Diversifying CSOs to provide essential services

Outsourcing working and Diversifying CSOs: Tells all about humble beginnings

Andy Holgate, Director of Business Development at Alveo Solutions tells all about humble beginnings, contract sales organisations and how they have diversified and grown to provide a range of essential services.

The days of ‘rent-a-rep’ are long gone, following the remarkable journey taken by contract sales organisations (CSOs). Remember when armies of recently qualified graduates in syndicated teams diligently delivered key messages almost by rote, through three product details, often on overlapping territories? Remember when joining a CSO was a nursery step toward ‘a real job’ in a manufacturer?

CSOs today in no way resemble those from which they evolved. CSOs have diversified so much that to many, the term contract SALES organisation is now a misnomer and they have instead attempted to rebrand as contract SERVICES organisations.

The sector is characterised by two types of business; the CSO that is part of a large, diversified corporate entity, such as IQVIA, Syneos, Ashfield and Star Medical, and the independent, arguably more purely sales-focused CSO, such as Alveo Solutions or CHASE.

“As primary care gives way to specialty and access challenges continue, CSOs are feeling the squeeze”

How it all began

The UK CSO sector began with Innovex in the 1980s, who were acquired by Quintiles in 1996. Quintiles itself began as a contract research organisation (CRO), so this was the first sign of the diversification to follow. Quintiles’ merger with IMS in 2016 created a business employing 58,000 people, providing a vast range of services. CSO is just one part of this empire.

Syneos, Ashfield and Star Medical were also created following many acquisitions and services expansion; Syneos was formed from another CRO:CSO merger, between INC Research and InVentiv, creating a business with 23,000 staff, and services from the laboratory to commercialisation. The CSO business is particularly strong in the US, and currently small in Europe but with expansion ambitions.

After forming in 1997, Ashfield’s sale to UDG in 2000 allowed Ashfield to build an offer encompassing primarily clinical and commercial services, healthcare communications and consultancy. CSO remains a core offering, and via acquisition of additional CSO businesses, Ashfield built a global footprint to rival that of IQVIA.

Star Medical is not alone in beginning as a recruitment agency, then re-positioning to also offer CSO. They were purchased by Uniphar in 2015, and following other acquisitions, can offer a range of clinical and commercial services.

Examples of the main CSOs and their positioning

CHASE is another business which started as a recruitment agency and continues to operate direct-to-headcount recruitment alongside CSO.

Founded in 2016, Alveo Solutions is the newest CSO, with a mission to offer services relevant to today’s market; especially more tailored solutions implemented via the optimum channel, that are outcomes focused and have a determination to build prescribers’ trust by delivering value in all interactions with healthcare professionals.

Global differences

Europe’s CSO market is more saturated than the US’s. Social healthcare systems mean greater price controls. With more stringent labour laws, the need for greater sales force flexibility drove strong CSO market penetration; for example, roughly 30% of all field sales heads in the UK are CSOs.

In the blockbuster heyday, the CSO’s main purpose was extra noise, and profits were good, but in these uncertain times, teams are smaller and CSO benefits perhaps centre around employment risk mitigation. In the US, labour dynamics and price controls are very different. Consequently, reasons to use CSOs have been more related to overall employment cost savings, though market access pressures are biting there too, which is increasing the attraction of flexibility.

Corporate or independent?

Because the number of representatives has declined massively over the past 10 years, as primary care gives way to specialty and access challenges continue, CSOs are feeling the squeeze. To satisfy investors’ demands, and the need to cover significant overheads, evolution via services diversification has been a key drive for the corporates. Provision of nursing services, alongside other high value roles, for example medical science liaisons and key account managers, has helped CSO business. Meanwhile, growth in digital, remote capabilities has added higher margins whilst offering an alternative channel to try to reach customers.

The corporates have attempted to leverage their size and breadth by seeking to contract with clients above country and/or for multiple services. They may even offer financial incentives to do so, in addition to the implied benefit of the convenience of ‘shopping under one roof’. There has been an attempt to reposition themselves as clients’ strategic partners, but ultimately, when the chips are down it’s still a client/supplier relationship, and local trusted relationships still count. Clients still like to be in control of delivery of their contract, and expect to receive timely and dedicated customer service. For corporate CSO business developers, the proposition is certainly more complex to describe and coordinate, and for customers potentially less clear and more onerous to navigate.

However, the value proposition from independent CSOs is more focused, with arguably a tighter relationship between contracting parties. The CSO is not just part of a larger entity. Anderson & Trinkle, in their book, ‘Outsourcing the Sales Function’, stress the purity of purpose offered by sales outsourcing. It begs the question of whether the associated services offered in a ‘one-stop shop’ proposition somehow dilute the overall goal.

The CSO sector aims to mirror CRO, where virtually all clinical trial activity is outsourced. But that hasn’t happened. Undoubtedly, CSO quality can match and supersede that of pharma itself. Speed of deployment is faster, and the benefits of flexibility are clear. The sector has evolved immeasurably since inception. What is clear is that pharma can choose from a range of businesses that all have incredible strengths. Perhaps it’s the style of relationship that counts as much as the services themselves?

Andy Holgate is Director of Business Development at Alveo Solutions. Go to www.alveosolutions.com