Study Finds Companies can Increase Bottom Line by Millions
PHILADELPHIA, Sept. 14, 2000 - While the industry has long taken a "more is better" approach to marketing and sales, new Accenture research has identified a handful of specific marketing and sales capabilities that can deliver significant growth to a pharmaceutical company’s bottom line.
The research found that, if a $1 billion pharmaceutical business improved select marketing and sales capabilities from average to high performance, it could gain as much as $135 million in additional operating margin - dollars that could be re-invested in other areas of the business such as R&D, product launches and other investments that help expedite the delivery of medical breakthroughs to the market.
"The industry is currently locked in an arms race to build sales force presence and promotional initiatives," said David Blumberg, partner in Accenture’s pharmaceutical and medical products practice. "In this environment, pharmaceutical companies must constantly focus their commercial resources - time and money - on the capabilities that will achieve the biggest impact. This research proves that industry leaders can fuel superior financial performance by getting better at a few key capabilities, not just doing more."
The study, How Much are Marketing and Sales Capabilities Really Worth? What Every Pharmaceutical Executive Should Know," is the first of its kind in the pharmaceutical industry to quantify the value and impact of marketing and sales capabilities on financial performance. The results offer a practical tool for identifying marketing and sales opportunities and efficiently prioritizing related business initiatives.
Specifically - and perhaps surprisingly - the research found that improving a relatively small number of marketing and sales capabilities can lead to superior performance. The previously referenced $135 million additional operating margin gain for a $1 billion pharmaceutical company breaks down as follows:
Highly skilled and motivated sales force -- $45 million Sophisticated sales planning -- $24 million Excellence in customer information management -- $32 million Effective leverage of advertising and promotional vehicles -- $18 million Ability to understand customer economics -- $16 million
"The U.S. marketplace is unforgiving when it comes to miscalculations in commercial strategy or execution," said Philip George, partner in Accenture’s pharmaceutical and medical products practice. "By targeting marketing and sales dollars toward improving capabilities that add the most value, pharmaceutical companies can better meet the needs of their customers and patients while simultaneously enhancing bottom-line performance."
Note to editors: David Blumberg and Philip George are the authors of the white paper, "How Much are Marketing and Sales Capabilities Really Worth? What Every Pharmaceutical Executive Should Know," which is available upon request. The study described in this white paper is one in a series conducted by Accenture to assess the relationship between Customer Relationship Management (CRM) capabilities and financial performance. In the Pharmaceutical industry, the current research focuses on marketing and sales (M&S) capabilities in North America. Accenture plans to publish a European version of this research early in 2001.