Big opportunities, mixed capabilities - Bridging the talent gap in the global Life Sciences Industry
This new ebook is providing new career and workforce trends in the Life Sciences Industry.
Big opportunities, mixed capabilities mark lanfear Bridging the talent gap in the global life sciences industry /02 ChangeinLifeSciences R&Dexpenditure 19992009 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, Asias share grew from 24 percent to 32 percent.1 At the same time, many of the industrys 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 industrys 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 worlds 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. Chinas 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 doesnt 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 Aglobalsector ingoodhealth 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 worlds 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 worlds 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 worlds 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 worlds largest life sciences market, turning over $396 billion in 2011. China and Germany were next Germanys life sciences market was worth $41.5 billion in 2011, while Chinas 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 worlds largest life sciences market, turning over $396 billion in 2011. The US also remains the worlds 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, Chinas share of global patents granted increased 12 percentage points across the decade to 16 percent in 2009, and continues to rise. Chinas life sciences market is showing significant growth. The countrys pharmaceutical market is already the worlds 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. Russias government has initiated a $428 million mega-grant program to strengthen life sciences research and modernize the industry.9 Brazils 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 Indias pharmaceuticals market will grow 13 percent annually to $29 billion by 2016.12 8 Generics and Biosimilars Initiative, Chinas 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 Chinas pharmaceutical market is already the worlds second largest with 5.6 percent of the global market share. /09 Staffing complications callforatalent 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, its 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 worlds leading pharmaceuticals companies have seen significant staff reductions in the past few years. One of the markets 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 Chinas life sciences industry grows, it is investing heavily in talent. The countrys 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 Chinas 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 Cultivatingnew talentcultures 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 tomorrows 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 For more thought leadership go to talentproject.com This information may not be published, broadcast, sold, or otherwise distributed without prior written permission from the authorized party. All trademarks are property of their respective owners. An Equal Opportunity Employer. 2014 Kelly Services, Inc. About Kelly Services Kelly Services, Inc. (NASDAQ: KELYA, KELYB) is a leader in providing workforce solutions. Kelly offers a comprehensive array of outsourcing and consulting services as well as world-class staffing on a temporary, temporary-to-hire, and direct-hire basis. Serving clients around the globe, Kelly provided employment to approximately 540,000 employees in 2013. Revenue in 2013 was $5.4 billion. Visit kellyservices.com and connect with us onFacebook,LinkedIn, andTwitter. Download The Talent Project, a free iPad app by Kelly Services. 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 worlds top 20 Biopharmaceutical corporations. He is a featured speaker at many of the Life Sciences industry conferences, as well as a university instructor. In addition, he is a published author in industry periodicals.