The Deadliest Strain

Chapter Six

They do this to us every time," the Southern California sales manager boomed. 'They're yanking our chain again. They know we have a September 1 release date for the Strep-Tester Home Kit. They should know how big this thing is going to be — If we get it out there before the sore-throat season starts."

"A delivery shift of one month will hurt us, but it isn't going to kill us," the VP of Sales interrupted. "And Bill and Ned Reynolds have told me personally that the change in production schedules will create a marked improvement in the company's cash flow. The government is making special arrangements."

"Be that as it may, we're undercutting the credibility of our frontline sales guys in not delivering a new product when we promised."

"As a company, we can always use improved cash flow, but I agree with you," another district manager chimed in. 'This is a major problem we have — we never say no to a quick buck. Frankly, when it comes to long-term planning, we stink. We don't stick to our strategic plan when we make 'adjustments' like this. I don't even know why we bother to diversify product lines. Whenever the government says jump, we say, How high?"

David Link looked around the room. He'd expected pandemonium, and he wasn't disappointed.

As the second-in-charge for North American sales, he'd had a half day lead over all the regional directors on the breaking company news.

David had been scheduled to be on vacation this week and next. Of course, in his position, no vacation was going to stop the top dogs from calling him on his cell phone. They wanted him at this one o'clock meeting in Wilmington today. The company was dropping a bomb on the sales department, so he'd made the two-hour drive. The good thing was that he and Sally and the kids were staying at his in-laws' beach house in Lewes. Although he was interested on how the sales force would react, he was looking forward to driving back to the beach tonight. These days, it seemed to be an increasingly rare event when they could get their family together under one roof for a dinner.

The uproar continued as management let the steam vent. It seemed that everyone wanted to get something off their chest. On the phone to Bill and Ned Reynolds, David himself had done some squawking when they'd told him of the decision to push back the release of their hottest non-military product in two decades in order to accept another government contract.

Reynolds was one of the last privately owned, midsize pharmaceutical companies in North America, and its quarterly sales had been creeping up on $100 million over the past two years, with net profits on a steady twenty to twenty-five percent rise. Since the company's founding back in the 1960s, the majority of Reynolds's business had been government-related, a situation that had gotten them off to a strong start but had created severe shifts in revenues, depending on the administration in Washington and the political affiliation of the founding family. Recent strategic planning by Bill and Ned Reynolds, the second generation running the company, had produced a five-year plan and two major changes. One was for Bill to become a vocal contributor to the Republican party while Ned remained a Democrat. The other was to push a chunk of money into R&D. Their ultimate goal was to expand their prescription and over-the-counter drug production until their government contracts comprised roughly fifty percent of the business.

David looked at his watch. They'd started the meeting an hour ago and they had yet to get anywhere. He did some quick math in his head regarding how long it'd take to make the commute back to Lewes tonight, considering the traffic. He definitely didn't want to miss dinner with the family. Their eldest daughter, Jamie, was heading back to New York tomorrow morning.

"Why doesn't anyone give us a straight answer?" someone in the room asked. "It seems like we're screwing ourselves for no reason."

The grumbling continued as the VP of Sales repeated his position. David knew the guy was in over his head, in spite of having gone to prep school with one of the Reynolds brothers.

Well, David thought, this was as good as any time to chime in and minimize some of the damage. Perhaps, with a little luck, he could even help to wrap things up. While David had been en route to Wilmington today, Bill Reynolds had made a follow-up phone call to him. Bill knew that there would be a lot of objections to the company accepting this new contract, especially on the part of the sales force. He'd asked David to intervene, if necessary.

David had actually been honored by the call. It was reassuring to know that he was highly respected by the Reynolds brothers. Twenty-six years he'd devoted to this company, and it was always good to realize that you were trusted by the people above you on the management ladder, as well as below.

That was a curious thing, for David was seen in the company as a family man. In general, a strong family life always seemed to run counter to success in American business, but not at Reynolds Pharmaceuticals. In fact, Bill and Ned had been vocal about David as a role model for younger executives. They saw it as a strength that he cherished his wife and three children. And Bill had been very supportive recently when David and Sally had gone through some very difficult times. Their youngest son, Josh, was twelve, and nine months ago he'd been diagnosed with leukemia.

Of course, with Sally giving up her job and managing the brunt of Josh's hospital visits and treatments, David's own work hadn't suffered badly this past year. But he'd made some changes. He was now not only a lot more flexible with his own schedule, but also with those of his employees. Working with Human Relations to make his staff a "test case" for the company, David had offered a lot of leeway for working from home or scheduling business trips around family commitments. Since implementing these changes, the sales numbers for his group had gone off the company charts. Initially, Bill and Ned had been cautiously supportive of the changes, but with performance continuing to remain strong, they were now completely on board with his management techniques.

The second reason for David's popularity with the company had to do with his habit of not dictating orders, but explaining a situation clearly and giving his team all the facts. Of course, he'd do a major selling job on the decision he wanted them to make, but in the end his people always felt that they had an input in decisions.

With the situation that had been dropped on his lap here, he wasn't totally sold himself, but he had to give it a try.

"Let's put all the facts on the table," he broke in.

The undercurrent ceased momentarily. The VP of Sales nodded to him gratefully. David pulled out his notepad and conveyed some facts and figures that he'd put together as soon as he'd arrived at his office before the meeting.

"Rather than getting competitive quotes and all the rest of it, the undersecretary of Health and Human Services asks us to produce one million units of DM8A serum in two weeks. They know our production rate, and they're well aware that we're operating now at maximum capacity across the board. It's public knowledge that the Dover plant won't come online with Strep-Tester production until early September. They also know that the Scranton plant is ready to switch over to production of DM8A when FDA approval comes down. The bottom line is this — to come close to filling this order, everything else in the queue — including new orders and the processing of returns — everything would have to come to a screeching halt and the focus put on this one order. So why would we do that?"

Someone at the far end of the room responded. "HHS comes to us because they know that every one of our competitors would tell them to go pound sand with that kind of deadline."

David nodded. "You're right. At the same time, we know that with standard lead time for that kind of volume, the unit selling price for DM8A serum is planned at just under two dollars. But HHS is offering to pay us close to fifty dollars for each unit, and they're throwing in a onetime setup charge and authorization for overtime billing to run our facilities 24/7. Overruns are theirs, too. They'll take any extra units we can produce in that amount of time. In addition, the money will turn over net-ten… not the standard sixty to ninety-day payment."

As always, it felt great to work in Sales. David could see pens scribbling on paper and numbers being punched in the calculators.

"That's a lot of money," someone said.

Heads were nodding.

David looked around at the faces. "And who in this room is not part of our profit-sharing?"

The murmurs were starting to take on a more positive note.

"Of course, we all are," the California sales manager said in his booming voice. "But what's the rush? Is there a fire they're trying to put out? We've been hearing that DM8A isn't scheduled for FDA approval for another five months. So what's it about?"

"DM8A is a new antibiotic," David replied. "It's better than anything out there and they want it."

"Yes, but HHS doesn't spend this kind of money without months of red tape… unless there's some emergency disaster relief in the works. What's going on?"

David shook his head and deferred to the VP of Sales, who shrugged his shoulders. No one had the answer to the question… not even Bill or Ned Reynolds, as far as he knew. That did bother him somewhat, but he wasn't about to let his emotions be a distraction here.

David tapped his finger on his open notepad. "The answer to that question falls outside of our purview. The government is insisting on complete confidentiality. This is nothing new. We've done it before. We get paid generously to meet their demands and keep quiet about it. And it's not like we're making some kind of chemical weapon. They're asking for antibiotics. I say we do our part in supporting this large order."

The fight seemed to have seeped out of them. There were a few nods, no objections.

"Since this is obviously a done deal," the East Coast director said calmly, "we should be spending our time now coming up with a strategy on how to deal with preorders on Strep-Tester. Our customers won't be happy."

"Preorders of Strep-Tester aren't the only problem. How about the standing orders on existing products?" another person added.

"We're putting together numbers on warehoused product right now," the VP of Sales replied. "We'll have an impact report later today. With regard to the Strep-Tester, we've arranged for some ten thousand additional sample-size packages of testers to run through this coming week as we gear up for DM8A. Use these as giveaways. We're raising the ceiling on your expense budgets for the next two months. Wine and dine the big accounts. Do what you're good at. District sales managers will provide information sheets to the reps regarding what we'll call a possible delay at this point. Tell them that we'll be shipping production lots before October 1. You all know the drill. Keep them happy, whatever it takes."

In addition to a year's worth of promotional brochures and literature, advertisements in key publications and months of beating the pavement, only five hundred samples of Strep-Tester had been distributed by the sales force. David knew the ten thousand additional samples would definitely be a help.

He also knew that everyone in this room, along with the entire sales force, would have medicine cabinets full of samples of DM8A, in case of an emergency. They weren't fools, and this was one perk that went with being in this line of business. The general public might have to wait in lines and pay an exorbitant price for new medications, but not drug company reps.

"Okay." The VP of Sales stood up. "We all know the routine. Production information is not to leave this room. Now, let's get to work."