Healthy Skepticism Library item: 7170

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

Greenberg H.
IMS Health Says Pfizer Cuts Won't Hurt Its Business
Yahoo Finance 2006 Nov 30
http://biz.yahoo.com/seekingalpha/061130/21463_id.html?.v=1

Abstract:

Herb Greenberg(MarketWatch) submits: There are times I say to myself, when I hit the “send” button, that I really should have done this or that. In the case of this morning’s blog piece on IMS Health (NYSE: RX – News), I should’ve done better journalism by going back to Journalism 101 and calling IMS to ask about the impact from Pfizer before I wrote the story.

As it turns out, based on its sliding stock price before my piece ever ran, half of Wall Street thought the same thing I did: That Pfizer’s (NYSE: PFE – News) decision to cut its U.S. sales force would hurt IMS. Nearly half its sales comes from its “Sales Force Effectiveness” business, which sells data to drug companies. Fewer sales people would mean fewer sales, right? Wrong.

I spoke with IMS later today and they said they have spent the day trying to tell investors that a cutback in sales people in the drug industry won’t impact then them negatively for several reasons: In the case of Pfizer, IMS doesn’t do business with Pfizer in the U.S., only Europe. Second, IMS sells its data to drug companies by drug class and frequency – not per user. With fewer sales people, companies will clearly try to renegotiate their multi-year contracts, as they always do, IMS says.

Won’t that result in lower revenues? To the contrary, IMS says revenues for its “Sales Force Effectiveness” unit should rise as they try to make their remaining sales people more productive.