Survey: Biotech Executives' Salary Hikes Indicate Industry's Health

The average annual base salary paid to executives at United States biotechnology companies--both privately and publicly owned--rose between 4.7 percent and 7.4 percent between 1991 and 1992, according to a recently released survey by executive search firm J. Robert Scott and accounting and consulting firm Coopers & Lybrand's National High Tech Group, both of Boston. Top biotechnology officials say the findings portend the future health and expansion of the industry, which, they say, should mean continued demand for research scientists at these companies. "The ante is increasing.... Salaries and bonuses have swung into gear, says Glenn Cooper, chief executive and president of Interneuron Pharmaceuticals in Lexington, Mass. Biotech companies' top executives, Cooper says, wouldn't be so highly compensated "if there wasn't a belief that biotech was going to be a driving force in providing new drugs." For its survey, J. Robert Scott received responses from more than 400 executives in 120 biotech companies across the United States during the fall of 1992. More than half of the companies responding to the survey reported employing fewer than 50 people, and most were between six and 10 years old. Sixty-nine percent reported revenues of $5 million or less, and only one company, Amgen Inc. of Thousand Oaks, Calif., is a member of the Fortune 500. Of the respondents, more than 70 percent had at least one product in the market. Nationwide, the companies predicted a 5 percent growth in revenue and a 59 percent growth in personnel. The most optimistic region was the Southeast, which predicted 346 percent revenue growth and 18 percent employee growth. Also "aggressively positive," according to the survey, was California, which predicted 190 percent revenue growth and a 43 percent rise in employment. The survey found that total cash compensation for executives in public biotech companies rose 13 percent last year. In privately held companies, the increase was 8.14 percent. The average incentive bonus varied from 13 percent at private companies to 19.25 percent at public corporations, according to the study. AVERAGE TOTAL CASH COMPENSATION (INCLUDING BONUSES) AT PRIVATE BIOTECH COMPANIES, 1992 VS. 1991 Title 1992 1991 Chief Executive Officer $150,863 $136,125 Vice President of Research & Development 109,998 101,534 Chief Financial Officer 99,816 88,204 Vice President of Business Development 105,300 102,600 Vice President of Sales & Marketing 127,260 110,023 Vice President of Operations 96,558 91,699 Vice President of Regulatory Affairs 86,886 80,348 Vice President of Human Resources 68,250 66,625 Source: J. Robert Scott/Coopers & Lybrand AVERAGE TOTAL CASH COMPENSATION (INCLUDING BONUSES) AT PUBLIC BIOTECH COMPANIES, 1992 VS. 1991 Title 1992 1991 Chief Executive Officer $247,852 $212,784 Vice President of Research & Development 157,344 135,660 Chief Financial Officer 128,865 115,197 Vice President of Business Development 118,575 107,330 Vice President of Sales & Marketing 128,258 101,876 Vice President of Operations 129,800 121,210 Vice President of Regulatory Affairs 117,703 101,250 Vice President of Human Resources 90,948 90,470 Source: J. Robert Scott/Coopers & Lybrand Average salary increases for research and development vice presidents last year, according to the study, ranged from 2 percent in private companies, which paid an average salary of $95,650, to 6.6 percent in public companies, where average salaries reached $126,890. The primary operations reporting to these executives include quality control, regulatory affairs, clinical affairs, and R&D, the survey found. The increases--many of which outpaced inflation, generally considered to be between 2 percent and 3 percent--were interpreted by the survey compilers and biotech executives as reflecting what they consider to be a continuing strong demand for seasoned managers, including those with scientific backgrounds. The high value placed on research directors, they say, should translate into continued funding for research departments in these companies. Eric Man-kuta, a vice president at J. Robert Scott, says biotech scientists will continue to be highly valued at both the early research and the product development stages. "I don't see a decrease in opportunities in the early stages of discovery science," Mankuta says. "And lots of companies are contemplating getting their products to the marketplace in the near future. So, research positions in end-stage science are definitely there, too." More than 70 percent of the survey respondents had at least one product in the market. Of the approximately 30 percent with no current products, 70 percent anticipated introduction of their first one within three years. The survey found that, like their counterparts in R&D, regulatory affairs executives--who ensure that their firms' products comply with government regulations--fared well. In public firms, they received increases averaging 5.5 percent and an average salary of $98,910. In private companies, they received increases averaging 6.1 percent and an average salary of $80,450. Interneuron's Cooper says these figures show that the regulatory affairs office has gained in importance in biotech firms. "So many products failed on the rocks of regulatory issues that the role of the seasoned specialist is really in focus now," he says. "The days of assuming biotech companies could get by with less of a complete data package than mainline pharmaceutical companies are over." Although venture capital is still available to seed biotech companies, there are not enough people to fill the many slots opening up at nearly all levels of science and management, some executives say. "There's a lot of money out there for investment and a lot of good ideas, but a shortage of people," says Tom Glenn, president and chief operating officer of San Carlos, Calif.-based PHYTOPharmaceuticals Inc., which makes plant-based human therapeutics. "And there are hundreds of companies that are three and four years old, in the development stage, that require skills needed to fill the void, from the boutique [small, specialized startup] to manufacturing." The study also found that chief executives and vice presidents of research and development have the largest percentage of ownership in biotech companies, with 3.9 percent and 1.6 percent, respectively. In addition to the lucrative salaries offered, perquisites were found to be commonplace, although mostly in larger companies: Thirty-one percent of executives received cars, 27 percent were given car phones, 14 percent had paid parking, 13 percent traveled first class, and 12 percent were given club memberships. Edward R. Silverman is a freelance writer based in Millburn, N.J.

Survey: Biotech Executives' Salary Hikes Indicate Industry's Health

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