As good as it gets: 1997 sales compensation report

March 1, 1998

Pharmaceutical Representative

A flurry of activity in pharmaceutical sales hiring in the last year to two years has created a favorable compensation environment for salespeople. As companies compete to fill and retain sales forces, they are educating and investing more in their representatives.

A flurry of activity in pharmaceutical sales hiring in the last year to two years has created a favorable compensation environment for salespeople. As companies compete to fill and retain sales forces, they are educating and investing more in their representatives.

Salespeople new to the industry find they have the luxury of weighing generous, competitive bids from rival companies, while sales reps with experience are discovering that opportunities within their own companies - and throughout the industry - are expanding considerably.

"Companies are very cognizant of the need to have attractive base salary and compensation packages," said Gary Tubridy, vice president of health care industries for marketing and sales consulting group The Alexander Group, Scottsdale, AZ. "Generally speaking, the [compensation environment] is as good as it's ever been."

Some believe that base salaries are higher than they have been in years past, but Pharmaceutical Representative's annual sales rep compensation survey suggests that commission and/or bonus structures have changed more in recent years.

In Pharmaceutical Representative's 1995 survey, 53% of reps said that commission and/or bonus comprised 10% to 29% of their total compensation package. In 1997, 64% of reps reported the same compensation package breakdown.

Meanwhile, the majority of sales reps reported that average annual gross incomes remained roughly the same.

Interestingly, 16% of reps gave no response to the bonus/commission question in 1995, whereas only 1% failed to respond in 1997. Does this mean that companies, in order to combat rivals' alluring promises of greener pastures, are making greater efforts to educate their salespeople about their compensation packages? It's possible.

According to industry experts, sales force growth should continue across the industry through 1998. When Sales Staff Surveys, a division of the Philadelphia-based Hay Group Inc., surveyed 30 pharmaceutical companies if they planned to add new territories in the year ahead, 70% responded "yes."

Satisfaction keeps pace with pay

Job satisfaction among reps is up as well. In recent surveys of reps in 35 to 40 pharmaceutical companies, Sales Staff Surveys found that the overall satisfaction level is upwards of 95%.

Exciting product portfolios, promising regulatory conditions and a dynamic health care environment have pharmaceutical reps feeling more confident and rewarded professionally.

"Satisfaction is up because the pharmaceutical representative has an armament of efficacious products," The Alexander Group's Tubridy explained. "It puts reps in a better position to make calls on physicians and add value."

Another reason why some sales reps may feel optimistic and proud about their profession is the pending flood of new medicines.

According to the Washington-based Pharmaceutical Research and Manufacturers of America, U.S. pharmaceutical companies are expected to invest more than $20 billion in research and development in 1998, nearly 11% more than what they invested in 1997. In the past, increased research and development spending has resulted in more products receiving FDA approval and reaching the marketplace.

So, although big compensation numbers are glamorous reasons to leave or stay in a position, reps are wise to look at long-term prospects over short-term rewards when considering a jump. They should also remember that their own companies are probably growing and offering opportunities at rates comparable to those of other companies.

"There are great opportunities for young people entering this industry," said Larry Gabe, vice president of Sales Staff Surveys. "And unlike three or four years ago, there is a lot of pride today." PR

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