April 13, 2015
By Mark Terry, BioSpace.com Breaking News Staff
U.K.-based GlaxoSmithKline , released information on Friday about possible changes to how it compensates its sales staff. The company is studying ways to simplify its Patient First program for incentive pay and expects a full report out in a month.
“We remain resolutely commited to our commercial model,” says Sarah Alspach, head of GSK’s U.S. External Communications in an email to BioSpace .
On Oct. 22, 2014, GSK announced major restructuring plans over the next five years with the goal of cutting costs by £1 billion. This was a result of a series of slow quarterly revenue in which operating profit dropped by 37 percent in a nine-month period.
At least some of the profit drop is related to pricing pressures in the U.S., especially on the company’s Advair, a top-selling drug for asthma and COPD. Its primary competitors are AstraZeneca PLC ’s Symbiocort and Merck & Co. ’s Dulera. The company’s U.S. operations account for almost a third of GSK’s sales.
The Patient First program in the U.S. was implemented in 2011. Prior to this program, individual sales targets were based on the number of prescriptions actually written.
The Patient First program, which is expected to really hit its stride in 2015, has the company’s pharmaceutical sales reps be evaluated and rewarded based on their technical knowledge, service quality and the company’s overall business performance. It has been introduced in 150 countries earlier in this year.
“These [measures] are designed to bring greater clarity and confidence that whenever we talk to a doctor, a nurse or other prescriber, it is patients’ interests that always come first,” said Andrew Witty, chief executive officer of GSK in a statement. “We believe that it is imperative that we continue to actively challenge our business model at every level to ensure we are responding to the needs of patients and meeting the wider expectations of society.”
GSK has halted some of its training programs this month and through May while the program is reviewed based on feedback from sales staff, according to an internal memo that went out to sales staff in March.
“GSK has led the industry by changing the way we reward our sales representatives,” Alspach told BioSpace. “Our approach is based on the core principle that we will not link the compensation of our individual sales representatives with the number of prescriptions generated. Throughout the program we’ve looked for ways to simplify the process but the fundamentals remain the same.”
The sales staff in the U.S. will receive target bonuses for part of 2015 while the new policies are under review. “This pause allows us to concentrate our attention on program improvements to be implemented in the second semester,” the memo stated. “Until then, it is critical that our focus be on driving performance, and that we use the removal of the simulations to increase business performance.”
The majority of GSK’s U.S. employees are located in Philadelphia and Research Triangle Park, N.C. On Mar. 24, 2015 the company announced it was laying off about 180 people in North Carolina, primarily in the sales, marketing and operations areas. In February the company indicated it was laying off about 150 people in its commercial and research and development group near Philadelphia.
