Posted by: Audrey Erbes | February 25, 2013

Pharma CEOs Out of Touch with Workforce Plus Events and Jobs

Hi,

I along with many others in the Linked In space and now Luke Timmerman of Xconomy are astounded that CEOs in pharma—the same pharma that indiscriminately axed 150,000 employees, first sales reps and then hard core R&D professionals between 2009 and 2012 while they were thrashing about trying to figure out how to overcome the revenue impact of the “patent clift”—are now complaining there’s not enough personnel with required talent to fill the jobs in their newly designed organizations. See article about layoffs on  Pharmalot site.

As with many industries including defense and software before them, pharma never looked at the consequences in the future of tossing overboard their expert talent that they developed in previous decades with some expense when they still knew how to invest in their staff’s development as a valuable asset for their business.  As I experienced at Syntex when the company was trying to save itself from a hostile takeout by Roche, the company went into a death spin as the directors laid off the “worker bees” in a frenzy. Recognition that the percentage of business costs to commercialize products were above the industry standard led to layoffs first with early retirements but then with less forethought.

In the PwC report “CEOs identified talent gaps as one of the biggest threats to future growth prospects.” Check out Derek Lowe’s blog for insights from R&D perspective.

The craziness of top management decisions without showing any foresight beyond this quarter’s earnings is rampant in our society. I remember in the aftermath of the 2008 economic debacle, local VCs counseled their companies to husband their money carefully to weather the storm. This was translated to layoff decisions at several local companies. Where else do biotechs spend their money if not R&D personnel? Biotech companies that had previously partnered and had milestone schedules to meet recognized rather quickly that they had to produce or lose their essential funding so that meant increasing staff.

In those same years I heard representatives from Big Pharma trying to convince audiences of their companies’ wisdom in large layoffs. Yes, the cost of developing drugs and low resulting productivity suggested that Pharma was broken but you don’t tear down the institutions before planning the course of action to overcome the underlying reasons for the problem.

Historically, across industries HR staff who interface with applicants typically are recent college graduates who don’t know much about their company’s business and the needs of hiring managers. Today computers are relied on to do the screening or outside headhunters who know even less about the business. All the incentives are set up to find the resumes that match the job description with no subjective room to gauge the candidate’s capability and ability to learn quickly and, thereby, who are the best candidates for the future of changing business.

Our industry in the past avoided these rapid changes in staff levels knowing new graduates didn’t learn the necessary industry skills in graduate school. I believe the growing influence of the quarterly profit and the “number” custodians’ related decisions fail to account for the potential impact of casting out the essential skills of their workforce on their future business is alarming. When employees become just representatives of profit and loss numbers rather than valuable resources, businesses suffer severely. I’ve been concerned that running after illusory profits in BRIC countries based on number crunching will prove extremely damaging to our industry in long run.  I’m only optimistic because I believe biotech companies better understand this. Big Pharma is learning the real cost of training new staff here or overseas to replace the skills they took for granted, but I just hope it won’t  be too late if they lose skills built over decades to foreign countries.

I just ran across an example of why you shouldn’t let analysts who represent investors solve company problems. In a recnt survey by http://thehcc.tv/, respondents were asked “If not listed, what changes would you like to see the new CEO of Medtronic implement?” Their answers were:

  • Cut 50% of in-house R&D – it is not productive
  • Nuke the commercial infrastructure. Cut 1/2 R&D that goes to incremental rather than revolutionary projects
  • Continue to buy back stock, maintain dividend and try to improve ROIC. Stable cash cow businesses should not be divested.
  • Higher dividend

The investors represented–88.2% healthcare specialist hedge fund, 11.8% generalist and 11.8% mutual fund. These guys don’t know how to develop life science products–I believe they are looking at numbers only.

Highlights of Upcoming Events Week of Feb. 24th

You’ll find me attending the Bio2Device Group and BioScience Forum meetings along with watching the BioCentury TV Today program and Sharevault Webinar.

BTW, BioCentury has an excellent in-depth lead article this week on the Chinese regulatory agency and related impact on clinical trials and timetables entitled “China’s Bottleneck.” This is a must read for those planning to develop drugs in China.

  • BioCentury TV Today, See new program Webcast Starting Sunday, Feb. 24, 2013 http://www.biocenturytv.com, Available anytime starting at 9:00 a.m. EDT; Topic: “Monsanto vs. Bowman: From Soybeans to Stem Cells;” Speakers: George Kimbrell, Senior Attorney at the Center for Food Safety;  Edgar Haug, Managing Partner at Frommer Lawrence & Haug representing farmer Vernon Hugh Bowman; Gary Baise, Principal Attorney at Olsson Frank representing the American Soybean Association;  Hans Sauer, Deputy General Counsel at BIO
  • Bio2Device Group, Tuesday Morning, Feb. 26, 2013; Topic: “Intellectual Property: It’s a strategy, not a collection;” Speaker: Wouter Roorda, Consultant, Patent Agent
  • Sharevault Webinar, Tuesday Morning, Feb. 26, 2013; Topic: “How Equity Crowdfunding Can Help Life Science Companies;” Speakers: Scott Jordan, Scott Jordan Associates and Linda Pullan, Pullan Consulting
  • BioScience Forum, Wednesday Evening, Feb. 27, 2013; Title: ‘A Molecular Diagnostic Test That Saves Unnecessary Thyroid Surgeries;” Speaker: Giulia Kennedy, Ph.D., Chief Scientific Officer, Senior Vice President of Research and Development, Veracyte
  • ASQ NCDG, Wednesday Evening, Feb. 27, 2013; Topic: Hot Topics; Moderator: Thomas Lypka, CEO TSL Quality Inc, RAC; Panel Speakers: ISO 14971:2012/ISO 13485:2012/MDD; Balazs Bozsik, Technical Manager-Medical Auditing, TUV Rheinland ROHS; Jack Walker, Project Manager, Stellartech Research Corp. UDI; Thomas Lypka, CEO TSL Quality Inc
  • Palo Alto AWIS, Wednesday Evening, Feb. 27, 2013; Topic: “Women, Powerful Financial Strategies: Financial Planning for Women in Science;” Speaker: Brett M. Macauley, CRPC® – Financial Advisor , Chartered Retirement, Planning Counselor Macauley Associates
  • WIB-San Francisco, Thursday Evening, Feb 28 2013, Social Event: “A Perfect Pairing: Women In Bio Present Chocolate and Wine;” Speaker: Sunita de Tourreil, The Chocolate Garage
  • GGPF, Saturday Evening, March 2, 2013; Topic: “Nanofiber Technology for Health and Environment;” Speaker: Prof. Benjamin Chu, Depts. of Chemistry, Materials Science & Engineering, and Biomedical Engineering, Stony Brook University

You can download the list of Audreys Picks Feb. 24, 2013 with further details about upcoming meetings through end of April and JobsThatCrossedMyDesk through Feb. 24, 2013 if you right click on the highlighted title or at http://www.AudreysNetwork.com/blog.

Audrey

 

 


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