Big opportunities, mixed capabilitiesmark lanfear

Bridging the talent gap in the gloBal life sciences industry

/02

Change in Life Sciences R&D expenditure

1999–2009

32%

24%

AsiA

38%

31%

U.s.

Growing and ageing populations around the globe have greatly increased demand for medicine and health products. As a result, the field of life science – which comprises mainly BioPharmaceutical, Device and Consumer Health companies – has become a trillion-dollar global sector.

The largest companies in the sector are headquartered primarily in the United States

(US) and Western Europe. However, life sciences focused companies in emerging

economies, such as China and India, are beginning to grow aggressively. Between

1999 and 2009, US expenditure in life sciences research and development (R&D)

decreased from 38 percent to 31 percent of the global total. Over the same period,

Asia’s share grew from 24 percent to 32 percent.1

At the same time, many of the industry’s largest and well known are feeling the pinch

as blockbuster treatments come off patent, consumer spending dries up, regulatory

burdens rise and workforces age.

Against this backdrop, there is a high level of global competition for the most talented

science, technology, engineering and math (STEM) staff – especially graduates with

highly specialized skills.

1 NIH, ‘Turning Discovery Into Health’, www.nih.gov/about/impact/impact_global.pdf.

IntroductIon /03

Many of the industry’s established giants are hurting as blockbuster drugs come off patent…

The location of those skilled professionals – and indeed the entire life sciences industry

– is also shifting towards the world’s emerging economies.

India produces 1.2 million engineering graduates annually.2 It also boasts a

pharmaceuticals industry with maturing drug development capabilities and a strong

generics market built, in part, on expired patents. China’s life sciences market is

growing fast as well, with strong increases in STEM graduate numbers and a greater

share of life sciences patents.

However, volume doesn’t always equal quality. In particular, life sciences companies

are finding that many of the new graduates entering the workforce require

additional training to be productive to expected levels. There is no substitute for

experience or quick fix when it is not there.

So what lies ahead? In this industry overview, we discuss how international

outsourcing and collaboration will be vitally important for life sciences players. Across

the sector, the most successful players will be those that can strike the best balance

between the strength of the traditional leaders and the dynamism offered by new

markets and professionals.

2 James Howell, ‘More demand for graduates in STEM subjects’, Graduate-Jobs.com, www.graduate-jobs.com/news/12394/More_demand_for_graduates_in_STEM_subjects.

/04IntroductIon

Life sciences companies are finding that many of the new graduates entering the workforce require extensive training.

/05

A global sector in good health

Companies based in the US and Western Europe lead the trillion-dollar global life science sector – but companies that participate in the Bio-Pharmaceutical and consumer health vertical are growing quickly in emerging markets.

The global life sciences sector is already large and growing rapidly. Population growth

is the main factor increasing demand for life sciences products – emerging markets

have emerging middle classes that are demanding access to a suite of healthcare and

consumer products. The world’s population continues to rise rapidly, standing at 7.1

billion in 2013.1 The United Nations Population Fund estimates it will increase to around

8 billion by 2025.2

The next two most important factors are growth in ageing populations and increasing

levels of diet-related health problems, such as diabetes and hypertension.

This demand is expected to increase sharply in coming years. Between 2000 and 2050,

the World Health Organization (WHO) expects the global number of people over 60 to

double from 11 percent to 22 percent of the world’s population.3

1 Current World Population, About.com, December 2013, geography.about.com/od/obtainpopulationdata/a/worldpopulation.htm. 2 United Nations Population Fund, ‘The World at Seven Billion: Top Issues – Fact Sheets’, July 2011, www.unfpa.org/webdav/site/global/

shared/documents/7%20Billion/7B_fact_sheets_en.pdf.3 World Health Organization, ‘Interesting facts about ageing’, March 2012, www.who.int/ageing/about/facts/en/index.html.

/06A globAl sector In good heAlth

The United Nations Population Fund estimates it will increase to around 8 billion by 2025.

The high global instance of diet-related ailments such as cardiovascular disease and

diabetes has led to much greater demand for preventative drugs and medical devices,

as well as mobile health and eHealth services. WHO cites cardiovascular diseases as

the leading global cause of death and anticipates diabetes will be the seventh leading

cause of death come 2030.4, 5

Slower growth in top 10, aggressive growth in emerging economies

The growth of the world’s largest life sciences companies is slowing. The operating

margin for big pharmaceuticals companies in 2013 is forecast at around 20 percent,

down from more than 24 percent between 2003 and 2009.6

The US is by far the world’s largest life sciences market, turning over $396 billion in

2011. China and Germany were next – Germany’s life sciences market was worth

$41.5 billion in 2011, while China’s is predicted to grow to $127 billion by 2015.7

4 World Health Organization, ‘Diabetes fact sheet’, October 2013, www.who.int/mediacentre/factsheets/fs312/en/index.html.5 World Health Organization, ‘Cardiovascular diseases (CVDs) fact sheet’, March 2013, www.who.int/mediacentre/factsheets/fs317/en/.6 Euler Hermes, ‘Does the global pharmaceutical industry need a new business model?’, Paris, France, March 20, 2012, as quoted in

Deloitte Access Economics, 2013 Global life sciences outlook: Optimism tempered by reality in a “new normal”., www2.deloitte.com/content/dam/Deloitte/global/Documents/Life-Sciences-Health-Care/dttl-lshc-2013-global-life-sciences-sector-report.pdf.

7 Espicom, ‘EIU: Healthcare and Pharmaceuticals Report – China’, as cited in Deloitte Access Economics, 2013 Global life sciences outlook: Optimism tempered by reality in a “new normal”, www2.deloitte.com/content/dam/Deloitte/global/Documents/Life-Sciences-Health-Care/dttl-lshc-2013-global-life-sciences-sector-report.pdf.

/07A globAl sector In good heAlth

The US is by far the world’s largest life sciences market, turning over $396 billion in 2011.

The US also remains the world’s leading grantor of biopharmaceutical patents, but

its global percentage of patents awarded declined from 38 percent to 33 percent

in the last decade. In contrast, China’s share of global patents granted increased

12 percentage points across the decade to 16 percent in 2009, and continues to rise.

China’s life sciences market is showing significant growth. The country’s pharmaceutical

market is already the world’s second largest with 5.6 percent of the global market

share, and its government has also pledged to invest 2 trillion Yuan ($308.5 billion) to

develop its biotechnology industry.8

Russia, India and Brazil also show promise on the global life sciences stage. Russia’s

government has initiated a $428 million mega-grant program to strengthen life

sciences research and modernize the industry.9 Brazil’s pharmaceutical market is

the third-largest in the Americas, after the US and Canada, with a 2011 value of

$25.7 billion.10, 11 The Economist Intelligence Unit forecasts that India’s pharmaceuticals

market will grow 13 percent annually to $29 billion by 2016.12

8 Generics and Biosimilars Initiative, ‘China’s 5-year biotech investment fires clear warning to US’, August 2013, www.gabionline.net/Biosimilars/News/China-s-5-year-biotech-investment-fires-clear-warning-to-US.

9 UNMC, ‘Dr. Kabanov receives ‘mega-grant’ from Russian Government’, UNMC News, Fall 2011, www.unmc.edu/publicrelations/docs/discover/fall2011_news.pdf.

10 Generics and Biosimilars Initiative Online, ‘The pharmaceutical market in Brazil’, December 2011, www.gabionline.net/Generics/General/The-pharmaceutical-market-in-Brazil.

11 Export.gov, ‘Drugs and Pharmaceuticals Overview’, Doing Business in Brazil: 2011 Country Commercial Guide for U.S. Companies, September 2011, export.gov/Brazil/static/CC_BR_DoingBusiness_CCG_PDF_Chap4_DrugsandPharmaceuticals_Latest_eg_br_062844.pdf.

12 ‘Management Discussions: Global Pharma Market’, India Info Line, May 2013, www.indiainfoline.com/Markets/Company/Fundamentals/Management-Discussions/Unichem-Laboratories-Ltd/506690.

/08A globAl sector In good heAlth

China’s pharmaceutical market is already the world’s second largest with 5.6 percent of the global market share.

/09

Staffing complications call for a talent transplant

A shortage of highly skilled workers is increasing competition for talent among top life sciences companies, compounding other industry pressures.

Access to the best and brightest talent is essential for companies looking to stay

competitive in the face of growing global demand for fast-moving and technologically

sophisticated pharmaceuticals and biotechnology products. However, it’s a complex

landscape right now – while some areas of the market are growing quickly and new

talent is becoming available, we are also seeing waves of layoffs among leading

companies as they adjust to new, lower-profit realities.

Operating pressures have resulted in cost cutting and layoffs

Between 2009 and 2012, expired pharmaceutical patents led to an estimated

$100 billion worth of lost drug sales worldwide. This figure is expected to be

$29 billion in 2013 alone.1 Companies that specialize in generic drug manufacturing

are now free to begin the process of producing equivalent therapies for a decreased

cost, which is placing pressure on organizations seeking to fund fresh innovation from

revenues earned from profits on earlier successes.

1 Generics and Biosimilars Initiative Online, ‘The biggest drug patent losses for 2013’, May 2013, www.gabionline.net/Generics/General/The-biggest-drug-patent-losses-for-2013.

/10stAffIng complIcAtIons cAll for A tAlent trAnsplAnt

Companies that specialize in generic drugs can now legally produce much cheaper alternatives to name-brand products.

Many of the world’s leading pharmaceuticals companies have seen significant

staff reductions in the past few years. One of the market’s largest players reported

over $60 billion in revenue in 2012 and a growth in its stock values, but at the cost of

downsizing and losing critical talent for a second year in a row. The challenges of the

over-stressed market and loss of profitabliity is driving very hard decisions.

Asia disrupting recruitment flows

As China’s life sciences industry grows, it is investing heavily in talent. The country’s

universities now produce more life sciences graduates and post-graduates than any

other nation.2 Chinese students are also studying offshore, securing the most American

doctoral degrees in biological sciences after American students.3

Many of these internationally educated and trained professionals are now also

returning home. According to a recent study, at least 80,000 Western-trained

post-graduates with life sciences doctorates returned to China to work in companies

or academic institutes.4

2 Robert. D. Atkinson, Stephen J. Ezell, L. Val Giddings, Luke A. Stewart, and Scott M. Andes, ‘Leadership in Decline – Assessing US International Competitiveness in Biomedical Research’, May 2012, www.unitedformedicalresearch.com/wp-content/uploads/2012/07/Leadership-in-Decline-Assessing-US-International-Competitiveness-in-Biomedical-Research.pdf.

3 NIH, ‘Turning Discovery Into Health’, www.nih.gov/about/impact/impact_global.pdf.4 George Baeder, Michael Zielenziger, ‘The Life Sciences Leader of 2020,’ 2010, wenku.baidu.com/view/0705856d1eb91a37f1115c4c.

html.

/11stAffIng complIcAtIons cAll for A tAlent trAnsplAnt

China’s universities now produce more life sciences graduates and post-graduates than any other nation.

Emerging talent pools need further training

While rising stars such as China and India are producing large numbers of STEM

graduates each year, the caliber of talent is yet to become consistently high enough

to satisfy the needs of the global sector. This is another example of how talent looks on

paper is not wholly indicative of their ability to be successful in a corporation.

This ‘talent gap’ poses a challenge for pharmaceutical companies aiming to send R&D

facilities offshore as needed skillsets and experience are lacking. It also complicates the

process of outsourcing work for biotechnology companies and suggests that many of

the experienced professionals being shed by the industry may still have plenty to offer.

/12stAffIng complIcAtIons cAll for A tAlent trAnsplAnt

The caliber of talent is yet to become consistently high enough to satisfy the needs of the global sector.

/13

Cultivating new talent cultures

Life sciences companies should secure valuable talent by outsourcing and creating partnering arrangements with progressive, like-minded international peers. Companies may also consider extending recruitment age ranges to encompass STEM initiatives in schools and creating flexible work opportunities for highly skilled retired or retiring workers.

Despite layoffs and cost-cutting in various segments of life sciences, the sector is still

growing as a whole worldwide. It also faces a widening skills gap as fewer high-end

graduates find their way into the workforce.

The ongoing shortage of world-class STEM talent requires life sciences companies to

become more resourceful in their recruitment strategies. For example, groups that

previously focused their recruiting on specific academic pockets in Europe and the US

are beginning to turn to top international universities – often in emerging markets – to

find graduate talent. Those seeking more experienced STEM workers are looking to

the fast-growing and progressive biotechnology firms and post-graduate labs around

the world.

/14cultIvAtIng new tAlent cultures

Groups that previously focused their recruiting on specific academic pockets in Europe and the US are beginning to turn to top international universities – often in emerging markets.

Helping close the talent gap

Companies seeking STEM workers in emerging countries should explore new ways

of finding and nurturing local talent. Pharmaceutical companies may consider

investing in educational programs and facilities to train promising STEM graduates

to meet world standards. Biotechnology companies could take a similar approach

by attracting promising STEM candidates with scholarships and initiatives through

international universities.

Both industries could benefit from using low-cost collaborative technologies

(such as video conferencing and cloud-based platforms) to partner with universities

and development firms. These technologies may present life sciences companies

with cost effective ways to ‘test the waters’ overseas, by outsourcing selected

operational and production aspects and forming tentative partnerships with other

international organizations.

/15cultIvAtIng new tAlent cultures

These technologies may present life sciences companies with cost-effective ways to ‘test the waters’ overseas.

A broader recruitment net

BioPharmaceutical, Medical Device, and Consumer Health corporations also need

to consider the issue of retaining enough skilled workers. One way to counter staff

turnover trends is to broaden target recruitment demographics. In addition to seeking

out new sources of talent overseas, pharmaceutical and biotechnology companies

should consider changing recruitment intake to encompass a wider range of ages and

experience levels. Segmenting skillsets and job functions through proactive workforce

planning drive strategic decision making when it comes to talent acquisition and

engagement alignment.

For example, companies could explore the possibility of creating and funding

educational initiatives for students in high schools and colleges in promising

international life sciences markets. This can help nurture talent pools by providing

students with education opportunities and pathways into sought-after global roles.

At the same time, it gives companies a way to find and educate tomorrow’s

high-end STEM workers, thereby forging a more sustainable stream of quality talent

for future growth.

/16cultIvAtIng new tAlent cultures

One way to counter staff turnover trends is to broaden target recruitment demographics.

Holding on to experienced workers

At the other end of the spectrum, life sciences companies can widen talent pathways

by targeting older, highly experienced STEM workers. While these workers may have

retired or be planning retirement, many are increasingly likely to seek supplemental

income through part-time or reduced-work programs. The opportunity to have

these experienced professionals in your talent mix will raise the knowledge of your

entire team.

Alternatively, companies could investigate offering reduced-work programs to mature-

aged STEM workers. By combining a percentage of on-shore or core resources

with off-shoring or outsourcing engagements lessens the risk of discontinuity. This

approach saves wage costs and retains experienced staff, while also accommodating

the need for lower working hours among older employees and easing the transition to

retirement for all involved.

Collaborative technologies such as video telephony and cloud computing can

also help to accommodate older workers if they are geographically removed from

the company. Technology should be use extensively, not to replace, but enhance

the human experience in our business. The wealth of experience in this

demographic of the global talent pool could prove invaluable for supporting future

life sciences innovation.

/17cultIvAtIng new tAlent cultures

Companies could investigate offering reduced-work programs to mature-aged STEM workers.

eXIT

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abouT The auThor

mArK lAnfeAr is a global practice leader for the life science vertical at Kelly services,

a leader in providing workforce solutions. mark has overseen teams of scientific professionals

around the world for almost two decades. he has held leadership roles in two of the top three

scientific workforce solution companies and three of the world’s top 20 biopharmaceutical

corporations. he is a featured speaker at many of the life science’s industry conferences, as

well as a university instructor. In addition, he is a published author in industry periodicals.