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Skills on tap
We are in the middle of one of the largest economic crises in history. Credit is frozen, companies are making historic losses, and cuts, layoffs and pay freezes are endemic. Pharma, despite being seen as a safe haven by many stock markets, has the enduring challenges of patent expiries, a drop in research and development productivity, generic substitution and pricing and regulatory pressure. The industry is cutting headcount wherever it can to reduce operating costs.
In short, the future looks gloomy for the research-based pharmaceutical industry and its biotechnology cousins, and this means there are fewer new opportunities than there were 12 months ago.
Job candidates are affected too. They see the world changing and this makes them fearful. The perceived risk of changing jobs is far greater than I've ever seen. Add to this the fact that most people have seen the value of their property decline and any security they see in their current job is more attractive to them than the risk of a new endeavour. So "replacement" vacancies are in short supply.
Market disparity
There is a misconception between companies' views that candidates are in plentiful supply and thus cheaper to acquire during a recession, and people's behaviour in light of the new world economy. Recruitment has never been more complex or difficult.
Although underlying global trends remain the same, the impact of the credit crunch is altering the way in which businesses operate.
Let's examine the industry's response to its key challenges at this time.
Mergers and acquisitions
There has been an upsurge in re-organisations and mergers. In the short term, this may provide economies of scale, however, in the longer term, the survivors will be those companies that embrace real change, develop new approaches to existing markets and commit fully to the challenges of the emerging markets. The success of these approaches will depend on access to talent and the freedom and authority these companies give to those charged with making crucial changes.
Outsourcing
Companies are increasingly outsourcing what used to be considered the core functions of a research-based pharmaceutical organisation; pre-clinical and clinical development, sales, production and distribution. This should be good news for the service sector, but the short-term necessity to cut costs militates against it. Companies are increasingly outsourcing these functions to low-cost environments like India, China and South America as a result.
New and emerging markets
The regions mentioned above have small indigenous pharmaceutical skills bases and few seasoned executives. Their burgeoning markets must be exploited and this will require both new approaches and tried-and-tested marketing strategies.
In addition, as in Europe, opportunities will emerge because of the shift towards high-tech, niche pharmaceuticals and the need for complex lifecycle management strategies. Experts in health economics, outcomes research, strategic marketing, pricing and reimbursement, and medical education will all be in demand.
For the larger companies, the 'international' talent problem can be overcome by using international secondments. However, this carries the risk of simply doing more of the same in a territory that requires novel approaches. Partnering with a truly global, integrated executive search and interim management firm is one way to ensure an organisation gains the maximum benefit from relocating its activities.
A recent assignment to find a chief executive officer for a Singapore-based client illustrates this point. The chief executive that the company was trying to replace had left the team feeling "a genuine sense of loss" and it needed to re-establish itself quickly.
More than 30 credible candidates from the US, Europe, Canada, India, Singapore and Australia were narrowed down to a shortlist ready for interview, through an international search co-ordinated by the interim management company's UK, US, French, German, Swiss, Chinese and Singaporean offices.
Cost cutting
The current economic situation enables companies to shed some of the excess built up since the crisis of 2001. In my view, you cannot cut your way to success, so this strategy is of limited use, and it could be argued that an effective management team should not have allowed the fat to accumulate. However, it is a fact that company headcounts are shrinking, and no matter how well-planned these exercises are, companies will find that critical talent is missing and that vital projects are delayed. A flexible resourcing solution is offered by interim management and its more sophisticated version, 'escalator management'.
Escalator management
Escalator management provides an alternative to talent management through the lifespan of a company. Its success hinges on the ability to access the most experienced, international interim managers and extensive global reach. Companies need access to the right expertise and experience at the right time. But often these heavyweight roles are only needed for a defined period to take the company to the next level.
One of the fundamental problems a new company faces when taking on permanent staff is the time and cost involved. Also, in a changing environment, a permanent person with a fixed set of skills is not necessarily what is needed.
As the company enters a new phase, it needs access to different skills.
Escalator management will:
• Secure top talent for new companies
• Enhance intellectual property by providing rapid, early expertise
• Deliver flexibility with low risk
• Build investor confidence
• Protect equity and downside risk.
With escalator management, individuals or specialist teams can be placed at short notice for brief, concentrated bursts of activity or for longer, more sustained periods, depending on business demands. Phasing expertise in and out when needed frees companies from the long timescales and expensive costs of permanent hires and exits. As the business evolves, the team revolves.
Nurture talent
The acquisition, development and proper application of talent should be the number one priority for the pharmaceutical industry. Many companies pay lip service to this self-evident truth, treating people as a resource to be exploited.
Organisations that nurture talent and embrace the potential of their staff will be the ones that prosper when the economy recovers.
The Author
Nick Stephens is chief executive of RSA, specialists in global life sciences executive search, interim management and consultancy.
To comment on this article, email pm@pmlive.com.
