Ranking of 20 Drug Companies' Sales Forces Shows Productivity Flat or Declining

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  1

  null

  02/25/09 | Report as spam

  RE: Ranking of 20 Drug Companies' Sales Forces Shows Productivity Flat or Declining

  I would like to know about the methodology followed to rank these companies.

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  2

  null

  02/25/09 | Report as spam

  RE: Ranking of 20 Drug Companies' Sales Forces Shows Productivity Flat or Declining

  I would like to know about the methodology followed to rank the above mentioned companies

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  3

  BNET's Jim Edwards

  02/25/09 | Report as spam

  RE: Ranking of 20 Drug Companies' Sales Forces Shows Productivity Flat or Declining

  The methodology is explained in the final paragraph of the story. Here it is again for those who missed it:
  
  BNET produced the numbers by dividing a company?s revenues by its spending on SG&A, producing a revenue yield per $1 of SG&A. Those results were compared to the previous four quarters to identify a trend.

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  4

  jonmrich

  02/25/09 | Report as spam

  RE: Ranking of 20 Drug Companies' Sales Forces Shows Productivity Flat or D

  Overall this is a good analysis. Probably a
  million other ways you could do this, but this
  makes a good deal of sense to me. However, the
  methodology doesn't seem to match with the
  title. To measure sales force efficiency,
  shouldn't you be considering the number of
  sales reps as part of the equation? Such as
  SG&A divided by number of reps or revenue
  divided by number of reps.

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  5

  BNET's Jim Edwards

  02/25/09 | Report as spam

  RE: Ranking of 20 Drug Companies' Sales Forces Shows Productivity Flat or Declining

  @jonmrich: You're absolutley correct. This analysis could be a lot more sophisticated. SG&A is a gross number that encompasses a multitude of sins, including advertising, promotions, sales reps and the cost of rent and paper clips.
  
  However, companies tend not to break out that level of detail when they report their finances.
  
  Readers should regard these numbers as simply a measure of how efficiently companies martial their marketing/sales/admin resources every quarter. It's a rough-n-ready look. My take concentrates on reps a lot because reps and advertising and marketing tend to be by far the majority cost of SG&A.

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  6

  mjk1000

  02/26/09 | Report as spam

  RE: Ranking of 20 Drug Companies' Sales Forces Shows Productivity Flat or Declining

  I would greatly question the validity of this analysis. Measuring the efficiency of reps, or even efficiency of investment in SG&A at this level ignores countless material factors:
  
  Each company's product portfolio's therapeutic areas, clinical data, competitors, countries of sale, time in lifecycle, reimbursement standards and so forth.
  
  A sales force's productivity should be measured in terms of the value it produces excluding extraneous factors. E.g. a sales force producing 10% growth in a highly competitive market, where a product would have experienced a 20% decline without sales effort is more productive than one that drives 15% growth in an exclusive market.
  
  Or, to take a more concrete example: you can't look at Allergan, which is a global company selling a largely cash-pay cosmetic/plastics portfolio of both drug and surgical products into a recessionary economy to Genentech, which sells mainly serious chronic illness products (read: covered by reimbursement) in the US only, and then say - see Allergan's sales force is less productive.
  
  It would be fairer to say that companies are spending more or the same on SG&A relative to their revenues, but to draw productivity conclusions from that information alone doesn't make much sense.