Case Section Customer relationship management and networked healthcare in the pharmaceutical industry Received (in revised form): 2nd August, 2004 Gagan Bhalla is a senior consultant with Accenture’s Health and Life Sciences practice in New York. Gagan graduated with an MBA from INSEAD and holds a Masters degree from Vanderbilt University and a Bachelor’s from IIT Bombay. Gagan works with senior marketing and sales executives at top pharmaceutical companies in defining brand management strategies. He also assists these companies with their Licensing and Business Development partnerships and in developing clinical data management best practices at leading pharmaceutical companies Theodoros Evgeniou is an assistant professor of Information Systems in the Technology Management department of INSEAD. He holds two BS degrees, an MEng, and a PhD in Computer Science from MIT, Where he has been been affiliated with the Artificial Intelligence Laboratory and the Center for Biological and Computational Learning. His current research interests are in the areas of data mining and business intelligence, both developing technologies in these fields as well as studying their stretegic impact on business, particularly in the digital world. He has published in various scientific journals and international conferences Leonard Lerer is the Chairman and Chief Analytor of TLM LLC, a specialist analytics provider to the life sciences and financial sectors. He is also the Managing Editor of the International Journal of Medical Marketing. INTRODUCTION It is commonly believed, within the industry at least, that the pharmaceutical marketing function is unique. The traditional marketing mix variables such as product life cycle, price, distribution and communication are scrutinised and tightly controlled by regulators and payers; and in addition there are multiple customer groups to manage. The main pharmaceutical customer remains physicians, but patients, who are the end- users of the products, play an important role, as do insurers, governments and managed healthcare (MHC) organisations. Traditional pharmaceutical marketing strategy is based on the deployment of large salesforces. The salesforce model, the cornerstone of the industry, involves pharmaceutical sales representatives (reps) ‘detailing’ a portfolio of drugs to physicians. The salesforce is usually constituted as a matrix structure, where reps are part of territorial sales teams. This model proved quite effective with the number of sales reps in the USA doubling over the 1990s and contributing to the double-digit annual sales growth of the industry. While the number of sales reps doubled however, the annual rate of increase in the number of practicing physicians remained flat over the same time period. In the USA, the annual 11 per cent increase in salesforce size since 1993 has led to only a 2 per cent increase in physician calls. Consequently, access to physicians has become increasingly difficult with multiple reps targeting the same doctors, thus escalating competition. A 2002 McKinsey study indicated that sales reps spend over a third of their time in the field dropping off samples at the International Journal of Medical Marketing Vol. 4, 4 370–379 # Henry Stewart Publications 1479–1897 (2004) 370 Gagan Bhalla Accenture Strategy and Business Architecture, Health and Life Sciences Practice, 1345 Avenue of the Americas, New York, USA Tel: +1 917 452 4083 e-mail: Gagan.Bhalla@accenture.com