KEY TAKEAWAY: AstraZeneca is looking at ways to more directly link executive compensation to a $45 billion revenue target amid investor concern over the pay package given chief executive Pascal Soriot. Too often when this happens sales comes first at the expense of legal and good marketing practices.
I’ve seen some executives, within pharma, make bad decisions based on the need to achieve sales targets. One VP once told me, when I voiced regulatory and legal concerns over a project, that “it’s legal as long as we don’t get caught”. He was a former sales director now in charge of marketing a pharma product.
When compensation is directly linked to sales people tend to make really bad decisions in pursuit of bigger paychecks. This in turn puts patients last and gives legal and regulatory people sleepless nights. I’m sure those of you reading this story who work in pharma know of the many instances when sales were made a priority.
Mr Merck once said that “good medicine leads to good business” but today impatient investors who want their investments doubled in a year are driving down pharma stocks because they don’t understand the changing landscape of healthcare.
Maybe instead of linking a really high compensation package to sales the Board might want to reduce pharma CEO compensation and measure what’s really important, like new drug development, employee turnover and the effectiveness of new drugs. If indeed the compensation is linked to sales than AZ will become a sales driven company and I guarantee we will read about a fine that will be levied because they put sales ahead of patients.