Life sciences companies are regularly challenged by one objective: how to consistently meet revenue goals and earnings guidance in an industry marked by significant, even seismic, change. The global life sciences market, projected to grow at a compound annual growth rate (CAGR) of 11.75% between 2023 and 2028, presents immense opportunities. However, many companies are still struggling to capitalize on this growth, in fact, only 17% of executives surveyed said even 70% of sales reps hit their quota in the past three consecutive quarters and this is leading to unreliable revenue.
The issue is a symptom of a deeper, more systemic problem: companies continue to rely on the legacy sales-led commercialization strategy—despite the fact that there is a new healthcare economy. As the industry has shifted, so too must the strategies that drive commercial success. Increased regulatory and value-based care requirements, more complex patients, and declining physician access and purchasing power are just a few of the factors that continue to erode the effectiveness of the traditional sales model. It’s time to re-think the approach.
The Legacy Sales-Led Model: A Systemic Shortfall
Grey Matter Marketing recently surveyed C-Suite executives across the life sciences sector and released the 2024 State of Life Sciences C-Suite Report. The report highlights just how badly the legacy sales-led model is failing. Two-thirds of C-Suite executives surveyed reported that less than 60% of sales reps hit their quotas in the past three consecutive quarters. When life sciences companies continue to lean into the traditional commercialization model, they set themselves up for unreliable revenue, quarter after quarter. This inconsistency in reliable revenue not only impacts top-line revenue, but also stifles research and innovation, hinders market cap growth or company valuation, and delays the delivery of critical breakthroughs to healthcare professionals and patients.
The report reveals a pivotal—if not precarious—conclusion: overcoming the revenue reliability crisis requires more than just adjusting financial incentives or enhancing sales infrastructure. Overcoming the revenue reliability crisis demands a holistic evaluation of how companies engage with their markets and innovate within their commercial models. The reality is that the legacy sales-led model is no longer sufficient in today’s new healthcare economy.
Competing vs. Creating: The Strategic Imperative
The survey results point to a critical decision that life sciences companies must make: continue with a sales-led approach and compete in crowded, existing markets, or create new, uncontested categories. Companies that choose to compete focus primarily on features or price to drive market share by exploiting existing demand. In contrast, companies that choose to create new categories generate net new demand, effectively rendering the competition irrelevant.
The data shows that the industry is evenly split between these two approaches, with 50% of C-Suite respondents characterizing their current commercial strategy as creating demand for a new market or category, while the other 50% are competing in existing markets. Further analysis of the survey data indicates that companies adopting a "creating" strategy achieve significantly better outcomes. Companies where at least 60% of sales reps hit their quotas for the past three consecutive quarters were more likely to be following a "creating" strategy rather than a "competing" one. This suggests that the ability to generate demand for a new market or category directly impacts the reliability of revenue streams and overall financial health.
In fact, when a company creates a category, they will typically go on to own more than 70% of that market valuation as the category leader. These companies grow revenue four times faster and market cap six times faster than their competitors.1
The Path Forward: Shifting to a Creating Mindset
For life sciences companies, the implications of this report are clear. The legacy sales-led model, while once effective, no longer delivers the results you need in the new healthcare economy. Companies that continue to rely on competing within existing categories may find themselves stagnating and on a path to failure.
To break free from this cycle, life sciences executives must embrace a "creating" strategy—a business objective that prioritizes the development of new categories focused on meaningful product differentiation that unlocks transformative outcomes for your customers and your company. While many executives think they are embodying this approach, if you can’t meet or beat your target, you’re probably not.
Successful companies don’t get people to use their products. They get people to change their behavior. Having the best product doesn’t matter. Being a “first mover” doesn’t matter. Filling an unmet need doesn’t matter either. To win you have to uniquely solve an important problem and get people to reject the old way and embrace the new. Because problems move people, not features.
The savviest CEOs recognize this and are deviating from the traditional approach and leaning into an alternate commercial growth strategy to more reliably achieve market leadership and advance the standard of care.
How to Learn More
To delve deeper into the insights from our report and explore how your company can shift from competing to creating, read the 2024 State of Life Sciences C-Suite Report. Discover the strategic steps you can take to ensure reliable revenue and position your company for exponential growth in the life sciences market.
1 Yoon E, Deeken L. Why It Pays to Be a Category Creator. Harvard Business Review. March 2013.
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