Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



GSK's New Drug Marketing Model: Pharma Reps As Educators, Not Sellers

Don't let it get away!

Keep track of the stocks that matter to you.

Help yourself with the Fool's FREE and easy new watchlist service today.

A GlaxoSmithKline (NYSE: GSK  ) pharmaceutical sales representative these days still works to get in front of a physician's desk to discuss GSK drugs. But their conversation today is vastly different compared to one year ago. That's by design, said James Millar, GSK's vice president of oncology marketing and sales.

Pharma rep compensation has historically been sales-based: Sell more drugs, make more money. Doctors knew a rep was incentivized to sell more to make more, Millar said.

But GSK is aiming to remove financial incentives from the equation. Pharma reps still receive a mix of salary and bonus. But GSK replaced individual sales targets with new targets measuring the overall performance of the sales team and feedback from customers.

The new system also evaluates a rep's scientific knowledge as well as the ability to communicate that information. Millar, who helped design the new GSK program, said GSK's goal isn't necessarily to sell as much medicine as possible. The goal is to communicate both benefits and risks of a drug.

"That's where, in the pharma industry, we differ from commercial packaged goods," said Millar, who spent 10 years at Proctor & Gamble (NYSE: PG  ) before joining GSK. "There's no reason that 100 percent of households can't have (laundry detergent) Tide. With medications, it's different."

In acknowledging that for some patients a particular treatment might be inappropriate, GSK is turning on its head the old model of selling as many drugs to as many patients as possible. London-based GSK, which has its U.S. headquarters in Research Triangle Park, North Carolina, announced the pharma rep changes last summer. The new program started in January.

But the entire pharmaceutical sales model is already in flux and not all of that change is by design. In part, pharma companies are reacting to backlash from the perception that big pharma wines and dines physicians to promote their drugs, said Corey Ackerman, senior partner at pharma industry executive search and recruitment firm Cornerstone Search Group. GSK's top U.S. executive Deirdre Connelly acknowledged as much last winter in speech at a pharmaceutical industry conference where she said that the pharma industry has "lost its way" in how it markets and promotes its products.

Change is also being driven by insurers. Prescription decisions are increasingly determined by a payer's formularly, not sales and marketing. The old pharmaceutical sales model of tens of thousands of drug reps promoting products to physicians is gone, consulting firm Cutting Edge Information said in a recent report. Beyond providing drug information, the sales force must now also provide greater support to physicians by helping them track payers' forumulary and reimbursement changes.

These marketing changes are confronting all pharma companies, Ackerman said. Payers aren't interested in drug marketing, Ackerman said. Before they pay for a drug, they want to know how it compares to others for a particular indication.

"Sales is really changing from relationship building to information delivery," he said.

While GSK tries to adjust the discussion between physicians and pharma reps, the reality is that fewer and fewer such discussions happen. ZS Associates annual AccessMonitor report, which tracks sales rep interactions with prescribers nationwide, finds that doctors are less willing to meet with sales representatives. Just 54 percent of prescribers in 2010 were "rep-accessible," down 7 percent from 2009. Meanwhile, the ranks of pharmaceutical reps are shrinking. ZS Associates reported that the pharmaceutical sales force peaked in 2007 with 102,000 reps. The firm projected that in 2012, that number will be only 75,000.

With GSK's new pharma rep model in place less than a year, Millar said it's too early to assess how well it's working. But he said reps have been open to the changes and results based on the new targets will be tracked over time. Millar reiterated that the new program aims to help doctors make appropriate prescription decisions for GSK medicine.

"We fully believe if we do that, sales will follow," he said.

Time will tell if other pharmas follow GSK's sales model as well.

The Motley Fool owns shares of GlaxoSmithKline. Motley Fool newsletter services have recommended buying shares of GlaxoSmithKline and Procter & Gamble. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Read/Post Comments (1) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On September 16, 2011, at 3:15 PM, rdlacy wrote:

    was with GSK for 35 years. We did that about 11 or 12 years ago. Most Physicians do not like to be 'educated' by a drug rep. This is just another model and spin on an old idea. Didn't work back then either.

Add your comment.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 1553854, ~/Articles/ArticleHandler.aspx, 5/25/2016 11:34:56 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated Moments ago Sponsored by:
DOW 17,863.94 157.89 0.89%
S&P 500 2,089.59 13.53 0.65%
NASD 4,888.48 27.43 0.56%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

5/25/2016 11:17 AM
GSK $43.06 Up +0.35 +0.82%
GlaxoSmithKline CAPS Rating: ****
PG $81.65 Up +0.68 +0.84%
Procter & Gamble CAPS Rating: ****