Healthy Skepticism Library item: 17046

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Publication type: news

Russell J
Lilly changes course as it shrinks its sales force
IndyStar.com 2010 Jan 17
http://www.indystar.com/article/20100117/BUSINESS/1170324/Lilly-changes-course-as-it-shrinks-its-sales-force'

Abstract:

As drug maker rethinks its tag-team approach, some reps are being left out in the cold

Full text:

Keith Fourcade, a sales representative for Eli Lilly and Co., was stunned when he learned in November that he was about to lose his territory as part of a company restructuring. He had three months to find another position in the company or turn in his sample case.
“I’ve always believed the salesperson was the backbone of the company, and I had such good numbers,” said Fourcade, whose job was to visit doctors throughout Baton Rouge, La., and talk up the benefits of Lilly’s neuroscience drugs, including Cymbalta and Zyprexa.

With 20 years of pharmaceutical sales experience under his belt, including 21/2 years at Lilly, Fourcade thought he was near the top of his game. He was pulling down $115,000 a year and was driving a company car. He had won a company “turnaround award” last fall for boosting market share for all his products and raising his territory in company rankings. At his last evaluation, Fourcade said, his boss told him he was doing a nice job and gave him a 6 percent raise.
But now, like thousands of other pharmaceutical sales representatives across the country, he is looking for another job.
In one of the largest industry restructurings in years, just about every one of the nation’s major drug makers is shrinking its sales force. The move is a stark turnaround from years of bulking up their sales ranks and blitzing doctors’ offices with samples, literature and free lunches.
Increasingly, doctors have gotten tired of the nonstop sales visits, which have cut into their time to see patients. These days, more than a third of medical schools require sales reps to have an appointment before calling on physicians or residents, according to the American Medical Association. About one in four physicians works in a practice that refuses to admit sales reps. Of those who do see reps, nearly half require an appointment, up about 23 percent from 2008.
“It just got out of hand, with the number of people calling on these doctors every week,” said Linda Bannister, a drug analyst for Edward Jones in St. Louis. “It wasn’t a good use of resources anymore for the drug companies.”
Just about any doctor can tell a story of sales reps parading through their waiting rooms or hospital corridors, asking for a minute or two to pitch their company’s products, and get the doctor’s signature as proof of a visit, while patients are made to wait.
Dr. Carey D. Chisholm, director of the Indiana University-Methodist emergency medicine residency program, got so fed up with the visits that he banned sales reps years ago.

“The information that they bring is always biased, essentially promoting their product. Otherwise they wouldn’t be there,” he said.
So now drug companies are revising their playbooks and cutting jobs. It’s the latest overhaul in an industry that is feeling squeezed, as regulators are approving fewer new drugs, pipelines are turning out fewer new medicines and payers are resisting price increases.
Many drug makers, including Indianapolis-based Lilly, also are pulling their belts tighter in anticipation of losing billions of dollars in annual revenue in coming years, as many blockbuster products lose patent exclusivity and face competition from low-priced generics.
“These are tough times in the industry,” said Les Funtleyder, a drug analyst at Miller Tabak & Co. in New York. “If you’re a drug company, you have to match personnel expenses with your revenue. It’s basic math.”
Some consultants say drug companies will have to continue to change their sales models, finding new ways to win over patients, doctors and payers. A recent study by PricewaterhouseCoopers calls the Big Pharma sales model “increasingly ineffective” and warns that by 2020, even productive sales reps will be obsolete.
So one by one, the big drug makers are rethinking their old ways and, in the process, chopping sales jobs. In December, Lilly said it had shed 25 percent of its U.S. sales force in 2009, representing about 1,000 employees and contracted workers. Other companies, including Pfizer, Merck and AstraZeneca, have made similar announcements.
All told, the number of U.S. drug sales reps has fallen by 10 percent from its peak of 100,000 in 2005, according to ZS Associates, a drug consulting firm. And that figure could continue falling by tens of thousands of jobs, perhaps to as low as 70,000 by 2015.
With fewer people, some drug companies are coming up with a new plan of attack.
At Lilly, that plan includes reducing the number of reps who call on a single physician. In the past, Lilly sometimes sent three or four reps to call on the same physician each month or two.

But in the summer of 2007, the company held a four-day “Vision Jam” with all employees to listen to problems and suggestions. Over and over, sales reps said doctors were complaining about the high volume of sales calls from numerous reps.
“The old model just didn’t work anymore,” said David Ricks, president of Lilly USA. “Most pharmaceutical companies, including Lilly, were focused on delivering a structured message. We were focused on how many times could we communicate our message to our customers.”
The new model, Ricks said, is based on pulling back — both in the number of reps calling on a single doctor and the type of message they deliver.
The company decided to send just one rep to call on each doctor, and to spend more time listening than talking. Rather than delivering a rapid-fire speech on the drug’s benefits, the reps are now instructed to ask questions about what the doctors need.
The company began a pilot program in Ohio and Wisconsin to test the concept and liked how it worked. Beginning this month, Lilly rolled out the plan nationwide.
But that meant that territories that used to have three or four Lilly sales reps per product group would have fewer. And that would mean pink slips for some.
Fourcade, the Louisiana rep who once played linebacker for the New Orleans Saints, was told he could apply for an opening elsewhere in the country. But with a young family and deep ties to his community, he decided to leave Lilly and look for another job close to home. He said he was shocked that Lilly decided to cut so deeply.
“They kept telling us, ‘Everything is fine. Your job is secure. Don’t worry about it,’ “ he said. “Suddenly, they began chopping. I feel they should have been more open about it, told us exactly what was going down. It was hush-hush for so long.”
But some Lilly reps who kept their jobs said the company’s shift is for the better. Lori Wopshall, a senior executive sales rep in Indianapolis, said physicians she calls on don’t want to talk to three or four Lilly reps, just one.
“I just truly see the value in one point of contact between Lilly and physicians,” she said.
“One person can listen to them better. One person is more accountable.”
In the meantime, it could take months or years to persuade doctors who have slammed their doors on drug reps to reopen them.