This document discusses sales force deployment recommendations for a mid-sized pharmaceutical company entering markets in the CIS region. It recommends deploying reps primarily in Moscow with 8 reps and a director of sales and marketing to focus on tenders. Additional reps should focus on other large cities like St. Petersburg, the Volga region, and the Urals initially, then potentially expand to other large cities over 3-5 years. Maintaining a realistic view of sales potential and focusing on major population centers will generate the majority of sales.

1. Sales Force Deployment
for small and mid-sized
companies in the CIS
Günther Kneissl-Mayer

2. Content
• Basic data and information on the CIS
• Discussion of a case study
• Recommendation and conclusions
Sales Force Deployment in the CIS, Rome, Oct 2007

3. GDP per Capita p.a. (PPP)
US$ (000)
US$ 300-400 monthly
Sales Force Deployment in the CIS, Rome, Oct 2007

4. Pharma Markets and Drug
Consumption
657
444
303
220 210
105
59
45 43 45
10
Source: DSM Group, Russian Pharmaceutical Market 2006
Sales Force Deployment in the CIS, Rome, Oct 2007

5. Public vs. Private Funding of
Pharmaceutical Markets
Source: DSM Group, Russian Pharmaceutical Market 2006
* estimates
Sales Force Deployment in the CIS, Rome, Oct 2007

6. Business Environment
 Growing purchasing power, middle class evolves
in big cities
 Huge diversity
 geography & climate
 culture & economy
 Corruption! (Source: Transparency International, Global Corruption Report 2007)
 Ukraine 99th, Kazakhstan 111th, Russia 121st
 Bureaucracy
 Developing infrastructure
Sales Force Deployment in the CIS, Rome, Oct 2007

7. Geography of the CIS
22 cities > 1mill. inhabitants (11)
29 cities > 0.5 mill. inhabitants (23)
Sales Force Deployment in the CIS, Rome, Oct 2007

8. Sales Force Environment
 Fast growing markets (>20% y-o-y)
 Little to no reimbursement
 Average retail price per pack around US$ 1.5
 Strong brand affinity among the wealthy
 Local producers dominate market in units (70%)
 Powerful wholesalers and pharmacy chains
Sales Force Deployment in the CIS, Rome, Oct 2007

9. Sales Force Environment
 Low level of transparency
 Well educated reps only in bigger cities
 High employee turnover
 Maximum no. of reps: R 500, UA 300, KAZ 40
 Contract sales forces in Russia only
 Lots of tenders
Sales Force Deployment in the CIS, Rome, Oct 2007

10. Case Study
 Western mid-sized niche pharma company (sales: US$3 b) trying to establish itself in
Russia (population 140 mill.)
 Portfolio: 3 highly effective Rx drugs, all registered and patented
 One gastro product is reimbursed and sold in regional tenders
 Other products not reimbursed with retail prices > US$ 40
 Potential patients: 1 mill. in gastroenterology and 1.5 mill. in dermatology
 Total target group: 14,000 gastroenterologists and 8,000 retail dermatologists
 Calls per day: 10-18
 Competition: 1 big multinational (higher prices), 1 mid-sized multinational (lower
prices), already in the market since 3 years with 400 and 30 reps respectively
(together 80% market share in value in each segment), 2 local producers with cheap,
old drugs (70% market share in units in each segment)
 Biggest market potential in Moscow
 Minimum peak sales/rep: US$ 450,000
 Cost/rep p.a.: US$ 20,000
What deployment would you as sales force managers recommend to your GM?
Sales Force Deployment in the CIS, Rome, Oct 2007

11. Geography of Russia
11 cities > 1mill. inhabitants
23 cities > 0.5 mill. inhabitants
Sales Force Deployment in the CIS, Rome, Oct 2007

12. Recommendation
 Rule of thumb: 1 rep per 1 mill. inhabitants in cities
 Deploy reps primarily in Moscow: 8 reps + 1 DSM (tender,
WS)
 Next cities (simultaneously or 1 year later):
 St. Petersburg (4)
 Wolga region (4) 2 DSM
 Urals (2)
 Siberia West (2) 1 DSM
 3-5 years later possible expansion into cities with >0.5
mill. inhabitants according to regional purchasing power
 No coverage of rural areas
 Close cooperation with nation-wide wholesalers
Sales Force Deployment in the CIS, Rome, Oct 2007

13. Conclusions
 Maintain a realistic view of potential sales (ROI)
 Gradually deploy according to purchasing power
 Focus on big cities will generate 90% of sales
Sales Force Deployment in the CIS, Rome, Oct 2007