Over the past decade, macro trends in healthcare have pushed life sciences companies to pursue increasingly sophisticated key account management (KAM) strategies and capabilities to provide unique offerings and value. This capability requires an orchestrated, cross-functional go-to-market model designed to address the needs and engagement preferences of a defined segment of large, complex, and strategically important healthcare systems and groups.
Two of ZS’ major studies suggest that the trend towards more advanced KAM strategies and capabilities will continue to accelerate for pharma manufacturers. Furthermore, these studies demonstrate how KAM must be treated not simply as a role or as a sales or market access initiative, but as an organization-wide business strategy.
So, what is driving the push toward increasingly sophisticated KAM strategies? How should leading pharma companies respond?
The Importance of Large, Organized Customers
Large, organized customers have become increasingly central to the U.S. healthcare ecosystem. Consolidation among providers continues unabated, leading to larger and larger health systems. Despite the pandemic, $22 billion in healthcare mergers and acquisitions closed in the first three quarters of 2021. This leads to fewer health systems treating a larger percentage of total patients each year. It’s the same story outside of health systems as well: Mega-payers control vast healthcare empires encompassing both care delivery and data science. In addition, the top three pharmacy benefit managers process more than three-quarters of all relevant drug claims.
Despite these organizations’ size, pharma sales representatives remain severely constrained in their ability to reach the physicians who prescribe our products. While physical access was already a challenge in many markets prior to the pandemic, average daily call activity by pharma sales reps has plateaued at just 78% of pre-pandemic levels with no sign of further recovery.
ZS surveyed administrators from major U.S. health systems to understand trends in organization strategy, healthcare provider management, and engagement with life sciences manufacturers.1 The results demonstrate how attitudes within these large customers have evolved—and why engagement with them must evolve as well. Two findings, in particular, illustrate how health systems exert strong influence over physicians’ treatment decisions:
- Three out of four systems track physician prescribing with scorecards to standardize utilization.
- 86% of respondents said they expect central control to increase in the future.
At the same time, ZS’ research reveals that health system leaders are eager to work with life sciences manufacturers in a new way.
- Administrators expressed interest in increasing partnership across each type of engagement tracked, with a 42% year-over-year increase in their desire to partner with manufacturers to address challenges that emerged during the COVID-19 pandemic.
- Pharma manufacturers currently partnered with organized customers achieve significantly higher customer satisfaction as measured by Net Promoter Score (NPS)®, as seen in Figure 1.
Taken together, these trends make a compelling case for the large and growing importance of organized customers to the success of most, if not all, pharma manufacturers. As the primary business strategy for engaging with these large and complex institutions, KAM is poised to grow in importance.
Pharma Responds with Increasingly Complex KAM Strategies
ZS’ groundbreaking study on the “State of KAM in Pharma and Medtech2,” conducted in partnership with the Strategic Account Management Association, provides compelling evidence that both pharma and medtech leaders have taken notice of these sweeping changes in healthcare: 90% of leaders we surveyed say that KAM is a strategic priority for their company’s executives.
When ZS polled these same leaders about their investment priorities, their responses indicated a strong intent to evolve to increasingly sophisticated and impactful KAM strategies and capabilities.
1. Value Propositions and Solutions Tailored to the Needs and Priorities of Key Accounts: This was far and away KAM program leaders’ highest-rated priority, with 66% identifying it as one of their most important future investments. Unsurprisingly, they identified their ability to provide solutions that address organized customers’ “triple aim” needs of improving clinical outcomes, boosting patient experience, and operating more profitably as their greatest current area of weakness.
2. Customer Engagement Process and Operating Model: The second most frequently cited investment priority concerned more sophisticated “ways of working.” This included enhanced customer engagement approaches and more effective internal cross-functional collaboration—both of which are imperative for bringing forward and implementing advanced solutions. Pharma leaders specifically cited the need for better alignment between commercial and medical functions (while operating in accordance with compliance considerations) and new and expanded B2B strategic marketing capabilities and resources.
3. Role Design, Sizing, and Deployment: Role design—and, in particular, improved clarity across customer-facing roles—was leaders’ third most frequently cited investment priority. At the same time, customer engagement processes required for strategic partnering will require greater time from key account managers and associated account team members. As a consequence, pharma companies will need to rethink team sizing and resource allocation to accounts
4. Key Account Manager Training and Development: The movement toward more advanced solutions and engagement processes will require another evolution in KAM skills development within the industry, making it the fourth most frequently cited investment priority by our survey respondents.
The sequence and clustering of these investment priorities demonstrates that leaders understand the interrelationship of KAM effectiveness drivers. Developing advanced solutions requires enhancing the customer engagement process and operating model, which in turn, requires adjustments to roles, resourcing, and deployment—as well as elevated customer engagement skills. Together, these findings paint a compelling picture of a pharma industry focused on moving toward significantly more sophisticated and impactful KAM strategies and capabilities.
ZS’ recently released book, “Key Account Management Excellence in Pharma & Medtech,” provides insights relevant to cross-functional leaders responsible for their companies’ KAM strategies, capabilities, and impact. The insights and frameworks shared draw upon leading practices pioneered by cross-industry front-runners in KAM and adapts them to the specific nuances of life sciences.
1. “Provider Organization Partnership Tracker – wave 4”, ZS, 2022. Study surveyed 92 administrators for U.S. health systems.
2. “State of KAM in Pharma and Medtech,” ZS, 2020. Study participants included 17 KAM leaders representing enterprise or business unit KAM organizations at 10 of the top 20 pharma companies and 27 KAM leaders from 15 top medtech companies.