December 2, 2014
By Mark Terry, BioSpace.com Breaking News Staff
Seeking to be more agile and patient-focused, Bristol-Myers Squibb reportedly laid off 1,000 employees in China, mostly in sales. The changes are at least partly credited to a crackdown on corruption by the Chinese government that makes it more difficult for sales representatives to access hospitals and physicians.
“As part of our organizational evolution, we are reviewing and determining the appropriate structure and size of the organization with the objective to best serve patients in China,” Bristol-Myers Squibb said in a statement to China Daily. “We will make every effort to keep the impact on individuals to a minimum. It is also our commitment to treat all affected employees fairly and to implement the adjustment in accordance with the applicable laws and regulations of China.”
In September of this year China fined U.K.-based GlaxoSmithKline almost $500 million on charges of bribery. In addition, the Changsha Intermediate People’s Court sentenced former GSK China general manager Mark Reilly and four other company managers to prison terms. The sentences were suspended, which potentially allowed them to avoid jail time. Reilly was immediately deported.
“What we know is that sales representatives’ access to hospitals in general, and physicians specifically, is not going to be as easy and readily available as it has been in the past,” said Benjamin Shobert, managing director of Rubicon Strategy Group, in a statement. “So, multinational pharmaceutical companies must find new, innovative ways of accessing these key opinion groups.”
The shift in China policy means that biotech and pharmaceutical companies will need to work through academic communication officers or medical liaison staff rather than directly with physicians. Other changes, at least made by GSK, is a shift in sales policies that have bonuses tied to sales staffs’ scientific knowledge as opposed to sales targets.
Companies have long thought that Asia in general and China in particular, due to the size of the potential markets, were going to be lucrative. The reality is more complicated. “Pharma companies are learning that China is not the bonanza they expected,” Erik Gordon, a professor at the Ross School of Business at the University of Michigan said in the Wall Street Journal. “They have to offer rock-bottom prices. In many regions, they have to engage in traditional Chinese relationship building that looks to Western eyes like bribery, and looks like bribery to Chinese authorities whenever they are unhappy with a drug company.”
