S&R Blog

Why Pharma Is Pushing Its Drug Pushers Out

New day. Same story.


The pharmaceutical industry is going through a transformation — not only has it been consolidating with mega-mergers like the one between Merck (MRK) and Schering-Plough, but it’s facing a major patent cliff as the revenues from the blockbuster drugs of the 1990s fall prey to generic competition.

Yet, these larger changes have led to shifts in other parts of the industry, too. Since Big Pharma can no longer rely on new blockbuster drugs to pad their top line, these companies now have to transform how they do business to include the biotech model of finding drugs for diseases with smaller patient populations. This also means a major overhaul of how the industry sells its product to the masses.

Pharmaceutical sales reps will be the first to tell you that the industry is scaling down. Once plentiful — there were more than 100,000 reps in 2005 — the drug sales rep is quickly becoming part of the past. A recent report by Deloitte proclaimed to the industry to change its sales models or bust.

An article in the Indianapolis Star this week shows just how much sales rep are despised by the very doctors they’re supposed to woo. Doctors have been pushing for sales reps to make appointments and cut down their pitch time. In some cases, doctors are asking to ban their presence altogether (one in four doctors now refuses to meet with reps, according to the Deloitte report).

But doctors’ dislike of this incredibly aggressive and confident class of individuals isn’t the only reason that the sales rep is becoming extinct. Doctors are no longer the key decision makers when it comes to what drugs are being prescribed. That decision now rests heavily with consumers (who are highly affected by direct-to-consumer advertising), and even more so with insurers who are the primary payers for the often over-priced drugs being pushed by the pharma companies.

Pharmaceutical companies aren’t blind to the problem. The past year has been a bloodbath for pharmaceutical peddlers. AstraZeneca (AZN) said in 2007 that it would cut 7,600 people by 2013; it later upped that number to 15,000. The company didn’t say where those jobs would come from, but the sales force was offered the buyout first. Sepracor, wholly-owned subsidiary of Japan’s Dainippon Sumitomo Pharma, reduced its number by 530 in 2009, bringing its sales force to 1,325 people. King Pharmaceuticals (KG) eliminated 380 field sales positions last year, bringing its total number of reps down to 720 and Sanofi-Aventis (SNY) cut 750 people from its sales roster.

Jump to 2010: Pfizer (PFE) cut 556 sales reps as part of its broader layoffs due to its merger with Wyeth last year. Earlier in the month, Merck eliminated 400 positions from the Schering-Plough headquarters in New Jersey with a majority coming from the sales team. This is on top of the 1,000 sales reps that Schering laid off in 2008 before its merge.

So how will the new pharmaceutical sales landscape look?

It’s likely that insurance companies are going to be playing an even bigger role in which prescriptions become the drugs of choice. Meanwhile, Big Pharma will likely look to outsourced sales rep to educate those same insurance companies. As a plus for doctors, their knowledge will likely have to come more from medical journals and other non-biased sources.

“Pharma’s challenges require a detailed understanding of each stakeholder’s role and contribution to value,” says W. Scott Evangelista, principal at Deloitte. “By better understanding every stakeholder’s unique needs and motivators, a pharma company would be better equipped to improve its internal capabilities — e.g., knowledge, skills, tools — to interact more effectively with each constituent.”


What do physicians really think about Big Pharma?

According to Dr. Candida Fink’s latest blog post on PsychCentral, not highly. In what clearly wasn’t a good year for pharma in terms of reputation, Dr. Fink highlights why she will “no longer see any drug reps.”

I didn’t want to hear from them, and I haven’t since. I avoid lectures and meetings that drug companies sponsor, and I use no drug company pens or notepads. The longer I avoid direct contact with drug company reps, the better I feel about it. The further removed I am from these things the more I realize I was getting a lot of my information about medications from company reps who had vested interests in my using their product. I realized that I don’t need samples, because the companies give samples only of their newest products, and those don’t have the research or track records that the older products have. Furthermore, the older products are now available as generics, which ultimately save my patients far more money than they save by taking a few free samples and then paying for the priciest, newest product.

Obviously, this is the opinion of one physician, but the points Dr. Fink brings up about her disdain for pharmaceutical marketing tactics have been echoed more than once lately. So if not from pharma companies, where would physicians get their information about products? According to Dr. Fink,”That isn’t to say I don’t keep informed and try new products that are appropriate for certain patients, but I do so based on research and my patients’ needs, not who bought me lunch last week.”

Samples, proper medical education, and other informative materials should be needed to help improve patient outcomes. But physicians seem to be turning their heads the other way.  If pharma doesn’t heal the wounds and restore the trust with physicians, credibility will be the least of its problems. What do you think?

Read Dr. Fink’s post here.

Who will lead pharma back to a constructive, trusting, and value-based industry?

The “conspirators” have been revealed—the  Pharmageddon2012 “conspirators” that is.  This past week, the November issue of MedAd News broke a story on Pharmageddon2012 and the people behind the scene—S+R Medical Communications (SRMC) and Friday Morning.

For those of you who have not taken the time to check out Pharmageddon2012, this multifaceted website uses a variety of social media outlets to carefully and anonymously describe what we believe is the pharma industry’s greatest problem—the breakdown of communication and trust between physicians and the industry.

The site, describes the issues and problems that exist but what it doesn’t address is the passion, belief, and attitude of those people at SRMC and Friday Morning who have to live and deal with the implications of what Pharmageddon2012 represents. You must admit a campaign like Pharmageddon2012 could be risky for a business that that has spent over 18 years enabling and helping our pharma clients devise the very same communication pieces and strategies that we believe contributed to the demise of physician trust.

However, we also believe that someone needs to lead the charge for change and why shouldn’t it be SRMC and Friday Morning? We spent the last 10 years closely watching, listening, and seeing firsthand the strategies and tactics that led to the mistrust problems. We were frustrated and angry about the situation, and we struggled to understand what new strategies and solutions we might incorporate into our business model. The end objective is to help us build our success—and, equally as important, that of our clients.
To that end, we must help clients find ways to restore physician confidence AND improve patient outcomes.

So while we are willing put our collective necks on the line, the real question is which pharma companies will be the first to understand and see the need for communicating with physicians in a different way? Which companies will choose to use educational programming that is needs-based? Are you, as a pharma marketer, willing to use total transparency and clarity as you describe ALL of the important aspects of how your brand is best used? When a physician asks, “Which of my patients are specifically and best suited for what your product does?” what will your sales force say? How will you provide educational and promotional programs that allow your sales force to bring value and relationship building to every sales call?

Is YOUR pharma company willing be a leader and change the pharma/physician communication model back to a constructive, trusting, value-based relationship? Do you believe that you can participate in this change process and at the same time positively impact your brand’s financial achievements? It’s tough to be a leader and to stand out from the crowd. But in fact, that is the opportunity that is before us right now.

If you have the same passion and spirit for this issue as we do, if your brain and heart tell you it is time to do it differently, please contact me. I can show you how we can work together to put our industry, your company, and your products back on a more productive, positive path.

Dave Recht
CEO, North State Resources, Inc.

Trust: No longer just a physician and Big Pharma problem

Trust has been a big topic on this blog of late and for good reason. The pharmaceutical community has a growing divide between physicians and drug companies and unless it’s addressed, a cataclysmic  event could be on the horizon. But according to a report in the Washington Post, there is an even bigger trust issue growing between patients and physicians.

The Post reported that 68 percent of respondents to a Pew Prescription Project survey  supported legislation that would require public disclosure of financial relationships between physicians and industry. In fact, 78 percent believed that accepting gifts from the pharmaceutical industry influences their doctors’ prescribing habits, but only 34 percent said they would be likely to ask their doctors about potentially troubling financial ties.

So what’s the solution? Transparency? Conversation? Regulation? Find out what the Washington Post recommends here.

Who have pharma consulting companies and brand managers displaced from the strategic decision table?

Part 2 of “How did pharma ad agencies become “expendable”?

The advertising agencies of course! The agencies no longer had to worry about strategy because the consultants and the brand managers had that all figured out. Thus, the agencies could simply take orders on what words and “pictures” they should “paint” on the ad concepts and be done with it. And if you are simply painting words and pictures onto paper (or electronic screens), then that can’t be very difficult, so it becomes a simple commodity and even easier for purchasing to decide who did what.

Who was last horse out of the barn?

Well, ashamedly it was the agencies themselves. As all of the above was going on, most of the agencies, being the good guys that we are and not wanting to rock the boat, simply let it happen. We sheepishly gave up our seats and voice by not saying a whole lot and not challenging the decisions that were being made. We gave it up without fight

Now I know what you are thinking: “You guys deserved it”; or “You didn’t add that much anyway” or  “I never got strategic input from my agency” or  “They always saddled me with the junior AE”.

Some or all of those comments are certainly true.  But the fact of the matter is that most agencies did all of the above. They fell into the trap and believed that by simply executing what the “smart people” told them, they would earn more business. They by and large stepped away from the key issues of strategy, branding, messaging, and having the common sense and insight to tell their clients what they really need to know and hear.  And, they didn’t yell loud and clear up and down the client’s marketing/senior management chain.

What is the fix for agencies if they are to hold their ground and claw their way back?

Start with knowing the client’s business inside and out–the brand, the science, and medicine; the competition; and the real world.  Only through knowledge can an agency bring insight, strategy, and solutions that will result in brand success.

Demand and keep demanding to be part of the client’s marketing strategic decision team–The more an agency partners, participates and understands what the client’s ultimate issues and goals are, the better the agency can counsel and advise.

Hire the best AEs you can, and couple them with senior-experienced agency personnel–While it is fine to have a junior AE in the day-to-day business mix, a senior level manager must and should be highly involved with a client’s business.  Both the AE and senior level manager must frequently interact with the client team and must be sure that they bring valuable insight, strategy, and creative thinking to the client.

Finally, have frank and direct conversation with your clients (all the way up and down their management team)–Create understanding and acceptance for the value and work that you bring them, and make sure that you are not simply viewed as a vendor or commodity. Have these conversations with high-ranking client managers to make sure they understand that you understand their business and are in it shoulder-to-shoulder along with them.

It’s time to take off the vendor uniforms, put away the hand trucks, and put on the business suits and deliver insightful, strategic, creative solutions.

-Dave Recht

How did pharma ad agencies become “expendable”?

There was a time, actually not so many years ago, that ad agencies had a real and meaningful place at the table. That is, they were a real part of a pharma company’s strategic and marketing leadership team, and companies actually sought out and listened to the counsel of their agencies.

However, over the past 10 to 15 years, things have changed rather dramatically, to the point that many agencies have fallen to the dreaded “vendor” status. In a sense, many agencies have abdicated their once exalted position as counselors and experts and now are simply gristle for the ever frequent RFP and purchasing agent who is only looking to produce a detail aid at the lowest bid price.

Holy smoke, get on your delivery person uniform (you know, the ball cap, the Dickey heavy cotton work pants, and the ever-present shirt with your name monogrammed on it in script), get your hand truck full of boxes of promotional materials, and load those detail aid vending machines in the halls of purchasing.

So, what has changed that allowed this dreadful thing to occur?  Let’s take a closer look.

The first horse out of the barn was the advent of purchasing departments and their increased role in making marketing decisions. Don’t get me wrong, it certainly didn’t start like that, and yes, there is a role for purchasing departments. However, this began when the purchasing god convinced the company president that boat loads of money could be saved if purchasing had the opportunity to get involved in the marketing “vendor” selection process.  There is that dirty “v” word again!

If purchasing could simply set the guidelines and process for “standardizing” the agency selection process (to the point that you can ever standardize a strategic and creative development process), then the marketing folks could compare apples to apples and make the right decisions on who would best help them obtain their brand goals.

Of course, the average purchasing agent knew little to nothing about the creative process, the needs of marketing, the principles of marketing and the quirks of regulatory, legal, medical and those sorts who often impacted how the process went. In other words, purchasing bought a detail aid much in the same way that they bought a truckload of Erlenmeyer flasks, notepads, or pens. After all, a detail aid is a detail aid.

What about the issues of brand message, positioning, strategy and all the other important but hidden intricacies of brand continuity, image, and so on?  Those were either free or not important.

Purchasing’s power has only increased from that early point.  Today, purchasing often sets the hourly rates an agency may charge, determines how many hours an agency may spend on an awarded “project”, and conducts “reverse” bidding online to see how low they can drive the price.  There is always some fool out there that will do it for less.

After all, a detail aid is a detail aid.

The second horse out of the barn was the arrival of all those preeminent consulting groups.  You know the ones I am talking about–the high and mighty out of Boston, the “big boys” from the “Big 8”, no make that “Big6”, no make that “Big 4” accounting firms who suddenly became experts in pharma operations and marketing.  They came resplendent with their MBAs and regression analysis and operational organization schemes that would assure even more riches.  Of course, these were the very same consultants that came from the top MBA schools in the world and went on to use what they learned to help topple this country’s financial institutions and aid companies such as Enron, WorldCom, and so many others.

Yet, the pharma companies had to keep up with the Joneses and one pharma company couldn’t be outdone by another, so they hired these consultant companies.

So every company had to break itself into business units, often duplicating services and increasing overall overhead costs. And then, each company simply had to have 10,000 to12,000 reps in the field so that every doctors office in the land was swamped by 3 to 6 sales reps (each representing a different product/division) all sitting in the waiting room at the same time.  And of course, each company had to restock their marketing departments with those fresh MBAs whose schools taught them that they were the only people bright enough to think strategically and have the common sense it took to see what was going on in the real world.

And who did these consulting companies and MBA brand managers displace from the strategic decision table?

Find out tomorrow….

-Dave Recht

74% of physicians look to pharmaceutical representatives to stay informed about medications.

Physicians have spoken and reps DO have a pivotal role in keeping physicians informed. According to a recent survey of physicians, 74% of respondents said they rely on pharmaceutical companies and their reps to stay informed about medications to treat certain conditions.  The online survey conducted by S&R Communications Group also found that physicians considered gaining insightful information from representatives to be a higher priority than searching for relevant information on the web or through the FDA.

More results from the survey can be found here.