GSK's Garnier Gets Snippy at Marketing Costs

GlaxoSmithKline is playing it characteristically cool about any possible plans to scale back its sales force in the manner of AstraZeneca, Pfizer, and other industry giants. But it is forging ahead with cost-cutting on its marketing side, largely snipping away at its agency attachments.

The company outlined its "Next Generation Now" marketing model with its 2006 financial results. The move calls for consolidating all of its professional advertising--not including direct-to-consumer ads or public relations--under a single holding company. It also institutes "key changes for agency reviews" and "financial parameters and resource guides" to streamline the account-management process and hold down rates.

GSK launched the model in the fourth quarter of last year when it hired a number of Interpublic Group agencies for some of its biggest growth drivers, including diabetes drug Avandia (rosiglitazone) and asthma drug Advair (fluticasone and salmeterol inhalation powder). The bulk of the work went to ad firms FCB Healthcare, Regan Campbell Ward McCann, and Torre Lazur McCann. All told, GSK spent just under $1.5 billion on advertising last year, an increase of three percent over 2005.

On the sales side, GSK pointed to a customer-service initiative called Worldwide Sales Force Excellence, which trains drug reps to deliver information in a "when," "why," and "how" format--often supported by visual aids of clinical data. It also set up a certification program, which tests reps on their product knowledge, and its annual report noted that "scores were consistently around 98 percent."

But CEO Jean-Pierre Garnier was coy when a reporter asked whether he planned to reduce the firm's headcount--as many competitors have already done. "We are not going to say on the day of a press conference that we're going to fire 3,000 people--that's not good management," he said. "We closed 28 manufacturing sites, but you never hear about that--we just do it. It's important to get on and concentrate on the R&D."

Garnier at no point ruled out the possibility of layoffs, however, and analysts offered contradictory opinions of whether GSK might--quietly, of course--follow the trend. While some have described industry's staffing of drug reps as an "arms race" that is finally being demobilized, others are quick to point out that GSK--with its ten and counting CEDDs (Centers of Excellence for Drug Discovery)--isn't facing the same pipeline woes dogging much of Big Pharma.

Its top product, Advair, brought in about $6.4 billion last year, an increase of 11 percent, and is expected to get a boost from new data this quarter. In addition, GSK's blockbuster diabetes franchise grew 25 percent to $3.1 billion. Here, too, the company is promoting the results of its ADOPT study, which supports Avandia as a first-line treatment. The company's own market research suggests that 92 percent of physicians expect that the study results will have at least a moderate impact on their prescribing habits.

Sarah Houlton contributed reporting to this story.