Contents:

Executive Summary Managed Markets Departments: Size, Structure and Alignment: The importance of managed markets to pharmaceutical companies’ bottom lines continues to grow. With that growth comes expansion of managed markets departments and evolving roles of marketers, account managers and staff. This chapter examines three prevailing models for departments and explores their sizes, structures and alignments in the context of the key business drivers influencing staffing and strategic decision making. Broad Structural Trends within the Industry: This section explores broad industry trends for managed markets structure. From Medicare Part D’s impact on structure and account alignment, to dedicated resources and the location of managed markets departments within the overall framework of drug companies, this section provides readers with a top-level view of managed markets structure. Structure and Staffing: Top-tier Firms: The organizational structure and staffing levels of top-tier firms – those ranked in the top 20 in global sales – are explored in depth in this section. Practices and business environments common in departments at companies at this level are examined, and strategic and structural pitfalls are identified. Case studies illustrate the organizational structures and key business drivers of top-tier companies. Structure and Staffing: Mid-size Companies: Fundamental business drivers and structural differences distinguish mid-size companies from top-tier firms and small pharmas and biotechs. This section explores these factors in detail. Detailed structural analyses illustrate a smaller, yet growing mid-size company as well as a larger company on the verge of top-tier status. Data and insights in this section aid growing companies in setting growth plans. Structure and Staffing: Small Pharmas and Biotechs: Lacking managed markets marketing resources and armed with only limited account management infrastructures, small pharmas and biotechs are faced with unique strategic and account alignment decisions. With a brief case study, this section explores the factors that differentiate small pharmas and biotechs from their larger competitors. Medicare Part D: Strategic Planning and Execution: This chapter analyzes the Medicare Part D prescription drug benefit in detail with a focus on its impact on pharmaceutical managed markets organizations. The history of Part D, its structure, and enrollment trends are discussed. The pharmaceutical industry’s response, including strategy and planned actions, is examined. Background of Medicare Part D: This section explores the development of the Medicare Part D prescription drug benefit from its inception. Coverage structures, plan variations, enrollment trends, dual eligibles and low-income beneficiaries are explored. Medicare Part D’s Impact on Managed Markets and Reimbursement: Medicare Part D is vastly changing the landscape of insured lives in the United States. Drug companies need to understand these changes and how they will impact their managed markets efforts. This section addresses how Part D is impacting competitive market changes and how insurance providers and drug companies are responding. Analysis of Strategic Planning & Activities of Companies Concerning Part D: Managed markets departments’ strategic and tactical responses to Medicare Part D are analyzed in this section. Part D’s potential impact on product revenue is discussed, and steps for integrating Part D into the pharmaceutical company business model are outlined. This section also analyzes specific changes to managed markets marketing and account management as a result of Part D. Managed Markets and Reimbursement Resource Allocation: Brand teams and managed markets departments often need to justify budgets and headcounts for specific products. This chapter includes extensive benchmarks for overall department budgets as well as product-specific resource allocations. Several companies’ product profiles provide resource allocators with the data they need to make key decisions and justify them to management. Managed Markets Budgets: This section analyzes 2006 managed markets department budgets. Benchmark data for spending on specific line items, such as commercial managed care, federal Medicare/Medicaid, state Medicare/Medicaid, long-term care, and trade relations are included. Company Profiles: This section includes case studies of eight brands’ managed markets spending levels in the context of their clinical profiles, competitive landscape, and managed markets department infrastructures. Company A Company G Company H Company J Company K Company M Company P Company T Employee Compensation: This section analyzes benchmarks for employee compensation, including base salary, bonus and benefits, in both managed markets marketing and account management. Compensation data are differentiated by company size. Executive Summary: Charts and Tables Managed Markets Departments: Size, Structure and Alignment Broad Structural Trends within the Industry Figure 1.1: Sliding Scale of Managed Markets Departments Figure 1.2: Percentage of Companies with Dedicated Managed Markets Departments Figure 1.3: Percentage of Companies with Centralized Managed Markets Departments Figure 1.4: Functions that Oversee Managed Markets Departments Structure and Staffing: Top-tier Firms Figure 1.5: Integrated Managed Markets Structure at Top-tier Firms Figure 1.6: Company U’s Managed Markets Department Executive Structure Figure 1.7: Company U’s National Accounts Structure Figure 1.8: Company U’s Regional Accounts Structure Figure 1.9: Percentage Growth Expected in Managed Markets Marketing at Top-tier Firms (through 2006 and 2008) Figure 1.10: Percentage Growth Expected in Managed Markets Sales at Top-tier Firms (through 2006 and 2008) Structure and Staffing: Mid-size Companies Figure 1.11: Higher Account Loads Lead to Lower Account Penetration Figure 1.12: Company V’s Managed Markets Department Structure Figure 1.13: Company W’s Managed Markets Department Executive Structure Figure 1.14: Company W’s National Accounts Structure Figure 1.15: Company W’s Regional Accounts Structure Figure 1.16: Company W’s Trade Relations Group Structure Figure 1.17: Company W’s Contract Operations Group Structure Figure 1.18: Company W’s Government Affairs Structure Figure 1.19: Company W’s Customer Service Group Structure Figure 1.20: Percentage Growth Expected in Managed Markets Marketing at Mid-Size Companies (through 2006 and 2008) Figure 1.21: Percentage Growth Expected in Managed Markets Sales 65at Mid-Size Companies (through 2006 and 2008) Structure and Staffing: Small Pharmas and Biotechs Figure 1.22: Company P’s Managed Markets Department Structure Figure 1.23: Percentage Growth Expected in Managed Markets Marketing at Small Pharmas and Biotechs (through 2006 and 2008) Figure 1.24: Percentage Growth Expected in Managed Markets Sales at Small Pharmas and Biotechs (through 2006 and 2008) Medicare Part D: Strategic Planning and Execution Figure 2.1: National Medicare Part D Managed Care Providers Background of Medicare Part D Figure 2.2: Medicare Part D Structure Breakdown Figure 2.3: Medicare Prescription Drug Plan (PDP) Regions in the US Figure 2.4: Medicare Advantage (MA) Regions in the US Figure 2.5: Medicare Beneficiaries with Prescription Drug Coverage as of January 13, 2006 Medicare Part D’s Impact on Managed Markets and Reimbursement Figure 2.6: Part D Projected Annual Increases Figure 2.7: Medicare Part D Relationships Analysis of Strategic Planning & Activities of Companies Concerning Part D Figure 2.8: Medicare Part D Targets for Providers and Pharmaceutical Companies Managed Markets and Reimbursement Resource Allocation Figure 3.1: Company A: Managed Markets Development Budgets Figure 3.2: Company A: Managed Markets Development Staff Figure 3.3: Company N: Managed Markets Development Budgets Figure 3.4: Company N: Managed Markets Development Staff Managed Markets Budgets Figure 3.5: Managed Markets Sales: 2006 Budgets Figure 3.6: Managed Markets Marketing: 2006 Budgets Figure 3.7: Managed Markets Sales: 2006 Total Products Supported Figure 3.8: Managed Markets Marketing: 2006 Total Products Supported Figure 3.9: Managed Markets Marketing: 2006 Average US Budgets by Company Size Figure 3.10: Managed Markets Sales: 2006 Average US Budgets by Company Size Figure 3.11: Managed Markets Marketing: Average Number of Supported Products by Company Size Figure 3.12: Managed Markets Sales: Average Number of Supported Products by Company Size Figure 3.13: Managed Markets Marketing: Commercial Managed Care Budgets Percent Allocation Figure 3.14: Managed Markets Marketing: Commercial Managed Care Budgets Figure 3.15: Managed Markets Sales: Commercial Managed Care Budgets Percent Allocation Figure 3.16: Managed Markets Sales: Commercial Managed Care Budgets Figure 3.17: Managed Markets Marketing: Federal Medicare/Medicaid Budgets Percent Allocation Figure 3.18: Managed Markets Marketing: Federal Medicare/Medicaid Budgets Figure 3.19: Managed Markets Sales: Federal Medicare/Medicaid Budgets Percent Allocation Figure 3.20: Managed Markets Sales: Federal Medicare/Medicaid Budgets Figure 3.21: Managed Markets Marketing: State Medicare/Medicaid Budgets Percent Allocation Figure 3.22: Managed Markets Marketing: State Medicare/Medicaid Budgets Figure 3.23: Managed Markets Sales: State Medicare/Medicaid Budgets Percent Allocation Figure 3.24: Managed Markets Sales: State Medicare/Medicaid Budgets Figure 3.25: Managed Markets Marketing: Long-Term Care Budget Percent Allocation Figure 3.26: Managed Markets Marketing: Long-Term Care Budgets Figure 3.27: Managed Markets Sales: Long-Term Care Budget Percent Allocation Figure 3.28: Managed Markets Sales: Long-Term Care Budgets Figure 3.29: Managed Markets Marketing: Trade Budget Percent Allocation Figure 3.30: Managed Markets Marketing: Trade Budgets Figure 3.31: Managed Markets Sales: Trade Budget Percent Allocation Figure 3.32: Managed Markets Sales: Trade Budgets Company A Figure 3.33: Company A’s Managed Markets Budget Breakdown Figure 3.34: Company A’s Managed Markets Percent Allocation Company G Figure 3.35: Company G’s Managed Markets Budget Breakdown Figure 3.36: Company G’s Managed Markets Percent Allocation Company H Figure 3.37: Company H’s Managed Markets Budget Breakdown Figure 3.38: Company H’s Managed Markets Percent Allocation Company J Figure 3.39: Company J’s Managed Markets Budget Breakdown Figure 3.40: Company J’s Managed Markets Percent Allocation Company K Figure 3.41: Company K’s Managed Markets Budget Breakdown Figure 3.42: Company K’s Managed Markets Percent Allocation Company M Figure 3.43: Company M’s Managed Markets Budget Breakdown Figure 3.44: Company M’s Managed Markets Percent Allocation Company P Figure 3.45: Company P’s Managed Markets Budget Breakdown Figure 3.46: Company P’s Managed Markets Percent Allocation Company T Figure 3.47: Company T’s Managed Markets Budget Breakdown Figure 3.48: Company T’s Managed Markets Percent Allocation Employee Compensation Figure 3.49: Managed Markets Marketing: Percent Breakdown for Average Total Compensation Figure 3.50: Managed Markets Marketing: Total Compensation Breakdown Figure 3.51: Managed Markets Marketing: Senior Manager Compensation Breakdown by Company Size Figure 3.52: Managed Markets Marketing: Senior Manager Compensation by Company Size Figure 3.53: Managed Markets Marketing: Line Manager Compensation Breakdown by Company Size Figure 3.54: Managed Markets Marketing: Line Manager Compensation by Company Size Figure 3.55: Managed Markets Marketing: Line Worker Compensation Breakdown by Company Size Figure 3.56: Managed Markets Marketing: Line Worker Compensation by Company Size Figure 3.57: Managed Markets Sales: Percent Breakdown for Average Total Compensation Figure 3.58: Managed Markets Sales: Total Compensation Breakdown Figure 3.59: Managed Markets Sales: Senior Manager Compensation Breakdown by Company Size Figure 3.60: Managed Markets Sales: Senior Manager Compensation by Company Size Figure 3.61: Managed Markets Sales: Account Manager Compensation Breakdown by Company Size Figure 3.62: Managed Markets Sales: Account Manager Compensation by Company Size

Companies Mentioned

Companies Profiled in Report: Abbott Laboratories AC, Inc. Access Rx Group Adolor Amphastar Pharmaceuticals Aperon Biosystems Bayer Elan Pharmaceuticals FCB Healthcare Hospira Merck Novartis Novo Nordisk NPS Pharmaceuticals Organon Oscient Pharmaceuticals Paddock Laboratories Pan American Laboratories PRA International Purdue Pharma Schering-Plough Serono Solara