Trends and Future Directions for the High Performing District Sales Manager

A Comparative View from 2007 and 2009

Report Summary Best Practices, LLC

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Trends and Future Directions for the High Performing District Sales Manager

A Comparative View from 2007 and 2009

Best Practices, LLC

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Table of Contents

Project Overview

Key Insights

Detailed Findings

Appendix About Best Practices

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The district sales manager (DM) is the cornerstone of sales force effectiveness and high performance. As pharmaceutical, biotechnology, and medical device companies evolve, roles and responsibilities for DMs also must evolve to boost sales performance.

Project Methodology and Study Objectives

Research was conducted through an online survey in 2009 to update 2007 survey data.Deep dive interviews in 2007 captured executive insights and best practices that are still applicable in today’s landscape.By identifying recent changes, new directions and best practices, this study will help define the most important current and future roles of the district sales manager to drive superior sales productivity and growth.

Sales Force Growth & Reduction DriversDetailed Sales Model ChangesPhysician Access LevelsCritical DM Activities & Trends in DM ResponsibilitiesEssential DM Management, Leadership & Competency SkillsImpact of Pharma Model Changes on DMsPharma Sales Rep LicensingDM Readiness for ChangeSlides with this symbol in lower left-hand corner are part of the initial 2007 study and are included for longitudinal and comparison purposes.

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Participating Pharma & Biotech Companies

Canada Croatia

Partner Locations

Algeria Australia

Belgium Brazil

Egypt France

Hungary Ireland Japan Kenya

Malaysia Mexico

Netherlands Pakistan Poland

Puerto Rico Singapore

South Africa Spain UAE

Ukraine USA (30+

responses)

SUHASINI IMPEX

First-line field sales management insights were harvested from 94 sales leaders from 46 different pharmaceutical and biotechnology companies across 24 different countries on six continents. Interestingly, most key themes cross countries and continents.

Field Insights Span the Global Bio-Pharma Market

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From seasoned executives to managers full of ideas, the range of respondent titles suggests depth and breadth of perspective on the future of district sales managers.

Range of Career Levels Lend Insight

Associate Director, Field Development Associate Director, Field Sales Mgmt Development Associate Director, Sales Operations Associate Manager, Sales Training & Development Director, Business UnitDirector, Field Sales Director, Global Selling Effectiveness Director, Marketing Director, Mgmt Development Director, Payer Strategy & Non Professional Promotion Director, Platform Development Director, Sales Director, Sales & Marketing Excellence Director, Sales & TrainingDirector, Sales Effectiveness & OperationsDirector, Sales Operations Director, Sales Strategy & Effectiveness Director, Strategy & Operations District Manager, Sales Executive Vice President, Sales & MarketingGlobal Manager, Sales Force Excellence Head, Business IntelligenceHead, Organizational Development & Talent MgmtHead, Sales Excellence

Head, Sales Training Manager, First Line Sales Manager, Global Sales Manager, Learning & Development Manager, MarketingManager, National Market Development Manager, National Sales Force Manager, Sales Manager, Sales & Marketing Manager, Sales & Marketing Training Manager, Sales Training & Development Manager, TrainingManager, Training & Development President, US OperationsRegional Director, Sales Regional Manager, Sales Force Excellence Senior Director, Mgmt Development Senior Director, Sales Senior District Manager, Sales Senior District Manager, Specialty SalesSenior Manager, Mgmt Training Vice President, Organizational Development Vice President, Sales & Marketing Vice President, Sales Operations

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Key Insights

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Field research surfaced various insights and observations that spotlight the accelerated evolution of the bio-pharmaceutical sales model and the changing role of the first line district manager. Key findings include:

Key Observations, Insights & Findings

MOTTLED VIEWS OF THE EVOLVING BIO-PHARMA SALES LANDSCAPEOverall Industry Hopes For Growth Remain: Companies expect to keep their sales forces flat in the upcoming year – and hope for growth remains with a majority expecting to increase sales staffs within three years. Field research reveals 53 percent of companies expect sales force sizes to increase. Products in development expected to hit the market, sales model changes, new therapeutic areas and customer segments to address will fuel this sales force growth.

ACCELERATED EVOLUTION OF ALTERNATIVE SALES MODELSAlternative Sales & Marketing Channels Emerge: Rapid experimentation is occurring and myriad sales model changes are underway. The “revolutionary re are make” of the outside sales model has been overstated in terms of how quickly e-channels and technologies will transform.Customer Centricity Defines The New Sales Model. The majority of changes are occurring in territory size to better focus reps, to create individualize call plans for key accounts and to reduce how many accounts reps can call upon – all changes designed to deepen customer focus.

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DSM Future a Chief Concern for Pharmas, Biotechs

Most respondents answered the survey on behalf of a pharmaceutical or biotechnology manufacturer.

Pharmaceuticals Manufacturer, 70%

Biotechnology Manufacturer, 17%

Medical Device Manufacturer, 6.5%

Other, 6.5%

n=46

% of Respondents

Q2. Indicate which of the following types of companies you represent.

• Pharma/Biotech Technology Provider• Physician Recruiter/Placement• Pharma Product Exporter

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Q. Please estimate total number of employees in current field sales force

Benchmark participants represented sales forces ranging in size from 28 for a single specialty product to 8,500 for the entire global field staff. The average sales force represented by survey respondents had more than 1,500 employees.

(n=33)

140

543

1,537

1,275

25thPercentile

Median Average 75thPercentile

Num

ber o

f em

ploy

ees

2007 Sales Force Size at Participating Companies

*The average sales force size has decreased by less than 100 reps from 2007 to 2009.

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Q. What is the current total number of Reps and DMs in the group you represent?

On average, benchmark participants represented groups with nearly 1,400 reps and more than 160 front line district sales managers. In the groups represented by survey participants, the average number of sales reps per District Manager was 9.3.

120

550

1,397

1,600

15 50151 120

25thPercentile

Median Average 75thPercentile

Num

ber o

f em

ploy

ees

RepsDMs

2007 Number of Sales Reps and DMs

*The span of control for DMs has increased slightly, from 9.3 to 10, since 2007. The average number of DMs has decreased.

(n=33)

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Q. Which of the following factors are key drivers of the expected growth?

(n=24)

Three-quarters of companies that expected growth in their sales forces in 2008 and beyond also anticipated new product launches. Expansion into new therapeutic areas also was expected to drive growth.

16%

20%

24%

32%

76%

4%

8%

Sales force has not kept pace withcorporate growth

Expanding into new regions

New customer segments (i.e.,managed care)

New indications anticipated

New sales model

Moving into new therapeutic areas

New products expected to launch

% of Companies

In 2007, New Products Drove Sales Force Expansion

*From 2010 to 2012, moving into new therapeutic areas and addressing new customer segments are expected growth drivers more so than in the past.

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Two Years Ago, Change Signals Began Lighting Up

(n=32)

Q. Has your company made or planned any significant changes to its sales model?

Half of research participants were completely overhauling their sales models within the next few years. As many as 84 percent had recently experienced or currently anticipated some significant sales model changes.

Sales Model ChangesCompleted

within last ~18 months

Change underway but not complete

Change scheduled within

~18 months

Total planning change

No current

plans for this

Increased customer focus 41% 41% 3% 84% 16%

Revised DM training 22% 38% 16% 75% 25%

Alternative sales channel investment 10% 29% 32% 71% 29%

Piloted new sales model(s) 30% 17% 23% 70% 30%

Revised DM duties/role 20% 37% 13% 70% 30%

Revised rep duties/role 29% 29% 6% 65% 35%

New sales technology investment 19% 6% 26% 52% 48%

Complete sales model overhaul 23% 17% 10% 50% 50%

½ benchmark class companies plan full overhaul!

Accelerated evolution

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DM Training is Evolving to Enable ChangeTraining curriculum must evolve to enable the DM to be effective in shifting to new roles in a rapidly changing local market.

“Part of what we’re looking at doing…is more training for our DMs around business acumen, because there’s major change or a paradigm shift. I’d say most of pharma is still in the old model; even if you change the way you’re structured, you may not be changing the thinking.”

– Director Sales Force Effectiveness

“Part of what we’re looking at doing…is more training for our DMs around business acumen, because there’s major change or a paradigm shift. I’d say most of pharma is still in the old model; even if you change the way you’re structured, you may not be changing the thinking.”

– Director Sales Force Effectiveness

FLM Training Elements (Mentioned in Interviews)• Business acumen & Business Analytics • Business planning & Resource Allocation• Financial analysis – Territory P&L and Balance Sheet• Developing a strategy for the market. • Assessing state of local markets; • Key influencers in health care for state & market; • Working with local Managed Care entities• Using Health Economics & Outcomes Information• HR training to reflect multi-generational work force• Major account selling and account management• Dealing with C-level customers at local major accounts

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Executive Quotes:“Management development programs designed at the DM employee level”

“Well-laid training programs to empower DMs in jobs”

“Develop training programs to strengthen strategic perspective (acct mgmt) and business acumen”

“Develop “management trainee" positions as DM stepping stone”

“Continued study and educational opportunities”

“Analytical tasks (trends on regional market)”

Executive Quotes:“Management development programs designed at the DM employee level”

“Well-laid training programs to empower DMs in jobs”

“Develop training programs to strengthen strategic perspective (acct mgmt) and business acumen”

“Develop “management trainee" positions as DM stepping stone”

“Continued study and educational opportunities”

“Analytical tasks (trends on regional market)”

Broad Training Needs Seen for DMsTraining needs identified through field research range broadly from leadership and business skills to regulatory issues and evidence-based medicine competency. District sales managers most often prescribed analytical and business management training to prepare DMs for changing roles.

DM Training Needs Specified by Participants:

• Leadership skills

• Coaching & motivation skills

• Analytical & financial skills

• Change management

• Business management

• Diversity management

• Scientific education

• Market & industry knowledge• Surviving a paradigm shift

• Strategy planning & execution

• Profitability mindset

• Selling & recruiting

• Specific subject areas:

• Outcomes data

• Evidence based medicine

• Patient advocacy

• Regulatory Issues

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Highly Important Somewhat Important Not Very Important Not at All Important

DM Success Dependent upon Rep Success

Employee related activities, such as staffing, development, evaluation and retention, impact the successful performance of a DM.

n=48

Q18. Evaluate the following management skills of your district sales managers in terms of their importance to successful performance.

• Negotiations, Strong Leadership

• Communicating vision• Strategic analysis

2%

23%

23%

29%

31%

48%

52%

71%

92%

46%

58%

60%

56%

44%

44%

23%

6%

25%

15%

8%

13%

8%

4%

4%

2%

2%

2%

2%

2%

Other

Project management

Diversity management

Information management

Budget management

Information management (managing repcommunications)

Organization

HR management (staffing, retention)

Employee performance management(evaluation, development)

% of Respondents

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Field research surfaced various insights and observations that spotlight the accelerated evolution of the bio-pharmaceutical sales model and the changing role of the first line district manager.

Key Insights for Reflection & Action Planning

1. Overall industry hopes for growth remain - but one in three expect sales forces to shrink. Customer centricity is defining the new sales model.

2. Business models experience accelerated evolution - not radical change or mass extinctions. Technology enables - but is not the “answer.”

3. Training curricula are rapidly evolving and are central to readying DMs for change.

4. DMs require greater strategic thinking and analytic skills to develop winning strategies in local markets.

5. Evidence-based medicine, complex reimbursement systems and health outcomes data all are gaining importance.

6. Generational differences challenge district sales managers - and should be addressed with training.

7. Stricter regulations for bio-pharma sales professionals lie on the near horizon.

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Best Practices, LLC is a research and consulting firm that conducts work based on the simple yet profound principle that organizations can chart a course to superior economic performance by studying the best business practices, operating tactics, and winning strategies of world-class companies.

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919-403-0251

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