Pharmaceutical company representatives who work within the primary care field receive an average of 22% of their total pay in the form of bonuses, while for those working in the speciality care field, the average percentage of salary accounted for by bonus pay is 23%, according to a new study from competitive intelligence firm Cutting Edge Information.
The majority of primary care reps receive 20%-25% of their total pay through incentive-based compensation, while for some the percentage can be as much as 27%, according to the firm’s Pharmaceutical Sales Management 2008 report. By assigning such a high rate of their reps’ income to bonuses, drugmakers allow these employees to reap rewards which are commensurate with their performance, says Cutting Edge.
“These companies want to ensure that their reps are 100% vested in achieving their sales targets,” commented David Richardson, senior analyst at Cutting Edge Information. “Tying their compensation directly to performance is one of the best ways to do that,” he added,
According to companies surveyed for the report, the focus on reps’ relationships with physicians encourages the sales staff to think about long-term strategies rather than having a near-sighted view of sales.
Such strategies will become more important, as drugmakers are continuing to reduce their sales staffing levels in the face of fewer new products and increasing competition. On Tuesday, Wyeth announced that it would lay off 1,200 of its US reps, after having reduced its sales force 15% in 2005. However, according to research firm Pipal, the number of reps calling on US physicians has more than doubled to over 100,000 within less than a decade.
