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Video Transcript: Beyond Pick, Pack and Ship: Expanded Value of Distributors for Manufacturer Brand Teams and Sales Organizations

Webisode transcriptions completed by third-party vendor. AmerisourceBergen Specialty Group assumes no liability for the accuracy of the content.

Gina: New models in trade relationships. Sales force optimization. Greater transparency of supply chain data. How are specialty pharmaceutical distributors changing the way they interact with their upstream manufacturer partners? And how have these changes driven growth and improved decision-making? Join us to find out. “In the Know” starts now.

Hello and welcome to “In the Know,” your source for insight and analysis on the issues that matter to specialty pharma. I’m your host, Gina Clark.

Today we explore how specialty pharmaceutical distributors have expanded well beyond their traditional role as “pick, pack and ship” companies to provide services that dovetail with pharmaceutical manufacturers’ own teams. We’ll look at how pharmaceutical companies have taken advantage of distributor sales team structures to optimize their own sales staff. And we’ll discuss how access to data continues to emerge as a key strategic differentiator.

Our guests today are Chris Myers, Chief Operating Officer for ASD Healthcare, and George Rafferty, Vice President of Sales for ASD Healthcare.

Thanks to you both for being with us today.

Chris: Thanks for having us Gina.
George: Yes, Glad to be here.

Traditionally, pharmaceutical manufacturers have viewed distributors as a key part to the supply chain, but they seem to be more focused on how a distributor has value after a product sells rather than before. You say this is changing, why is that?

Chris: Well, I think it’s a great question. What’s happened is, as competition has increased for them, they’ve looked at more efficient models to help them accomplish more of the task that they traditionally did. They traditionally looked at us as a “pick, pack, and ship” operation. I think it speaks a lot about the integrity and the relationships they have with ASD, to be able to say “We think that you can do more.” Whether if that’s using our sales channels, whether if it’s data, whether it’s marketing, there’s definitely been a shift to allow us earlier in the process, sooner in the channel and even down channel for them.

George: And I think also, just the level of experience, and to kind of piggy back off of what Chris is saying, Manufactures see us because of the wealth of knowledge that we have, the resources we have available to us, as well as the people on our team that have extensive experience on the manufacturing side lend us to be apart of their commercialization strategy now as to just be on the talent of delivering product after they’ve gone through the process.

Chris: I think one of the biggest components there is trust. As the supply chain has tightened up, as distributors have really consolidated, they really can trust somebody like ASD. And we have a unique opportunity to capitalize on that, publically backed, been in business for 15 years and real proven track record for our partners.

So how did we get to this model? Where your sales team serves to augment a manufacturers’ own staff. And how have industry dynamics and contraction across multiple areas of the industry impacted this?

George: I think that’s a great question, and a lot of those changes in the environment have been really beneficial for us. First off, the market place is getting increasingly more competitive out there. Share Voice and physician officer has declined, with sales force reduced with many manufacturers. So I think what a lot of manufacture partners are looking for are us to compliment what there efforts are out there. And from the ASD perspective, if you look at our various sales forces, our average tenure is about 6 ½ -7 y ears. So I think our manufacturers are looking for not only for a compliment to their current sales forces, but they’re seeing the type of in depth relationships that we have with our partners we’ve established over years and trying to find a way to leverage that to their benefit.

Chris: And you know, just to add to that, when we have literally a relationship with every health system in the entire country as well as the majority of alternate site providers, it’s a very easy switch for us to be able to down into this relationship so that customers can take advantage of some of the things that our manufacture partners want to do for them. Whether that’s marketing, whether that’s campaigns, or whether that’s just augmenting their sales force

So we’re talking about benefits,Lets talk through some of the benefits that a manufacturer derives from this type of service model. What specific value might a manufacturer see as a result of this?

Chris: Well, I think there are a couple things, I’ll touch on some and I’m sure George has some to add. I think the data capture that they’re able to get. So, they can literally design a campaign with us to launch a drug into the market, and they can tell us what’s the objective. Is the objective to increase penetration? Is to increase new markets? Is it organic sales? And we can measure that from day one and report back to them in a live time basis or the end of the campaign to say “ here’s what we accomplished or did not accomplish.”  And again, having a nimble force of sales people that can do that pretty quickly, allows us to that ramped up, and actually going well before a manufacturer could.

George: and just to add to that, I think the key in a successful product launch is speed and efficiency. I think any manufacture that does their homework ahead of time and pulls in all available resources are going to be able to do those two things. I think, to get back to Chris’ point, whether it’s direct marketing campaigns, sales force, complement to their sales organizations, supply data, any of those things are key t them to get to the market more quickly and more efficiently.

Chris: You know, if you’re a manufacturer and you have a trusted partner, why not want to put your resources in to ??? As competitive as the market place is, there are really few blockbuster drugs that are out there. Why not put your energy into that as suppose to putting it into something that a trusted partner can do for you.

So are there certain types of manufacturers or certain product types that are more appropriate than others for this model?

Chris: it’s an interesting question. I think obviously with our leash being in the plasma-derived products out of the business and especially pharmaceuticals, we have seen to be a very large increase in more of the orphan drugs. Orphan drugs that require data capture, a very small sub site of the population that is affected and then some real time data back to the manufacturer to say, “is this drug, that’s newly launched getting to that population? How quickly is it getting to that population? And is the distribution controlled and was the supply chain secure?”

George: Just to add to that, I think in the past, people may historically thought that only smaller companies would benefit from the type of resources that a company like ASD could provide. But I think we’re seeing large manufacturing companies as well as smaller companies that may be their first time in the market place are really taking advantage of those capabilities.

Do you encounter any reservations among your manufacturer partners? If so, what are the more prevalent ones? How would you address those?

Chris: You know, I think the biggest thing, historically, have been just losing that connection to the customer, or though view as losing, even though they’re not. But they’re being any entity or person in between them and their directing customer, has been something that they had to overcome. And I think as the market has consolidated as competition within distribution is consolidated to really three rational players and certainly in specialty distribution, and plasma distribution, ASD is ahead and above our competitors. I think that’s allowed them to overcome some of those challenges and just some of those historical concerns they’ve had.

George: I think the only other obstacle is really overcoming that “pick, pack, and ship,” and we have to prove that mentality, and we have to prove that. I think what we see are manufacturers take advantage of the certain part of resource from us, and once they get cupped with that they move on. I do think that there is a perception in the market place; we still need to overcome against the “pick, pack and ship” theory.

Chris: The other thing that about ASD, we really differentiate ourselves on service. And really the relationships with the customers, with those providers, and in some cases, even with patients. And so, as our manufacturers have heard those stories, they’ve heard from those providers or they’ve heard from the patients about the service that ASD has done. The way that they’ve gone above and beyond for their patients, to get drugs to those patients, they’re very trusted us more to do those kind of things.

What best practices can you share for building these trade relationships between distributors and pharma? How can both parties collaborate to go beyond what’s historically been a marriage of necessity?

Chris: I think the key is transparency. If you’re transparent with the manufacturer all through the whole process, what are you charging? What are you getting for that? What’s the value that they’re going to drive verses the fees that you’re charging them?  Giving them the transparency to building the model, what ever that may be. Or on data capturer around a commercialization offering, around a marketing campaign, but really having them in the process as much or little as they want as suppose to running away for the solution and coming back and saying “here you go.” That really has going a lot of support for us.

George: I think from a sales perspective specifically, the closer our reps work with the manufacture’s reps, the better the partnership and the better results we can be. So I really find that communication takes place, and they team up against certain customer strategies is really where it is most effective from a sales perspective, between the manufacturing partners and ASD.

Chris: I think as George said, another key is to speak to market. Being able to quickly put together a campaign for them, quickly work with them, what ever their initiative is, and being able to get those results for them very quickly.

George: I think from a manufacturers standpoint, they need to realize that every sales rep and every marketing rep that sits in our building, is making 40 to 50 outward bound calls a day. And I can tell you, by none, there’s no one else that has that kind of reach to the market place, then what our sales forces can do.

We have seen a dramatic rise in manufactures demand for data and analytics at every point of the care delivery process. What types of data requests do distributors receive from manufacturers and how are the distribution partners meeting those requests?

Chris: I think it starts with “what does the market look like?” particularly, our part of the supply chain and our part in the industry in especially pharma, the interest is “what does the market look like for this drug that I’m trying to bring to market or this drug that I’m trying to drive greater penetration in? So, that’s number one. Number two is where does your distribution channels reach? Where do they reach? Where are they? Are there any areas that are not exposed that could be? And I think also, obviously is the outcomes data, what are they trying to achieve? And how quickly can we show them that they’ve achieved that?

George: And I think it’s really not just trying to understand what physicians are using, or what hospitals our customers using. It’s getting better insight as to why certain decisions are being made, and I think anyone that has that kind of customer insights going into launch, are the ones going to be most successful. So I just think it’s beyond what we typically see and what’s gone on in the rearview window, what have people done? But, really trying to get insight as to why certain decisions are made around certain products

Chris: You know, it’s interesting how much those decisions differ, it’s not just price. For one customer it may be price, for another it may be some of the different ingredients in the product, another may be the relationship they’ve had with the manufacturers in the past. We’ve definitely seen, n o matter what customer we’re involved with that it’s not just one single thing that is repetitive, it seems to change on a daily basis.

George: And I think it’s more and more critical. It's different if you’re first in class in the market, but in certain areas it’s a crowded market p lace, I think its even more important for them to better understand how decisions are made going into the market place, because you only get one time and lots of product if it’s not successful in the first 6 months, its very difficult to make up after that 6 month period is over.

Chris: You know, and I think that particularly in the plasma industry with these life saving drugs, that access is key. So for providers to feel that they are going to have a manufacturer, manufacture partner, like ASD, that is going to continue to be there for them and provide access to them to these drugs that are critical to people’s lives, that absolutely paramount for them.

How does the approach to data change when working to aggregate, analyze and package it for upstream partners versus for internal use?

Chris: You know absolutely, they’re greater demands on the data that you need to have, how you provide it, what does it look like? What does it feel like and the speed? So I would say all of those components are very important. Speed is, what does it look like, how easy and user friendly is it? And for manufacturers who are typically aggregating data across several distributors not just one, I think it has to be in a very flexible format. That allows them to either get it in a real time basis, or we’ve done things like portals to do that for people or aggregated in a way that’s very simple to use.

George: And I think quite honestly, the manufacture partners demand for data has actually med us be more disciplined from a sales perspective ourselves in how we’re managing our customers. So we spent quite a little time in the past few months having a better understanding on how our customers are buying. Number one, it makes us much more effective and number two, we can provide that back to our manufacturers as well. So, not only are the manufacturers demanding data, we as a special distributor need to have that kind of information as well.

Chris: And I think it’s interesting, as we’ve done this exercise that George is referring to look at how our segmentation data line up with our partners. Are there sets that match each other? Or are they not? And if so, why is that the case? And that really has been invaluable to us.

So Chris and George, let’s turn to the future, I’d like to get your thoughts on how data offerings will continue to evolve. First, let’s start with the bad news—what limiting factors do distributors run up against when developing data solutions?

Chris: Well I think the bad news is if you are not the sole distributor, you cannot provide one set of data to a manufacturer. So you will always be working against the fact that you are not the only person that can control all of the data, and that works in terms of a difficulty for the manufacturer and the multiple data sets, but also the kind of data that you can get if you have your single distributor for that manufacturer.

George: Now I think from the ASD perspective, one of the benefits that we have or one of the lucky things we have is because we distribute so much product, that we really do have a good sense as to what is going on in the market place. So to Chris’ point, although we don’t have access to other distributors just because the share volume that we do, we are sitting on quite a bit of data. That’s really projectable as to what’s going on in the entire market place.

So building on that, which actually becomes good news: What can manufacturers expect to see from their distribution partners in the near-term future?

Chris:  Well, I think that there’s definitely a greater opportunity for us to use applications; Even applications on an iphone, that are more real time data sets, so what we’re able to provide data on a truly real time basis. We at ASD, internally have a tremendous amount of real time data that we use that allows us to see what our customers are buying. What product they’re buying. Who’s buying, when are they buying it. And I think for us to be able to provide that same type of real time data in a mobile type of application on a ASP base, whatever the client wants then I think we are going to have more and more flexibility to provide for them.

George: I think just to add to that, is a greater customer insight as to what the end user is doing with product. I think its critical and I think the best practices that we’ve been able to garner having to launch hundreds and hundreds of product over the last several years, is we can be able to provide those types of best practices to manufacturers partners. Again, getting us earlier involved in commercialization strategy then previously.

Chris:  And I think, as George said earlier, that ability to say why your customers are choosing what they’re doing, whether it’s a product, whether it’s a manufacturer, whether it’s a different brand, why are they making those choices?  And as close as we are to our customers and speaking to them everyday over and over, we get insights to them verses their competitors that they really don’t get to see.

Circling back to our original points about distributor-supported sales, in what ways can improved data tools provide mutual benefit for manufacturer teams and your own sales staff?

George: I think that’s a great question.  Access to data, whether it’s a manufacturer or a special distributor is critical to success. I think it really comes down to access to data, helps us again to understand our customer to target our efforts more efficiently and more effectively. So whether it’s a distributor or manufacturer, that’s going to be beneficial for everybody from speed, efficiency to market, as targeting our customers with having access to appropriate and accurate data.

Chris: and certainly being able to see how our customers respond to a new entrance to the market is also helpful for us, to figure out how we should be nimble too in terms of our product distribution. I think that’s an added benefit as well.

So It looks like we’re out of time. Chris, George – thanks so much for joining us today.

George:  Thanks for having us, it’s been great.

Chris: Yes, Thank You Gina, we appreciate it.

And thank you for joining us—we’ll be back soon with an all-new webisode. Until then, if it’s on your mind, it’s “In the Know.”

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