles to this:

• Cooling things down: Focussing the remits of teams, such as Marketing, to align better with their areas of expertise and to give them more time for value-add activities.
• Heating things up: Empowering underutilised (or improperly utilised) functions, such as Medical or Digital.
• Setting the thermostat: Establishing rigorous measurement to actively track and manage changes to the business – this should happen at an operational and a journey level.

Implementing effectively

There are several ways to go about implementing these elements, and a number of pitfalls to avoid too. From our experience, we propose three recommendations to keep in mind for the transformation of your business:

1. Of the people, by the people, for the people: While we may speak in terms of functions and business units, your organisation is made up of people. The mention of ‘reconfiguring functions’ or ‘ensuring best use of resource’ can lead colleagues to worry about redundancies or messy reorganisations. When that happens, everyone is scared, and no one is ready to make change. Shifting the responsibility of functions ultimately serves your colleagues best – allowing them to do more of what they’re good at. Ensuring that colleagues are clear on this benefit will allow you to co-create your new organisation with them, and guarantee success.
2. Planning the change against a set of design principles: As part of the planning process for this change, a set of design principles should be agreed by leadership based upon the new company strategy. For example, the new strategy to unlock greater value from medical to deliver a better offering of medical services to patients. These design principles must be simple yet specific statements that help guide the implementation and execution of a new operating model. Throughout the implementation frequently refer to the design principles, using them as criteria to ensure you are staying on track with your strategy and avoiding conflicting priorities.
3. Numbers paint a thousand pictures: When making a change of this magnitude, the question will inevitably arise as to whether or not it is successful. Different functions require different ways of answering this. While commercial functions will have revenue and product figures to hand, non-commercial functions, such as Medical, won’t. Our experience has shown us how metrics can be created around levers of business value – for example, your access to key customers, maturity of relationships, etc. Doing this properly will give you the ability to definitively prove the success of your new business model (in whatever form you implement it).

The recent pandemic has accelerated changes across the healthcare sector – and the need for a flexible operating model has been highlighted across the board. Put simply, there are better ways of working together which can unlock more value for pharma companies, HCPs and patients which do not require moving mountains to achieve them.

If you would like to discuss anything in relation to this article or pharmaceutical operating models further please get in touch with Jamie Campbell (Jamie.Campbell@penpartnership.com) or Glen McCracken (glen.mccracken@penpartnership.com).

References

1. Joseph A. DiMasi, Henry G. Grabowski, Ronald W. Hansen, Innovation in the pharmaceutical industry: New estimates of R&D costs, Journal of Health Economics, Volume 47, 2016, Pages 20-33, ISSN 0167-6296
2. EvaluatePharma, World Preview 2019: Outlook to 2024, June 2019