Sales force sizes exploded in 1998

The number of pharmaceutical sales reps in the United States has escalated to unprecedented heights this year, but a hiring plateau may be on the horizon.

"The top 15 pharmaceutical companies alone added 4,600 reps this year, which is amazing," said Steve Gutterman, director of strategic studies for IMS Health, Plymouth Meeting, PA. "The biggest increases were among the top 10 U.S. pharmaceutical sales forces, including Schering, which went up 43%, and Pfizer, which went up 28% between August 1997 and August 1998."

Overall, the number of pharmaceutical sales reps in the field has reached approximately 57,500, according to IMS Health's data. In 1997, that number stood at 50,500 and in 1996, it measured a modest 41,000. That means the total rate of growth from 1996 to 1998 was 39%, with a compounded annual growth rate of 18.5%.

Such significant increases in sales force sizes raises several questions. One, why hire at such breakneck speed? Two, where are the companies finding all these new reps? And three, how long can this industry expansion last?

"Companies feel that having share of voice is such a critical factor that they don't want to be at a disadvantage in the number of reps with key competitors," said Gutterman in response to the first question. "They're hiring in preparation for new product launches and also in defense of new launches by competitors."

One-third of industry growth can be attributed to new products, which IMS defines as those that have been on the market for two years or less. Primary growth drivers have been new prescription products and line extensions, as opposed to price increases. With these kinds of critical growth elements, companies are trying to increase their voice share in the market.

How they accomplish this varies by company.

Many companies, for example, are increasingly relying on contract sales force reps to add volume to their messages. According to IMS Health data, the top 15 companies added 4,200 contract sales reps to their promotions last year - nearly the same amount they added to their in-house sales forces. In a report released earlier this year, IMS Health stated that approximately 10% of reps in the field are working for contract field forces,

"[Contract sales force companies] are growing by leaps and bounds," said Gutterman. He cites several industry cases where companies employed contract sales forces in order to evaluate them for long-term hire. In at least one instance, a company decided to hire the part-time sales reps.

Other companies recruit new hires from their competitors or other industries, but finding qualified candidates is becoming an increasingly challenging task. "Anecdotally, we hear a lot of companies are having a hard time recruiting good reps," Gutterman said. "[Pfizer] used to say it was harder to become a Pfizer rep, percentage-wise, than it was to get accepted into Harvard or Stanford. I don't think they say that anymore."

Still other companies overcome their industry competitiveness and copromote products together. The upcoming copromotion of the COX-2 inhibitor Celebrex is an example of two major field forces - Pfizer and Searle - working together to gain market share for one company's product. Gutterman speculated that collaborations such as these may impel companies to hire specialty copromotion sales reps to support two or three copromoted products and one major, exclusively promoted product.

There are signs that the mad hiring rush is slowing down, however. From 1996 to 1997, the rate of increase among the top 30 companies was 23% but by 1998, it had declined to 14%. "It's still increasing at a good clip, but it's slowing down," said Gutterman.

One reason behind the slowdown could be diminishing returns. IMS Health analyzed call rates per rep per quarter from 1996 to 1998. In the second quarter of 1996, figures showed 191 calls per rep per quarter. But in the second quarter of 1998, IMS Health noted that call rates per rep per quarter had fallen to 151 - a drop in rate of minus 20%. And when reps did make their calls, IMS Health found, they were only able to talk about one or two products, whereas in the past they might have been able to discuss three.

Gutterman explained: "It's all a matter of doctors allowing more reps to see them now that there are 16,000 more reps in the field than there were two years ago, but not giving [the reps] more time." PR