Predictions suggest that the Pharmaceutical industry needs to cut $36 billion in Selling, General and Administrative costs by 2017 to maintain an operating margin similar to 2012. Expiring patents, increased government regulation, declining physician access and reducing out of pocket expenditures have shifted the balance of (buyer) power to payors and providers. WNS DecisionPoint(TM) estimates that the rising influence of payors and providers has eaten up around 3.6 percentage points of the top 10 players’ average gross margins from 2009 to 2014 and is expected to hurt them more going forward. Currently, many pharma companies are focused on containing sales and marketing expenses as a strategy to combat shrinking profit margins, but doing so is likely to hurt their bottom line in the long run. Without strong sales and marketing efforts, demand for their products is bound to decrease. Rather than sacrificing headline growth by cutting down investments in robust sales force and reducing marketing spend, pharma companies could turn to analytics to improve their existing sales force effectiveness and improve marketing return on investment. Analytics can help companies: - Study data related to claims, patient, physicians, payors and providers to generate useful insights around launch action plans and create a distinct positioning thereby ensuring maximum usage post launch - Draft market entry and expansion strategies - Understand patients’ needs, competitors’ strategies, and stakeholder expectations early in the drug development process to aid delivering an acceptable return on investment (ROI) - Tailor promotional messages, understand affinity of channels for various stakeholders, monitor sales force metrics, reduce administrative time to improve selling & marketing efficiency and effectiveness To learn more about the challenges facing the pharmaceutical industry and strategies to overcome them, read the full report at: http://www.wnsdecisionpoint.com/our-insights/reports/detail/46/bending-the-buyer-power-curve-downwards

1. wnsdecisionpoint.com
Bending the Buyer Power Curve
Winning with Analytics

2. 11 Wnsdecisionpoint.com
Stronger influence of payors and providers weighing on pharma
companies’ profitability
Rising influence of payors and providers in the US, as reflected in the Buyers Power Index, led to a reduction of 3.6 percentage
points in top pharma companies’ Gross Margin between 2009 and 2014
100% 107% 108% 109% 116% 120% 127% 135% 140%
2009 2010 2011 2012 2013 2014 2015F 2016F 2017F
Buyers Power Index (BPI)
BPI to go ↑ going forward as well, which is again expected to hamper profitability
BPI is a function of pre-defined parameters or input variables such as generic sales contribution,
consolidation of hospitals, physician access and out of pocket expenditure as a % GDP to ascertain the
influence of payors and providers in the US. BPI is likely to go up in future as:
 Generic contribution increases from 19.3% in 2014 to estimated 22.7% in 2020
 More hospital consolidation takes place
 Physician access becomes more restricted
 Out of pocket expenditure reduces from 11.1% in 2014 to 10.2% in 2020
Read the full report to learn more about BPI and its impact

3. 22 Wnsdecisionpoint.com
Successful companies are driving commercial excellence for
competitive advantage
1 McKinsey
2 ZS Associates
3 BCG
4 WNS DecisionPoint
5 IMS Health
Read the full report to understand each strategy and its implementation in detail
StrategiesDrivers Market Statistics
80%1 of the commercial failures are
because of lack of differentiation
Driving fast-paced but high-quality research and
development
~60% of the pharma companies are using advanced
analytics in R&D4
Planning and adjusting launch plans according to
uptake experience
Embracing smaller size drug launches to diversify
and reduce sales attrition risks
Understanding patient needs, competitor strategies
and payors/providers’ expectations in order to
reduce drug failures in pre and post launch phases
Controlling SG&A expenses
Creating more robust account management and
selling strategies to combat declining physician
access
Increasing geographical expansion
Sales erosion from patent expiries
Declining physician access from 78%
in 2009 to 51% in 2014 in the US2
Declining healthcare spend as a % of
GDP in most of the developed
economies like Japan and UK
Top 17 pharma companies need to cut $36 billion in
SG&A costs by 2017 to maintain an operating margin
similar to 20125
69.1% of the companies are using advanced analytics
for sales force effectiveness and pricing
reimbursement analysis4
Emerging markets including BRIC are expected to
grow by 7-10% during 2015-20 as against 3-6% for
developed economies like the US, EU-5 and Japan5
Sales erosion of $65 B due to patent
expiries between 2014 and 2019
Commercial prowess of 53 drugs approved in 2014
will generate aggregate peak sales of $48 billion as
compared to $53 billion for 36 drugs approved in
20133

4. 33 Wnsdecisionpoint.com
Advanced analytics is being used as one of the key enablers to build
an agile go-to-market strategy
Read the report to understand the effective implementation of analytics in detail
of companies are currently
seeking the services of
specialist analytics companies
67%1
of companies have achieved
commercial benefits from the
application of analytics
87%1
of the companies expect to
increase investments by
6-10% in advanced analytics
per year going forward for the
next 4-5 years
47%1
1 Based on WNS DecisionPoint study
Study data related to claims, clinical trials, patient,
physicians, payors and providers to generate useful
insights around launch action plans and create a distinct
positioning thereby ensuring maximum usage post launch
Understand patients’ needs, competitors’ strategies, and
stakeholder expectations early in the drug development
process to aid delivering an acceptable return on
investment (ROI)
Tailor promotional messages, understand affinity of
channels for various stakeholders, monitor sales force
metrics, reduce administrative time to improve selling &
marketing efficiency and effectiveness
Draft market entry and expansion strategies
Analyticsoneofthekeydrivers
toattaincommercialexcellence

5. 44 Wnsdecisionpoint.com
Sales and marketing functions are again expected to be the top two end-user groups going forward
Use of advanced analytics is comparatively high while devising selling
and marketing strategies
Sales and marketing divisions employ analytics more than any other department
2%13% 15% 4% 2% 9% 9%
18% 24%
15% 27%
38%
24%
49% 44%
53% 42%
31% 47%
20% 16% 29% 29% 22% 20%
Strategy R&D Marketing Sales Finance Managed Markets
Use of Analytics by Functions
Very less Less Neither less nor a lot A lot Extensively
31% 18% 22% 25%
2% 2%
11% 15% 31% 24%
9%
11%
22% 11% 20% 15%
9%
24%
Strategy R&D Marketing Sales Finance Managed Markets
Popularity of Analytics Application in the Next 2-3 years
Rank 1 Rank 2 Rank 3
For detailed applications of analytics to achieve functions’ effectiveness and transformation, read the full report
Source: WNS DecisionPoint™ Survey
Source: WNS DecisionPoint™ Survey; Data labels represent % of respondents; N=55

6. 55 Wnsdecisionpoint.com
How to win with analytics?
Identify and prioritize areas where to deploy analytics tools and methods based on business impact and
structural factors
Identify and
prioritize the goals
and requirements of
analytics
Carry out diagnostics (internal/external benchmarking) to assess the capability and maturity of current
analytics operating model
Define requirements within the company for the varied usages of analytics required and the associated
technology components, platforms, and data lifecycle governance to support them
Create a sustainable analytics roadmap for differentiated business growth and performance
Set up
infrastructure to
institutionalize
analytics
Identify the potential use cases for adoption of analytics
Prioritize the use of analytics based on the degree of tangible business impact expected to be generated
Embed analytics into the decision making process and align it to business outcomes
Measure the effects of analytics initiatives to ensure that they remain cost-effective and beneficial
Link analytics to
business processes
and measure their
effect

7. 66 Wnsdecisionpoint.com
A credible insights hub for companies looking to
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with todays realities and tomorrow’s disruptions.
Email: perspectives@wnsdecisionpoint.com
Website: wnsdecisionpoint.com
@WNSDecisionPt
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