‘Insourcing’: Rx for ROI

By Craig Nestel and Patrick Homer
Like most industries in today’s challenging economic climate, the life sciences industry is facing pressure to reduce costs, increase revenues and improve return on investment.

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On the cost front, the life sciences industry has enjoyed several decades of unchallenged growth and price protections in the form of patents. It is now entering an era when some of the legendary blockbuster drugs like Pfizer’s Lipitor (a $13 billion drug) are coming off patent and are facing competition from generics at much lower price points. Reimbursement rates from insurance companies, public backlash against monopolistic practices and increased scrutiny of the results of clinical trials have also hit life sciences hard. The consensus in the industry is that the blockbuster era has ended as the potential rewards do not outweigh the risks of spending years and hundreds of millions of dollars bringing a product to market. Going forward, life sciences companies will face much greater revenue pressures with a mix of lesser drugs.

In addition to these cost pressures, the life sciences industry is also facing unprecedented political and legal pressures in the form of increased scrutiny and regulation around the use of sensitive doctor prescribing information. Currently, several states have enacted measures to prevent life sciences companies from knowing exactly which physicians prescribed their drugs (as well as their competitors’). Additionally, at least 20 states have either enacted or are exploring measures to restrict how much money can be spent marketing to prescribers. States are seeking ways to reduce the influence that pharmaceutical companies have over physician prescribing patterns and to protect the privacy of its doctors.

These cost and legislative pressures are causing the life sciences industry to re-examine the way it sells and markets its drugs. After enjoying relatively few challenges to its strategy (which was largely based on unlimited access to prescribers), life sciences companies are seeking ways to reduce their costs and increase precision in sales and marketing activities.

One of the current trends is “insourcing” many of the sales and marketing functions that were previously performed by outside organizations. For years, life sciences organizations have paid premium fees to outside consultancies to crunch prescription and doctor profile data in order to develop physician target lists (doctors more likely to prescribe when contacted). Now, life sciences companies are sensing in growing numbers that the targeting process can be performed in-house, thereby dramatically reducing costs, reducing turnaround time, and increasing knowledge and ownership of one of the most important assets that any company has – its sales and marketing strategy.

This is where SAS® Enterprise Miner™ and its supporting suite of analytical tools comes in. Several leading life sciences companies are working with SAS to explore how they can use the predictive modeling capabilities of SAS Enterprise Miner along with their in-house resources to take back ownership of their targeting strategy from outside consultancies.

A fundamental enhancement in the SAS solution has been a key enabler to this trend. In the past, sales and marketing organizations within life sciences have viewed SAS as the province of the highly technical. Many pharmaceutical companies were reluctant to take on this complex responsibility and remained comfortable farming it out to outside experts. But with SAS Enterprise Miner, customers are finding that they can model the optimal go-to-market channel mix (direct doctor contact, e-mail campaigns, key opinion leader influence, sampling strategy) themselves with intuitive point-and-click interfaces and no programming. 

The insourcing trend is fundamental to SAS’s strategy within life sciences sales and marketing. SAS and SAS Enterprise Miner are at the right place and the right time to work with customers to help them achieve their goals of cost reduction and significantly enhanced sales and marketing capabilities.

Bio: Craig Nestel is a solutions architect and business solutions manager for SAS’ Health and Life Sciences Global Practice. Patrick Homer is the SAS Life Science Sales and Marketing Practice Principal.