* Drugmaker to hire 10-20 pct more doctors in-house
* Follows move to stop paying outsiders to promote drugs
* GSK hopes for long-term competitive advantage with revamp
* Short-term challenge to maintain effective promotion
By Ben Hirschler
LONDON, April 17 (Reuters) - Drugmaker GlaxoSmithKline - hit by bribery claims in five countries - is to employhundreds more doctors as members of staff as it seeks to build anew sales model designed to eliminate sharp marketing practices.
Following a decision to cut commercial ties with outsidedoctors, GSK expects to increase its in-house team of physiciansby 10-20 percent over the next year or so from around 1,500 atpresent, Chief Medical Officer James Shannon told Reuters.
Leaders of Britain's biggest drugmaker believe they have ablueprint that will put GSK ahead of rivals when it comes toethical behaviour - but the company keeps getting knocked backby allegations of past corrupt practices.
GSK is now investigating claims that bribes were paid todoctors in Poland, Iraq, Jordan and Lebanon, following a muchlarger case of alleged bribery in China.
Chinese authorities in July accused GSK of funnelling up to3 billion yuan ($483 million) to doctors and officials toencourage them to use its medicines in a case that the companyhas described as "shameful".
Shannon, the man charged with overhauling relations with themedical community, admits that changing fundamentally the wayGSK interacts with doctors will require "a lot of work".
The firm aims to become the first in the industry to stoppaying outside doctors to promote its products, end payments formedics to attend conferences and delink incentives for salesrepresentatives from individual sales targets.
It won't be easy. A key challenge in the process, which isdue to be completed by 2016, is how to make the transitionwithout ceding business to rivals in the $1 trillion-a-yeardrugs industry.
Since none of its peers have yet followed suit, industryanalysts - and some company insiders - say GSK's unilateral moverisks putting it at a marketing disadvantage, particularly inemerging markets.
"It's a hard thing to do, and it could have a negativeimpact on revenues," said Stijn Vanacker, global healthcareanalyst at investment manager Robeco. "Doctors are the ones whouse the drugs. They are the customers, and you need themonside."
STEP BACKWARDS, MOVE FORWARDS
There is a long tradition of drug companies paying outsidemedical experts, known as "key opinion leaders", to speak ontheir behalf at medical meetings, based on the expectation thatother doctors will trust their opinions.
Shannon acknowledges the risk in abandoning the decades-oldpractice but believes society's demands for squeaky cleanrelations between doctors and industry means GSK will be at acompetitive advantage in the long term.
"Sometimes you have to take a slight step backwards to moveforwards," he said in an interview.
"I'm assuming society will continue the pressure, andeverybody else will have to follow, and I would rather be doingthis in an organised way over the next 18 months rather thanfind that regulations have changed and we are forced toimplement it in six months."
In the United States, where GSK has already decoupled reppay from sales volumes, it has found that business has notsuffered, and in some cases commercial staff are getting accessto doctors who refuse to see rivals, Shannon said.
Adapting to the new, stringent in-house rules will require are-balancing of resources at GSK.
Part of that will see GSK giving more money to third-partyacademic organisations to fund medical education, but thecompany is also expanding its medical affairs department andrecruiting more trained doctors to work full-time for thecompany. Shannon said he was looking to recruit both juniormedics as well as some leaders in their field.
Some of them will act as expert speakers at medical meetingswhere outside experts have been used up until now.
"It is still important to have those discussions, but therewill probably be less than we have today," Shannon said.
"This is not a one-for-one process of stopping paying doctorX and replacing him by doctor Y - this is an entire rethinkabout our business practice."
GSK also intends to make much greater use of digitaltechnologies, such as webcasts and webinars, to communicate withdoctors instead of paying for them to attend conferences.
Despite the barrage of bribery reports, GSK insists it doesnot have a "systemic issue with unethical behaviour" and says ithas a clear system for dealing with violations, which resultedin 48 dismissals and 113 written warnings last year.
Public concerns about interactions between drugmakers anddoctors are unlikely to go away, with companies now obliged todisclose payments to individual doctors in the United States andsimilar rules set to take effect in Europe in 2016.
Authorities on both sides of the Atlantic are also lookingfor cases to prosecute under the U.S. Foreign Corrupt PracticesAct (FCPA) and the UK Bribery Act, which prohibit payments togovernment officials, including state-employed doctors, toobtain business overseas.
Pfizer and Johnson & Johnson have bothsettled claims under the FCPA within the past three years, and aReuters examination in 2012 of filings by the world's top 10drug companies found that eight of them had warned of potentialcosts related to charges of corruption in foreign markets. (http://www.reuters.com/article/2012/02/28/us-pharma-corruption-idUSTRE81R0S720120228) (Additional reporting by Adam Jourdan in Shanghai; Editing byWill Waterman)
Glaxosmithkline (GSK)