Detailing ROI is falling

According to a new report issued by London-based Datamonitor, sales forces are growing in size, but sales force return on investment is decreasing. The report reveals that physicians have less time to see sales representatives but are contacted by an increasing number as pharmaceutical sales forces expand. Therefore, reps are spending an increasing proportion of their time trying to gain access to physicians rather than actually detailing. As a result, the return on investment in the sales function is declining.

However, according to Datamonitor, rather than increasing the efficiency of their existing sales forces, many companies are seeking to increase their share of voice simply by increasing their sales forces. This fuels further sales force growth by competitors and sets up a cycle of accelerating sales force growth coupled with falling ROI.

More reps in the field

Between 1999 and 2001, 64% of the 40 sales forces profiled by Datamonitor increased in size, with an average growth of 21%. In particular, five pharmaceutical companies profiled in the United States increased their sales forces by an average of 42%. Sales force growth is typically attributed to the need to support new product launches and to maintain the company's share of voice in highly competitive markets. The result is even greater competition for the time of increasingly pressured physicians. Seventy-seven percent of companies interviewed by Datamonitor were planning to expand their sales forces further by 2005, so this competition will only increase.

Datamonitor also found that, between 1995 and 2000, the amount of time spent with sales reps by the average U.S. physician decreased from 12 minutes to seven minutes per day. Over the same period, only 20% of physicians increased the number of reps seen daily, despite the significant growth in total sales force head count, implying that each rep is making fewer successful physician visits. Meanwhile, large U.S. practice management companies are increasing the pressure on physicians to reduce the time devoted to activities not directly related to patient care. As a result, sales force ROI is in decline as reps spend more time attempting to gain detailing appointments than making productive visits. According to Datamonitor, if ROI is to improve, companies must identify new ways of meeting the needs of their target audiences and must tailor their detailing programs accordingly. Companies that fail to improve their productivity will experience further ROI decline if sales forces continue to grow at existing rates.

A global view

According to the report, many pharmaceutical companies are not structuring their sales forces optimally, following country-specific factors first, instead of their marketed portfolio.

Datamonitor's best practice analysis indicated that companies' marketed portfolios should be the primary influence on sales force structure. While the majority of companies profiled closely match their structure with their marketed portfolios, Datamonitor found that small and medium-sized pharmaceutical companies often do not structure their sales forces in the optimum way.

Datamonitor Analyst Neal Hansen commented: "With country-specific elements superimposed on an optimum global structure, each sales force can meet the specific needs of its target audience both efficiently and effectively." PR