Over the past three years, pharmaceutical companies collectively jettisoned 150,000 jobs. Small wonder that the industry now finds itself facing an enormous talent gap in its scientific work force, according to a report released this week by PwC's Health Research Institute (HRI).
Just as biopharmas try to form more agile organizations based on partnerships with third parties, alliances with vendors and market innovations such as offshoring and crowdfunding, employees with the skill sets to manage those roles are being lured away by academic medical centers, contract research organizations and industry suppliers.
The PwC report, "New chemistry: Getting the biopharmaceutical talent formula right," suggested biopharmas must look outside the industry for fresh skills and adopt nontraditional approaches to compensate and incentivize employees.
"In the traditional model, it was not unusual for a person to be in an individual large pharma company for decades," said Robert Franco, a principal at HRI. "We're seeing that model erode."
An HRI survey of human resources and R&D executives at U.S. biopharmaceutical companies found that 72 percent of organizations plan to increase R&D capacity over the next 12 months, and six in 10 plan to increase investments in their work force over the next three years. However, 51 percent of executives reported that hiring has become increasingly difficult and only 28 percent felt confident they would succeed in recruiting top talent.
The telephone survey of 130 industry executives, completed in October 2012, concluded that talent gaps represent the second greatest threat to biopharma growth, after concerns about corporate tax burdens.
Although biopharmas still need rock star scientists, those individuals must do more than simply conduct experiments and translate the scientific findings. With much of the early stage discovery and development effort now delegated to third parties, "the skill sets needed are for people who can oversee and manage" these projects, Franco said. (See graph, The life sciences industry is looking for new skills among scientists.)
Biopharmas "need people who have a broader perspective," so they understand how each piece of data flows together "to tell a complete story," Franco explained. "They also need to understand some of the challenges or pitfalls in the design and execution of an experiment."
Too, biopharmas need scientists with skills in regulatory affairs to help navigate the maze of government rules and regulations. Although the FDA approved 39 new molecular entities in 2012 the highest level in nearly two decades the industry faces growing pressure to improve its hit rate. According to PwC, drug development costs rose from an average of $2.8 billion per approved molecule between 2002 to 2006 to $4.2 billion between 2007 to 2012.
Finally, biopharmas need bioinformatics and health economics outcomes research expertise to show regulators, insurers and consumers using real world data that their products improve health or reduce overall health care costs.
Thus, scientists who rise to the top in the future will need dual degrees in science and business and cross-training in management, quality and clinical operations. To recruit that talent, biopharmas may need to cast a net that encompasses other industries and organizations, according to the HRI report.
They'll also need to rethink compensation formulas and adopt incentive programs that encourage R&D productivity, such as intellectual property sharing or sales royalties, rather than traditional bonuses. (See graph, Few companies offer novel incentives such as intellectual property sharing or sales royalties upon product launch.)
Cross-trained scientists "will look to be rewarded for their intellectual curiosity as well as their ability to manage across different cultures and organizations," Franco told .
For now, efforts to adopt new compensation models for scientists remain experimental.
"Pharma companies are still struggling with the best mix for those kinds of rewards," Franco admitted.
For biotechs, one lesson from the upheaval is to recruit scientists with interests beyond a single clinical asset. Crafting cross-functional positions that encompass project management, regulatory oversight and market analysis "is going to excite people about job offers," Franco said.
The industry may want to look to the executive suite for examples. 'sfound that, whether hailing from business or scientific backgrounds, biotech CEOs usually are tasked with overseeing the entire development process of drug candidates into approved products. Management incentives are different, as well. CEOs derived only 35 percent of total compensation from salary, with half from long-term compensation and the remainder from bonuses.
That's not to say the skills developed in big pharmas necessarily translate to biotech drug development.
"When you come from a large organization with a lot of infrastructure and some hierarchical thinking, it can be difficult to be effective in biotech, where you're only one step away from the key decision-maker," Franco said.
As pharmas create smaller work teams and drive decision-making to the individual level, "that gap will not be as large," he added. "People are going to be rewarded and to advance their careers by managing across a variety of cultures."
The PwC report is available at http://www.pwc.com/us/newchemistry .
BioWorld's 2013 Executive Compensation Report.