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.”


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

Here’s a novel idea – death to the ‘to-do’ list!
June 24, 2009, 1:22 pm
Filed under: behavior, brands | Tags: , , , , ,

As a product manager during these challenging economic times, you are probably faced with one or more of the following situations:

• Your budget has been cut
• Your staff has been cut
• Your forecast has not been cut
• You have more responsibilities than you did last year
• Your company did not get a government bailout

No matter what else they attempt to accomplish, it is also extremely unlikely that Congress and the new administration will add any hours to each day—24 is all you will get this year.

If you are like most of us, you are busier than you have ever been. You have a wireless card for your laptop and a smart phone grabbing all your emails around the clock. The only time you are unplugged is when you are flying somewhere (and even that will soon change). Your daily to-do list stares back at you at the end of day, mocking all your efforts to cross off just a few items.

What’s the solution? How about doing away with daily to-do lists?

Blasphemy, you say? Not so, says time management guru David Allen, the author of “Getting Things Done.” Allen suggests replacing the daily to do list with a “Next Action” list, divided by category and project. He says that the problem with daily to-do lists is they almost always contain items that really don’t have to get done that day. Tasks that must be done that day belong on your calendar—all other tasks should reside in the launch pad of your Next Action list. Allen’s system preaches that you should decide multiple times during the day which of these Next Actions are the best use of your time at that moment.

Allen even provides clever instructions on how to set up your Task function in Outlook to accommodate his system. Whether you use some of his system or all of it, the Getting Things Done model may help you gain a greater sense of control over the long list of tasks that you face.

Business Week editor Ellen Joan Pollock recently underwent a David Allen Co. individual coaching session and set her goal as “10 extra hours in my week.” Impossible? Not according to the GTD system. Failure to make decisions about tasks and projects can be incredibly time-consuming. Once the system is in place, 10 hours of newly-found time is quite conceivable. Evidence of Pollock’s inefficient system was her in-box of over 6,000 emails.

These ideas may sound radical, but let’s face it—is your current system working well? If not, it may be time for some radical thinking. Let’s see…does banning to-do lists require Congressional approval?

– Ed Leon

How can a product manager develop a brilliant marketing idea? Push!
April 29, 2009, 1:35 pm
Filed under: brands | Tags: , , , , , ,

I once started working for a Commercial Vice President at a large pharma company who told me he kept a yellow sticky note on his bathroom mirror where he could see it every morning. The note had one word on it: “PUSH!” After I had spent several months in my new position, I understood the reason for this daily reminder. In any organization, good ideas will never be developed and executed without someone relentlessly pushing them every day.

As a pharma product manager, you have certainly experienced this first hand. No matter how brilliant your idea, somebody in your company (or multiple somebodies) will tell you that your idea is:
•    Too risky
•    Unproven
•    Too expensive
•    Not a high priority
•    Too early
•    Too late
•    In need of more consideration
•    In need of revision

Today’s pharma business model depends on ideas and projects being subject to the consensus opinion of stakeholders. Unfortunately, your team of stakeholders includes talented, well-meaning colleagues and supervisors whose job it is to throw cold water on your idea, or at least modify it beyond recognition. Even if your idea survives the consensus test, you soon realize that it is your priority, and often yours alone.

This sets up the next problem—ideas, like stalled cars, have inertia. Unless they are pushed continuously, they stop moving. Once they stop, it takes much more energy to get them moving again than if you hadn’t stop pushing in the first place. But enough amateur physics—the point is that the progress of an idea, even a great one, will grind to a halt unless it has a champion. That champion is you, the product manager.

It’s tempting to play it safe, to only push projects that are likely to have consensus and not ruffle any feathers. But the safe path is only an illusion—in the end, you will primarily be held accountable for the success of your brand, not how well you avoided conflict with stakeholders.

So keep thinking big! Work with your agency to develop great ideas. Be bold and challenge your stakeholders to do the same. And keep that sticky note where you can see it every morning.

-Ed Leon