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A prospective client called several days ago and asked: “What should I pay a great performer and what should I pay a salesperson who doesn’t meet expectations?”

Assessing sales compensa

According to USFDA, a combination product is one composed of any combination of a drug and device; biological product and device; drug and biological product

tion effectiveness from the perspective of expected market pay levels is far too limiting. Sales compensation should be evaluated within the context of the entire performance and pay ra

; or drug, device, and biological product and fixed dose combination would include two or more combinations of drug.

Examples of combination products may in

nge for the job performed and results delivered. Furthermore, sales compensation plans and pay levels should be created or critiqued in the same way that one assesses any other investme

lude drug-coated devices, drugs packaged with delivery devices in medical kits, and drugs and devices packaged separately but intended to be used together.

nt geared toward making money or improving future business.

Companies expect a substantial revenue and profit return on their investment in sales compensation. For example:

1. A compa

here is enormous increase in the number of combination products entering the market in the recent years. Combination products have proven advantages but fixe

ny that pays a 10% commission invests $1.00 to net $9.00 – a 9:1 return on its commission investment.

2. A company that provides a $25,000 bonus opportunity to a field sales representat

d dose combinations are still in the process of convincing regulatory authority on their advantages over the single ingredient formulations.

Combination pro

ive for generating $2,500,000 in revenue does so in the expectation that it will receive $100 for each dollar of bonus paid.

So how do you increase the odds of getting a substantial ret

ucts have become life saving products for the pharmaceutical companies who doesn’t have many innovative molecules in their product pipeline and have been inc

urn on sales compensation and achieve a reasonable compensation cost of sales? First, you build a clear understanding of how sales resources influence the sale so that your sales force

easingly used in the product life cycle management. Even the companies having product patents are trying to extend their product life cycle through the combi

is precisely focused on factors that matter. Supporting the sales effort through astute organizational definition and performance-driven pay creates the link between sales effort and de

nation products and maximize the revenues. But the companies involved in this practice are overlooking that they are burdening the patients both economically

livered results.

Every bit as important as incorporating the drivers of performance into the sales incentive plan is the creation of an effective connection between pay and results. Th

and physically. They need to rightly judge the benefits of the combination products and they have to even look at the risks involved when combining the produ

is means you need to make sure total pay is incentive-weighted and variable compensation is leveraged – configured to produce market-leading payouts for high performance. Low performers

ts. Some of the combination products were well accepted by physicians while others suffered. Companies involved in development of combination products are fi

must be paid meaningfully below market, creating significant performance-based incentive payout differentiation. Aligning your incentive payout profile with the marketplace doesn’t ade

ding difficulty in defining their combination products and facing various challenges from selecting a combination to marketing it.

Following aspects would a

quately pay “winners” like winners and “losers” like losers.

You can reveal the amount of incentive payout differentiation in your sales incentive plan by examining your incentive payou

dd to the challenges in developing combination products:

Which markets to tap where the combination products can do fairly well?
Which combination prod

t multiples. Compare your payouts for high performance to the awards paid for low performance. The high performance payout divided by the low performance payout is your incentive multi

cts are meaningful and rational?
Which therapeutic categories to select?
Which Combinations can address unmet needs of the patients?
Do combin

ple. The multiples across your performance distribution (e.g., “target” vs. “minimum acceptable,” “excellent” vs. “target,” and “outstanding” vs. “excellent”) should accelerate, recogni

tions increase the patient compliance?
What would be the developing cost?
How to tackle the risks encountered during combination product developmen

zing the value of achieving increasingly difficult performance levels. You can test your incentive payout differentiation against the market by comparing your multiples to the market’s

t?

As combination products don't fit into the traditional categories of drugs, medical devices, or biological products, the USFDA is in the process of devel

50th vs. 25th, 75th vs. 50th and 90th vs. 75th percentile incentive payouts.

Best-practice companies have high performance sales cultures. Their strategies for acquiring and retaining

ping new procedures for reviewing their safety, efficacy and quality.

Professional from academic institutions, pharmaceutical industries, health care indust

business are aggressive. Losing profitable revenue growth that was hard won isn’t acceptable. Goals at the salesperson level are stretched.

High performing companies are intolerant of

y and representatives from various regulatory agencies are working out to design the regulatory requirements for manufacture and sale of combination products

, and pay stingily for, below goal performance. Rewards for high performance are significant. Their incentive payout at “outstanding” performance is at least four times the award at “t

.

As there is an increasing trend of the combination products companies manufacturing such products should be able to tackle the problems involved in the de

arget” performance and as much as twenty-five times the payout at “minimum acceptable” performance. But, they also know that sales compensation alone won’t drive high performance. And

elopment. They need to be wiser in analyzing the market trends and the regulatory requirements.

Companies that provide selfless information through particip

so they employ an integrated approach toward performance management, emphasizing sales leadership, training, sales focus, communication, performance measurement and pride of achievement.

tion in industry events and feedback to regulatory authorities would be able to face the challenges and will be successful in developing combination products

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