Contract Sales Agencies; The future trend of Sales & Marketing in the Pharmaceutical Industry

SALES & MARKETING With drug companies regularly announcing new rounds of layoffs, going into pharmaceutical sales may seem risky.  For job seekers, there is one bright spot: Contract Sales Agencies.

These lesser-known companies are increasingly contracting with drug manufacturers to sell their products. In turn, they are employing more and more sales reps. Agencies such as inVentiv Health Inc., Quintiles Transnational Corp. and Publicis Touchpoint Solutions are expected to employ 13,000 drug salespeople by 2015, up from 6,000 last year, according to IMS Health Inc., an industry consultant based in Danbury, Conn.

“Our number of contracts are going up, and the business will grow substantially in the next three to five years,” said Daryl Gaugler, senior vice president of the outsourcing unit of Quintiles, which currently employes about 2,300 field reps. InVentiv Health and Touchpoint Solutions said they, too, plan to boost headcount as their business grows.

Growth in contract sales positions comes against an overall drop in the number of people selling branded drugs. The ranks of pharmaceutical sales reps, both contract and those with manufacturers, are expected to drop to 70,000 in 2015 from 105,000 in 2006 as drug manufacturers cut costs, said Chris Nickum, vice president at IMS.

Manufacturers have fewer drugs to sell and therefore need fewer people to sell them. Patents for their top moneymakers, such as Merck’s Singulair, Sanofi’s Plavix and Pfizer’s Lipitor, are expiring. Pharmacists will automatically substitute generic counterparts for branded drugs once they become available.

Meanwhile, with drug-research pipelines drying up, drug makers aren’t developing enoughnew products to replace the expiring blockbusters. Until pharmaceutical companies have new revenue-generators, they won’t hire salespeople, said Irina Rivkind, an pharmaceutical analyst at Duncan-Williams Inc., a Memphis-based investment bank.

Drug makers are turning to the contract agencies. The contractor typically provides salespeople for one year to sell about three drugs. Once the contract is up, sales reps scramble for another opportunity. This model gives companies flexibility to deploy large sales forces without committing to full-time workers. The contract reps get sales experience with less long-term job security.

Jeff Tinney, 32, had sold Pamine Forte, an ulcer medication, and AnaMantle HC, a hemorrhoid treatment, for Bradley Pharmaceuticals for six years until losing his job in 2008 when Bradley, based in Fairfield, N.J., was acquired by Nycomed International, the Zurich-based maker of the antacid Riopan and the osteoporosis treatment Preotact.

He got a job as a salesperson on a two-year contract with inVentiv a few months later and was recently promoted to a management position. He earns about as much as he did working for Bradley, he said.

“This is where I want to be,” Tinney said. “Seeing how they’re putting time and effort into developing the reps here, I don’t think I would have had this opportunity at a big manufacturing company.”

Ashley Goddard, 36, worked for Touchpoint Solutions as a contractor selling Nasonex and Clarinex for drug maker Schering-Plough from 2007 to 2009. Her base pay as a contract salesperson was about the same as working for a manufacturer, but her bonus was lower. At Touchpoint Solutions, she got a $5,000 bonus while her counterparts at Schering-Plough received $20,000, she said.

Historically, contract sales reps haven’t earned as much as those working directly for manufacturers. That may change, said Dave Mauro, former national sales director of Quintiles, now a senior vice president of sales at OpenQ Inc., which provides technology and data services to biotech companies.

“As manufacturers downsize, there are some really qualified people they can draw from,” Mauro said. “Therefore, the compensation needs to change. It is changing.”

For pharma reps who want to take a stab at contract sales, it’s imperative they understand the organizations.

One way to distinguish yourself is to know the organization before interviewing, said Gaugler. He said has been shocked by the number of people who have come to interviews knowing little about the Durham, N.C.-based company. Many people are familiar with the drug manufacturers, but not with the contract sales companies.

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About GREGinSD

A Generation X|Y'er that resides in beautiful San Diego, Ca.
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