How to Set Territory-Level Goals for Rare Disease Products
The rare disease and orphan drug space remains one of the most difficult markets in which to set accurate and equitable territory-level goals. Not only does the rare disease space differ considerably from therapeutic areas with much larger patient populations, but the space differs drastically from one rare disease to another. Despite these challenges, the sales force is one of the most important tools a biopharma company has in driving disease awareness and reaching these too often underserved patients, requiring effective sales compensation planning and goal setting. In this blog post, we will explore how to set territory-level goals for a rare disease product to ensure your product reaches and improves outcomes for as many patients as possible.
Territory-Level Goal Setting for Rare Disease Products
Too often, common methodologies used to set goals for rare disease products are ineffective. For example, the base period plus % growth methodology places more unit growth on large volume territories, which ultimately penalizes the main contributors to the bottom line. Base period plus unit growth assumes all territories can grow by the same amount, which is also inequitable. Setting goals on territory trends penalizes fast growing territories and rewards slow growing territories. Utilizing a weighted combination of these methodologies exacerbates rather than alleviates each’s deficiencies.
So then how should goals be set for rare disease products?
The optimal way to set goals for rare disease products is what we refer to as the Goal Gap Maintenance/Prospecting Methodology, a methodology we’ve been using for several years on rare disease products with great success. This methodology calculates territory-level goals using the following formula:
So what are each of these elements of a territory’s goal?
Part 1: Projected Base
The first element of a territory’s goal—the projected base—is made up of the following three variables:
Minimum Sales for Frequent Ordering Large Accounts
Identify large accounts that order frequently and determine their minimum order in recent history; this becomes the minimum retained sales for these large accounts
Projected Sales of Irregular Ordering Large Accounts
Utilizing an inventory attrition model, predict the likely amount that irregular ordering large accounts will order in the plan period
Projected Sales of Remaining Accounts
Determine the attrition rate of sales for remaining accounts to project the sales to be expected in the plan period
Consider the first variable: minimum sales for frequent ordering large accounts. We look at the sales these frequent ordering large accounts exhibit over time in order to determine the minimum sales we can expect from them:
With these three variables, we have the first element of the formula to calculate a territory’s goal: its projected base.
Part 2: Share of National Goal Gap
The second element of the formula is the territory’s share of the national goal gap. So what is the national goal gap?
When we aggregate all of the projected bases calculated for the first element of a territory’s goal, we get the national projected base—the sum of all territory-level projected bases. The difference between the national goal and the national projected base is what we refer to as the national goal gap.
A portion of this national goal gap is allocated to each territory, which is added to the territory’s projected base to get its goal. But how is the national goal gap allocated across territories?
The national goal gap is allocated to each territory based on the following two variables:
Relative Potential/Potential Proxy
Potential in the territory; for products without potential data, we utilize proxies such as claims data, total past sales in the territory, or other surrogates
Relative Time Available for Prospecting
How much time the territory has available for prospecting after allocating time for maintenance; maintenance time is determine based on number of accounts generating sales, number of HCPs at those accounts, etc.
With this, we have the second element of the formula to calculate a territory’s goal and can add it to the territory’s projected base to get the territory’s final goal.
Conclusion
While goal setting can be very difficult for rare disease products, there are innovative methodologies life sciences companies can utilize to set territory-level goals that are more accurate and equitable than common methodologies such as base period plus. The Goal Gap Maintenance/Prospecting Methodology outlined in this blog post—adding a territory’s share of the national goal gap to its projected base—has a proven track record of improving goal accuracy and equity for rare disease products, which ultimately enables life sciences companies to reach and improve outcomes for as many patients as possible.
