NAPSR PRESS RELEASE (Washington DC) PRWeb NewsWire

PHARMACEUTICAL SALES COMPENSATION OUTLOOK FOR 2007

Surveys have shown that the pharmaceutical industry has been expanding its
sales force at record rates over the last 5 years. The pharmaceutical
industry is also looking to grow its sales force in 2007. In fact 31 percent
of the biotech companies and 19 percent of the specialty pharma companies
surveyed planned to grow “a great deal” and another 48 percent and 24
percent respectively, planned to grow “steadily” over the course of 2007.

Two out of three surveyed companies plan on introducing new pharmaceutical
products in 2007. With this growth and new product launches the companies
are also looking to “improve sales-force productivity”. In 2007, companies
are also reporting that they expect nearly every type of pharma sales rep to
make fewer calls, which is surprising. On average, sales reps are now
expected to make 8 calls a day, down from nine. This change probably means
that pharmaceutical companies are being more realistic in their expectations
as they are emphasizing the need for quality interaction with physicians.

The pharmaceutical industry has traditionally been a sales-dominated
business, in contrast to the consumer good industry which is dominated by
marketing functions. With the focus of the pharmaceutical industry being on
its sales force, starting salaries for entry-level sales rep is
significantly higher than for a beginning salesperson in other industries.
In fact, once incentive compensation is factored in, the average entry-level
pharmaceutical sales rep earns 32% more than their counterparts in other
industries. The mix of base salary and incentive pay is shaped by an
organization’s competitive objectives. Generally in 2006, companies aimed to
make the base salary about 78% of total compensation, the rest is incentive
compensation.

The good news for pharmaceutical sales people is that the total compensation
has continued to grow for them. The average sales rep earned $91,700 in
total compensation in 2006, compared with $85,900 in 2005. Increases were
particularly marked among specialty reps. The average first year level
specialty rep total cash compensation jumped from $75,600 in 2005 to $82,100
in 2006. Pharmaceutical companies are also using a variety of additional
cash and non-cash rewards in an effort to recognize extraordinary sales
efforts. These non-cash rewards, in fact, often have greater impact than the
formal incentive-compensation plan in motivating their sales staff.
Companies appear to be increasing other benefits such as upgrades in car
options and single rooms at sales meetings.

Industry knowledge and formal pharmaceuticals sales training is also on the
increase for entry level reps and applicants. New hires are no longer
afforded a leisurely orientation period before they are expected to begin
contributing. Over the past several years, the trend has been to put new
hires in the sales field sooner and sooner. Entry- level pharmaceutical
sales training and certification programs has allowed companies to more
effectively do this and become more productive. In fact it has been proven
that CNPR graduates do not need the same degree of training before they
begin detailing physicians.

In summary the pharmaceutical market is vast, complex and very dynamic.
There is now simple way to measure and reward sales performance with
complete accuracy and fairness. However, pharmaceutical companies never stop
trying to come as close to this ideal as possible.