In news that should come as a surprise to no one, it looks like Roche Diabetes Care is about to undergo yet another restructuring, which is really a nice way of saying more layoffs are coming. Perhaps the real news here is that Roche actually has anyone left in the unit to layoff. Like everyone else in conventional blood glucose monitoring, Roche has cut costs to the bone as they desperately try and find a buyer for this beleaguered unit.
Compare this news to an article that appeared in Fierce PharmaMarketing which stated:
“When we hear about companies actually hiring reps, that’s news. Given the thousands of sales layoffs over the past several years–and recruiting focused on emerging markets, especially China–staffing up in the U.S. or Europe is out of the ordinary. When that hiring isn’t about a new drug launch, we hardly know what to make of it.
That’s just what Novo Nordisk has been doing: hiring reps by the hundred in the U.S. First, it was in anticipation of the Tresiba launch that didn’t happen in 2013, but last fall, another 350 joined the company. Couple that with 120 new nurse educators, and the Danish drugmaker has expanded its field force by almost 15%.”
Granted the diabetes drug market is not as bad as the diabetes device market, but it won’t be long before it suffers the same fate, which makes this decision by Novo Nordisk (NVO) even stranger and not just from a cost perspective. It’s a well-known fact that the fewer and fewer physicians are actually seeing sales reps. It’s also true that while the physician would like to have control over which drugs they prescribe increasingly this decision is being taken away from the physician and put in the hands of the patients insurance company.
Although pharma reps hate to hear this, the reality is their job function can be easily and more cost effectively performed by an automated or virtual system. This is increasingly true with diabetes drugs which are filled with me-too copycats that all do basically the same thing pretty much the same way. The days of pharma reps sitting with physicians reviewing the latest study data are over, the simple fact is if a physician wants information on any drug the fastest, easiest way to get it is to surf the net. Add in the fact that either by law or by cost concerns also over are the days when reps can leave behind drug samples.
Novo’s decision to continue to add reps while the competition is moving in the exact opposite direction would make sense if they actually had something new to sell. Yet with Tresiba delayed at the FDA indefinitely we can’t quite figure out what exactly these people will be doing. This is not like the old days when a company could put an army of reps into the field and see an almost impact on sales growth. Novo already has a well-established and well known product line. So again just what new stories can these reps, the lucky few who actually get to sit down with a physician, say.
Lastly there is the cost issue which is a major issue when one considers that pricing pressure continues to intensify. This move to add reps makes me believe that old habits die hard at Novo as they continue to believe that they will receive premium pricing for the products they make. There continued pursuit to have Tresiba approved in the U.S. is another example of this.
While the FDA is being overly cautious with Tresiba, the fact is even if the drug does eventually make it to market it will have a tough time given it’s likely a generic version of Lantus will be available which will drive prices even lower.
Years ago I warned everyone that the BGM market was transforming itself from a medical device to commodity market where price trumps performance. Unfortunately for BGM companies this prediction came true and as a result they are watching a once prosperous business sink into oblivion. Unable to divest themselves of these units it makes perfect sense they would cut costs to the bone and get whatever they can from these units.
Today we’ve been warning everyone that the diabetes drug market is following this same path and every indicator tells us that this prediction is also coming true. The real question is can a company like Novo avoid the mistakes made by their BGM counterparts.
Can they, unlike their counterparts, adapt to this new environment, see realistically where this market is and more importantly where it is headed? Their continued pursuit of Tresiba with the FDA and hiring even more reps tells Diabetic Investor that history will be repeating itself. That it won’t be long before that Novo also decides that it’s time to restructure and align costs with the new realities of this market.
We realize this not welcome news to all these new reps but it is unfortunately the way it is.
Source: Forbes Business