No Red Envelopes As MRs Granted New China Recognition

The exchange of red envelopes containing gifts or money, considered customary during the Lunar New Year celebrations in China, is becoming an outdated practice as far as medical reps and physicians go, amid ever-increasing ethical scrutiny and government efforts to restore the reputation of a tarnished profession.

BEIJING - Even the head of a top industry association can't tell exactly how many medical reps there are in China, underscoring a highly fragmented situation.

According to Zhou Yan, deputy sectary-general of the China Pharmaceutical Industry Association (CPIA), a domestic industry group, there are an estimated tens of thousands of people working in this role.

"The medical reps are large in number, composed of people from all backgrounds, and their capabilities are largely uneven, posing great challenges to effective management," conceded Zhou during a forum on pharma field forces, held Jan.26 in Beijing.

The meeting was held to mark the official recognition of medical (pharma sales) reps as a profession that is now included in China's latest version of its “Dictionary of Occupation Titles”.

First really emerging in China in the 1980s, a medical rep position has never been seen as a glamorous job. The situation is further complicated by the highly competitive nature of the generics-dominated industry in China, where 96% of the roughly 4,700 domestic drug makers rely on producing copycat drugs.

To gain a competitive edge, many manufacturers resort to extreme and irregular marketing tactics such as offering bribes in exchange for prescriptions. The "Daijinxiaoshou”(cash for prescription) practice was so prevalent a few years ago that the government initiated a nationwide probe.

"For makers that can't compete with innovative new drugs, they rely on aggressive sales methods, even illegal means. That has made medical reps the society's bad apple," Zhou told the forum.

Both multinational and domestic firms have come under investigation for compliance violations, and UK-based GlaxoSmithKline PLC was fined $485m for wrongful marketing practices (Also see "GSK “Sincerely Apologizes” And Accepts Record $485 Million Fine For China Bribes" - Scrip, 19 Sep, 2014.).

Since then, the company has changed its sales compensation mechanism for reps globally, shifting away from a focus on meeting and exceeding sales quotas.

Which Category?

The inclusion of medical reps into China's list of official occupation titles is largely a correction, pointed out Xu Jiangong, a member of the China FDA's expert committee on occupation titles.

"We want to use the opportunity to reinstall the original meaning to medical reps in China, correcting wrong conceptions, and returning the profession to its true self," he explained.

To that end, medical repping as a formally recognized occupation has been placed under the sub-category of international commerce within the economics and finance professionals category. It is not in the medical professional group as reps are seen as only a link between such professionals and drug makers, and so are not in the same categories as physicians, clinicians, or pharmacists, explained Fan Wei from the China Academy of Personnel.

Still, the inclusion represents a step forward in recognition. From now on, sales personnel will also have to pass certain requirements to become an MR and will need to go through vigorous training on subject knowledge, marketing and sales and ethics, and to follow the formal Code of Conduct, pointed out the CFDA's Xu.

The Code

The Code is an especially thorny issue in China, where business negotiations are often conducted over dinner tables and contracts discussed at drinking parties, while gift-giving over major holidays like the Lunar New Year is a must.

Realizing the challenges, industry associations including the R&D-based Pharmaceutical Association Committee (RDPAC), which represents multinationals, and the CPIA introduced a Code of Conduct for MRs in 2014, and reinforced it by seeking pledges of support from other associations.

At its first introduction, nine associations signed on and one year later 17 came onboard, including physician lobbying groups such as the China Medical Doctors’ Association (Also see "GSK Aftermath: Industry Grapples With Compliance Issues" - Scrip, 26 Sep, 2014.).

The over-arching objective is to reduce case-based sales tactics from both the giver's and receiver's side, the CPIA's Zhou stressed.

"The end goal is to create such an environment that the government bans the [cash] gifting by MRs, and drug makers are fearful to give it and physicians are unwilling to take it," she said.

MR Reductions, Training

Despite the progress, China's ongoing economic woes have dented pharma industry growth and directly impacted MRs, and while sales forces are still large in size, the absolute number has been declining despite the industry's chronic need for talent.

One factor is companies’ business strategy shifts. In the wake of the compliance probe, GSK for instance has downsized its operations in China through plans to let go roughly 1,000 people (Also see "GSK Reportedly To Lay Off 1,000 In China" - Scrip, 27 Jan, 2015.).

US firm Bristol-Myers Squibb Co. has also cut its China head count by nearly 1,000, mainly in sales functions.

The inclusion of MRs into the official occupation titles is also expected to heighten professional requirements and mean more potential staff exits, pointed out industry experts.

Presenting at the Beijing forum, Brendan Shaw, assistant director general of the International Federation of Pharmaceutical Manufacturers and Associations (IFPMA), said that the role of MRs in general is becoming more complex due to rapid industry changes and requirements for efficiency.

To that end, the industry needs to increase training to nurture the professionalism of reps, he said.

Tokuo Tanaka, the managing director of the Japan Pharmaceutical Manufacturers Association (JPMA), speaking at the forum along with Yohei Chikazawa, director of the Japan MR Certification Center, said that industry associations need to closely monitor MR behavior to avoid any conflicts of interest. Several high-profile scandals in recent years in Japan have damaged the pharma industry’s reputation in the country.

In China, many MRs are simply sales personnel and if they don't upgrade to become a professional, they will have to be forced out, RDAPC managing director Joseph Cho emphasized. His group offers annual certification exams for MRs but still predicts declining numbers.

Since reaching a peak figure of 12,139 candidates taking the group’s non-mandatory tests, the figure has been steadily declining and in July 2015 only 8,562 people took the exams, reaching a five-year low.