According to a recent Visiongain report, the contract sales market was estimated at $5.48bn in 2017 and is expected to grow at a CAGR of 7.9% from 2017 to 2028, growing at a CAGR of 9.6% in the first half of the forecast period.
Contract sales organizations (CSOs) provide various services, the benefits of which mirror those of outsourcing research and manufacturing, which provides customers with flexibility and scalability, said Paul Mignon, president of Selling Solutions, Syneos Health.
As such, the sales forces of pharmaceutical companies have shrunk dramatically, explained Jez Moulding, COO of UDG Healthcare and EVP of Ashfield. “In contrast, contract sales organizations have grown, with increased demand for reps on highly flexible contracts,” he said.
When asked to rank the most important reason for outsourcing at a recent Ashfield Advisory Board meeting, clients cited deployment speed, flexibility, and risk mitigation as pivotal, Moulding said.
“The next highest ranked reason was strategic sourcing, meaning the long-term outsourcing of a substantial percentage of non-core services, enabling a pharma company to streamline and focus internal efforts on the priorities for its business agenda,” he added.
Challenges and opportunities
It’s a complex market and data has become critically important for sales representatives, as there are more medicines and more competition than ever before, Mignon said.
Moulding also cited the rate of change within the pharma industry as one of the main issues affecting the pharma contract sales industry. However, this provides an opportunity for CSO to offer pharma stability, he said.
“With an aging population, the medication landscape is moving rapidly to specialty-based products, requiring CSOs to become operational experts in rapidly deploying commercial services,” said Moulding.
Additionally, Moulding said the rise in digital and change in customer communication preferences provides an opportunity for CSOs “to continually innovate in order to provide the best and most appropriate solution.”
The industry has also experienced changes in stakeholder groups, with a shift from prescribers to payers and an increasing focus on patients as significant stakeholder. “As a result, pharma now has a much larger and more diverse range of stakeholders to communicate with,” said Moulding.
An evolving industry
There has been an increase in outsourcing across the board over the past five years, and Mignon anticipates it will continue to grow immensely over the next five.
“Thirty years ago, contract research organization (CRO) outsourcing was probably at the same range that commercial outsourcing is today,” he said. “Since then, CRO outsourcing has quadrupled, and while commercial outsourcing has not grown as much during the same timeframe, I expect it will catch up in regards to pharmaceutical sales outsourcing over the next five to 10 years.”
Examining the biopharmaceutical industry as a whole, Mignon said companies are being squeezed by the rebates they are providing, as well as by operating models and by sales volatility. “Company’s profits are not what they were 10-15 years ago,” he added. “The model needs to evolve and change to meet the expectation on the horizon.”
Moulding explained CSOs have helped pharmaceutical companies adapt to this change over the past five years and have enabled them to the mitigate risk (and costs) associated with hiring a permanent in-house sales force.
“Pharma companies are now looking for fewer global, strategic partners that can offer multiple services, across multiple geographies,” Moulding added. “There has also been a shift towards multi-channel models and digital marketing offers opportunities for contract sales organizations who have already invested in these areas.”
In the next five years, Moulding expects these trends to continue and accelerate as the industry continues to feel the pressure to operate more effectively and efficiently. He also predicts increased outsourcing to CSOs who can offer a comprehensive range of services.
Echoing this sentiment, Mignon said Syneos wants clients to start thinking of the company as more of a strategic partner than a vendor putting people in the field. He poses the questions: Are market access strategies needed? Advertising or public relations specialists?
“Ultimately, it’s about helping the patient get the therapy they need and stay on it to get the most benefit possible,” Mignon said.