Sales force cutbacks are nothing new in pharmaceuticals. Although the industry as a whole has traditionally been quite stable, the individual companies within it are much more volatile. The nature of the beast is that its companies' sales forces expand and contract in a cyclical fashion, almost like it's breathing.
Last week, Pfizer announced that it will downsize its U.S. sales force by 20% by the end of this month. This will directly affect approximately 2,200 Pfizer sales representatives and managers. But what about the indirect effect on the rest of the industry and on job-seekers who are trying to get into the pharmaceutical industry?
Clearly the most direct impact will be to the individuals who make up Pfizer's sales force. Although companies that are downsizing never make public the exact criteria they use to decide who stays and who goes, they usually use some combination of tenure, sales rankings, and ratings from annual reviews. But speculating about the exact formula Pfizer will use is as pointless as asking the Colonel for his secret recipe.
And what about the job-seekers who were in the middle of the interview process with Pfizer when they announced a hiring freeze a while back and were told, in effect, to stay tuned? I think it's safe to say that it's time to turn the channel. For the most part, they would be smart to focus their efforts on getting jobs with other companies or in other industries.
One indirect effect of Pfizer's cuts is that people seeking sales jobs with pharmaceutical companies other than Pfizer will find themselves in even more of a buyer's market than before. It's widely known that pharmaceutical sales jobs are very tough to get because of extremely stiff competition, and lots of it. Now there will be another 2,200 experienced, well-trained, and unemployed pharmaceutical sales representatives added to the pool of job-seekers. Job-seekers without pharmaceutical industry experience will have a harder time than ever getting in.
Sales representatives who are currently employed with other pharmaceutical companies will also be indirectly affected by Pfizer's downsizing. Why? Because as Pfizer goes, so goes the industry. The top tier of big pharma behemoths -- Pfizer, GSK, Merck, Novartis, and a few others -- has been in a widely acknowledged arms race for years. Pfizer's long overdue and badly needed cuts are just the first stab at reining in this runaway horse of an industry.
In the late '80s, pharmaceutical sales forces, like our hair and the shoulder pads in our power suits, were big. In the early '90s, the industry responded to the threats posed by the Clintons and other vocal critics of the industry's excesses by cutting back on sales forces. Back then, it was unfashionable to call it a layoff or a downsizing -- 'rightsizing' was the euphemism du jour. But for the past decade or so, pharmaceutical companies have again been one-upping each other through sales force redundancy. Why deploy just one sales force when you can have two or three or six mirroring each other? Why be the only company selling your products when you can hire mercenaries in the form of contract sales organizations to overlap your own sales force? Despite this, it's not just critics of the industry who have been calling for change. The CEOs of the big pharma behemoths have been warily watching each other and hoping that someone else would be the first to throw down their weapons so they could all follow suit.
So Pfizer has made the first major cut...it will be interesting to see who's next.