Print“The planned cuts reflect the dramatic change in the industry in both the mix of products that drive revenue for these companies, as well as how purchasing decisions are made.”
In 2011, Big Pharma companies made deep cuts to their salesforces as they contended with a loss of patent protection on some of the top-selling drugs in the industry. Nevertheless, a new study finds that half of these companies say they are still overstaffed, compared to just 5 percent of life sciences companies overall. The study from the global consulting firm Hay Group says Big Pharma companies plan to cut salesforces by 6 to 15 percent over the coming year. The survey includes responses from more than 30 pharmaceutical, specialty, and biotechnology companies representing a broad cross-section of the U.S. pharmaceutical industry with data collected for about 90 sales, marketing, and medical affairs positions.
The planned cuts reflect the dramatic change in the industry in both the mix of products the drive revenue for these companies, as well as how purchasing decisions are made. It also reflects the continued challenges these companies will experience in transitioning away from a world that had been defined by the one-size-fits-all blockbuster to a world where value is increasingly becoming a determinant of purchasing decisions.
“When it comes to staffing and go-to-market models, the gap between Big Pharma and other players in the life sciences arena is considerable, and it continues to grow,” says Matt Gurin, Hay Group’s U.S. reward practice leader for life sciences.
Gurin says pharmaceutical companies have been reluctant to alter sales models and strategies because they have been historically successful. “Given the magnitude of change in both the competitive and regulatory landscapes, it is not surprising, perhaps, that many commercial organizations are proceeding cautiously since it’s a strong prescription to both shrink and change at the same time,” he says.
The study also found that prescription volume is a key concern for sales organizations with 55 percent of the respondents saying it was a primary factor. Revenue attainment and market share both followed at 21 percent.
But despite the significant changes under way, companies are not spending more on training. Hay Group found training budgets at most companies remained stagnant at nearly 60 percent on 2011. A total of 27 percent of companies increased their spending on training, up from 13 percent in 2010.
“In order to excel in the evolving life sciences market,” says Gurin, “successful organizations will be required to be ambidextrous, to rationalize both the size and activities of their commercial organizations to deliver value, not just revenue.”
February 17, 2012
http://www.burrillreport.com/article-despite_cuts_big_pharma_says_it%e2%80%99s_still_overstaffed.html
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