GlaxoSmithKline's New Sales Force Compensation System in the US

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Excerpts

The environment for pharmaceutical marketing and sales changed significantly in the late 1990s and the 2000s. The earlier approach of the marketing team developing the marketing communication and the sales team visiting the doctor and detailing the product to him/her was no longer enough... GSK's Sales Force in the US GSK, which at one time maintained 9,000 sales representatives or Professional Service Representatives (PSRs) to promote its products in the US, had decreased its sales force over time. For instance, in November 2008, it cut 1,800 positions, bringing the US sales team down to 7500...

The company realized that in the first decade of the new millennium, there had been a significant change in the US healthcare marketplace. This change, according to Connelly, was driven by the "demand by patients, healthcare providers, and payers for higher quality care, lower costs, and better health outcomes"...

This move by GSK elicited mixed reactions from sales professionals, industry observers, and experts. Some felt that this marked a return to the old model of selling pharmaceutical products based on product knowledge rather than hard sell tactics...

Industry observers viewed GSK's new sales force compensation plan as a radical change and felt that it could transform sales and marketing. Analysts felt that as GSK was one of the world's leading pharmaceutical companies, the changes it made in its compensation for the sales force were likely to influence the business strategy of its competitors...

Exhibit I: World's Top 10 Pharmaceutical Companies
Exhibit II: Statute on Exemption for Outside Sales Employees under the FLSA
Exhibit III: Excerpts from US District Court Judge Frederick Martone's Ruling

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