External Sales Force Commercial Solutions – The future of pharmaceutical sales
As the revenues of big pharmaceutical companies shrink so do the budgets they spend for promotional and sales activities. Furthermore small companies usually can’t afford to maintain a full sales team (for medical detailing and sales to pharmacies) even if they know that such an investment would bring them additional revenue. This means that pharmaceutical companies (operating either in countries under financial stress such as Greece, or in countries with more affluent health systems such as Denmark) lose important opportunities to develop and grow their product portfolio and they are therefore losing some serious amounts of money.
Having realized this problem pharmaceuticals are beginning to cooperate with companies offering sales and commercialization solutions tailored to their particular needs. The so called “Rent a Rep” model (we use brackets since a company doesn’t actually lease a person as it happens with employee leasing companies but makes use of a third party’s already existing sales network) allows pharmaceutical companies to test the potential of their products with the use of an external or a “leased” sales force. This kind of sales models usually start small, with a limited number of sales reps. However as sales increase and the product gains momentum, the external sales force grows bigger sometimes even by ten-fold. Usually external sales teams (or “Rent a Sales Rep” models as they are known in the U.S. and in the E.U. – i.e. in Greece, UK, Germany, France and other European countries) work as efficiently as in-house sales teams. The difference is that the external or “leased” field force model costs less and offers additional benefits to the company that uses it.
So what are the benefits that a “leased” sales force entails, contrary to an internal field force? Firstly, it is costs. Depending on the extent of dedication to the product pharmaceutical companies that use external med or sales reps (aka “Rent a Rep” models) can economize significant resources. The “leased” sales force can operate on a dedicated, on a shared or on a surge mode.
Among these three models the “Dedicated Sales Force” is the most expensive, which is normal since all efforts are focused on one product or one company. However even this model is cost-effective compared to an in-house sales team. “Shared Sales Force” is a medium cost and a less luxurious option. In a “shared” or else “syndicated” sales force model the sales rep communicates more than one product to the health care professionals. This makes syndicated sales force an even more affordable option. However a company that decides to go on with this option has to negotiate the position of its products in the sales rep’s portfolio. Finally the “Surge” sales team has the lower cost of every other option but it has several drawbacks, which include a continuity loss of physician relationships and a less capable field force.
Apart from cost, an external sales team (or “Rent a Sales Rep” model) carries the advantage of flexibility. Pharmaceutical companies don’t need to hire large medical or pharmacy sales teams. They can simply outsource their medical detailing and sales to pharmacies process to a third party that is already experienced in this particular field. In a few words, pharma companies pay only for the services rendered and not for the salary, the social benefits, the insurance and all other costs an in-house sales rep entails.
Moreover such commercialization solutions offered by experienced sales organizations are usually supplemented with unique insights and deep knowledge of the pharmaceutical market. By this way pharmaceutical companies manage not only to obtain a “leased” sales force but a trusted and skilled partner to stand by their side in this endeavor. In other words pharmaceutical companies can tap into their partner’s knowledge and increase their probability of success by avoiding some common mistakes they would have otherwise committed.
In brief, external sales force solutions (also known as “Lease a Rep”, “Leased Field Force” or “Rent a Sales Force” commercialization models) are here to stay. Contrary to an in-house sales team this kind of pharmaceutical sales solutions offer multiple benefits such as lower costs and greater flexibility coupled with the insights brought by an experienced third party. However as not all pharmaceutical sales organizations are the same or equally skilled and reliable, companies must choose wisely with whom they are going to cooperate with.
(This article was originally published in the hardcopy edition of “Sales Promotion Magazine”).