Siddharth Verma |
Pharmaceutical Industry was always resilient to hiring cyclicity. Unlike the IT Industry, it never rained jobs in the Pharma sector. But, recruitment was steady, incremental and stable enough to make careers a long and fulfilling one. Both MNC and Indian majors have enjoyed lengthy tenures from their talent. Pharmaceutical majors have also given the right career progressions to their bright talent. Top talent in this Industry has grown not only through large assignments in India but also meaningful international opportunities. Needless to say, recruitment in Pharmaceutical sector was done with a sense of long-term purpose.
There have been few key factors that helped the Pharma professionals career growth. The number of specialised hospitals in Tier 1 and 2 cities has increased. Hospitals have got corporatised and the flow of Venture Capital into the healthcare sector has gone up too. Higher Insurance penetration to the Healthcare sector has also been a boon for the Pharma & Devices Industry. The International growth of Indian Pharmaceutical majors over the last 2 decades has also added sheen to the careers of Indian Pharma Professionals.
All this has meant more investment on expansion, which resulted in new plants, more R & D centres, and geographic expansions. Henceforth, talent addition has been a constant factor. People grew from within and more people have been attracted to the Industry from outside. First came the global and domestic growth of companies like Sun, Cadila, Cipla, Lupin, Glenmark, DRL, Aurobindo and Biocon to name a few. Then the global MNCs started to set up their Global In-house Centres in India. Novartis, Paraxel, Astra Zeneca, Nova Nordisk & Eli Lilly are some of these many marquee names. Both these factors contributed to a steady recruitment in pharma Industry for the last 2 decades.
Pharma Present Tense
2018 hasn’t been very pleasing on that front though. There has been a slowdown if not a freeze on the new jobs front. The globally focussed Indian companies have faced headwinds in the North American markets. This has been their cash cow for the longest time. In the domestic market, 20% of the drugs have faced price controls. Additionally, there is an increased scrutiny on the retail margins on the distribution of the products. The high margin stents have already seen a price cut of 80%. These factors are slowly affecting the business models of Pharma companies in the domestic market. Their average EBITA Margins which have mostly been north of 25% is under duress. Pharma companies have to sustain their lobbying to ensure there isn’t a further threat to their business model. They also have to innovate their operating model to ensure the lower prices don’t dent their profitability. This has put pressure on their new hiring investments.
Pharma companies have not been known for recruiting thousands of people in one go unless there was a greenfield project. Nevertheless, recruitments at large pharma companies were constant. Top ten Indian Pharma companies always had large In-house recruitment teams and recruitment was always an ongoing scaling project. There was always recruitment beyond replacement hiring because for every growth milestone there were new investments made. The current pressure on operating model has slowed down R & D expansion and thereby the hiring as well. Any cursory look would suggest that there are quite a lot of job openings across pharma skill sets. But, the question to be asked is about the number of new jobs. The last 2 quarters indicate that only replacement hiring is in vogue.
Make no mistake, the recruiters of pharma companies are still hiring big time for their sales force. The top 10 Pharmaceutical companies have a field force in the range of 7-10,000. These are high attrition roles and the replacements are ongoing. Pharma recruiters are spending 80% of their time hiring their salesforce. Every Large Pharmaceutical company has about 200-300 sales roles to fill every month. But, that need was evergreen and the most noteworthy is the slowdown of expansion hiring and R & D roles. Additionally, senior talent from Pharma Industry is reluctant to move as they aren’t very excited about the current macro trends.
In the long run, stock market pundits say Pharma still has more tailwinds in its favor. But, Pharma companies have to discover their winning ways of overcoming the challenges related to the US Market. The US regulatory pressure is something they have weathered in the past. The larger challenge lies at home where the pricing regulation has squeezed operating margins. They need to find a new operating model which can feed their profitability and growth. The recruitment upside will come from that. Till that time new jobs creation and related recruitment frenzy will have to wait.
From a hiring point of view, Pharma Industry needs a new prescription for the good times to return in the near term.