Stability Despite Decline?

Packaging professionals are being paid sustainable salaries, and the industry continues to seek skilled new packagers, but professionals are working harder and in fear of consolidation.

In today’s economy, consolidation and downsizing are on the minds of pharmaceutical and medical device packaging professionals responding to this year’s annual salary survey conducted exclusively for Pharmaceutical & Medical Packaging News. With the U.S. economy growing at just under 2% according to the U.S. Department of Commerce, these professionals are witnessing “consolidation, overall efforts to save and cut costs, and outsourcing,” reported one respondent.

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For instance, one respondent wrote that he or she was “currently involved with the merger of two large companies,” another was expecting “industry consolidation and potential departmental consolidation within company,” and still another is “currently going through a divestiture,” whose “buyer could be a large corporation or venture capital/investment bank, which will have an impact on bonuses and benefits.”

Thankfully, corporate interest in maintaining quality, increasing innovation, and implementing sustainability initiatives are keeping packaging professionals hard at work. Pharmaceutical and medical device companies are striving to innovate ahead of competitors and to meet FDA or other regulator approval, so packaging professionals who demonstrate their departments’ utility are poised to reap the rewards.

On average, salaries are healthy, and employment is stable. Respondents to this year’s survey report an average annual salary of $104,000 and an average raise of 4.1%. The average respondent has been employed in the industry for just over 16 years and at his or her current organization for just over 10 years. Only 8% of the respondents are actively looking for new jobs.

TROUBLED JOB MARKET
Salary figures in this year’s survey are lower than those reported in last year’s survey, which found an average salary of $105,000 and an average raise of 4.5%. And they are even lower than those in 2009, when survey respondents reported an average annual salary of $107,000, with an average raise of 4.8%. To be fair, there is certainly the chance that entirely different groups of professionals completed each of the surveys, so we cannot definitively report that average salaries are on the decline.

And we have no evidence whatsoever of any salary cuts.

There have been a sizable number of layoffs reported throughout the pharmaceutical and medical device manufacturing industries. PMP News sister publication Pharmalot reported last year that Merck had plans to eliminate about 15,000 jobs by 2012, Abbott Labs was cutting about 3000 jobs, and Biogen had plans to cut 650 jobs.

Survey respondents are living these headlines. “Continuing consolidation and foreign/low-cost competition will continue to squeeze profits, prevent raises, and increase layoffs,” wrote one. “Outsourcing and transfer of packaging operations there by closing my site, in which case I would lose my job,” wrote another.

The cuts continue. In May, Bayer Healthcare announced that in 2012 it would transfer production of its multiple sclerosis drug Betaseron from California to Germany. And in June, Johnson & Johnson’s Cordis business announced that it would stop making its drug-eluting stent at the end of 2011, leading to consolidations and plant closures. 

BRIGHTENING FUTURE?
The outlook for many segments in the pharmaceutical and medical device industries is positive, however. Research from Pharmalive Special Reports predicts that the U.S. implantable medical device market is set to grow more than 8% annually, credited to treatment advances for cardiovascular, orthopedic, neurological, ophthalmic, and other chronic ailments.
Globally, the orthopedics industry will experience an annual growth rate of about to 5% to 7%, predicts Pharmalive. The global market is expected to reach $41 billion by 2016,  $22.9 billion of which will stem from joint reconstruction.

Biologics advances are also driving the industry. According to Andrew Humphreys, editor in chief of UBM Canon Data Products, which produces the Pharmalive Reports, “biologics accounted for a significant amount of FDA’s new drug approvals during 2010. Some of these biologics are projected to become blockbuster brands, such as Prolia/Xgeva for osteoporosis and skeletal-related events from solid tumors, Acterma for rheumatoid arthritis, the blood thinner Pradaxa; the oral multiple-sclerosis drug Gilenya, and the prostate-cancer vaccine Provenge.”

Humphreys notes that FDA is getting stricter, particularly in its 510(k) process, but it is also working to streamline the review process for low-risk medical devices.

Survey respondents pointed to demand for their own companies’ offerings as driving packaging team compensation. Specifically, “an increase in HCV [hepatitis C virus] testing/availability of HCV drugs will drive demand for our products, increasing bonus,” wrote one. Others are witnessing an “increase in cataract surgery volumes” and an “increase in nutritional drinks
overseas.”

These market developments are influencing the progress and path of the packaging professional. Innovation is key to competition. “Innovative sales and new medical devices” will affect compensation, wrote one respondent. “Our product has not changed much over the last year, but the deliver device has.”

Investment in state-of-the-art medical equipment is also anticipated to affect the compensation of packaging professionals. “As the economy improves, I expect that capital equipment purchases will get back to higher than historical figures (due, in part, to aging surgical and infrastructure equipment). This should mean increased sales and subsequently increased compensation,” wrote one respondent.

Cost reduction in the healthcare industry is expected to drive some packaging demand. “Increased revenues seen as [an] increase of prepackaged medical devices plays a part in overall cost reduction and reduced hospital length of stay.”

However, respondents are concerned about the impact of healthcare reform. One reported that healthcare reform involves a “drive to reduce costs and outsourcing also to reduce costs.” Another said “Obamacare and [the] medical device manufacturing tax will affect personal compensation negatively.”

And the industry continues to grapple with “energy and raw materials as well as transportation costs,” wrote one.
Resin prices are a worry. “As the cost of resin increases, our costs increase, and our profit margin decreases,” one wrote.

PACKAGERS STEP UP
Emphasis is on regulatory compliance and manufacturing efficiency. “Manufacturing concerns that do not comply with industry regulations will be forced to close down,” said one professional.

Quality is of utmost importance. “Tougher regulatory climate is impacting the way we manage quality and compliance,” wrote one packager. “I believe this is a great time for quality professionals and hopefully [it will] positively impact their overall compensation and receive the appreciation for this critical function.”

Survey respondents are witnessing “more automation,” “serialization,” and “sustainability developments.”

Compensation is tied to performance, respondents reported. “Project success [is] based on manufacturing footprint moves and validation success,” said one packaging professional.

While respondents do report outsourcing, some see a jump in in-house work. One professional reported an “increase in in-house manufacturing/packaging.” Another reported that “we have taken on more product.”

Corporations are running pretty lean, influencing compensation. “The overall lean environment everybody is working in will keep raise percentages low for the next few years,” wrote one.

However, it “is expensive to manufacture quality product with minimum resources,” said another.

Despite the number of industry layoffs, there still is a “shortage of skill set,” wrote one respondent. “Only highly qualified need apply willing to serve.”

GLOBAL ENVIRONMENT
Pharmaceutical and medical device firms continue to play in global markets, and the effect on packaging professional compensation is mixed. Packagers are busy “meeting company global directives and new product launches.”

A “better economy will make more customers buy our products,” wrote one. “Also, wider (global) approval of our products after approval by regulatory bodies” affects compensation.

A “global financial crisis, especially in the EU,” concerns folks. “A large number of our sales come from the EU and any slowdown over there could have a large effect on our business.”  

However, some respondents are concerned about outsourcing, particularly to “China” or “third-world countries.”
“The industry must slow down or stop producing product from countries outside the U.S.,” urged one professional. “This will encourage a larger market to seek filling options inside the U.S.”

METHODOLOGY
Data were obtained during an e-mail survey of PMP News subscribers. The survey was designed by PMP News and Readex Research. A survey sample of 7940 was selected from PMP News’s domestic, qualified circulation, representing 8119 recipients who work for manufacturers of medical devices, pharmaceuticals, in vitro diagnostics, and nutritional supplements. The sample was limited to only those with one of these jobs: engineering, packaging design, production/manufacturing, QA/QC, and research & development. Of the 7940 surveys emailed by Readex in May, 1420 were returned undeliverable, resulting in a net-effective mailout of 6520. The survey was closed June 3 with 233 usable responses, a 4% response rate based on the net-effective mailout. The results in this article are based on the responses of 176 respondents who indicated that they are involved with healthcare product packaging and work full time for a medical device manufacturer, in vitro diagnostic manufacturer, pharmaceutical manufacturer, and/or nutritional supplement manufacturer. Statistically speaking, these 176 represent an estimated 6100 industry professionals. The margin of error for percentages based on 176 usable responses is ±7.3 percentage points at the 95% confidence level. Questions answered by groups numbering fewer than 30 respondents may not be tested at the 95% confidence level. Survey results should be interpreted with this in mind. The survey was conducted in accordance with accepted research standards and practices.

Below please find reports on professionals working in production/manufacturing/QA/QC; R&D and package design; and engineering.

 

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