Changes to our sales representative incentive programme

We are announcing changes to our incentive programme for sales representatives in certain countries. These changes reflect the growing shift in GSK’s portfolio to innovative Specialty Care products, including oncology. They will allow the Company to attract and retain the best sales force talent, enhancing the quality of our dialogue with healthcare professionals (HCPs) and helping them better serve patients. The changes uphold our ethical and values-led approach to HCP engagement, in full compliance with laws and policies, whilst supporting delivery of strong performance.

Why we are making these changes

It is important we regularly review our commercial model to evolve with the environment in which we operate, our changing portfolio and in support of our Innovation, Performance and Trust priorities.

GSK’s current Sales Force Incentive (SFI) programme was introduced in 2012. During this time, we have remained the only company to have made a broad shift in how we incentivise and compensate our sales force; our peers continue to use individual sales targets across geographies and product lines.

Also during this time, our strategic priorities have changed and our portfolio has evolved, with a growing shift towards innovative Specialty Care medicines, including oncology. This has been accelerated by the recent acquisition of TESARO, our strategic alliance with Merck KGaA and the refocus of our pipeline - which now has 17 oncology assets in the clinic and the potential launch of the first of these in 2020.

The level of complexity in Specialty Care around treatments, healthcare systems and sub-populations of patients, together with the volume and pace of scientific news, is much greater than in other areas. Speciality Care therefore requires sales representatives with a high level of expertise and experience to deliver detailed, expert information to specialised HCPs in this field to help them better serve patients.

In this context, following a review against peers, we believe we can make our current SFI programme more competitive when it comes to recruiting, motivating and retaining sales representatives and sales management with the right levels of expertise and experience. This is particularly so in Specialty Care where significant competition exists between pharmaceutical companies for talent.

Changes we are making

We will therefore make specific and targeted changes to our SFI programme for sales representatives, initially in three markets only (US, UK and Canada), that will allow us to: 

• attract and retain the best talent to enhance the quality of our dialogue with HCPs for the benefit of patients
• uphold our ethical and values-led approach to HCP engagement, in full compliance with laws and policies, whilst supporting delivery of strong performance

The key changes are as follows: 

• We will retain the existing total compensation ratio of fixed (75%) and variable (25%) pay but will evaluate the variable pay component using sales targets that are closer to the individual effort. The variable pay component will remain capped for all sales forces.
• For sales forces in Specialty Care (including ViiV Healthcare), the variable component of their pay will be evaluated using individual sales targets. We will also increase the maximum variable pay an individual sales representative working on Specialty Care can receive.
• For sales forces in Pharma Primary Care and Vaccines, the variable component of their pay will continue to be evaluated using sales targets above individual level. However, these targets will be based on the performance of smaller groups of sales representatives (rep+1 level) than our current model of rep+2 level to incentivise both strong teamwork across the particular sales territory and individual discretionary effort.

These changes will be applied in the US, UK and Canada from July 2019 and, depending on effective implementation in these initial markets, and assessment of risk, the changes may be applied in other European and major developed markets from January 2020. This means that the changes may over time affect approximately half of our sales force globally, with approximately one-fifth of the global sales force moving to the individual sales-based measures.

Support for the changes

We will put a comprehensive training, control and monitoring framework in place to ensure implementation of the new SFI policy is fully aligned with GSK’s values-based approach to HCP engagement, and in full compliance with laws and policies. All participants will be required to complete new ethics and values-led behaviour training, with twice-yearly certification. Additional controls will include active monitoring of sales data and spot checks to detect signs of potential abuse, and an internal audit of how the new programme is being rolled-out.

We will apply a zero-tolerance approach for any employee that acts against GSK’s values or infringes the policy, with a focus on off-label promotion and/or inappropriate transfer of value. Non-compliance will result in, at a minimum, exclusion from the variable pay component of the new scheme, and could result in dismissal. The variable component of pay, whilst based on individual performance versus targets, is only accessible to individuals meeting specific training and behaviour-related thresholds for ethical conduct.

This new SFI programme will mean GSK is more closely aligned to other pharmaceutical company incentive schemes, yet overall remains more conservative in Pharma Primary Care and Vaccines.

The new SFI programme, with its integrated controls, will enhance the quality of our dialogue with HCP professionals to help them better serve patients, better enable the Company to achieve its performance goals, and ensure we uphold our ethical and values-led approach, supporting our goal to be one of the most innovative, best performing and trusted healthcare companies.