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Pharma Companies Lay Off Sales Reps and Use More Digital Tools to Market to Office-Based Physicians

Clinical laboratories and pathology groups may benefit from the attractive economics of digital marketing

For more than two decades, pharmaceutical sales representatives have been ubiquitous in doctors’ offices. But in a surprise development, many of the nation’s largest pharma companies are dramatically downsizing their sales forces and opting to promote their products through digital media.

This is an important new trend which has consequences for those clinical laboratories and anatomic pathology groups which send their own medical laboratory sales reps into doctors’ offices. It is evidence that the economics of sending sales reps into offices to educate and persuade physicians to prescribe new drugs for patients may be less favorable when compared to the economics of reaching physicians via the growing number of new digital sales and marketing channels.

In a recent story published by The Wall Street Journal, it was noted that pharmaceutical companies, as they reduce the number of sales reps who make calls on office-based physicians, increasingly make greater use of digital sales and marketing programs that include the Internet, smart phones, tablet technology and even iTunes.

New Survey Data Supports Pharma’s Shift To Digital Marketing Tools

Survey data indicate that physicians are increasingly receptive to getting information about new prescription drugs via digital media. Intouch Solutions, a marketing research agency serving the pharmaceutical industry, reported that, in one survey, interviews determined that 68% of physicians who had received a “detail” from a pharma sales representative via iPad stated they were extremely satisfied or very satisfied with the format. This survey of 100 physicians also showed that:

  • Eight in ten physicians rate digital detailing as the same or better than previous methods.
  • Preference for digital detailing is higher by a wide margin among younger physicians (in practice 20 years or less).
  • Physicians in practice more than 20 years prefer paper-based details regarding prescription drugs.

In his interview with The Wall Street Journal, Eddie Williams, who heads up Novo Nordisk’s  (NYSE: NVO) pharmaceutical business in the United States, said that “72% of U.S. doctors own a smartphone, and 95% of them use it to download medical applications.”

Both tables displayed above show how pharmaceutical companies have been reducing the number of employees and the number of sales representatives in the United States. Beginning in 2006, pharma firms have reduced the number of sales reps by 25% as they began to shift marketing dollars toward digital media and similar web-based marketing programs. (Graphic copyright The Wall Street Journal.)

Both tables displayed above show how pharmaceutical companies have been reducing the number of employees and the number of sales representatives in the United States. Beginning in 2006, pharma firms have reduced the number of sales reps by 25% as they began to shift marketing dollars toward digital media and similar web-based marketing programs. (Graphic copyright The Wall Street Journal.)

It should not surprise most pathologists and clinical laboratory managers to learn that the number of office-based physicians who consider these sales calls to be intrusive, and thus  refuse to see pharma detail reps, is increasing at a steady pace. Figures show the number of “no see” doctors rose from 20% in 2009 to 25% in 2010, according to Bruce Grant, Senior Vice President of Digitas, a digital marketing agency of Publicis Groupe.

“In an era of increasingly difficult access to physicians, we believe tools such as the iPad and similar devices will help open new lines of communication across healthcare stakeholders,” noted Faruk Capan, Intouch Founder and CEO, in his company’s press release about the survey findings.

Pharmaceutical companies believe that redirecting budgets toward digital marketing is one way to cut costs. In 2009 AstraZeneca (NYSE: AZN) established its first digital marketing group, which created AZ TouchPoints. This website gives physicians direct online access to the company’s services and support. Physicians can use this web portal for sample ordering and formulary information. They can also access educational materials for their patients. Of course, the website allows doctors to interact with an AstraZeneca representative when further information is needed.

John McCarthy, AstraZeneca’s Vice President of Commercial Strategy and Operations in the U.S., told the WSJ that this innovative website helped AstraZeneca slash its marketing costs and redirect its sales force to certain prescription drugs which need more scientific discussion, In 2010, AstraZeneca indicated that it planned to eliminate 16% of its workforce by 2014, including thousands of sales positions in Western markets. Projected annual savings from this staff downsizing are projected to total $1.9 billion.

In the case of Novo Nordisk AS, the Danish drug maker says it is supplementing its existing pharmaceutical sales force with both a website and iPad/iPhone application—called Coags Uncomplicated. Each offers tools to help doctors diagnose bleeding disorders. Other websites evidencing the growing digital marketing trend include Sanofi-Aventis’ (NYSE: SNY) and Merck & Co.’s (NYSE: MRK)

Pharma Companies Expect Digital Marketing Trend To Accelerate

“Sales calls to doctors’ offices were still the most powerful tool for driving new prescriptions,” said Wa’el Hashad, German drug maker Boehringer Ingelheim GmbH’s Vice President of Cardiovascular and Metabolic Marketing, in the WSJ article. When the company launched its cardiovascular drug Pradaxa in the U.S., it developed a digital-marketing package to target doctors. The program included webcasts for physician-to-physician communication about the drug. “No doubt digital marketing does have an impact,” observed Hashad.

Another expert who believes that that digital marketing will get more emphasis from pharmaceutical companies is David Windhausen, who is Senior Vice President at Intouch Solutions. In his company’s press release he declared, “We’re working with many of our pharma clients now to help them adapt to these new devices at a rapid rate, and we expect the trend to continue.”

There is an important message here for clinical laboratory managers and pathologists who are tasked with managing their medical laboratory’s sales and marketing efforts to office-based physicians. All signs indicate that physicians are increasingly willing to use the Internet and other digital media as a source of health and medical information.

Because of the huge dollars pharma firms spend to get their message in front of phyisicians, the fact that they are downsizing their sales sales forces and shifting dollars to digital marketing channels is noteworthy. Clinical laboratories and pathology groups would benefit from assessing how they can harness similar digital marketing channels to identify cost-effective that they can harness digital media in promoting their clinical laboratory testing services to office-based physicians.

—Pamela Scherer McLeod

Related Information:

Drug Makers Replace Reps With Digital Tools

Physicians Prefer Pharma Reps to Deliver Information via iPad

Big Pharma Spends More On Advertising Than Research And Development, Study Find

THE DARK REPORT: Digital Pathology News


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