Are Sales Representatives Still Relevant?

Are Sales Representatives still relevant in today’s turbulent pharmaceutical industry environment? This is a question that, although it may seem a little out of place now, will become more scrutinized over the next few years.

The pharmaceutical industry faces a number of key resistors to growth, including the impending 2011 “patent cliff” set to erode some $78 billion in branded sales from drugs whose patents expire between 2010 and 2014. In addition, there will be $32 billion lost due to the continued erosion of already expired brands. These are big numbers. The priority for pharma is to ensure the successful navigation of this new landscape to maintain current growth rates.

While the imminent erosion of sales will no doubt be a major headache for the industry, many payers will be jumping for joy. Payers can expect to make savings of $44 billion in the US and $5 billion in the five European markets as generic prices take the bottom out of the branded market.

Companies can no longer expect that expensive drugs providing marginal benefit will be reimbursed at historically high prices. In response to this, there will be a transition from primary care drugs to the more specialist secondary care portfolios.

The planned launches of these new drugs will not, however, escape the attention of the payers. Competition for reimbursement will intensify given the high price points of these specialist/orphan indication drugs.

While globalization and expansion into newer markets is an additional strategy that will aid in successful navigation, the strategies most pertinent to the traditional pharmaceutical sales force are the cost containment strategies being implemented by large and mid-size pharma.

These cost containment strategies are encapsulated by the reduction seen in Research and Development spending and, hence, the increased focus on in-licensing. In addition, “mega mergers” have been a recent strategy to cut costs, grow sales, and ultimately boost profits. Roche/ Genentech and Merck/Schering are the most recent examples.

With the global economic downturn dominating headlines over the last couple of years, the negative press that would normally be associated with the 67,000 employees laid off across just 10 companies has escaped the attention of the media. Of this number, sales teams assigned to promote expired or soon-to-expire blockbuster drugs took the brunt of the hit.

So, is this just a small indication of things to come or will we see a reversal in this approach to cost cutting? The signs unfortunately seem to indicate a continuation of this trend. With the reduction in primary care type drugs, the focus will be on smaller sales teams with increased responsibility.

In order to remain competitive, the Sales Representatives of the future will have to have greater clinical knowledge as they get to grip with the complexity of rare diseases and oncology drugs, in addition to a solid understanding and articulation of health economics so that they can have credible discussions with the local payers.

The answer to the question, “Are Sales Representatives still relevant?” is, therefore, not straightforward and the relevancy of Representatives to the industry will very much depend on their skill sets and responses to change.

It is, therefore, the responsibility of both the pharma industry and the individual Representatives to ensure that they are not left behind and appropriate training is provided and/or sought in order to maintain a competitive edge.

Those who doubt the importance of the Representatives to the future success of the industry should not forget that one of the reasons the “patent cliff” is so high is the tremendous contribution that Sales Representatives have made over the last 10 years!