Healthy Skepticism Library item: 7171

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

Herper M.
Pfizer Cuts Could Change Drug Business
Forbes.com 2006 Nov 28
http://www.forbes.com/2006/11/28/pharmacuticals-pfizer-merck-biz-sci_cx_mh_1128pfizer.html?partner=yahootix

Abstract:

Pfizer is cutting some 2,200 sales jobs, reducing the size of its marketing army by a fifth and signaling a sea of change for the way that drug firms market medicines.

In a press release, the drug giant said that the cuts were an “initial step” in its “transformation strategy.” Jeffrey Kindler, who took over as Pfizer’s (nyse: PFE – news – people ) chief executive in July, has promised an across-the-board analysis of the drug firm with no sacred cows.

Through a prepared statement, Kindler said that the changes would “better align our sales organization to our overall customer and business needs.” He said the changes would make Pfizer “a more agile and effective company.”

Drug firms rely on salespeople to call on physicians’ offices, informing doctors about the benefits of new drugs and handing out free samples. Without such promotion, new medicines wouldn’t go into wide use. But in the past decade the number of sales people in the industry has tripled to 100,000. There is now one salesperson for every nine doctors, compared to one for every 18 in 1996.

Marketing might has been a big force in Pfizer’s success. It and other drugmakers have been in an arms race to visit doctors offices more and more often. Some physicians complain that they see too much of company salespeople. There has also been a backlash, as some refuse to visit with the marketers. Stanford University, Yale University and the University of Pennsylvania have all adopted policies to reduce or eliminate communication between sales reps and doctors.

Some industry boosters defend the importance of sales reps. In a recent interview with RxCompliance Report, a newsletter, the former head of communications at the Food and Drug Administration argued that banning salespeople might be harmful. Peter Pitts, who now heads the Center for Medicines in the Public Interest, suggested that studies be run to see whether marketing hurts patients or actually helps them.

But many in the industry may be waiting on Pfizer to make big cutbacks. Last February, GlaxoSmithKline (nyse: GSK – news – people ) Chief Executive Jean-Pierre Garnier said the company would “welcome” a reduction in the number of salespeople, but that he couldn’t make cuts if his competitors continued to flood the field with marketing reps. “ Physicians are overwhelmed in some countries by the number of sales representatives,” he said. “We think that if sanity can be restored, and if the arms race starts to slow down, it will be good for the industry.”

Pfizer cutting back, then, might have a big effect on the entire drug business, allowing other companies to cut back on sales and marketing spending as well. More changes could be on the way. On Thursday, the company is presenting an outline of its drug research. In January, it will outline additional actions that may be taken to transform the company.