Career Supplement | Big Makeover for Big Pharma

Since the New York City life science technology-consulting firm Intrasphere Technologies opened an office in India, Samuel Goldman, cofounder and chief technology officer, says he works fairly bizarre hours, scheduling 6:00 A.M. meetings on a "regular basis."

Jun 20, 2005
Alison McCook
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Since the New York City life science technology-consulting firm Intrasphere Technologies opened an office in India, Samuel Goldman, cofounder and chief technology officer, says he works fairly bizarre hours, scheduling 6:00 A.M. meetings on a "regular basis." In looking at industry trends, more and more scientists should brace themselves for strange commutes, middle-of-the-night E-mails, and videoconferences with coworkers.

That's right: it appears that offshoring has arrived.

Although the terms "offshoring" and "outsourcing" are often used interchangeably, they are not the same-but both are happening in the pharmaceutical industry. Offshoring typically describes what happens when a company runs its own facility abroad. Outsourcing describes when a company uses another firm to work as a contractor.

The jury is still out on how offshoring will affect job prospects for life scientists in the pharmaceutical industry. Some analysts say it will mean job losses in the United States, while others insist the cost savings it brings will free up resources for research and actually result in more jobs overall. But one thing is for sure: it's happening, and it's changing the way pharma does business.

The increasing globalization of pharma is just one of a number of factors likely to affect job prospects in the industry now and in coming years. Companies are spending a record amount on research and development (R&D), but the number of newly approved drugs is dwindling. Multinational, multibillion-dollar firms face enormous cost pressures from stockholders, the government, and consumers. And companies may have to work harder to gain regulatory nods for new products after last year's COX-2 inhibitor crisis.

The ongoing squeeze to perform means many companies are also shifting resources away from research and towards developing drugs and bringing them to market, which may mean more jobs in those areas. Fears that regulators will become more stringent about drug approval may encourage companies to hire more scientists with experience in regulation and drug safety.

Overall, experts say the pharmaceutical industry might face leaner times, and there will be layoffs, but strong scientists are always in demand. Indeed, in 2002, when US unemployment among life scientists hit a 20-year high of 3.9%, it was still easier for them to find jobs than workers in other industries. In fact, the government predicts that the number of life science jobs will grow over the next few years.

Annual Salaries in Pharmaceutical and Medicine Manufacturing

CEOs: $179,090

General and operations managers: $126,120

Marketing managers: $121,770

Sales managers: $107,850

PR managers: $117,430

Natural sciences managers: $128,970

Medical and health services managers: $110,170

Source: Bureau of Labor Statistics, Nov. 2003

Average Salaries for Life Scientists in the Pharmaceutical Industry

$65,042 with a BA only (from $60,017 in 2003, an 8.45% increase)

$73,462 with a Master's (from $70,733 in 2004, a 4.13% increase)

$111,268 with a PhD (from $104,824 in 2003, a 10.93% increase)

$164,199 with an MD/PhD (from $155,267 in 2003, a 6.18% increase)

Source: AAAS 2004 Member Salary Survey

"I think jobs in this industry are certainly more secure, and better paying, than in most other industries," says Steve Projan, vice president of biological technologies at Wyeth Research in Cambridge, Mass.

THE BIG PICTURE

The US economy has traditionally been kind to industry scientists. According to the National Science Foundation, since 1980, the number of people working in nonacademic science and engineering jobs has climbed four times faster than the average, with an annual growth rate of almost 5%.

The United States Bureau of Labor Statistics (BLS) also predicts that the number of people working as life scientists should increase by 18% from 2002 to 2012. Moreover, the BLS expects that from 2000 to 2010, employment among scientists will increase three times faster than it will in other occupations.

Not all sectors of the life sciences will benefit equally from this growth. "There's definitely going to be pockets of strengths and weaknesses," says Henry Kasper, a BLS economist. For instance, the BLS predicts that scientific research and development services will increase by 19%, while pharmaceutical and medicine manufacturing may rise a whopping 36%, perhaps as a result of the recent surge in late-stage biologics that need to be mass produced. In comparison, government life science jobs are expected to climb by a relatively meager 13%.

POCKETS OF STRENGTH

Even if the pharmaceutical industry continues to stay strong overall, experts expect that certain positions will feature more prominently in want ads over the next few years. For example, opportunities in bio-pharmaceuticals – the development and manufacturing of biotech drugs such as genetically engineered hormones and monoclonal antibodies – may expand at a faster rate than in small molecules. In 2002, 30% of all newly approved drugs were monoclonal antibodies and recombinant proteins, up from 6% in 1999, according to a report from the Tufts Center for the Study of Drug Development (see chart, page 8).

Indeed, Richard Kneece, CEO of Massachusetts Technology Corporation, producers of career and talent hub Hirerx.com, says that he expects to see an increasing number of jobs in the production and manufacturing of biopharmaceuticals. For Wyeth's Projan, biologics are the drugs of the future because they are targeted, causing fewer side effects than traditional drugs. Moreover, most agents are injectable, making it harder for people to buy them at lower cost over the Internet. "It's easier to manage the biopharmaceutical market," Projan says.

In the last five years, Wyeth expanded its protein manufacturing facility in Andover, Mass., and hired 1,300 more people in Dublin, Ireland, to manufacture biopharmaceuticals. Projan says he expects that big pharmaceutical companies will also be hiring in discovery and development of biopharmaceuticals, not just manufacturing. "This is where the growth is, in terms of new jobs," he predicts. Indeed, he says his company just announced that it is looking for 52 new people to work in biopharmaceutical development in Andover making novel protein therapeutics.

<p>DECLINING DRUG APPROVALS BECOME BIOTECHNOLOGY'S OPPORTUNITY</p>

Note: SMD = small molecule drug rDNA = recombinant protein mAb = monoclonal antibody

New SMD, rDNA and mAb Therapeutics Approved in the U.S. (1/1/90 – 10/1/03). With monoclonal antibody recombinant protein products accounting for 30% of all product approvals in the U.S. in 2002–vs. 6% in 1999–pharmaceutical firms have been looking to, and will continue to depend on, biotech firms as sources of new R&D. This, in turn, will confer greater bargaining leverage to biotech firms seeking strategic partnerships and licensing agreements with larger drug companies.

In addition, Brad Smith, director of staffing and diversity at Roche at the company's US pharmaceutical headquarters in Nutley, NJ, says that the company is trying to increase its early portfolio, both by generating its own molecules and by cutting deals with companies working on promising new treatments. As a result, he says he expects to see growth in jobs related to clinical trials.

Marcie Geremakis, director of human resources for preclinical research and development at Roche, says the company recently expanded its research facility in Nutley and is now investigating infectious and autoimmune diseases, which may mean more jobs in those areas. She also expects the company to look for more chemists, particularly medicinal chemists, who often are in short supply. Roche is also looking for PhDs with experience in toxicology, pharmacology, safety pharmacology, and pathology, as well as cell biologists with in vivo experience. "To find someone with in vivo experience is really challenging," Geremakis says.

Wyeth's Projan says he expects his and other companies will also consider hiring more people with experience in pharmacogenomics, which involves predicting how patients will respond to a particular drug based on their genetic makeup (see "Medicine Gets Personal," page 12). Pharmacogenomics is a "huge, early field," he says, and will likely drive up demand for individuals who are well-versed in proteomics, transcriptional profiling, and biomarker identification.

Other jobs likely to be hot in coming years will be those combining expertise in drugs and devices, says Buster Houchins of search firm Christian & Timbers in Columbia, Md. For examples, he explains, companies see that drug-coated stents help patients more than a drug given with an uncoated stent. As a result, many companies may be eagerly searching for people who understand both drugs and devices, perhaps drug researchers who spent time at device companies, and vice versa, Houchins notes.

Pharmaceutical giants will also likely be hiring people with experience in drug safety and regulatory approval, says David G. Jensen, managing director at CareerTrax in Sedona, Ariz. People who have worked in regulatory affairs, quality control, and validation, which are positions that often require strong science backgroundswill be in demand, he says. In the United States, companies will want people who understand regulations in other countries, so that they can help the company break into overseas markets. "Having multinational people in quality is a great thing," says First.

However, companies could be very selective about who they hire for these positions, giving preference to highly trained scientists, predicts Kim First, president of The Agency, a California-based biopharmaceutical search firm. For instance, companies might be advertising for more MDs to work in regulatory positions, thinking they will be more impressive to the Food and Drug Administration, she says.

Pharmaceutical companies are steadily adding to the list of what they're looking for in candidates, says Jensen. Twenty years ago, a position that required only a PhD in cell biology demanded experience with large bioreactors a few years later. Now, candidates won't even be considered if they don't have experience with serum-free cell culture media development as well, he says. "They want absolutely everything."

This is making First's job a lot harder, as she struggles to find people who meet companies' ever-growing list of requirements. "We're busier than ever," she says.

POCKETS OF WEAKNESS

As pharmaceutical companies struggle to face cost pressures and produce drugs more cheaply, they will undoubtedly cut back on certain positions they deem no longer profitable. Translation: layoffs.

In general, companies are less likely to hire sales representatives, predicts Houchins. Big Pharma has realized paying someone $100,000 a year to stand in front of a family doctor for 90 seconds is "very inefficient," he says. Hirerx's Kneece says he "barely ever" sees ads looking for pharmaceutical sales reps anymore.

Overall, Houchins predicts that pharmaceutical companies will eliminate up to one-quarter of their sales force this year alone. "There's big layoffs pending," agrees Jensen.

Still, new drugs have to be marketed, and Houchins expects companies will focus on pitching their message more efficiently and marketing in alternate ways. They may try selling their products to third-party payers, which dictate practice to many doctors, rather than to individual physicians. For this reason, Houchins says he predicts that VicePresidents of reimbursement – in charge of pitching drugs to insurers – will be in big demand in coming years. This may be particularly important when the new US Medicare prescription drug benefit takes effect on Jan. 1, 2006; in the preceding months, pharma companies will likely be vying to get their drugs placed on the formularies each private insurer will cover under Medicare.

Roche's Smith predicts that companies will also be trimming support staff-including human resources, finance, and other administrative positions – as a way to cut costs

IMPACT OF OFFSHORING UNCLEAR

Life science is already a global industry. Large pharmaceutical companies have offices on practically every shore, and researchers from around the world frequently collaborate. However, as the pharmaceutical industry faces unprecedented cost pressures, experts believe that R&D and other fields in life science that used to stay close to company headquarters are starting to expand or move to lower-cost countries. Areas that have already begun moving offshore – such as clinical trials and manufacturing – will increasingly do so. This may mean positions traditionally found in the European Union and the United States will become more commonplace abroad.

Countries such as China and India that have proven themselves in the information technology world are now working harder than ever to improve their science training, protect intellectual property rights, and establish facilities that pass muster for US and EU regulators. India, for one, has as many as 20,000 pharma companies. And foreign-trained scientists are often willing to return home to work for less money but with a lower cost of living. Roche recently opened a new R&D facility in Shanghai.

Experts predict that pharmaceutical companies will also be more likely to embrace out-sourcing. A survey of 34 pharmaceutical companies by Cambridge Healthtech Advisors in Massachusetts found that nearly 60% of companies will outsource at least 20% of R&D by 2006, a twofold increase from 2003. Twice as many companies also plan to outsource more than 80% of clinical development operations by 2008.

It's too soon to tell what offshoring or outsourcing might mean for US and EU pharma jobs. Recently, the BLS released a list of characteristics that make jobs more likely to leave the United States. The agency predicts that jobs that require a lot of interaction, feature a lot of uncertainty about the specifications, and depend on creativity and innovation are more likely to stay stateside.

Ames Gross, president of Pacific Bridge Medical, a Maryland-based firm that helps companies set up shop in Asia, warns that while companies may say offshoring means expansion, the ultimate goal is replacement. Even if no jobs are replaced, once a company opens its doors in India or China, whenever they need to hire, they will look first to that cheaper labor market before choosing a new staffer in the United States, he says. The BLS's Norman C. Saunders says that companies may not be honest when they say offshoring won't cut jobs back home, since it's "unpopular" to admit they are planning to move 5,000 jobs to India.

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However, other experts say the exact opposite may also be true-instead of cutting jobs, offshoring and outsourcing could increase jobs by enabling companies to investigate more drug candidates. A. Srivathsan, director of life science and healthcare at the New Jersey IT firm Marlabs, which has an office in India, says that companies that set up shop elsewhere will be able to investigate more drug candidates for less money, which means more molecules will enter clinical trials and return to the United States and European Union for their final testing and development. "Offshoring will create more jobs," he predicts. And although science education is improving abroad, lower-cost countries have a "long, long haul" before they can match the innovation and research prowess of the United States and European Union, says Srivathsan.

First says she is not seeing a loss of R&D jobs in the United States. "I haven't seen them adding a lot, but I haven't seen them cutting any," she says. Overall, she hasn't seen any effect of outsourcing or offshoring on US or EU jobs, likely because there is still a shortage of good scientists and engineers back home. If anything, pharmaceutical companies that cut jobs back home will eliminate the weakest workers, and strong scientists will always be in demand, First says.

Although Roche recently opened a facility in Shanghai, they also started investigating another therapeutic area at their Nutley facility, says Smith. Even if companies continue to expand elsewhere, "it's hard for me to ever envision a time when the US will not be a leading" location for research, he says.

EU OUTLOOK

While many American companies are thinking about expanding into lower-cost countries, Europeans are still looking towards America, says Carol Featherstone, editor-in-chief of the ELSO Gazette, a publication of the European Life Scientist Organization in Germany. According to a Financial Times report, Big Pharma spent 50% more on research in Europe than in the United States in 1990. While R&D spending has grown on both sides of the Atlantic, in the last 11 years about 40% more has been spent in the United States than in Europe. The reasons include political factors, such as pricing control and taxation policy, as well as research issues, such as talent availability and access to academic networks. As a result, Wyeth's Projan predicts there will be a concentration of pharmaceutical R&D in the United States over the next few years.

Overall in Europe, the job forecast for 2005 in all sectors looks very much like that in the United States, says Peter Nicholls, chair of the Personnel Advisory Committee at the BioIndustry Association, a UK-based bioscience trade organization. "We tend to follow the US," Nicholls notes. "So what happens in the States tends to happen [here], particularly in the UK, and in the whole of Europe soon after." In Europe over the next year, Nicholls predicts that most available industry jobs will largely be in the area of developing and bringing a drug to market, rather than research.

Even the United Kingdom's relatively progressive stance on stem cell research likely won't have much of an impact on jobs, notes Nicholls, who is also the director of human relations at the UK-based biotech company Celltech. Researchers still need to get a license from the government to do the work, Nicholls says, and most applications are refused.

However, basic research may see one bright spot on the EU horizon: Many former Eastern bloc countries, such as Poland, are building up a biopharmaceutical industry and "starting from scratch," Nicholls says.