Question

Quintiles Transnational: Dennis Gillings founded Quntiles Transnational in 1982 when he realized that drug companies were great at inventing new medicines but not particularly good at analyzing the vast amounts of data that came out of clinical trials. He thought drug testing should be broken down into a series of standardized steps and he signed up a network of doctors interesting in enrolling patients in clinical trials. In the ten years leading up to 2010, Quintiles had conducted 4,700 trials on 2.7 million patients.

Quintiles also established a large contract sales organization (CSO) to support its pharmaceutical company clients. Large pharmaceutical companies, faced with cost pressures as well as the costs of maintaining their own sales forces, have increasingly turned to CSOs like the Innovex division of Quintiles, PDI Inc., or inVentive Health to provide variable cost “flex reps” as an alternative to adding the fixed cost they would incur if they added to their own sales forces. CSOs are widely used in therapeutic areas that require somewhat less scientific knowledge, like respiratory, dermatology, and lifestyle. The growth rate in contract sales and marketing was projected at 35% to 2015.

Question:  What are the risks of using or not using the CSO arm of Quintiles. 150 words or more.

Answer 1

Risks of not using CSO:

• High sales force cost to companies, hence if not used, companies will continue to have burden of sales employee costs
• It converts long term fixed costs into short term variable costs, hence to avoid fixed costs and investment required in it, CSO is necessary at some stage
• CSO provides a flexible work force. Companies can’t keep hiring and firing costs and operations. CSO provides that flexibility
• If CSO not used, it may question survival strategy of many companies

Risks of using CSO:

• It can hamper the traditional Relationship selling activities in such businesses
• Since using CSO can act like an indirect sales team, the buyers really won’t be interested for a long term buying approach and relative relationship building. This may hurt top line and bottom line of Pharma companies
• You can’t nurture or develop your own remaining sales force very efficiently.
• CSO can sometimes might not sell as competent as Companies’ workforce
• Lack of motivation and determination towards job in such sales CSO sales team is always an issue, may often drop sales volume and revenue