Field force sizing
Pharma companies are currently reviewing their field force sizes. Having played follow-my-leader in scaling up their field forces, they are now playing follow-my-leader in downsizing them.
History does not provide comfort that they will get it right. The last downsizing wave in the early 90s (which resulted from the perceived threat from managed care - a threat that never materialised) was followed by a hasty re-sizing as company after company learnt the hard way that reps were the key driver of sales.
So, what is the optimal field force size?
Companies sometimes spend millions of dollars on large, complex field force sizing models. This is bizarre as a massive body of empirical data has shown that, in every area of forecasting, simple models are as accurate as complex ones.
The essence of a field force sizing model is extremely simple. As you hire more reps, your costs increase linearly - each extra rep costs the same amount of money.
But, the returns from each additional rep do not grow linearly. This is because of the law of diminishing returns. Each additional rep delivers a little bit less than the last one.
So, as we increase rep numbers, the additional sales returns decline, but the additional costs don't. We therefore eventually reach a point where the cost of hiring a new rep equals the returns that they generate. This is our optimal field force size because, if we hire any more reps, the returns will be lower than the costs.
Inpharmation has developed an elegant software tool for pharma field force sizing. It allows you to employ a simple, evidence based approach that is just as valid as the hugely expensive mega-models, is less expensive and easier to understand.
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