2008 could be a very bad year for pharma

Apr/03/2008 05:16 Filed in: Pharma Business
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Schering-Plough said yesterday that about 5,500 employees, or 10% of the company's 55,000 headcount, have got to go. This comes after Wyeth is going to cut 1,200 jobs and an early indication from people who I have talked to at agencies indicate that DTC budgets are being cut to the extreme forcing some agencies to also start downsizing. So when management screws up and CEO's continue to rake in millions of dollars in perks and salary the people lower on the totem pole are shown the door.



The business model in pharma had to change, it was only a matter of time but how many of us expected the model to change because of screw ups? Over the last 4-5 years pharma had been adding salespeople while fewer and fewer physicians had time to meet with salespeople. Recent statistics show that less than 20% of salespeople actually get to meet with doctors anymore and now that patients are starting to rate physicians this is likely to drop even further as HCP's try to spend more time with patients.


I had a chance to talk with several people at the agency level this week and they are concerned as well. "I haven't seen a cut in spending like this in a long long time" said one executive. Another interactive agency has already started to layoff people and is looking to expand its business outside of pharma & health now. It's ironic because with half the money pharma spends on TV & print you could reach more people on the Web and actually measure the impact of the intervention of your eMarketing efforts. You give me a budget of $30 million and I'll drive business to the bottom line, new Rx's !


Another industry executive told me "I'm just so tired of this runaround". "Once again we have to spend more time justifying spend than actually working on programs to drive business, it's wearing my team down". Ahh yes the endless Powerpoint presentations to management on WHY you should spend money, but the reality is that in pharma marketing is viewed as an expense with little ROI, it's the sales force that gets us business ! That's right hire them, lay them off and then send to talk to doctors who don't trust what they have to say and can't see them anyway. Makes sense to me...


The other reality is that DTC has not evolved to keep relevant. The messages are still "pushed" to consumers, websites are still stuck in Web 1.5 and marketers seem unwilling to try new approaches to leverage social media and the information age.


In the end pharma has failed in so many ways: they failed to see the future of a post blockbuster business model, they failed to understand the power that patients now wield, and they failed to install in the organization a new model of transparency at every level. It's too bad that marketing has to pay the price for all these missteps but then again when was the last time you saw a DTC campaign nominated for any major award outside of pharma magazines?
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