Glaxo Changes How It Pays Sales Reps as Drugmaker Bets on Cancer

(Bloomberg) -- GlaxoSmithKline Plc has reversed course on how it pays some of its sales representatives in a bid to spur growth as the U.K. drugmaker expands in the competitive market for cancer medicines.

Glaxo will put more emphasis on individual staffers’ performance in a move that will affect about one-fifth of its global sales force and bring its policies more into line with rivals’, according to a statement Thursday. The company said it will impose more controls to monitor sales data and detect any signs of abuse.

The changes are a sign of Chief Executive Officer Emma Walmsley’s efforts to boost Glaxo’s competitiveness while moving further into the cancer field, pharma’s most lucrative area. In October, the company said it would resume paying doctors to promote its medicines and attend medical meetings, unwinding a policy introduced five years earlier following a U.S. probe of its marketing and sales practices.

In 2011, then-CEO Andrew Witty introduced a program that eliminated the link between sales targets and bonuses for Glaxo’s U.S. marketing team. Few drugmakers followed.

The latest moves will occur in the U.S., U.K. and Canada starting in July, before potentially reaching other European and developed markets in 2020, the company said. Glaxo said it will keep the existing ratio of 75% fixed pay and 25% variable compensation, but will use individual sales targets to figure out the latter component in its business that includes cancer and HIV medicines. The company also will increase the maximum bonuses an individual sales representative in that unit can receive.

To contact the reporter on this story: James Paton in London at jpaton4@bloomberg.net

To contact the editors responsible for this story: Eric Pfanner at epfanner1@bloomberg.net, John Lauerman, John J. Edwards III

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