While the impact of managed care has brought downsizing and uncertainty to many marketing executives, rent-a-reps have become a life raft to keep severed sales staffs above water.
Top executives of leading contract sales organizations say pharmaceutical and other healthcare marketing departments are needing sales staffs that are flexible and low cost, and temporary sales staffs are often the solution. Contract sales forces are one-third to one-half the cost of an in-house sales force, say contracting companies.
"The major impact has been in the way pharmaceutical companies look at their sales resources," said Charles Saldarini, president of Professional Detailing Inc. (PDI), a Mahwah, N.J.-based rep company. "The pressures that managed care has generated have companies saying, "We're going to need sales forces that are more flexible, that are lower cost, and that can be plugged into the new, decentralized structures.' "
George Melillo, president and CEO of PharmFlex, a rent-a-rep company based in Manhattan, says manufacturers are more aggressive in considering alternate sales channels for drugs that need promotional attention.
With an uncertain future, [rent-a-reps] are a better cost-effective alternative to growing a sales force," said Melillo. "and a suitable alternative to co-marketing."
For example, a temporary entry level sales representative could cost between $7 to $10 an hour while a similar person on staff with healthcare benefits could cost about $15 an hour.
Marketing departments are now using temporary reps to call on managed care organizations (MCOs) both to do contract negotiations, to implement disease management programs and to work with pharmaceutical benefit management companies (PBMs) and hospitals on contract compliance. They are also staffing convention exhibits and trade shows so as not to incur the opportunity costs associated with pulling staff representatives from their territories.
Basic Changes In Perception
"The big change," Barbara Saltzman of New York City-based MMD, Inc. explained, "is that contract selling has come of age. Fifteen years ago, it used to be that manufacturers didn't want to have it known that they were using our services; didn't want us to identify them. Now the use of contract sales reps is widely accepted. And not only accepted - it is recognized as making good business sense."
As a result, rent-a-reps are not just getting secondary programs --small regional assignments or helping out with older products. Now they carry flagship products, so that campaigns have become much larger and are of much longer duration.
Saldarini explains these trends in terms of companies' changing needs. "Our relationships are built much more out of strategic needs," he says, "as opposed to just tactical needs. Where people used to say, 'I need 25 reps for six months to fill a gap," now they say: "We want to discuss 100 reps for two or three years to implement a brand strategy.' In other words, there is now a recognition that the sales force flexibility supplied by companies like ours has become a basic core competency."
For example, PharmFlex's reps are used for major product launches, managing product groups, and they work alongside their customers' sales representatives.
The Growing Role of Outsourcing
MMD has been introducing major new products for the past 10 years, and has helped launch several significant drugs, including Eldepryl for Sandoz, Theracys for Connaught, and Theo-Dur Sprinkle for Key Corp.
And Saldarini quotes one of his clients as saying: "We purposely went out light to see what we needed. What we do have is a sales force of 50 and contract for everything over that."
In addition, PDN has been contacted both by managed care and pharmacy benefit organizations themselves, to help them with educating prescribing physicians.
How To Work With Reps
Melillo points out that there is a difference when one deals with a rep as opposed to permanent staff.
"Many companies find it difficult to work effectively with a [temporary] force. Patience, motivation, and understanding the objectives of [temporary] workers are important to success."
Melillo said that while most reps go through intensive training, the ins and outs of each company is different and therefore there will always be a learning curve.
"Reps can be as effective as your staff and better but you must invest the time to teach them first," he said. For example, Melillo suggest forming a training program or booklet that explain sales techniques or product lines. As with all temporary workers, the agency is responsible for making sure that workers are credible and contracts usually include clauses concerning discretion about company property and information.
(Professional Detailing Inc., 800/242-7494; MMD 800/228-4343)