By: Steve Wunker
This blog first appeared as Steve Wunker’s piece.
With the end of the pandemic approaching, B2B companies are looking at how commercialization practices were turned upside down in the past year and assessing what to keep vs. discard. There is a longer-term perspective to take, however. With the end of the pandemic approaching, B2B companies are looking at how commercialization practices were turned upside down in the past year and assessing what to keep vs. discard. There is a longer-term perspective to take, however.
One of pharma’s giants shows how it can be done. Imagine switching the focus of what your company sells, while managing a transformation of your commercialization model, and throwing in a transition of several thousand field sales representatives to virtual engagement during the pandemic. Then picture doing all of that while still growing the business. It’s daunting, and yet this is what Novo Nordisk has accomplished in the U.S.
Novo Nordisk is an approximately $20 billion firm based in Denmark, with roots back to 1923. It has led the global market for insulin and had a historic emphasis on that critical drug; however, knowing biosimilar competition and other market pressures were on the horizon, the company decided on a long-term approach to be sustainable. It wanted to fully realize how the potential of newer molecules and its innovative pipeline could deliver solid growth. That made products that extend beyond diabetes to other aspects of metabolism, and ultimately to other types of disorders, a critical focus. And it just so happened that the company scheduled one of its most important drug launches in January 2020 – the first oral drug to regulate GLP-1, a vital metabolic enzyme – would run head-first into the pandemic.
Achieving this strategic shift involved an honest examination of how to deploy its largest and most significant asset for the global company’s largest market: field sales representatives. Ultimately, the sales headcount was reduced from roughly 5,000 in 2017 to 4,200 to 2020, in an industry where typical pharma sales reps have a fully-loaded cost of $250,000 to $300,000 per year. The decision to cut staff in the middle of a product launch during a global pandemic was tough, but it was a part of how Novo Nordisk is proactively getting in front of fast-changing industry dynamics. Additionally, the firm needed to modernize internal functions like marketing, operations, and analytics to better support commercialization. On top of those major changes, add the effect of the pandemic on a sales model that had not changed dramatically for decades. Business-as-usual was out the window.
To find out how the company pulled this off, I spoke with Doug Langa, President of the company’s U.S. subsidiary, Novo Nordisk Incorporated. He laid out three key steps the company took.
1. Root everything in deep understanding of customers. Langa was unsparing in his assessment of what the company had to transform from. “In 2016, we had a model that didn’t change our sales approach across the U.S. We treated the country as one big conglomerate, which we knew it wasn’t.” The company was missing out on important regional dynamics, like the varying levels of competition among health systems in different markets, and the extent to which these health systems had consolidated decision-making. It approached doctors based on factors such as what types of patients the physicians saw and what drugs they prescribed, but it missed critical contextual factors – or, as we’d say, Jobs to be Done – that drive how physicians actually make decisions.
The challenges didn’t stop there. Langa says, “We just used this old algorithm around the number of calls you could make on a doctor in order to change behavior. So we had this old-school model of sending out as many sales reps as possible, getting one big footprint, and pounding away.” That changed. Langa explains, “We moved into a more systematic, algorithmic way of looking at healthcare across the U.S. and how we deployed our resources.”
By marrying deep customer understanding with mathematical models, the company could ladder from qualitative insights about how decisions get made down into very actionable data regarding how many visits a doctor would receive and what format was the best way to engage them. Langa recounts how that aspiration came to life. “It was all about analytics – hone down to the right message for the right doctor, with the right amount of samples. We really understood physicians and their contexts, solo vs. group practice, the demographic that they served, and more.” With this information, the company could quickly put the right resources behind distinct campaigns, including new drug launches or new ways to engage doctors as the ability to do in-person visits became restricted.
2. Re-assess the profile and capabilities that reps require. Novo Nordisk knew that part of its transformation would involve reducing its headcount of sales reps given their significant cost, and in recognition of the fact that many group practices and health systems started placing strict limits on reps visiting physicians in their practices – even before Covid hit. From 2017 to 2020, the number of reps dropped from about 5,000 to close to 4,200. But the transformation wasn’t just about headcount reduction.
Langa explains, “The role of the rep is more complex today because it’s not just about making a certain number of calls and getting the message out. It’s about using the right digital tools that we make available. It’s also about meeting stakeholders where they are. If physicians need to meet our rep at 8 pm, we’ll do it. The flexibility aspect is really important, especially since these representatives continue to be one of our most significant and impactful assets, and especially when launching a new drug.”
And so the company has embraced flexibility – required not just by marketplace demands but also by having a more diverse product portfolio than in the past. This puts new demands on reps and requires new competencies. Langa says, “We need to be agile in how we deploy our resources. We could ask one group of reps to do something, and then toggle things and they need to be OK with us doing that. The world is not going to stay the way it was.”
The company assessed whether a Contract Sales Organization – an outsourced sales group – would help it achieve this flexibility, and it decided against going that route. Langa explains how they made the call. “They do come at a much lower cost, but there’s also risk. We think having a sophisticated rep with the right level of clinical expertise and B2B engagement is still critically important. These are important dialogues we have with physicians, and it’s requiring a higher element of expertise. We’ve actually had some groups in the company get larger, like diabetes educators and medical liaisons. Importantly, we believe the passion and purpose of our employees is a competitive advantage.” In other words, even while it was looking to cut costs and make some trade-offs, the company recognized that rep expertise was a core capability, so it doubled-down there and focused on quality over quantity.
3. Change how customer engagement occurs. Even well before Covid hit, Novo Nordisk was diversifying how it interacted with physicians and other medical decision-makers, but the pandemic turbo-charged those efforts. Langa recalls, “What we learned is that we can do the things we traditionally did in person – like speaker programs, customer calls, and deployment of samples – virtually… Attendance at speaker events in 2020 was actually up because people realized it’s easier to do this virtually than getting to a restaurant.” He summarized, “We’ve learned to meet physicians where they’re at.” It’s all about understanding the customer and then shaping the experience to that nuanced view.
The old model isn’t totally gone. Rather, hybrids will now prevail. “We’ve done some things that will stay after Covid, but we need to stay razor sharp about getting back to personal. There will inevitably be a mix of personal and non-personal…over time there is a lifecycle to products, and there’s a component of personal relationship at the launch that will be less later on.” As with the overall sales model, it will be a matter of tailoring the right approach to the right product to the right customer with the right message.
Lessons for other leaders: Reflecting on his experience through this transformation, and generalizing his lessons beyond the pharma industry, Langa has three key pieces of advice. First, he says, “Have a vision. We very clearly articulated to the organization what we wanted to do, and having that to anchor back on was critical.” Second, he has a point about what can keep the organization true to that vision. “Think long term. My job is to think quarter-to-quarter, honestly every Monday because that’s when I get my numbers. But we have to know where we’re headed if we’re to get there.” Finally, he says, “Be transparent. When we have a win, we’re going to celebrate. But we’ll also have challenges and the need to acknowledge them and quickly correct. That’s just our culture.” It’s that transparency – and how it manifests in a leader as authenticity – which enables the flexibility that underlies much of the company’s transformation.
Through any transformation, and even more so in a crisis like the pandemic, it is essential to root a company’s moves in “meeting customers where they’re at.” The pandemic upended common practices, but Novo Nordisk had already stolen a march on transforming commercialization. Through its depth of customer understanding and flexible work practices, the firm could handle this rogue wave with agility. These practices can put a B2B company in strong position no matter how choppy the waters may be ahead.
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