Guns for hire - a glimpse of the future?

One of the trends within Big Pharma over the last 10 to 15 years has been that of outsourcing work traditionally done "in-house". This has happened in a number of functions, notably clinical trials, PR and, more recently, sales.

It is estimated that there are between 10-12,000 Big Pharma representatives in the UK and around 30 per cent of these are now outsourced, that is employed by a third party other than the drug company whose products they push. Commonly known as "rent-a-reps" they are often less well rewarded than than their Big Pharma counterparts. They truly are "guns for hire": one day they might be promoting Product X. However, if and when contracts change, they might find themselves visting the same doctor and this time they are promoting the competitor Product Y.

In the US, the total number of drug reps is thought to be around 90,000. But the percentage currently outsourced is only around 9 per cent, but this figure is expected to climb significantly.

“We believe that increasing financial pressures on drug companies, along with increasing government pressure to reduce drug prices, will lead to an increase in drug companies looking to reduce costs by outsourcing more of their sales reps,” said Stephen Cotugno, executive vice president-corporate development of PDI, a leading "rent-a-rep" firm.

Traditionally, around 80 per cent of a Big Pharmas' marketing budget is spent on its sales force. However, primary care sales, the prime target of the sales team, are slumping, accounting for only 60 per cent of revenue in 2003 compared with 75 per cent of revenue in 1998.

This trend is expected to continue, as generics further erode the pricing power of brand-name products and many major drug companies are now making substantial reductions in core sales force numbers, particularly in the US.

Insiders' view: Take a look on CafePharma and see what PDIs' reps say about their job satisfaction (and also what other companys' reps say about PDI reps). It's not nice.

These rent-a-reps are an inevitable consequence of Big Pharmas' Big Problem, but they are certainly not a solution. At best they are a "stop gap" costs reducer.

Source: http://www.outsourcing-pharma.com/