Pharma Reform

Have things changed that much or have sales reps with the help of their lawyers just figured out how to characterize the pharmaceutical sales representative position so as to align their cases with the FLSA definitions for “non-exempt?”  Granted, it has been a while since I have been in the field (as a rep or riding along) but I always felt pharmaceutical sales reps were pretty autonomous, responsible, and accountable for “selling” the company products (legal and regulatory constraints considered) and “managing” the business in their territories.

Ok.  I’m not an attorney but the recent U.S. District Court ruling (Kuzinski, et al. v. Schering Corporation, Civil No. 3:07cv233 (JBA), August 5, 2011) would seem to suggest that all pharmaceutical representatives will have to be classified “non-exempt” hourly employees and be eligible for overtime pay.

By the courts’ strict interpretation of the FLSA (Fair Labor Standards Act) definition, pharmaceutical representatives do not actually make sales. Basically, they do not “consummate sales or obtain contracts or orders” or “binding commitments for purchase” from the physicians they call on and therefore do not qualify for the “outside sales exemption.”  This is hard to argue when a Department of Labor FLSA literal definition for prescription drug “sales” would only occur at the pharmacy or within the supply chain (e.g., wholesalers, chain pharmacies, buying groups, and hospitals) through negotiation, contract, and transaction activities that do not directly involve pharmaceutical representatives.  Despite arguments about the regulatory requirements dictating the role of physicians in the prescription drug sales process, without a lenient interpretation (consideration for regulatory and prescription drug market limitations) of the FLSA definition, it is unlikely that pharmaceutical representatives could ever qualify under the “outside sales exemption.”

The court’s interpretation of “administrative exemption” as it pertains to pharmaceutical representatives, however, is even more disconcerting.  It seems that if you do any training, supply any company developed sales materials or territory management assistance, or provide any management oversight, the courts will determine that “the primary duties” of pharmaceutical representatives do not include the “exercise of discretion and independent judgment with respect to matters of significance.”  This would suggest that the only way to qualify for the “administrative exemption” is to make sure pharmaceutical representatives have complete autonomy (totally independent of any corporate input), do their own training and planning, do whatever they want in the territories that they define as theirs (on their own with no physician or account data supplied by the company), decide and say what they want about the products they choose to promote, and are not managed or supervised in any way.

While this may sound absurd, this is not meant as a sarcastic commentary and certainly is not meant as legal advice but rather a practical observation of how the courts seem to be interpreting the FLSA definitions for “outside sales” and the “administrative exemption” as they pertain to pharmaceutical representatives.  As a result, if the courts continue to rule on these grounds,  I believe pharmaceutical companies will have little choice but to classify pharmaceutical representatives as “non-exempt” hourly employees and will be forced to implement some of the types of tactics discussed in an earlier post.  mike@pharmareform.com

Several courts have now determined that pharmaceutical sales representatives should be considered “non-exempt” hourly employees and therefore are entitled to overtime pay.  In coming to this conclusion the courts agreed with the pharmaceutical sales representatives who filed the suits claiming they were not sales people or professionals exercising discretion or independent judgment as defined by provisions of the Fail Labor Act for “exempt” employees.  If the courts continue to hold these findings to be true, here are some new work rules “non-exempt” pharmaceutical representatives can expect to see:

•  Your work day is expected to be 8 hours per day Monday through Friday between 7am and 6pm.  You must not work more than 8 hours per day or more than 40 hours per week without prior written approval from your District Manager.

• Working weekends (Saturday or Sunday) or holidays is prohibited unless you have prior written approval from your District Manager for a particular weekend or holiday requiring your presence for work related activities.

• You are expected to “clock in” using your iPad when you leave your home for work and “clock out” when you have completed your 8 hour work day.  You must plan to complete your 8 hour work day with arrival back at your home.  You can chose to complete your 8 hour work day in your territory but that will be your choice and you will be on personal time after the point you “clock out.”   Use of the company car from that point to the return to your home must be recorded as personal miles .

• If you receive emergency customer calls (you are not to make customer calls except in response to their call) outside your work day hours, you are to record those (caller name, time of call, purpose of call) in your weekly activity report and include the time in your time log.  You will have to adjust your subsequent work time so as not to exceed the 40 hours per week maximum.

• Failure to “clock in and out” may result in loss of pay for that period of time.  Repeatedly “forgetting to clock in or out” may result in disciplinary action including the possibility of termination.

• You may take personal time during the work day as long as you put in your 8 hours between the hours of 7am and 6pm.  You must clock out and back in for all personal time taken during the work day.  Other than clocking out and back in, you do not have to provide any information regarding personal time activities.

• If you plan to take more than 2 hours of personal time during work day hours (7am to 6pm) on any one day you must get prior approval for a vacation day.

• You will be gps tracked to verify time and location for all work related time during your work day.  This will also be used to verify mileage for business versus personal use of the company car.

• You are required to clock out and back in for your mandatory 15 minute breaks, once in the morning and once in the afternoon.  You can not skip breaks or combine break times. You are not to do work related activities during your breaks.

• You must clock out and back in for your mandatory 1 hour lunch break during which you are not to do work related activities.  You can not skip your lunch break and your lunch break must be taken daily between 10am and 1pm.   If you do a work related food activity with physicians or office staff during lunch time, this can not be your lunch break.

• Nobody, not even your District or Region Manager or the VP of Sales, can require you or request that you do work related activities when you are clocked out, including for breaks and lunches.

• Because all work related travel time counts against your 8 hours per day and 40 hours per week, all territories will be reevaluated and realigned where necessary to minimize travel requirements.

• Where possible, all company required meetings will now be by teleconference or video conference to avoid travel.

• You will not be expected or allowed to travel outside your territory to attend any medical or scientific meetings or conferences, if it means you will exceed your 8 hours per day of work.

• District meetings will be kept to a minimum and centrally located to minimize travel for all attendees.  District meetings will be structured to an 8 hour work day with the mandatory “non-business-related” breaks and lunch for which you must “clock out and back in”.  You will be required to take your lunch break and can not do any work related activities during your District meeting lunch break.   So as to not encourage work related activity during District meeting lunch breaks, you will be expected to determine where you would like to have your lunch and pay for your own lunch.  There will be no District meetings requiring overnight stays.

• Any travel outside your territory, except for District Meetings, will require prior written approval from your District Manager.  If travel time requires you to take more than 8 hours per day to attend and return home from a District meeting, you must have prior written approval from your District manager with the anticipated “Overtime” required to make the meeting.

• Only company provided training programs will be considered “work related” required training for which work day time will be allotted.   Any additional training, reading, or research you choose to do with regards to your job or career development will be your choice and done on your personal time.  These “extra” activities will not be required and are therefore “on your own personal time.”

• You will be allotted 2 hours of “work time” every week to take care of any company required administrative tasks (e.g., expense reports, weekly activity reports, or planning) or training. You must be clocked in during this time.

• Your biweekly pay will be automatically calculated from your time sheets captured from your “clock in and clock out” data.

• Any exceptions to these work rules must be identified upfront with the anticipated number of “work hours” involved, any anticipated overtime hours identified, and must have prior written approval from your District Manager.

• Failure to comply with any of these new work rules will result in disciplinary action including the potential for termination.

I am not espousing these rules and I have probably missed a few.  I’m not an attorney but I tried to look at what pharmaceutical companies might have to do to avoid further Fair Labor Act liabilities by establishing work day expectations and accurately tracking and recording work hours for pharmaceutical representatives who are considered “non-exempt” hourly employees.

Of course, the company will have the choice to just pay the overtime when they want to make the exceptions for business reasons.  But, to manage overtime pay and not have it be abused or extended beyond financial feasibility and to avoid litigation, these types of work rules will almost certainly be required.  One could also argue that these work rules are necessary to protect the “non-exempt” pharmaceutical representative from being taken advantage of by management.

While I’m sure some reps may be applauding the overtime pay rulings, I see this as an unfortunate situation, fostering a distrustful work environment with a demoralizing outcome for “professional pharmaceutical representatives.”  How disappointing that it has come to this.    mike@pharmareform.com

Visionary, courageous leadership, R & D retooling, and a new business model are usually the answers given for what is needed to resolve the pharmaceutical industry’s current state of dysfunction.  I believe that unencumbered performance and productivity levels of front line employees is the foundation for resolving many of the issues facing the industry today.  And, I am not suggesting industry people are not working hard today.  So what do I mean?

Industry reports, Wall Street commentary, media exposure, and trade journal articles continue to paint a pretty depressing picture for the pharmaceutical industry. Declining revenues, thinning pipelines, prominent blockbuster products coming off patent, an inordinate number of disappointing clinical trial results, and inexplicable regulatory rejections are just a few of the issues haunting Pharma executives.  Collateral damage from mergers and acquisitions, plant closings, downsizings, and continued regulatory and legal consequences from questionable, if not illegal, activities.  The state of the pharmaceutical industry seems more than just a little challenging as a place to work.

In the midst of this challenging environment, pharmaceutical executives need the support and high level performance from their employees more than ever before.  Unfortunately, executive credibility among the rank and file may be somewhat compromised by uncertainty precipitated by their actions of the past and more recently, the pick slips handed to many of their fellow co-workers.  With the continued threat of even more cost cutting and downsizing,  inspiring and maintaining employee morale will take more than visionary leadership and executive cheerleading.

The single biggest factor company executives have to deal with as they try to manage through to prosperity is the psyche of their employees.  What if I’m worried about my job, the financial viability of the company, the stock price (my retirement), more pipeline failures, litigation losses, and bad press?  Can I really be performing at my highest level?  Do I even care?

So, when are people most productive and performing at their highest level?

When they feel good about themselves, their job function, and their company.  When they are well trained and have the expertise to perform at a high level.  When they have the right mindset about who they are, the role they play in what they are doing, and how well they are doing it.  When they feel they can still grow in their jobs, know they can learn and feel good about finding new ways to do it better.  When they don’t feel like their job is a job but rather what they do makes a significant contribution to the good of the company.  When their efforts and performance level are acknowledge in a meaningful way.

How does your company deal with these issues?  Do company executives and managers have a psyche improvement plan?  Do they have the training to help employees create and develop the right mindset and reach these higher levels of performance?  Or,  are they just hoping things will get better?   mike@pharmareform.com

It has taken me a long time and a lot of reflection to acknowledge and appreciate the sage advice my first district manager gave me over 30 years ago.

Here are some of the nuggets of wisdom I found helpful that might be of interest regardless of where you are in your career.  You’ll notice these apply more universally to business than just to the sales position I was in at the time.  They may seem simple and obvious but like many things in life, holding true to their full intent and purpose is much harder than the words might suggest, especially over the course of a career.

Show up: Put in a full day, everyday.  Not just when you feel like it or want to,  but especially when you don’t feel like it or don’t want to.  Most people don’t.

Follow up: check regularly and return phone calls immediately. You don’t know the customer’s sense of urgency, it could be an emergency.  When you promise to do something, send something, or check back … do it… no excuses.

Make one more call: At the end of the day when you are ready to go home, make one more sales call.  This extra effort accumulates into an additional month of sales calls every year.  You never know when that one extra call is going to make a difference for your customer, a patient, or for your incentive compensation.

You get one shot at trust: If your customers quit trusting you, they quit buying from you.  They catch you once in a lie, misrepresentation, or faking an answer, they have no reason to believe you after that.

Be ready for your next job before you get it: This meant that I would have to find the time, energy, and commitment to stretching my development to include subjects and skills beyond my current position. In other words, take responsibility for my own education and career development.  

As busy as we were the days he rode with me, I always found it interesting that he found quiet time to have a cup of coffee to have these discussions.  He made it a point to make sure I was able to listen, commit my complete attention, and engage in the discussion.  This was never during drive time in the car when it might have been convenient and perceived as a good use of time but he knew I would have too many distractions to absorb the salient points he was making.

I feel fortunate to have the opportunity to pass these along to you.  Hopefully they will be useful in the pursuit of your career aspirations.  Perhaps some of you will share some of the more useful pieces of insight, advice, or coaching that you received in your career.

mike@pharmareform.com

We are definitely living in a “Just Do It” global economy that rewards action and speed of execution.   This sense of urgency is reinforced by our instant access to new information on the internet and capabilities such as high speed trading on Wall Street.  Service providers and advertisers reinforce this need for speed and create universal expectations with offerings to get it done faster, quicker, and in less time.  In fact, we can’t seem to get things done fast enough, all in the name of taking advantage of a fleeting opportunities and staying competitive.

Almost nothing of importance in the pharmaceutical industry happens fast yet an incessant sense of urgency almost seems to be a badge of honor and is often applauded by Wall Street.  There seem to be a pervasive need to get things done quickly at pharmaceutical companies to create a competitive advantage (first to market) and potentially increase the commercial opportunity (more time left on the patent to market the product).

But, is having this sense of urgency always a good thing? Let’s take a look at four areas where an indiscriminately managed sense of urgency can lead to inferior, if not disastrous, results for a pharmaceutical company.  A reckless sense of urgency in research, manufacturing, commercialization, and employee development all carry significant potential liabilities.

Looking for quick hits in discovery research, rushing products through clinical development and even quickly killing product candidates early in development can all lead to disappointing results, even for products that might have otherwise done really well.  Missed therapeutic applications, overlooked safety issues, and product failures in late stage clinical trials can be symptomatic of making urgency and speed a priority in research.

Manufacturing operation with a heightened sense of urgency may be able to get up and running quickly or increase production output but run the risk of operational errors, increased waste, and fostering damaging quality issues.

Similarly, when commercial plans and tactics are deployed without due processes in an effort to get it done or to make a change quickly, marketers run the risk of medical-legal compliance liabilities, market miscommunication, misdirection of the sales force, and potentially slow adoption or even instigate rejection of the product by the market.

Also, when individuals who have accelerated promotions to higher levels of corporate responsibilities before they are truly ready, they are probably not thinking about the potential liabilities of premature advancement. Unfortunately, the realities of their inexperience can quickly catch up with them,  resulting in mistakes and poor decisions that have increasingly greater and longer lasting impacts on the company and the people who report to them.

I’m not suggesting the pharmaceutical industry and executives abandon this sense of urgency but rather to apply it discriminately and manage it carefully.  Not everything should have the same heightened sense of urgency and those that do require a commensurate high level of attention to detail with a disciplined, realistic assessment of expectations and potential liabilities.  Somebody needs to be asking; “Are these timelines necessary and realistic?  Why? And For what end result? “  With these timelines; “What are we missing here?” and “How do we mitigate the risks?”   mike@pharmareform.com

So what would you do in the previously described post? If you wanted to continue the sales representative role, could you justify the expense and the return on investment? What would your justification be?

It has to be very tempting for pharmaceutical executives to just:

• Eliminate the traditional sales rep positions entirely

• Hire contract sales (or MSLs) for product launches

• Find non-traditional ways to get product information to key customers

• Increase investment in medical and scientific communications activities

• Provide each customer with a personal customer service rep (phone/internet contact)

• Pay customer service reps hourly with bonus based on customer satisfaction ratings

So why should pharmaceutical companies continuing to deploy sales representatives in the face of such an expensive and daunting selling environment?

Not to be disrespectful but if you peel back all the activity based stuff that pharmaceutical sales representatives do or have done (sample delivery, lunch and learns, distribution of product brochures, etc.) it really boils down to keeping physicians informed about the company’s products, creating and maintaining a positive brand image, and understanding what individual physicians think about the products and how they fit into their practice.

Marketing has tools and tactics to accomplish many of these same objectives for the mass market.  None of them however, is as effective as sales representatives can be when it comes to intervention with individual physicians.  Making sure individual physicians are aware of products, stay current with their appropriate use and correcting misinformation or misperceptions require personal interactions and feedback.

Unfortunately, if you justify the sales representative role as a way “to drive sales” you may have discovered the reason pharmaceutical sales representatives are less welcome in a lot of offices today and why, when you do get in, you don’t get much time.  When you focus on “driving sales” you have a different call.  Your mindset and presentations change and the dynamics of the interaction change as well.    mike@pharmareform.com

In the last post we discussed how Big Pharma might have avoided having to lay off so many of their loyal employees had they done a better job of managing their business for the long-term.  Well, easy to look back and criticize but how about looking forward?

Here are some things for Big Pharma executives to consider as they restructure for the future:

• No single blockbuster product can fix a dysfunctional pharmaceutical company.  It can only buy time to make the inevitable difficult but necessary changes.
• The pharmaceutical market will become increasingly global with less regional variation in treatment practices, regulation, and pricing.
• Unsubstantiated value of seemingly unjustifiably high prices will be met with market rejection, outright price controls, government price negotiations, and higher rebate expectations.
• Relative to Big Pharma pipeline needs, Biotech will have a finite supply of clinically meaningful differentiated innovative products available for acquisition
• Traditional marketing and sales activities will have little impact on prescribing behavior which will be more influenced by scientific rationale, demonstrated meaningful clinical benefit, and the impact on overall healthcare costs of treating the patient
• Prescribing will be increasingly managed with “best practice treatment guidelines” prompted and monitored for compliance through e-prescribing technology
• Electronic medical records with medical information systems driven algorithms will allow for real world assessments for determining relative therapeutic benefits and healthcare cost implications of treatment options
• Financial incentives, cost management benefits, and more effective products and programs will drive a revitalized interest in making preventive medicine and medically prescribed life style changes a priority
• Product and treatment assessments will be more rigorous, more sophisticated, and less easily influenced by Pharma companies unless they have  compelling real world clinical data to support their claims
• Comparative efficacy will become a regulatory and healthcare market expectation
• Therapeutic options will include stem cell, gene therapy, and synthetic biology- derived treatments.  Some may ultimately eliminate the need for chronic treatment in small molecule mass markets.
• Drug-device and delivery systems will target treatments to specific disease targets, increasing efficacy at lower doses while reducing the potential for side effects and adverse reactions
• Companion diagnostics and personalized medicine will be a regulatory, market, and healthcare provider expectation
• Reliable, high quality manufacturing that ensures consistency and safety will be a differentiating feature for pharmaceuticals, especially for generic drugs
• Affordability will eventually mean denying insurance coverage (private or government) for high priced drugs with marginal therapeutic benefit, especially those with minimal end of life benefits
• To maintain profitability under intense pricing pressure Pharma companies will be forced to dramatically reduce their operating expenses (well beyond their current thinking)
• Big Pharma companies that maintain their large organizational size will have less pricing flexibility and will be hampered in their ability to deliver innovation, ensure customer satisfaction, and avoid regulatory and legal missteps

So what to do now:

• Pharma recruiting, training, and talent management must improve with a focus on expertise, competence, and integrity.  Hire and develop “the best” (e.g., world class scientific expertise, visionary leadership with integrity, highly skilled operations personnel) rather than just finding somebody who has done or can do the job.
• Focus research on comprehensive understanding of diseases rather than just exploiting chemistry and disease targets.  Strive for preventions and cures rather than just developing another compound or molecule to get to the market.
• The number of pipeline projects is only meaningful in the context of new market expectations.  Products that can not deliver clinically meaningful differentiation should be objectively reevaluated for commercial viability in a more demanding healthcare market. Fewer development programs will make it past this assessment if companies are truly objective and critical in their evaluations.
• Pipeline target product profiles should define the potential “comparative efficacy“ and the meaningful clinical benefits relative to other therapeutic options
• Identify and develop plans for securing the specific data needed to substantiate the claims of efficacy, safety, and “value”.  This is not just to meet regulatory requirements but to withstand rigorous, more sophisticated managed market expert assessments.
• Make companion diagnostics a requirement for pipeline projects
• Develop managed market expertise throughout the organization not just as commercial function.
• Develop healthcare system collaborations that allow for understanding, designing, and executing comparative product and treatment assessments in different electronic medical records systems
• Assume none of the traditional marketing and sales tactics will work (including social media) and then prepare plans for promoting your products in this new healthcare market. For example, think about how electronic medical records and best practice treatment guidelines will influence e-prescribing.  How will you educate a physician population without traditional tactics?
• Assume that even your most aggressive cost cutting programs in operations will not be enough.  Root out legacy, non-essential expenses as if you were facing bankruptcy.
• All non-core competencies should be critically evaluated as outsourcing opportunities
• Invest in expertise, competence, integrity, and high performance systems and equipment to ensure consistent high quality manufacturing (if the company plans to continue manufacturing as a core competency). Invest and retool your processes now for the future.

Critical Success Factors

• Innovative new products with companion diagnostics
• Robust real world data to support clinically meaningful differentiation
• Organizational managed market expertise
• Talent management focused on expertise, competence, and integrity
• Low cost, efficient yet reliable operations
• Commercial programs designed to help healthcare providers and patients realize the full value of the company’s products
• Become a trusted and credible source of disease and treatment information
• Patient well-being must be a priority (e.g., patient safety more important than negative impact on sales or potential implications for litigation)
• Leadership and organizational integrity

The intent here was not to draft a business plan but rather to identify some of the predictable changes of the evolving new healthcare market that will impact Pharma companies.  This was merely to demonstrate that it is possible to anticipate the changes we see evolving in the market and prepare for them if we look forward and take action now.

Now, I’m sure some of you are thinking… ” do you think we are idiots? You made me read all this for nothing.  Obviously, the industry and its executives are doing this.  We have strategic planning groups of MBAs working full time on this stuff.”

Well, I’m pretty sure industry executives thought they were taking care of the future back in the mid-1990’s as well.

mike@pharmareform.com

Layoffs, divestitures,  and closing of facilities continue in the pharmaceutical industry and I don’t believe we are even close to seeing the end.  This is horribly painful and almost inhumane in some cases.  Big Pharma executives could have and should have seen that their business model, product pipelines, and more importantly, their balance sheet projections were not sustainable in the evolving healthcare market that was becoming increasingly managed, more cost conscious,  and more demanding for innovation, clinically meaningful differentiation, and proof of value (think about the recent public review of Provenge^®).

I believe the current layoffs are in large part a result of Big Pharma mismanaging the cash they were generating over the past two decades.  Innovation in R & D was not critical for market success when you could “tweak molecules” and drive sales of even marginally differentiated products with aggressive, and wastefully expensive marketing and sales tactics.  Efficiencies in operations were not a priority when you had so much cash coming in that the modest  savings generated by pseudo cost reduction programs seemed inconsequential and not worth the effort.  And despite laboring through annual departmental political battles for headcount requests, cash rich Big Pharma continued to add staff while still delivering Wall Street acceptable operating profits.

You can’t blame the economy for historically bloated operating expenses, diminished R & D productivity, or the billions of dollars spent on litigation, fines and settlements for questionable marketing and sales activities.  The patent cliff and the increasingly managed evolving new healthcare market were not only predictable but their impact could have been mitigated had executives worried more about long term strategies rather than focusing on meeting quarterly numbers to appease Wall Street and ensure their own personal financial security.

But now Big Pharma has no choice. There is no way for the slowing revenue growth to support the expensive, inefficient operating infrastructures they have accumulated over the last several decades.  Unfortunately, and even unfair perhaps, this means their front line employees will bear the brunt of the mismanagement.  Even more unfortunate, is the loss of jobs at Big Pharma at a time when unemployment is at an all time high and the global economy is struggling to recover.

Even without 20/20 hindsight, I believe the current situation was avoidable.  Had Big Pharma pursued innovation in the mid-1990’s rather than relying on “tweaking chemistry” just to get products to the market, managed their expenses when cash was plentiful, and had the foresight to begin adjusting their strategies and workforce for the evolving new healthcare market rather than trying to be the biggest Big Pharma you would not be seeing the layoffs we have been experiencing.

So what does Big Pharma need to do to make sure they realize the benefits of this painful but necessary downsizing?  We’ll discuss that in the next post. mike@pharmareform.com

I would say that from the feedback, comments, and tone of comments I have received pharmaceutical sales representatives definitely hate scripted presentations.  Here’s my take on it.

I should have made a point that pharmaceutical sales representatives should not be expected to deliver the exact same script verbatim to the same physicians more than once. I don’t believe there is any way to make the exact same scripted presentations not sound disingenuous.

If your company feels that compliance with a Corporate Integrity Agreement mandates tightly scripted sales presentations, then those responsible for drafting those scripts must do a much better job of crafting them as prescribed in the previous blog.

Companies and commercial management that feel scripted presentations will be more impactful than letting reps “wing it”  must also do a much better job of crafting the presentations, making them much more rep and physician-friendly as prescribed in the previous blog.

Perhaps I got this from my first District Manager ( one of the best I ever met in the industry)  but I am a firm believer that for product presentations there is always “a best way to say it.”  Getting a scripted presentation right is really hard work and requires an iterative process to get it right.

I also know that when I am shopping to make an important purchase I prefer a sales person who is well prepared with a carefully crafted, well thought out, information packed, and smooth flowing logical presentation (including answers to my questions and objections) than somebody who just “wings it.”  You may nail it occasionally by “winging it”, but I believe you will be more consistent in delivering important information and come across as more professional with a well scripted, prepared presentation.   Again, I also believe the more you practice delivering the presentation the less it will sound robotic and monotonous.

My impression from the feedback is that the scripted presentations pharmaceutical sales representatives are being asked to deliver do not meet the quality of presentations I have referred to in these posts and no amount of practice will make them better.   That being the case,  I would probably hate them as well.   mike@pharmareform.com

Many pharmaceutical companies have been divesting assets and downsizing operations as they try to accommodate the impending patent cliff, disappointing research productivity, diminishing impact of traditional commercial tactics, and the slowing revenue growth.   Given the state of the industry and in light of the market changes taking place,   I also recommend in Pharmaplasia™  that pharmaceutical companies downsize their operations.   Despite being painful to employees (and their families)  and as disruptive as it might be for the company, it in many cases is the absolute right thing to do,  but how you go about doing it matters.

Criteria used to assess what gets divested or downsized include things like poor or mediocre past performance, lack of perceived need, and the magnitude of the potential expense savings.  In the spirit of fairness (especially when it comes to employee relations issues) and to satisfy the quantitative justification needs of management, numbers often drive the decision making process.  As strategic as companies might try to be,  a numbers-based decision making process will lead to collateral damage with unintended consequences including:

• Loss of  expertise
• Loss of management experience
• Disruption of business relationships

Unfortunately, these are the very business assets pharmaceutical companies need and can least afford to jeopardize as they prepare for the evolving new healthcare market.

But you might be thinking that companies and management are smart enough to avoid these pitfalls by being analytical about their choices, right?  Well, let’s take a look at a few examples of where the process may not yield the results expected and could be detrimental to the company.

• Early retirement packages often accommodate employees with years of experience, including seasoned managers, scientists with expertise, and employees (including sales) with valuable long standing business relationships.  How many of your best people can’t resist the offer and walk out the door?  Remember, your best people are not afraid of being unemployed for too long if they take your offer.
• How about when the numbers  suggest eliminating sales representatives and territories with lagging sales and diminishing physician access.    Are less effective and even poorer performers being protected by having better sales numbers because their territories are in a less managed market…today?  Are your sales numbers a real reflection of the experience, expertise, and effectiveness of your sales representatives and managers?
• What about a manufacturing operation with a perfect track record for production that has comparatively higher costs driven mostly by the expenses associated with a larger, more experienced quality staff and more operational training.  Is this staffing and training perceived to be quantitatively excessive and unnecessary in the context of downsizing expectations?  Have you factored the complexity of their manufacturing and the impact (and expense) of a recall compared to the other production facilities? If so, do you eliminate the management experience, the staff (operational expertise), or the training?  What numbers do you use for that decision?

The point is that divestitures and downsizing while necessary in the current business environment for most large pharmaceutical companies will have collateral damage that goes well beyond the personal impact such decisions have on employees and their families.  Also,  a company’s assets may not be accurately reflected in the numbers used for the analysis of what to keep and what to let go.  Companies that are aware of potentially losing these hidden assets may ultimately make the same decisions but they also might look to find ways to avoid the loss or at least mitigate the impact rather than just accepting collateral damage as a part of the process.   mike@pharmareform.com