Pity the poor pharmaceutical sales rep

Amid mounting competition and a backlash against Big Pharma's aggressive sales tactics, drug reps are looking more and more like an endangered species.

By Aaron Smith, CNNMoney.com staff writer

It's hard out there for drug sales reps--particularly if they work in places where gaining access to doctors is becoming increasingly difficult।

Take Boston, Glenn Abrahamsen, senior director of global analytics for drug company Schering-Plough says the city is full of medical groups with formal policies restricting the access that company reps have to individual doctors। "We weren't allowed to leave samples: not tissue boxes or anything," said Abrahamsen, "We weren't allowed past the receptionist।"

Such "closed door" policies are now common around the country, especially in Washington, Minnesota and Wisconsin, according to anecdotal evidence from drug sales reps and medical groups. The backlash--fueled in part by double-digit increases in advertising spending by Big Pharma--is turning the industry on its head. Sales reps are facing massive layoffs and falling incomes as commissions drop. Drug companies, meanwhile, are scrambling to come up with new ways to get their medications in front of the doctors who would prescribe them.

In one sign of the dislocation, Pfizer is in the process of laying off 2,200 sales reps, or about one-fifth of its U.S. sales force. Industry watchers expect rival companies will soon follow with cutbacks of their own.

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Novartis suspends U.S. sales of Zelnorm

Financial Analysis: Novartis will survive Zelnorm

By STEVE MITCHELL

WASHINGTON, April 2 (UPI) -- Novartis suspended U।S। sales of Zelnorm after the irritable bowel syndrome drug was found to be associated with an increased risk of heart problems and stroke, but analysts think the move will be only a slight bump for the pharmaceutical giant and is actually more reflective of an increasingly cautious Food and Drug Administration.

Nigel Birks, an analyst with Dresdner Kleinwort, said the Zelnorm suspension is "obviously going to have an impact on Novartis," noting that the drug was slated to bring the company more than $1 billion in 2012.

"It does reduce this year and going forward some of the company's anticipated growth and earnings," Birks told United Press International.
But ultimately, the long-term outlook of the company is positive and it should recover after taking a hit in the short term, he added.

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Merck Forced To Put Unsuccessful Insomnia Drug To Sleep

NEW YORK (Reuters) - Merck & Co. and H. Lundbeck A/S said on Wednesday they were ending studies of experimental insomnia drug gaboxadol due to disappointing effectiveness and worrisome side effects in late-stage trials.

Merck and Lundbeck said the side effects included dizziness, headaches, hallucinations and vomiting. In a mid-stage trial presented last summer, Merck said one of the most common side effects was tachycardia -- a rapid heartbeat that can be fatal, especially to patients with heart disease.

Shares of Danish drugmaker Lundbeck closed down almost 17 percent on Wednesday in Copenhagen. Merck, a far larger company with a wide array of medicines, was little changed in early afternoon trading.

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Global Pharmaceutical Market Grew 7.0 Percent in 2006

HARTFORD -- IMS Health (NYSE: RX), the world’s leading provider of market intelligence to the pharmaceutical and healthcare industries, today announced that the 2006 global pharmaceutical market* (see endnote) grew 7.0 percent, at constant exchange rates, to $643 billion. A rebound in growth to 8.3 percent in the U.S. — fueled by an increase in prescribing volume due to Medicare Part D — and innovations in oncologics that drove strong 20.5 percent global growth in that therapeutic class, were key contributors to the market’s expansion.

“We continue to see a shift in growth in the marketplace away from mature markets to emerging ones, and from primary care classes to biotech and specialist-driven therapies,” said Murray Aitken, IMS senior vice president, Corporate Strategy. “Oncology and autoimmune products increasingly are demonstrating their value in answering unmet patient needs — offering significant opportunities for growth.”

In 2006, specialist-driven products contributed 62 percent of the market’s total growth, compared with just 35 percent in 2000. A number of primary care classes are experiencing slowing or below market-average growth due to the entry of lower-cost, high-quality generics and switches to over-the-counter products. These classes include proton pump inhibitors (PPIs), antihistamines, platelet aggregation inhibitors, and antidepressants. Last year, generics represented more than half of the volume of pharmaceutical products sold in seven key world markets — U.S., Canada, France, Germany, Italy, Spain, and the U.K. This trend reflects the changing balance between new and old products and the growing “genericization” of many primary care categories.

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From Swallowing to Swallowed-Up

Why sales-force automation company Dendrite decided to sell out

NJ BIZ Staff, Shankar

As a hard-driving 33-year-old entrepreneur, John Bailye brought a start-up company called Dendrite from Australia to New Jersey in 1986. Last week, he stood to pocket about $35 million from the $751 million sale of Dendrite, which makes software for pharmaceutical sales forces, to France’s Cegedim. Earlier this year, it lost its biggest customer, Pfizer, which accounted for a 10th of Dendrite’s $437 million revenue last year.

The deal, announced two weeks ago, marked a turnabout for the companies. It was Dendrite that stymied Cegedim’s attempt to enter the U.S. market four years ago when Bailye outbid the French company for Synavant of Atlanta, another developer of customer relationship management (CRM) software with a strong franchise.

At the time, Bailye shared with NJBIZ his dream of taking the combined entity’s annual revenue from about $400 million to $1 billion in five years.

The expansive mood led Dendrite to relocate from its Morristown offices to its current headquarters across 233,000 square feet in Bedminster’s Somerset Corporate Center. But Dendrite now faces challenging times, with increasing competition and pressure on profit margins. Earlier this year, it lost its biggest customer, Pfizer, which accounted for a 10th of Dendrite’s $437 million revenue last year.

Pfizer decided to take some of the sales-force automation work in-house and parceled out the field-sales support business to IBM. Meanwhile, Dendrite stock slumped from about $20 a share in September 2005 to between $12 and $13 before Cegedim offered $16 on March 2.
The deal values Dendrite at nearly 30 times projected per-share earnings in 2008, higher than the average of 25 times for enterprise software companies, according to Wachovia Capital Markets.

The $16 per-share Cegedim will pay in cash represents a 40 percent premium to Dendrite’s average closing price over the 20 days before the announcement. Dendrite, which operates in 50 countries with 3,000 employees, including 700 in New Jersey, must have seemed an obvious takeover candidate for Cegedim, which had not given up its U.S. aspirations after the Synavant debacle. “We saw it coming: consolidation is occurring in the entire business-applications area,” says Vikas Vats, executive vice president of marketing and business development at Market Rx, a Bridgewater-based supplier of planning and analytics services to the pharmaceutical and life sciences industries. Vats says the CRM industry’s 100 percent-plus growth rates of the early 1990s were not sustainable, and have fallen into the low double-digits in recent years.

Sales-force automation was a nascent business with just nine companies in the United States when Dendrite started out. Dendrite was the smallest and the only one in New Jersey. In recent years, the company has seen competitors eat into its business. Notable deals included rival Siebel’s 2001 win of Johnson & Johnson as a client. David Coman, Dendrite’s vice president for global marketing, says his company continues to have some of the strongest relationships within the pharmaceutical and life sciences industries. “We do business with all the top 20 pharmaceutical companies,” Coman says. Dendrite’s Web site lists 42 clients in the industry’s group.

“The combination [with Cegedim] is going to be a fantastic company with combined revenue of more than $1.1 billion, operating in more than 75 countries,” he says. “The merger will really enable the combined company to compete with some of the horizontal giants trying to come into our space.”

Pharma Marketing Blog: Are All Pharma Bloggers Biased Against the Industry?

By John Mack

Pharma Industry, Be Happy--Somebody Cares

By Lisa Conte

An Indian court case is once again pitting western pharmaceutical companies against the lives and health of poor people in the developing world. "Quarter of a million people urge Novartis to drop case against India," reads a January 29, 2007 press release from Doctors Without Borders.

Inflammatory headlines and angry NGOs anxious to bash big pharma proclaim that greed and inhumane practices are the pattern for the multi-national drug monopolies.

They remind us how Novartis sued Nelson Mandela in 1997 for signing a law that allowed South Africa to import cheaper HIV-fighting medications. These destructive battles are the predictable and unnecessary results of shortsighted pharmaceutical industry strategies in the developing world.

Big pharma's choice to argue for an overbroad interpretation of their patents make it easy to portray them as profiteers who restrict delivery of crucial medicines to the developing world. It doesn't have to be that way. Intellectual property rights and access to affordable medicines in less developed countries are not mutually exclusive.

Some background: