written on 10.12.2015

2016: the year of commercial outsourcing?


Andrew FryeHistorically, companies always grappled with growing their market share and increasing profits. Outsourcing marketing and sales activities to specialized service providers has become a valuable option. The industry has evolved tremendously but what does the future of commercial outsourcing look like? And how can it help healthcare companies grow in a market under pressure?

“Back in the day,” a pharma company may have introduced a product to a new market based on personal recommendations in the market or acquaintances. Unaware of the risks, proper due diligence of the local business partners was possibly neglected. In the first months, the company would receive a monthly update with encouraging sales numbers. However, when sales stalled, the business partner would suddenly be hard to reach. More often than not, the collaboration would bring disappointing results. Suddenly, the once promising market became a liability.

Professionalization drive
Naturally not every outsourcing exercise was ill-prepared or ended badly. Today, we can conclude that commercial outsourcing has evolved from being a “fingers crossed” exercise to a strategic growth strategy.

Previously, commercial outsourcing was only about market entry, but nowadays many companies already have a presence in Asia. Commercial outsourcing is therefore increasingly about market optimization and cost control of non-core assets and mature brands.

Looking into the near future, we see five developments that are further shaping the (commercial) outsourcing landscape:

1. Focus focus focus: home and emerging markets are slowing down, investors are concerned about return on investment and Asian governments need to control their healthcare budgets. This increased pressure is leading executives to focus their funding, particularly in the pharma sector. Companies with an established presence in Asia are considering reallocating resources to core products or therapeutic areas, thus freeing up resources by reducing their footprint in certain countries or therapeutic areas.

On the opposite end of the spectrum, many companies new to the region may see emerging Asia as the next growth market but lack critical mass and local knowledge. The outsourcing of sales and marketing activities in the region has become a viable option for both groups.

2. Making tough choices: after a period of blockbusters, patent cliffs and relative lack of new products, an innovation spurt is just around the corner for pharma companies. A good number of specialty care products, mostly premium priced, are coming to market. The challenge for these companies is how to shift resources to new products while dealing with the growing pressure from generics and biosimilars on their established range of products. The need to invest in the future range, while not penalizing today’s performance, is driving commercial outsourcing decisions.

3. Compliance matters: “It wasn’t me” is no longer a valid argument. Following (financial) accounting scandals, legislators have tightened the screws: companies nowadays are not only responsible and accountable for their own actions, but also for those of their business partners. A number of regulations such as the Health Insurance Portability and Accountability Act (HIPAA), Anti-Money Laundering (AML) requirements, the Foreign Corrupt Practices Act (FCPA) and the UK Bribery Act have increased the pressure on companies to enhance third-party due diligence. More than ever, compliance standards and trust are considered as primary criteria in marketing and sales partnering.

4. Modern sales and marketing excellence: transparency and consistency in reporting and overall business management comes hand-in-hand with compliance. Executives expect their outsourcing partners to provide full visibility on results – in each market – and an advanced Electronic Territory Management System (ETMS) that drives efficient and targeted in-call activity by the sales force.

5. Omni-channel growth: companies are looking for partners that can continue business growth in traditional sales channels, but also through new methods such as telemarketing and telesales. The commercial models of traditional face-to-face interactions with healthcare professionals (HCPs) face increased competition and tighter regulations. Pharma and consumer health companies are therefore looking for new ways to engage with HCPs and customers.

While e-commerce in healthcare is often restricted by local regulations, over-the-counter and consumer health companies in particular will want to tap into digital opportunities quickly, and ideally all in the hand of one trusted partner. Not all outsourcing vendors are able to cope with all the above requirements. This could lead to further consolidation of the outsourcing market.

No matter what 2016 brings, the days of “a friend of mine knows a company that can help us grow” are behind us. When exploring growth potential in a new or existing market, having a trustworthy and capable partner across the region is becoming increasingly important and popular.

{a30adae4-46b9-4607-a5b2-ee77398c08e9}_HEC_Global_KS_2015.10_Healthcare_News_commercial_180x180_PNGFive frequent questions to DKSH on commercial outsourcing

We discuss growth strategies with our clients, prospects, key opinion leaders and other stakeholders every day. The outsourcing of marketing and sales activities to DKSH is often on the agenda. What are the key questions that come up?

1. How do you ensure that your sales teams have the same understanding of my product and industry?

DKSH’s management as well as 4,200 marketing and sales specialists across the region have a strong background in the healthcare industry. We continuously invest in their capabilities through our in-house training center, the Fantree Academy, which provides e-learning modules and on-the-job training programs, supported by in-field coaching activities.

And because we market and sell so many products, we have an in-depth understanding of most therapeutic areas and categories. We combine this knowledge with strong relationships in the channels across Asia.

2. How do you guarantee that outsourcing is not a compliance risk for me?

As a publicly listed company in Switzerland, we adhere to the strictest corporate governance and compliance legislations. We couple this with our strong financial background, transparency and reporting. In short: we treat our clients’ business like it is our own. Many of our Vice Presidents are members or elected leaders of national industry associations, such as Thailand’s Pharmaceutical Research & Manufacturers Association (PReMA) or Pharmaceutical Association of Malaysia (PhAMA).

3. Since you serve so many companies, how can you focus on driving the sales of my products?{91b5d478-3a4a-40d5-a934-35583b308576}_HEC_Global_KS_2015.10_Healthcare_News_commercial2_300x200_PNG

We ensure our sales teams have sufficient air time and resources to focus on your product. Options include shared or dedicated teams. We naturally ensure that confidential information is not shared between teams.

We drive our teams with sales force activity KPIs to ensure that they visit the right customer with the right message. Incentive schemes are also aligned to reflect the priorities in our clients’ product portfolio and reflect a culture of performance within our organization, with personal development opportunities to attract and retain talents.

4. Is outsourcing just a strategy to enter new markets or can you also help grow sales of mature products?

Commercial outsourcing is a viable growth strategy at any stage of expansion. We often help companies enter Asia and grow within the region by entering new markets. A significant part of our clients, however, are already well-established in Asia. We grow sales of their non-core or mature products by identifying new growth channels and strengthening execution. At the same time, we support their commercial efforts for core products by expanding their customer base and triggering new growth levers.

5. Wouldn’t it be easier to simply license or divest my product to a multinational company?

Outsourcing marketing and sales to a regional partner like DKSH offers more flexibility and control than licensing out or divesting products to a multinational company. It typically provides a better return on investment in the mid- and long-term. Compared to going it alone, sales uptake with regional partnering is much faster with a reasonable investment.


For more information about DKSH, please visit www.dksh.com/healthcare or get in touch with us by sending an email to healthcare@dksh.com