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FINS: Why Selling Drugs Will Never Be the Same

By Beecher Tuttle Ten years ago, the pharmaceutical representative was the rock star of the traveling sales world. A healthy economy, loose regulations on entertaining doctors and a steady stream of patent-protected "wonder pills" helped to open the door to almost any physician's office, making the profession of big company drug representative desirable for many job seekers. That perception still lingers, but the bloom has fallen off the rose considerably. The pharmaceutical sales paradigm has shifted drastically, and not just because of the economic slowdown, the U.S. Supreme Court upholding of "Obamacare" and more-strictly enforced rules concerning how salespeople can wine and dine physicians. Drug reps, who previously didn't need a science background, have evolved from influencers to educators, with very different responsibilities. There are also a lot fewer of them. If you don't have a medical background and are looking for a long, steady career in incentive-based sales, you may want to look elsewhere, or at least not stay in the business for too long. The growth of generics and increased emphasis on marketing has cut deeply into the ranks of sales folks, said Dr. Adam J. Fein, president of Pembroke Consulting, a pharmaceutical management advisory firm, and author of pharma blog Drugchannels.net. Inexpensive, no-name medicines don't need promotion while marketing directly to consumers has enabled drug makers to introduce new products with minimal manpower, said Mark Cannistraro, president of Apex Executive Recruiting Inc., a California-based recruiting firm that specializes in the pharmaceutical space. Drug companies also have switched to developing specialty medications, targeting conditions such as cancer, rheumatoid arthritis and multiple sclerosis, Dr. Fein said. Such drugs are marketed to smaller patient populations and sold to rheumatologists, oncologists and other medical consultants, rather than primary-care physicians, noted Dr. Fein, who said he believes specialty medications will make up as much as 50% of the drug market within the next few years. Even more targeted than specialty drugs are what are known as orphan drugs, highly specialized medications that treat diseases that affect as few as 3,000 patients worldwide, according to Jessica Cotrone, director of corporate communications for the human genetic therapies business at Shire PLC (SHP.LN, SHPGY), a biopharmaceutical company based in Dublin with a focus on orphan drugs. These drugs can cost as much as $300,000 per year per patient. Such treatments are generally immune to industry pricing pressures and can be expedited through the Food and Drug Administration's approval process, said Corey Ackerman, senior partner at Cornerstone Search Group, a New Jersey-based pharmaceutical and biotechnology executive search firm. Unfortunately for pharmaceutical reps, orphan drugs require an even-smaller sales force than do specialty drugs. "Because of this small patient population, we are able to treat patients with a minimal infrastructure, including sales forces," Ms. Cotrone said in an email. The overall push into specialized medication and orphan drugs has forced drug reps to become more knowledgeable about diseases as well as how to navigate the nuances of the health-care system, Ms. Cotrone said. Pharmaceutical companies want job candidates who can not only understand the technical background of a given drug, but who are also experts on the intricacies of the evolving health-care system and its commercial issues. "The era of sending out a massive sales force is ending," said Dr. Fein. "The need for more technical medical knowledge is growing--the need to understand more of the commercial issues like reimbursement, not just the efficacy and safety of drug." Unsurprisingly, over the last year major pharmaceutical companies such as Merck & Co. (MRK), Pfizer Inc. (PFE), AstraZeneca PLC (AZN, AZN.LN) and Novartis AG (NVS, NOVN.VX) have purged a significant percentage of their work forces, with much hiring being done by smaller pharmaceutical companies, said Mr. Ackerman. Merck laid off more than 10,000 employees--many of whom were salespeople--in the two years following its 2009 acquisition of rival Schering-Plough. In February, AstraZeneca disclosed that 7,300 employees will be let go by 2014. This number includes the 1,550 job cuts the U.S. business reported in the fourth quarter of last year, Tony Jewell, an AstraZeneca spokesman, told FINS by email. Nearly 75% of the cuts involve salespeople. While smaller companies are hiring, those jobs don't have the prestige and salary provided by the large companies, said John Burkhardt, managing director of MedZilla, a job board and networking site with a niche focus on the pharmaceutical space. "If a company offered a top sales rep less than six figures years ago, the candidate would have laughed at them," Mr. Burkhardt said. Today, unemployed sales reps are often relegated to accepting positions with much smaller base salaries. A secondary issue for sales reps moving to smaller firms is that acquisitions have become a norm in the industry. The purchasing company will often retain much of the technical staff from the smaller firm that it acquires but will regularly purge much of the sales staff. In addition, most acquiring companies retain sales reps based on tenure, not necessarily performance, said Mr. Cannistraro. Moving from pharmaceutical sales to a similar position in another industry is easier said than done, due mainly to the perception of the role by hiring managers in competing spaces. "The rumor on the street is that pharma reps are lazy," said one medical-device company manager who asked not to be named. Some pharmaceutical reps are known to be rather complacent, people only interested in working eight-hour days, said Mr. Cannistraro. That theory may have been exacerbated when sales reps at a number of large pharmaceutical companies sued their employers for the right to earn overtime pay. The Supreme Court ruled June 19 that pharmaceutical companies are exempt from paying their salespeople overtime. Good drug reps--those who keep doctors accountable and consistently hit their numbers--do have opportunities to grow as salespeople in other industries. Those reps who hit their numbers early and show the aggressiveness needed to succeed in a more-traditional outside sales environment can find opportunities elsewhere before being typecast, Mr. Cannistraro said. Write to Beecher Tuttle at beecher.tuttle@dowjones.com.

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