Pfizer's decision to reduce its sales force reflects a change in the company's marketing strategy, but does not mean the firm is facing a shortage of products to support, according to CEO Jeffrey Kindler.

The company announced Nov. 28 it was slashing its U.S. sales force by approximately 20% as part of an overall cost-cutting initiative.

During a media briefing after a Nov. 30 analyst meeting, Kindler said that, in rethinking its marketing approach to physicians, Pfizer decided that it is more valuable for a sales representative to have a meaningful 30-minute interaction with a physician every couple of weeks than to have daily two-three minute sample drop-offs.

Under that strategy, since there would be less frequent visits to physicians, the firm does not need to maintain its large sales force, he explained.

Pfizer's initiative was foreshadowed during an October announcement of its cost-cutting review, when Kindler emphasized that "there are no sacred cows" in response to a question about the sales force (¹ Also see "Pfizer Cost-Cutting: Details Are Sketchy, But Sales Force Is On The Table" - Pink Sheet, 23 October, 2006., p. 3).

There has been widespread speculation in recent years that Pfizer would cut its sales force, particularly as a number of large products such as Zoloft , Norvasc and Zyrtec lost patent exclusivity; the company implemented a more modest reorganization in 2005 (² Also see "Pfizer Sales Force Stays: Changes Include “Modest” Cuts, No Lay-Offs" - Pink Sheet, 11 April, 2005., p. 9).

However, during the media briefing, Kindler emphasized that the decision to cut the sales force did not reflect a lack of products to support, maintaining that there is no threshold for the number of new products needed to begin expanding the sales force again.

In the Nov. 28 announcement, Pfizer said that despite the reduction, it will be "maintaining strong support for all of its in-line products, including Lipitor , Celebrex and Geodon , as well as important new products such as Lyrica , Exubera , Chantix and Sutent ."

The company will maintain its current sales regions - which were aligned with Medicare's Part D bidding regions in the run-up to the launch of the drug benefit.

The cuts will involve changes of physician assignments, and the reductions will be based on performance, according to the firm. After the cuts are complete, Pfizer's U.S. sales force will be reduced from 11,000 reps to 8,800.

Other large pharma companies have expressed a desire to reduce their forces - as well as apprehension that such a move could place them at a competitive disadvantage.

The move by Pfizer could provide the impetus for other firms to reduce their forces, or realign to potentially focus on markets where they see areas for growth as Pfizer pulls back.

However, for the time being, Pfizer will apparently stand alone in its decision to significantly reduce headcount. Other companies, such as AstraZeneca, GlaxoSmithKline, Novartis and Lilly, have chosen to maintain sales force levels.

GSK CEO J.P. Garnier said in early 2005 that if Pfizer reduced the size of its sales force, GSK would follow suit (³ Also see "Waiting For Pfizer: GSK Will Cut Sales Force Should Pfizer Act First" - Pink Sheet, 14 February, 2005., p. 17).

However, according to the company, there are no immediate plans to institute a headcount reduction; rather, GSK said it will focus on using its resources more efficiently.

The company currently employs 9,000 U.S. sales reps and, thus, will have the largest U.S. sales force after Pfizer's reductions are complete.

While GSK maintains it will not eliminate any sales reps, the fact that it will not add any in light of several upcoming major launches effectively represents a reduced marketing capacity.

In 2007, the firm anticipates introducing major products such as human papilloma virus vaccine Cervarix and the oncologic Tykerb (lapatinib).

The company received priority review for Tykerb in combination with Roche's Xeloda (capecitabine) for the treatment of advanced or metastatic HER2 positive breast cancer in women who have received prior therapy, including Genentech's Herceptin (trastuzumab). The NDA has a March 15 action date.

The launch of Cervarix will come later: GSK recently announced it would delay an FDA submission until April 2007.

Rather than reducing its sales force, AstraZeneca plans to realign its sales geographies. The company said it will create smaller sales regions in early 2007 as part of its strategy to improve physician relationships.

According to the company, "each sales force member [will be] better able to focus on fewer physicians' offices, thereby enabling our employees to engage in more value-added relationships with our customers."

AstraZeneca's sales force currently numbers 6,000; the firm did diminish its sales capacity earlier this year by reducing its 800 member contract sales force from PDI.

During a conference call in July, CEO David Brennan said there were no plans to ramp up or cut sales reps in an anticipation of upcoming launches like asthma therapy Symbicort (budesonide/formoterol), which has been delayed while a new formulation is being developed (⁴ Also see "AstraZeneca Shelves Symbicort Launch Until 2007 To Prolong Product Life" - Pink Sheet, 31 July, 2006., p. 3).

Brennan asserted that maintaining its sales force level will not negatively affect upcoming launches because there is overlap in AstraZeneca's primary care audience between products like Crestor (rosuvastatin), Nexium (esomeprazole) and Symbicort.

AstraZeneca's decision to maintain its sales force levels departs from the position taken by former CEO Tom McKillop, who in early 2005 said the firm would consider making cuts, but not before its competitors did so (⁵ Also see "Industry Cost Structure Must Change, But Will Not Start At AstraZeneca – CEO" - Pink Sheet, 31 January, 2005., p. 9).

While AstraZeneca and GSK have previously indicated a willingness to consider headcount reductions, Novartis and Lilly have taken a different approach.

Novartis said in 2005 it would maintain the size of its 6,000-rep sales force regardless of its competitors' initiatives (⁶ Also see "Novartis To Maintain Sales Force In Face Of Potential Competitor Cutbacks" - Pink Sheet, 21 March, 2005., p. 20).

Lilly emphasized it would reorganize its sales force through specialization and realignment rather than reducing headcount (⁷ Also see "For Lilly Sales Force The Future Is Now: Reorg Emphasizes Sales Specialists" - Pink Sheet, 19 December, 2005., p. 12).

Lilly's "sales force of the future" initiative was implemented to improve the productiveness of sales efforts through increased specialization of reps and a broad force realignment. Somewhat similar to AstraZeneca's plan, Lilly reps were reorganized around geography, portfolios and type of customers, rather than around individual products.

- Brooke McManus

Quality Not Quantity: Pfizer Cuts Sales Team To Increase Meaningful Contacts

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