With Life Sciences Industry Facing Major Changes, Hay Group Study Finds Big Pharma Only Taking Small Steps Forward

PHILADELPHIA, PA-February 13, 2012 – Despite major sales force cutbacks in 2011, 50 percent of big pharma companies say they are still overstaffed, compared to just five percent of companies in the life sciences industry as a whole, according to Hay Group’s 2011 Pharmaceutical Sales Force Effectiveness Study. Big pharma organizations surveyed are far more likely to say they are planning to trim their force by 6 to 15 percent over the coming year to meet the needs of a rapidly changing pharmaceutical marketplace.

“When it comes to staffing and go-to-market models, the gap between big pharma and other players in the life sciences arena is considerable, and it continues to grow,” said Matt Gurin, Hay Group’s U.S. Reward Practice Leader for Life Sciences. “Pharmaceutical companies of all sizes have shown a reluctance to shun historically successful sales models and strategies in favor of the more account-based approach needed to succeed in the future. Given the magnitude of change in both the competitive and regulatory landscapes, it is not surprising, perhaps, that many commercial organizations are proceeding cautiously since it’s a strong prescription to both shrink and change at the same time. However for those organizations we know that are tackling the issue at the root level of the system—through employee behaviors, engaging leadership and alignment of measures with the goals of the organization—we believe the rewards will be commensurate with the effort.

While 40 percent of respondents said they focused on “adopting a customer-centric” approach to sales—up several points from 2010—it is questionable whether those companies are providing their sales representatives and managers with the necessary skills and incentives to do so:

• Prescription volume remains the key concern for pharmaceutical sales organizations, with 55 percent of respondents indicating it was a primary factor, followed by revenue attainment and market share (both at 21 percent).

• Training budgets remained stagnant at nearly two-thirds of companies (60 percent) in 2011, and increased at 27 percent of companies (up from 13 percent in 2010). In an industry that is working to embrace change and the concept of teams, training efforts are lagging behind. Only 40 percent of participants say they provide their sales representatives with teamwork training, and 60 percent provide training for managers in managing change.

• Hiring decisions tend to favor candidates with “years of pharma industry experience,” with just 40 percent of participants saying “behavioral and interpersonal competencies” inform their hiring decisions, and only 20 percent saying the same about “business acumen” and “scientific experience.”

“While everyone knows the stories of major players in the industry publicly vowing to make customer satisfaction a priority, our research found customer focus and satisfaction ranked near the bottom of a list of qualitative measures for organizations’ sales strategies,” said Gurin. “Some key players are beginning to move the needle for sales in the right direction by stepping away from tenure as a qualification for promotion and by shifting focus to providing value as defined by their critical customer segments. In order to excel in the evolving life sciences market, successful organizations will be required to be ambidextrous, to rationalize both the size and activities of their commercial organizations to deliver value not just revenue.”

About the Study
Hay Group’s Pharmaceutical Sales Force Effectiveness Study, now in its 21st year, is designed to characterize the policies, practices, and culture within pharmaceutical companies’ commercial organizations as well as to identify factors that influence sales performance. More than 30 pharmaceutical, specialty and biotechnology companies participate in the study each year, representing a broad cross-section of the US pharmaceutical industry. In total data are collected for about 90 sales, marketing, and medical affairs positions.

If you are interested in participating in the study or would like additional information, please contact Carrie Fisher, principal and director of the study, at 201.377.5879 or HayRxSFE(at)haygroup.com.

Please direct all media inquiries to Ben Weiss at 212.840.1661 or ben(at)blisspr.com.

About Hay Group
Hay Group is a global consulting firm that works with leaders to transform strategy into reality. We develop talent, organize people to be more effective, and motivate them to perform at their best. With 88 offices in 47 countries, we work with over 7,000 clients across the world. Our clients are from the private, public, and not-for-profit sectors, across every major industry and represent diverse business challenges. Our focus is on making change happen and helping people and organizations realize their potential.