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Novartis is the latest pharma company to move away from the traditional sales model of blanketing sales reps for one drug across the nation. The company is restructuring its force (and cutting jobs) to focus on a regional sales model.
Novartis announced on Monday that it would eliminate 550 sales positions in a cost-cutting move designed to restructure the way the drug firm sells medication. This comes on the heels of a quarterly report that showed the company’s third quarter net income dropping 69 percent, due in part to the purchase of Alcon.
A spokesperson for the company explained that the job cuts are not necessarily layoffs-Many of the positions are vacant jobs that haven’t been filled.
The sales reorganization is part of Novartis’ plan to build a new commercial model in the United States. The drug firm is moving from what it calls a “once size fits all” national model of mirrored sales forces to a tailored sales model that will reflect different geographical regions. Rather than being broken down by brand, sales teams will be multi-brand teams trained to sell to local customers.
“The commercial model change allows us to modify our approach as the US changes,” a Novartis executive said during an analyst call. “As the US becomes more restrictive on a market-by-market basis, this regional model allows us to make modifications.”
Earlier this year, Novartis conducted three pilot programs in Michigan, Massachusetts, and Oregon to determine how well this new sales strategy will work. Novartis Pharma CEO Joe Jimenez told Pharma Exec that the programs turned out better than expected.
“When I'm in those markets and I talk to our sales reps, they have a much higher level of satisfaction, because these are people that have been sitting in physician’s office in these restricted markets waiting for an hour for ten seconds with the physician-and they do that ten times a day,” Jimenez said. “Now there’s new access based on working with the customers at a different level.”
Each region will have a general manager who will oversee reps and be accountable for overall performance. The restructuring goes into effect early in 2009, and will cost about $20 million, which should return about $80 million annually starting in 2010.
Finally, the company announced several leadership changes. Here’s the breakdown:
Novartis appointed Joerg Reinhardt chief operating officer, Andrin Oswald was named head of vaccines and diagnostics, George Gunn was named head of consumer health, Andreas Rummelt was appointed group head of quality assurance and technical operations, Jeff George was promoted to head of Sandoz, and David Epstein will lead the innovative molecular diagnostics group.