Days of Live Pharma Reps are Numbered: M&A's and Outsourcing - the "Bain/Bane" of the U.S. Pharma Industry

Days of Live Pharma Reps are Numbered: M&A's and Outsourcing - the "Bain/Bane" of the U.S. Pharma Industry

Last night, my sons and I attended a NJ BioPharma Networking Group (NJBPNG) meetup at the Princeton Sports Bar and Grille. NJBPNG is an ad hoc LikedIn group, which you can join (here).

This group is mostly comprised of senior pharmaceutical executives in the research side of the drug industry (click on infographic on the right for more NJBPNG demographics).

It was a good night out with my sons, but not so upbeat for most of the people I met there, many of whom are out of work -- including PhDs, organic chemists, and project  managers.

When meeting new people I usually ask "What do you do?" The most frequent answer I received last night was "I'm in transition," which is one of those "Awkward Euphemisms" for out of work and looking for a job (see other euphemisms listed by Michael Spiro, a professional recruiter, on his blog here).

When I asked "Why?", the response was either mergers and acquisitions or outsourcing, which, I note, was the specialty of Bain Capital in its glory years. Sorry, I just had to throw in a Romney reference and relate "Bain" to "Bane" (i.e., the super-villain nemesis of Batman).

Seriously, outsourcing in the pharmaceutical industry is on the rise. Clinical research is being outsourced to countries like India, and China. Basic research is also being outsourced to startup companies and academia and maybe even overseas.

I also met a few people who are doing very well, thank you. One was the owner of a sales outsourcing agency that specializes in non-personal pharma sales and marketing; i.e., sales calls done by phone via a call center.

"This year has been my best year ever," said this person. He's been doing this for several years. In fact, his prediction for the future of live sales reps is dire: "they will disappear."

Frankly, I had hoped that my son -- a recent Penn State Smeal College of Business graduate -- would make some connections at the meetup that could help him find a job. He doesn't have any pharmaceutical experience, which is what a young recruiter attendee was looking for. Perhaps my son should become a recruiter -- if you aren't qualified for a job, maybe the next best thing is finding a qualified person.

But we learned of one job that my son IS qualified for: one of those people on the phone at the call center mentioned above. It turns out that this is a low-paying, entry-level job paying about $20 per hour. You don't have to be a nurse or former pharma sales rep. In fact, such people are over qualified for this sort of non-personal sales and marketing.

Just like young, entry-level commercial airline pilots bunk together in small apartment nearby airport hubs, young call center employees relocate near the call center and share low-rent apartments. Sounds like Penn State to me!

What advice should I give my son? Should he apply for a job at the call center?

Bean Counters Stifle Pharma Market Research

Bean Counters Stifle Pharma Market Research

The drug industry is laying off people left [brain] (research) and right [brain] (marketing and sales). Market research (MR) -- definitely a left brain activity -- is currently experiencing a downsizing that will have "implications for those in the trenches," according to Marc Iskowitz, writing in Medical Marketing & Media (see "State of Market Research: Analyze This"). Iskowitz summarized results of the Pharmaceutical Marketing Research Group (PMRG) Second Annual State of the Industry (SOI) Survey, conducted in collaboration with TGaS Advisors. Full survey results will be available at PMRG's Annual National Conference.

Here's some trend data from the survey that documents the downsizing:

"The reasons behind the downsizing are well known to anyone who follows the pharma industry," notes MM&M. "Brands are maturing and thus requiring less overall analytical support."

The workload of the MR staff, however, has increased according to Todd Francis, VP and head of commercial support and enterprise marketing for Sanofi US. Francis was quoted as saying "With reduced [research] headcount, [and] the same number of marketers asking the same amount of questions, you become less able to think about what you need to be doing next and more focused on the questions that are being asked."

But, who exactly is doing this work? Outside vendors are relied upon more and more to do market research. According to Karen Tibbals, former Director Market Research at Schering (Merck), this is stifling innovation in marketing research primarily because of the industry's preferred vendor system (see "Pharma needs truth tellers, not preferred vendors"). Tibbals now is a Self-employed Consultant, Trainer, Speaker and a Masters of Divinity Student at Earlham School of Religion (see her LinkedIn profile).

Tibbals also writes a soul-searching blog focused on the state of pharma marketing research "because I am concerned about the direction of the field. There have been changes taking place due partly to global economic trends. While I understand the forces behind the trends, I want market researchers to start to think about how they respond to the trends and not just react. I see danger in pure reaction, danger for the future of the market research field."

"With Finance and its henchmen in Purchasing and HR running pharma's operations, intangibles such as insight, veracity and innovation are low priorities when it comes to selecting suppliers," wrote Daniel Hoffman, the author of the Philly.com story cited above. "Finance and its minions claim that such qualities, in fact, don't really exist because they are not easily quantifiable or amenable to spreadsheet analysis. Absent such characteristics, marketing research becomes a commodity service that the pharmas can retain on a lowest cost basis. Some companies even go so far as to make supplier candidates compete for retainers by means of negative auctions -- lowest bidder wins. Since it works for hog bellies and soybeans, why not use it for marketing research?"

"Automation and outsourcing are giving us faster and/or cheaper, but not better," says Tibbals (see here). "Better has to come from people who are interacting, and thinking. In the effort to cut costs, care has to be taken that what is cut doesn’t affect the ability to improve, to provide more value and to serve as a competitive advantage for the corporations that pay the salaries."

[Note: PMRG is a Pharma Marketing Network (PMN) advertiser. PMN helps promote PMRG's Annual Conference. I am not paid to write blog posts such as this one by PMRG or any other advertising partner.]