Downsizing continues in pharma

Dec/07/2007 06:36 Filed in: Pharma Business
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Ah yes, when the going gets tough lay-off people. After all what better way to make the numbers than by reducing expenses via head count. Forget the fact that most pharma CEO's salaries could pay for a lot of people, after all they deserve the big salaries for declining market share and industry woes. BMS and Lilly were the latest to announce continued reduction in employees this week. BMS through layoffs and Lilly through attrition. Attrition by the way is a a fancy way of saying that they won't stop their good employees from leaving and do what they can to hold onto employees who are "content" and comfortable to collect their paychecks.



It's easy to use the word attrition when talking to the Street. They love to hear that because they know it translates into lower expenses. However what the Street fails to take into consideration is the fact that the good people, the ones who can really make a difference, are the ones that are leaving. The passion that these people felt was so strong that they decided to look elsewhere for employment rather than sit in a cubicle and collect a paycheck for doing routine tasks. What is really ironic about Lilly is that awhile back they decided that they were going to hire more sales reps for their diabetes business.



A year ago, Lechleiter said the company would try to boost its diabetes-drug market share by increasing its diabetes sales force by 40%. Only problem was diabetes giant Novo Nordisk “came back and increased theirs,” hiring about 700 new U.S. sales reps, Lechleiter told Loftus.




Never mind that sales reps are becoming less and less effective. Never mind that physicians don't have the time to meet with sales reps anymore and are turing to alternate channels to get information on drugs. So if you increase the sales force than the cuts must be coming from other areas like marketing. After all marketing is an expense and doesn't add any value to the company. This is the thinking of myopic Presidents who need to vacate their offices and make room for someone with visionary thinking and can lead by example. Why any world class marketer would stay in pharma is beyond me. Too much focus on the sales force and too much time explaining basic marketing principles to senior managers who came from finance or sales.
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