Sales Management: Starting from Zero - Pharmaceutical Executive


Sales Management: Starting from Zero
Sales force productivity is best captured in increments—not quotas.

Pharmaceutical Executive

There's another good reason to consider this new approach to quantifying sales force productivity. Pharma companies all allocate sales calls to doctors based on historic prescribing patterns, either for a specific brand or for the category. Heavy prescribers attract more sales calls, sometimes in proportion to their volume.

Here's the problem with that practice. Companies assume that if they make one additional call on a doctor who wrote 100 prescriptions for the brand—or the category—and one additional call on a doctor who wrote 50 prescriptions for it, they will get the same percentage increase from both of them. This approach inaccurately assumes that all doctors' responsiveness to detailing will be the same. In contrast, the zero base line system calculates each doctor's unique responsiveness to the product being detailed by simulating his or her underlying behavior.

Profit Potential After analyzing the outcomes of current sales call practices, Princeton Brand Econometrics has concluded that productivity increases of 25 to 75 percent are possible for large pharma companies, using the methods outlined here. For smaller companies, two- or three-fold productivity increases have been seen.

A company's sales force is normally its second largest expense item after R&D. It is the primary vehicle for converting R&D investments into profits that will fund the next round of drug discoveries. Ten years ago, blockbusters were regularly popping up from new product pipelines and companies did not need to maximize sales force productivity to generate necessary returns. Today, it's a different story.

Issues such as better sales training, better recruiting, and establishing better relationships with doctors (unless these relationships result in more frequent visits), although laudable, are unlikely to have a major impact on most businesses. If companies had mediocre recruiting, mediocre training, and mediocre doctor relationships, there would likely be competitive leverage gained by moving from mediocre to excellent. However, because companies seem to be closer to excellent than mediocre in these areas, improving them doesn't offer overwhelming potential for sales gains.

Brad Patten
On the other hand, there are clear quantifiable opportunities of financial significance for improving sales rep productivity through better resource allocation—an area where the gap between excellent and mediocre is much greater. .

Julia Kelly
Accounts Forest Laboratories signed a multi-year contract with Dendrite International for help desk and other support of its mySAP customer relationship management software, currently used by 2,800 of its field reps. Target says Auxilium Pharmaceuticals' 100 reps and managers will switch to its sales force automation software and Xanodyne Pharmaceuticals will use its mobile sales effectiveness suite Ventiv Health announced two deals by its Pharma Services division (VPS). Bayer's diabetes care unit will be supplied with a sales force to promote the Ascensia line of diabetes care products and services to retail pharmacists. And, under a multi-year agreement, Bristol-Myers Squibb will obtain a sales team of at least 375 reps to focus on the promotion of Cefzil (cefprozil) and Tequin (gatifloxacin).

Andy Baldwin
People Ventiv Health announced the addition of two directors to its board: Per GH Lofberg, president and chief executive officer of Merck Capital Ventures, and Mark Jennings, managing partner and co-founder of Generation Partners, a private investment firm. Ventiv also promoted three executives within its VPS division. Brad Patten will become vice president of marketing and corporate development; Julia Kelly will serve as executive director, marketing; and Andy Baldwin was appointed to the senior director of network services position. Shelli Field was appointed president of PDI's TVG marketing research and consulting business unit. Most recently, Field was vice president at Research by Design.

S. Kent Stephan is CEO of Princeton Brand Econometrics. He can be reached at (609) 987-1111.


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