Why Pharma Sales Reps are Reeling

Lets look at a few stats from IMS on the current state of the pharmaceutical industry in the U.S.

The U.S. will remain the single largest pharmaceutical market, with 3-5 percent growth expected next year. Pharmaceutical sales in the U.S. will reach $320- $330 billion, up from $310 billion forecast for this year.  So Americans are consuming more pills than ever before and drug companies are still making profits but why are  these companies laying off their best sales vehicle, their reps?

IMS  explains a major reason reps in the U.S. will be laid off.

Peak years of patent expiries shift major therapies to generic dominance.

In 2011, products with sales of more than $30 billion are expected to face the prospect of generic competition in the major developed markets. In the U.S. alone, Lipitor®, Plavix®, Zyprexa® and Levaquin® – which together accounted for more than 93 million prescriptions dispensed in the past 12 months and generated over $17 billion in total sales – likely will lose market exclusivity. The full impact of patients shifting to lower-cost generic alternatives for these products, as well as other brands in their therapy classes, mostly will be felt in 2012, due to the timing and expected competitive intensity among generic entrants.  To sum it up when your product goes generic and you no longer have a patent to protect your price and profits your profits will eventually shrink to $0.  This is because generic companies like Teva and Sandoz step in and manufacture/sell the product just above cost.  In economic terms you go from a monopoly to perfect competition where you sell your product just above its cost.

Compounding the problem

We’re in a recession so layoffs are expected, but pharma is supposed to be a steady job.  Back in the old days reps worked for one or two companies their entire career and retired with full benefit and pensions.  I used to compare it to a government job on the stability side but with better pay.  So why such a drastic change?  Throughout the 1990s and early 2000s, drug companies spent lavishly to increase their U.S. sales forces, an escalation most companies came to regret as a burdensome arms race. Sales reps with company cars and trunks full of free samples became a ubiquitous, and expensive, industry symbol.  The future for many sales reps looks bleak until a bunch of new and innovative products hit the market.

What industries do you see the most opportunity for top-level talent that might be leaving a career in pharmaceuticals?  Please share your thoughts below.

Pharma Stats

About Jason B Douglas

I am a results driven sales professional helping others elevate their sales.
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