Healthy Skepticism Library item: 17838

Warning: This library includes all items relevant to health product marketing that we are aware of regardless of quality. Often we do not agree with all or part of the contents.

Publication type: news

Deans M
Sales force effectiveness: are reps still relevant?
Eyeforpharma.com 2010 May 24
http://social.eyeforpharma.com/story/sales-force-effectiveness-are-reps-still-relevant

Full text:

Marcus Deans explains why the continued relevance of reps depends on developing new skill sets to maintain a competitive edge.

Are reps still relevant in today’s turbulent pharma environment?

This is a question that, although it may seem a little out of place now, will become more relevant over the next three to four years.

The pharma industry faces a number of key resistors to growth, including the impending 2011 patent cliff set to erode some $78 billion in branded sales from drugs whose patents expire between 2010 and 2014.

In addition, there will be $32 billion lost due to the continued erosion of already expired brands.

These are big numbers. The priority for pharma is to ensure the successful navigation of this new landscape to maintain current growth rates.

Pharma’s loss, payers gain

While the imminent erosion of sales will no doubt be a major headache for the industry, many payers will be jumping for joy.

Payers can expect to make savings of $44 billion in the US and $5 billion in the five major European markets as generic prices take the bottom out of the branded market.

Companies can no longer expect that expensive drugs providing marginal benefit will be reimbursed at historically high prices.

In response to this, there is a transition from primary care drugs to more specialist secondary care portfolios.

The planned launches of these drugs will not, however, escape the attention of the payers.

Competition for reimbursement will intensify given the high price points of these specialist/orphan indication drugs.

Cost containment strategies

While globalization and expansion into newer markets is an additional strategy that will aid in successful navigation, the strategy most pertinent to the traditional pharmaceutical sales force are the cost containment strategies being implemented by large- and mid-size pharma.

These cost containment strategies are encapsulated by the reduction seen in R&D spend and, hence, the increased focus on in-licensing.

In addition, mega-mergers have been a recent strategy to cut costs, grow sales, and ultimately boost profits. Pfizer/Wyeth and Merck/Schering Plough are recent examples.

With the global economic downturn dominating headlines over the last couple of years, the negative press that would normally be associated with the 67,000 employees laid off across just 10 companies has escaped the attention of the media.

Of this number, sales teams assigned to promote expired or soon to expire blockbusters took the brunt of the hit.

The shape of cuts to come

So, is this just a small indication of things to come or will we see a reversal in this approach to cost cutting?

The signs unfortunately seem to indicate a continuation of this trend.

With the reduction in primary care type drugs, the focus will be on smaller sales teams with increased responsibility.

In order to remain competitive, the sales representative of the future will have to have greater clinical knowledge as he gets to grips with the complexity of rare diseases and oncology drugs, in addition to a solid understanding of health economics so that he can have credible discussions with the local payers.

The answer to the question ‘Are reps still relevant?’ is therefore not straightforward, and the relevancy of reps to the industry will very much depend on their skill sets and responses to change.

It is therefore the responsibility of both the pharma industry and the individual representatives to ensure that they are not left behind and appropriate training is provided and/or sought in order to maintain a competitive edge.

Those who doubt the importance of the rep to the future success of the industry should not forget that one of the reasons the patent cliff is so high is the tremendous contribution that sales reps have made over the last 10 years!

For more on retraining reps, see ‘Retraining Reps To Sell New Technologies’ and ‘Getting sales reps ready for specialty care roles’.

For more on health economics, see ‘Health economics data and market access’.