A HEALTHY FUTURE IN PHARMACEUTICAL SALES?
SummaryThe pharmaceutical industry has often been described as counter-recessionary, the broad logic being that people will always get sick, and hence there will be a continuous demand for drugs. And whilst this may be true at a surface level, a more granular analysis would reveal dissimilarities between different segments of the industry
The pharmaceutical industry has often been described as counter-recessionary, the broad logic being that people will always get sick, and hence there will be a continuous demand for drugs. And whilst this may be true at a surface level, a more granular analysis would reveal dissimilarities between different segments of the industry – for example between the major ‘Ethicals’ (the providers of branded, blockbusters and the newest treatments) and the ‘Generics’ (manufacturers of off-patent older drugs, usually at a much lower cost than the branded molecular rivals). The big branded players make huge long term investments in R&D, and have high sales and marketing costs, whereas the generic manufacturers typically operate off a lower R&D cost base, with smaller sales and marketing teams and budgets.
And down at the level of individual companies, one company may have a strong portfolio of blockbusters all with a good few years to go before patent expiry, and a healthy pipeline of new drugs to bring to market further down the line. Whereas another may have its key blockbusters rapidly coming off patent, and may be searching desperately for biotech acquisitions, alliances or licensing deals to bolster an insufficient pipeline (representative deals being AstraZeneca’s acquisition of MedImmune for $15.6 billion, and Takeda of Japan paying $8.8 billion for Millennium ).
On top of all that, we’re being presented with a global financial crisis that looks worse than any other in living memory, and no consensus as to how this might affect the pharma sector.
So, many individuals may well be asking if now really is the best time to embark on a career in pharma sales. (And some existing pharma sales representatives could be thinking that it might be a good time to move in to a new industry - although who knows what that might be).
A further consideration is that - even prior to the current economic situation - many pharma companies have been reducing their field sales forces, as part of a general drive to reduce costs and improve margins. For example, 2007 saw a record number of lay-offs, including 10,000 going at Pfizer, Astra-Zeneca making 7,600 cuts, and Bayer 6,000, to name but three . And there is no strong indication that 2008 will be different.
Other forms of sales and marketing are also beginning to be adopted. eDetailing – using the web to push marketing messages out, rather than feet on the street, is gaining increasing share of voice (to declare an interest: the company owning PharmiWeb.com, PharmiWeb Solutions, is a provider of eDetailing and other solutions to several major pharma companies). And targeting high-level decision makers (e.g. prescribing advisory committees) rather than General Practice doctors, with fewer, but more senior account managers, is a declared strategy with some organisations.
So, as an existing or aspirant pharmaceutical sales rep, the big question is, what should you do?
Well, as they say in chat rooms, DYOR – Do Your Own Research. Check out the company you’re interested in: what’s their product portfolio? Are their sales reliant on a few blockbusters? And if so, when are the patents for those drugs due to expire? What does their pipeline look like? These are just a few of the questions you may want to ask, in parallel with the usual ones of: are they nice people to work with? Did they treat you well at interview?
You can find lots of relevant financial data online. For argument’s sake, let’s say you were interested in joining Pfizer. You could do your background research at Google Finance , Reuters, or MSN Money - amongst many other sites. As well as the current stock price and history, the latest market news, you will also find, importantly, what the analysts think - these are industry specialists that will have looked at the company through a microscope, to decide its investment potential, survivability and competitive advantage. And as you’re thinking about investing potentially years of your life with a particular pharma company, you might find this kind of analysis insightful and valuable.
The bottom line though is the bottom line, and it is clear that ‘Big Pharma’ is changing its model, by necessity. Not quickly, but demonstrably, and inevitably. The pressures it faces – declining margins, increased pressure from generic competition, fewer blockbuster candidates, and relentless shareholder expectations – mean that costs will be cut, and that includes within the sales force. Ultimately, there will be too many qualified candidates chasing too few roles. The data you glean from your market research should help you make a more informed decision about where to target your career search – which companies represent the healthiest choice for you. And the knowledge you gain will certainly make you look more impressive and well prepared during the interview process, giving you what may be a vital edge.