Comparative insights from 2008 and 2011. Contact us to view the full results.

1. Sales Force Effectiveness:
Uncovering How Pharmaceutical Companies Serve
the U.S. Hospital Marketplace
Best Practices, LLC Benchmarking Report

2. Table of Contents
 Study Overview 2
 Universe of Learning 4
 Definitions 7
 Summary of Key Insights 13
 Hospital Sales Force Structure,
Alignment And Support 17
 Targeting Key Decision Makers
and Influencers 23
 Community Hospitals 35
 Regional IDN/IDS 41
 Multi-state IDN/IDS 47
 Academic Medical Centers 53
 VA Hospitals 59
 Hospital Sales Force Staffing 65
 Hospital Sales Force Training 72
 GPO Focus 76
 Lessons Learned 79
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3. Project Methodology and Study Objectives
Best Practices®, LLC conducted this 2011 benchmark study to understand the variables
in developing an effective sales force to service the hospital marketplace -- to get
products on hospital formularies. Initial research was done in 2008 and where
appropriate, comparisons are made to that research.
 This study was designed to provide strategic insight into the
optimal sales strategy, structure and resources - by market
segment and customer profile - for the hospital marketplace.
 Key study objectives
 Hospital Segments Serviced
 Importance of Key Decision Makers/Influencers in Making Formulary
Decisions
 Hospital Sales Force Alignment
 Hospital Sales Force Structure
 Hospital Sales Force Support
 Hospital Sales Force Training
 Hospital Sales Force Staffing
 GPO Targeting and Sales Force Size
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4. List of Participating Companies
Executives from 12 leading pharmaceutical organizations participated in this
benchmarking study. The following companies are included in this class:
2011 2008
 Lundbeck  Pfizer  Wyeth
 Boehringer-Ingelheim  Johnson & Johnson  Axcan Pharma
 Covidien Healthcare Systems  Ortho-McNeil Neurologics,
 Pfizer  Guardian Technologies INC
 Johnson & Johnson Health Care International  TAP Pharmaceuticals
Systems  Novartis Oncology  GlaxoSmithKline
 Medtronic  Schering-Plough  Bayer Healthcare LLC,
 Abbott Laboratories  Procter & Gamble Diagnostics Division
 LabCorp  Ortho McNeil Janssen
 GlaxoSmithKline  AstraZeneca
 Fresenius Medical Services, North  Sanofi-Aventis
America  Eli Lilly
 Eisai  Abbott
 Roche  Cubist Pharmaceuticals
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5. Range of Career Levels Lend Insight
Thirteen executives and managers from 12 companies took part in this study. There titles
are listed below.
2011 2008
• Director of Sales & Marketing • Associate Director, Hospital Sales
• Executive Director, Institutional Specialty • Associate Director, Institutional Sales
Sales • Director of Marketing
• Director, Commercial Analytics & Portfolio • Director of Planning & Coordination
Management • Director of Sales, Hospitals
• Sales Director • Director of Sales Effectiveness
• Vice President Institutional Sales • Director of Sales, Health Systems
• Director, Institutional Business • Director, Corporate Accounts
• Sr. DCM • Director, Sales Force Effectiveness
• Sr. Manager, Account Management • Executive Director of Training, Oncology
Training
• Executive Vice President • Zone Director, Sales
• Director(2) • Exec. Dir., Commercial Operations Hospital
• MSE • Executive Director, Hospital Division
• Sr. Manager leadership training • Manager of Global Operations
• National Sales Director
• Sr. Director, National Hospital Sales Senior Manager
Strategic Initiatives
• Strategic Marketing Manager
• Vice President, Business Development
• Vice President Sales(2)
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6. Definitions
This study employed the following definitions to help standardize reporting and structure
research.
 Full Time Equivalent (FTE): An "FTE" is defined as a unit of measure which is
equal to one filled, full-time, annual-salaried position - in relation to the number of
hours an employee is expected to work per week. For example; if full-time
employees are expected to work 40 hours per week that equates to 1.0 FTE.
Twenty hours per week is half-time or .50 FTE.
 GPO: Group Purchasing Organization; An organization that provides access to
group purchasing services and programs. Can be associated with any market
segment.
 Service Line: The service line looks at services provided by therapeutic areas
such as cardiology or women’s health as opposed to traditional hospital
management structure where care is organized by skill, such as lab, imaging,
medicine or surgery.
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7. Hospital Market Segments
For the purposes of this study, the hospital marketplace is divided into several market
segments. Those are as follows:
 Community Hospital: A stand-alone private or public hospital that is not part of
an IDN/IDS.
 Regional IDN/IDS: Integrated Delivery Network, Integrated Delivery Service; A
regional network or system of hospitals and or clinics that operate within a state
or major metropolitan area.
 Multi-State IDN/IDS: Integrated Delivery Network, Integrated Delivery Service; A
network or system of hospitals and or clinics that operates across multiple states.
 AMC (Only applicable if targeted separately from a regional IDN/IDS):
Academic Medical Center; A hospital affiliated with an academic institution
(university) that provides medical education, including fellowship and residency
programs.
 VA Hospitals: Hospitals administered by the Veterans Health Administration.
These facilities include outpatient clinics, hospitals, medical centers and long-
term healthcare facilities.
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8. Hospital Key Decision Makers/Influencers
The U.S. hospital marketplace is also characterized by a range of customer types that
influence formulary decisions and purchasing processes. For the purposes of this study
hospital customers will be divided into three distinct groups to create a framework for
analysis.
 IDN Key Decision Makers/Influencers: Senior administrative personnel who
make and influence formulary decisions for regional IDNs, multi-state IDNs, AMCs
or VA Hospitals.
 Local Hospital Key Decision Makers/Influencers: Local administrative
personnel who make and influence formulary decisions for a community hospital
or a unit of a regional IDN, multi-state IDN, AMC or VA medical facility.
 Hospital Health Care Professional (HHCP) Key Decision Makers/Influencers:
Local medical personnel who make and influence formulary decisions for a
hospital.
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9. Hospital Sales Force Alignment
Hospital sales forces can be aligned/organized to meet the needs of market segment and
customer type.
 Brand Focus: is defined as a single product approach.
 Disease State: is defined as an approach in which multiple brands are linked to a
common therapeutic area, e.g., neuroscience, oncology, etc.
 Portfolio Focus: is defined as an approach in which sales people sell a
company's product offerings across brands and therapeutic areas.
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10. Hospital Sales Force Structure
Hospital sales forces can be structured to meet the needs of market segment and
customer type.
 Traditional sales representative: model targets health care professionals. The
sales force is narrowly focused on representing clinical and prescribing
characteristics of products to physicians.
 Account executive: model targets senior decision makers as well as physicians.
The account executive controls access to hospital customers and accesses
organizational resources such as brand, therapeutic and portfolio specialists
when required.
 Hybrid: model is defined as a blended structure where both the “traditional sales
representative" and the "account executive" approaches are employed.
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11. All Hospital Segments Targeted Now
Benchmark participants continue to target community hospitals and IDN/IDS organizations,
as well as VA Hospitals in 2011 as compared to 2008. Significant growth has been noticed
in targeting Regional and Multi-state IDN/IDS.
Q. Which hospital market segments does your hospital sales group service?
Segments 2006 %
Comm. 80%
8% 17% 13% 9% 18% 14% Hospital
36% 40%
68% Regional 80%
100% IDN/IDS
92% 83% 83% 91% 82% 86%
64% 60% Multi 60%
32% IDN/IDS
AMC as 33%
Community Regional Multi-State AMC VA Separate
Hospitals IDN/IDS IDN/IDS Hospitals VA Hosp 93%
Yes 2011 No 2011 Yes 2008 No 2008
N2011=10
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12. Hospital Sales Force Staffing Trends to Extremes
The FTE allocation of hospital sales groups still varies depending on the focus of the
biopharmaceutical company, but the greatest growth was seen in sales staffs of less than
50, 51-100 reps and more than 500 reps.
Q. How many total FTEs (sales people) make up your U.S. hospital sales force?
Segments 2006 %
<50 14%
30%
51-100 07%
101-150 14%
20%
251-300 21%
26%
20% 301-350 07%
10%
13% 13% 401-450 07%
9% 10% 10%
4% 4% 4% 4%
0% 0% 0% 0% 451-500 07%
<50 51- 101- 201- 251- 301- 401- 451- >500
100 150 250 300 350 450 500 >500 00%
2011 2008
N2011=10
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13. Hospital Segment In 2008: Community Hospitals
Although Brand focus was less important alignment strategy in 2008, benchmark partners
have seen growth in this strategy while aligning from the administrative to the healthcare
provider level .
Hospital Segment: Community Hospitals
Q. How is your hospital sales force aligned to meet the needs of each market segment and customer
type - by brand, disease state or portfolio?
Local Hospital Key Decision Hospital Health Care
Makers/Influencers: Professionals Key Decision
Makers/Influencers:
44%
44%
38% 38%
31% 31% 31% 31%
28% 28%
28% 28%
2008
2006
Brand Disease Portfolio Brand Disease Portfolio
N=20
Focus Focus Focus Focus Focus Focus
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14. Companies Focus on Many Training Modules
Benchmark class emphasizes more on providing specialized training for their hospital
sales forces. This training continues to be focused on skills that allow sales people to
better understand how to operate within the hospital network.
Q. If you provide specialized training to your hospital sales force, what additional training
modules or subject areas are added to your standard sales training syllabus?
Additional Training Curriculum:
•Account management of a hospital or integrated healthcare system
•Strategic Account Management
•Managed Care: Coding and Reimbursement Formulary
•Updates on health economy & political situations
•Negotiation techniques – Pharmaeconomics
•Negotiation skills, facilitation skills, consultative selling techniques
•Strategic Thinking, Influencing, Profitability and Finance Training
N2011=10
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15. GPO Relationships & GPOs Targeted (FTE):
More than 40% of the benchmark class do not combine the hospital and GPO market
segments. For those that do, 80% of benchmark class target 5 or more GPOs.
Q. Do you target GPOs with your hospital sales force? If you answered YES, how many GPOs do
you target?
GPO Relationships: GPOs Targeted (FTE):
80%
No, 44%
Yes,
56% 20%
2 5 or more
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16. About Best Practices, LLC
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.
Best Practices, LLC
6350 Quadrangle Drive, Suite 200, Chapel Hill, NC 27517
919-403-0251
best@best-in-class.com
www.best-in-class.com
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