The future of pharma sales reps


Now that GlaxoSmithKline has stopped tying sales force compensation to prescription volume, here's the obvious question: Why have a pharma sales force in the first place? Ditching pharma reps isn't a completely radical idea. As companies have started reporting meals and gifts for physicians under the Sunshine Act, many practices have severely restricted drug reps' access. A 26-year sales veteran recently told me about spending hours lurking in waiting rooms, hoping for three minutes of hallway chitchat with a busy oncologist about the weather, their kids - and then, if she's lucky, the drug she's selling. Labor costs continue to rise, but whatever "value" sales reps can deliver is declining - not a good business proposition.

It's also increasingly clear that the mere existence of sales reps harms pharma's reputation - and, in turn, its ability to develop drugs. Lay press articles and popular books and movies that lambaste pharma sales contribute to the demonization of all industry-doctor interactions - even the ones that provide critical insights for R&D. As I've argued previously, the entire drug development ecosystem is at risk if innovators can't collaborate productively with academic and community physicians to develop new therapies.

So, why have a pharma sales force at all? The main reasons are history and inertia. In Birth of a Salesman, Harvard Business School's Walter Friedman observed that in pharma and other industries, historically "[s]alesmen and sales managers [did] not think that customers based their choices solely on the objective assessment of information." With the idea that successful reps could drive sales by "handling objections" came an entire consulting ecosystem, built to help pharma commercial execs measure and improve "sales force effectiveness". And when iconoclastic biotechs recruit 20-year big pharma veterans to launch new drugs, is it any wonder that even industry "innovators" resort to tried and true commercial approaches?

But these old-fashioned ideas about pharma sales forces may be changing. Several years ago, I had a consulting client in pharma who ran a niche brand with very few sales reps - so few, in fact, that there was a sizable group of "house accounts" with no active coverage. When we tracked sales at "house" and "active" accounts over time (in a rare business version of a retrospective case-control study), there was absolutely no difference. It's a sign of the times that as I've recounted this story to commercial execs over the years, it's been mostly met with weary acknowledgement that the current field-based rep model is broken.

One fix that's been embraced by large pharma companies is simply trimming the size of the sales force - but that's an incremental solution, focused on managing near-term costs. The more impactful opportunity is accept and embrace some "new realities" about pharma commercialization in the modern era:

Information is what's valuable. Doctors want to learn about new and existing drugs - just visit a medical conference or stop by grand rounds for proof - as long as they're hearing objective, balanced data, presented by knowledgeable experts. What they don't want is to trade their most precious commodity, time, in exchange for pizza, pens, promotional pitches, and publicity (on a financial disclosure website). Companies need new approaches to cheaply and efficiently help physicians get credible, unbiased information in the most convenient way possible - and today's sales reps might not be fit for the task.

Payers are the new frontier. With cheap, effective generics available for many diseases, the access bar is rising for branded agents. Whether a therapy is truly groundbreaking or merely "incremental", companies need to demonstrate its value and figure out how to price it accordingly (as I've discussed previously here and here). This is emerging as a critical core competency for pharma - but again, one that requires different knowledge, skills and activities from those of the current sales force.

The data are the message. Objective information may not matter as much in selling cosmetics, kitchen appliances and the like, but the world has moved on in pharma. Physicians and patients are basing more of their decisions on clinical or cost data, or having those decisions made for them on these grounds by payers - and companies with the most and best data will likely succeed. If dollars are fungible, then, what's the best use of $600M - a 3,000-rep primary care sales force like Pfizer's (assuming an industry-standard "fully loaded" cost of $200,000/year/rep), or a half-dozen or more new clinical trials and real-world evidence studies?

GSK's new sales rep compensation policy is notable, but not disruptive. The truly transformative opportunity for pharma is to completely rethink how to commercialize drugs - which likely won't involve traditional sales reps at all.

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