Pharma Spends What on eSales?

Ed Silverman -- formerly the author of Pharmalot, now a reporter for the Wall Street Journal -- recently published some interesting pharma sales rep data from Cutting Edge Information.

According to his report ("The Pharmaceutical Sales Rep Lives to Fight Another Day"), "an average of only 10% of all interactions [between sales reps and physicians] are spent using the Internet or mobile device to host webinars or interact with physicians by email. The vast majority of physician outreach efforts continue to be undertaken through traditional methods – a face-to-face encounter with doctors. In any event, the average annual investment in electronic methods is $1.96 million."

$1.96 million? Is that a typo? Is this per company or per brand?

I've seen estimates that the pharma industry spends about $17 billion annually on physician promotion: $15 billion on detailing and $2 billion on meetings (see "U.S. e-Detailing Spending Up 74% in 2012. Yet Pharma Still NOT 'Digitally Mature'"). If only about $2 million per company -- or, let's estimate, $80 for all US activity -- is spent on electronic methods, that means only 0.5% of the total physician promotional budget is allocated to digital!

This number seems wrong and certainly not consistent with data from Cegedim Strategic Data (CSD), another market research firm. [See end of post for an UPDATE.]

In a 2012 Promotional Audit, CSD estimated that the U.S. pharmaceutical industry increased its professional digital marketing spending by 65% from $534 million in 2011 to $879 million in 2012. That's an order of magnitude greater than my estimate based on data quoted by Ed Silverman.

Perhaps the $1.96 million is per brand, not per company. I'm waiting for Ed to clarify.

Silverman also summarizes estimates on the cost of a typical sales call. This is something I've been trying to get a handle on for a number of years. Back in 2007, I asked "What Is Average Cost of Sales Call?" That poll garnered 271 responses from the Pharma Marketing Network Crowd, the consensus of which was that a typical sales call by a pharma rep costs between $201 and $500:

Click on image for an enlarged view.

The numbers from Cutting Edge Information data are as follows:

• The average cost of making a sales call to a primary care physician, with samples, was $210. But costs ranged from $50 to $500, underscoring differences among therapeutic categories and medicines.
• To visit a specialist, the average cost with samples was $285.

Whatever. It's a lot of money for sample delivery!

UPDATE: Regarding the $1.96 million number, Silverman told me via Twitter that "the study text and chart say per company." Again, assuming 40 companies doing 99% of the physician marketing in the U.S., that means only about $80 million is spent via "e" out of a total of $17 billion (0.5% of the total).

UPDATE to UPDATE: I received a copy of the original chart used by Silverman to come up with the $1.96 million estimate. It turns out that what Cutting Edge Information means by "eDetailing" may be limited to only LIVE online activities such as virtual reps performing online informational sessions and linking field reps with doctors via webcams. For an explanation and to see the chart, read Annual Pharma Investment in "eSales," "eDetailing," "Virtual Detailing" … Whatever!