Being Swallowed by the Big Fish -- and Surviving
Mergers and acquisitions continue to affect the careers and salaries of professionals in the healthcare packaging industry, but most respondents to this year's salary survey report stability, not shake-ups.
Daphne Allen, Editor
It seems like everyone will soon work for Johnson & Johnson, Tyco, Medtronic, Baxter, or a small start-up with new technology." These words, spoken by a packaging engineer in the medical device industry whose company was just purchased by Tyco, reflect the sentiments of respondents to PMP News's third annual salary survey. Mergers and acquisitions, which have been changing the medical and pharmaceutical industries for years, are continuing to affect the careers of packaging professionals. A significant number of respondents this year speak of such transactions either cutting their departmental budgets or restructuring their responsibilities. Some even mention layoffs.
The downturn in the economy has also affected packaging professionals. "Flat sale prices and slow market growth will affect compensation changes," one respondent writes. "This has been with us for a few years and is likely to continue for a few more." Says another, "Uneasiness on Wall Street [is] drying up venture capital, causing us to tighten our belts."
However, industry demand for healthcare packaging professionals has not significantly decreased. In fact, respondents report a need for talented packaging engineers, and those currently employed are enjoying relative stability. In the words of one respondent, there is a "higher demand for qualified personnel and thus more jobs." Says another, "High demand for qualified packaging engineers will increase my workload." These professionals are earning healthy wages: Respondents this year report an average salary of $74,700. This year's median salary is $70,000, with nearly two in five making $75,000 or more and only 4% earning less than $40,000.
Rather than cut back on personnel, companies in the midst of a merger or acquisition or a slowdown in sales often take other approaches to keep packaging costs down, such as investing in sophisticated packaging lines that save time and effort or selecting packaging systems that reduce material costs. Respondents speak of such trends, often relating them to individual success. "Compensation will be based on ability to implement increasingly more technical and sophisticated control systems, vision systems, and motion systems," explains one respondent.
Today's packaging professionals understand that their success hinges on that of their companies, and they are acting accordingly. "If we turn a profit, my salary will go up," and an "increase in product sales will increase business profit, justifying increases in compensation," say two survey respondents. Consequently, packaging professionals who can help their companies become and remain profitable are enjoying stability and rewards, regardless of the mood of the market. And, as in the past two years, job satisfaction among respondents remains high—on a scale from one to five, with five representing very satisfied, more than 70% of the respondents selected four or higher. As a result, only 8% of the respondents are actively looking for new employment.
EFFECT OF MERGERS AND ACQUISITIONS
Packaging professionals who handle healthcare products tend to stay put once employed. On average, survey respondents have been employed at their current organizations just over nine years, and they have been in the healthcare product packaging industry 11 years. As yet, mergers and acquisitions haven't shaken up this stable landscape too badly. Some packaging professionals are even benefiting from such transactions. As a result of growth through acquisitions and mergers, one respondent's "company will grow fourfold in the next 10 years." Another faces "less competition."
Some healthcare packaging engineers, however, are nervous. "My situation could go either way," says one engineer. "If my prayer is answered, [the company that just purchased us] will just make some minor changes and give us the autonomy to run our existing facility and business."
A few respondents echo such concern. One worries about "losing [his] job because of consolidation resulting in job reductions." Another says that "consolidation may allow early retirement." And another says that a "merger could result in static compensation or lost jobs."
Other respondents, however, speak of different ways companies are trimming costs. "Purchasing companies might hold raises for one year, making it two years before we get a raise," explains one respondent. Says another respondent, "We were just acquired by a larger company with more rigid compensation rules than we [once had], although there is a bonus plan."
The downturn in the economy has had similar effects. Several respondents speak of "low sales," "lean manufacturing," and "the pressure to reduce the cost of manufacturing pharmaceuticals." Such realities are resulting in "corporate downsizing," "stagnant compensation," and "fewer profits equaling less compensation," respondents say.
However, as with those firms undergoing mergers or acquisitions, manufacturers are cutting back in areas other than their workforce. Says one respondent, "Cutbacks in business will result in cutbacks in business machine purchases. This will affect department budgets." Another respondent's company is "stalling programs." And, because his firm has few products in the pipeline and "may not meet financial targets for the year, [one respondent] would not receive full hours [and instead receive] a smaller percentage raise."
For those firms that need to reduce their workforce, they seem to be relying on attrition rather than termination. "Market downturn will cause some companies to reduce workforce and delay hiring," says one respondent. Another is witnessing "budget restrictions toward new hires."
Respondents predict that as soon as the market improves and their company profits increase, so will their compensation. "Bonuses are based on corporate performance," explains one respondent. Several are very optimistic. "As sales of our product increase, I should be in line for a promotion," says one professional. Another expects his "industry to rebound fourth quarter."
Despite respondents' worries, mergers and acquisitions and the recent near-recession have yet to hamper salary increases. The average salary increase this year is 6%, with nearly 80% of those receiving raises getting them without a promotion or change in job responsibilities. Only 10% of the respondents did not receive raises.
Professionals responsible for research and development and package design lead the pack in terms of average salaries and raises. In this year's survey, they report a mean salary of $80,400 and increases of 6.8%. Engineers are earning an average $72,600 and receiving raises averaging 5.3%. Respondents involved in production, manufacturing, and quality assurance and quality control are receiving a mean salary of $72,700 and raises averaging 5.9%.
Female respondents did see higher raises than male respondents: With a mean salary of $69,200, females received raises averaging 6.7%, while males, earning a mean salary of $75,900, received raises averaging 5.9%.
STRATEGIES FOR COMPANY AND PERSONAL SUCCESS
Drug and device makers looking for ways of cutting back seem to be turning to technology, such as automated lines that increase productivity and that reduce errors and waste. As solutions, survey respondents speak of the increasing need for automation in manufacturing and laboratory environments. According to one packaging professional, "increasing productivity" is important. Another says that the "need to develop and implement flexibility into packaging processes" affects his compensation.
Improving drug and device packaging is also important to company and individual success. One respondent says that his personal compensation will be affected by his ability to "improve packaging design and production output."
For a company to translate the use of automated packaging lines or improved packaging into cost savings, however, its employees must be trained to operate and maintain such systems. "Increasing operation efficiency requires increased skills," says one professional. Reporting "manpower shortages," respondents say that companies "need qualified personnel."
Some professionals blame a lack of appropriate academic training. "Colleges do not train for real-life work in the pharmaceutical industry, so the job market is tight," one professional explains. He "expects good raises to retain" him.
Capabilities that respondents identify as factors key to compensation increases are a knowledge of validation procedures, an ability to maintain GMP compliance and to adhere to revised ISO standards, and a familiarity with automation systems.
There is little question that today's business climate is affecting healthcare packaging careers and salaries. Even though the average raise that respondents received within the last year is 6%, a significant number of respondents say that future raises depend upon the profitability of their companies. Some respondents report more "performance-based bonus pay," for instance.
But rather than heading to the classifieds for new jobs, packaging professionals appear to want to stay put and wait for better times, and many are willingly increasing their knowledge of new technologies to help create those times. Operating as team members, they understand the significance of their role—one respondent says his "challenging work impacts the bottom line of his company"—and therefore they are investing their own futures in their companies.
The data for this year's survey were obtained during a mail survey of PMP News subscribers. The survey was designed jointly by PMP News and Readex Inc. (St. Paul, MN) and conducted March through May of this year. Surveys were mailed to 1000 subscribers who represent 9180 packaging professionals who work for manufacturers of medical devices, pharmaceuticals, clinical diagnostics, and vitamins.
The sample was limited to only those with one of these job functions: engineering, package design, production/ manufacturing, QA/QC, and research and development. To ensure representation of key recipients only, known suppliers to the industry and those with job titles of administrative assistant, attorney, buyer, CEO, CFO, consultant, owner, president, purchasing, or secretary were manually omitted from the sample by the editors before the surveys were mailed.
Out of the 1000 mailed surveys, 471 subscribers returned usable responses, representing a response rate of 47%. Because usable returns were received from less than half the survey sample, the possibility exists that those who did not respond might have answered differently than those who did. Survey results should be interpreted with this in mind.
The results presented in this article are based on the 377 respondents who indicated that they are involved with healthcare product packaging and work full time for one of the types of manufacturers listed above. These 377 individuals represent an estimated 7300 industry professionals.
The margin of error for percentages based on 377 usable responses is ±4.9% at the 95% confidence level. The margin of error for percentages based on smaller sample sizes—males or females, for example—will be larger.
This survey was conducted by Readex in accordance with accepted research standards and practices.