Even though the Q3 FY2014 results of the Indian pharma sector were subdued, dipping from double digts to around 9.5 per cent in the quarter, this could be explained as the impact of the new pricing policy and trade related standoffs. Some companies have managed to beat the industry average growth rate, proving that the impact of these factors will even out over a period of time as companies and customers adjust to the ‘new normal.’
As Ranbaxy continues to face US FDA scrutiny, with its Toansa plant in Punjab – its fourth facility- was also slapped with an import ban on January 23, industry analysts have been preparing for a scenario when the notinal reputational loss starts impacting the ability to win new manufacturing contracts. Another downer was the news that AstraZeneca would be shutting down its Bangalore-based R&D centre, Avishkar, and releasing around 170 scientists, as part of a pan-global move to consolidate its R&D facilities.
Hiring to pick up in 2014
Moorthy K Uppaluri Chief Executive Officer, Randstad India and Sri Lanka |
Hiring trends in 2014 will reflect these news flashes but recruitment agencies and job portals do not seem overly worried. As Moorthy K Uppaluri, Chief Executive Officer, Randstad India and Sri Lanka puts it, “The Indian pharma sector has always been an active recruiter, with a potential attract high quality talent even during slowdowns as the industry is virtually recession proof.” In fact, Uppaluri discloses that pharma has been a key growth engine over the last two to three years for his company, and they are expecting a 14 per cent hiring growth in this sector in 2014.
V Suresh EVP & Head Sales, Naukri.com |
In terms of job listings too, the lifesciences sector has been second only to the IT sector according to V Suresh, EVP and Head Sales, Naukri.com. The job portal site first started releasing Job Speak Index, a monthly indicator of job listings on its portal, in July 2008. The Index for the lifesciences sector started with a base of around 1000 listings, spanning pharma and biotech related positions. It peaked at 1603 listings in July 2013 and though the December figures are lower (1333), Suresh expects it to reach 1500-1600 levels in 2014 as well.
Kamal Karanth Managing Director, Kelly Services India |
These bullish predictions come on the back of industry observers like Kamal Karanth, Managing Director, Kelly Services India expecting an uptick in US FDA approvals for new research molecules from big pharma players. Karanth explains further saying, “This is good news as these companies encouraged by these wins may further advance their new drug pipeline. This means Indian CROs/CRAMS and other contract services will do brisk business, since most of these innovator companies outsource their developmental stages to India. This translates to more business which in turn translates to companies willing to pay more to hire talent.” Thus he expects that overall the sector will create more jobs in 2014.
Karanth believes that despite the recent challenges and concerns in the industry like quality issues/ US FDA warnings/ stringent price control/compulsory licensing/ambiguous patent laws, etc., there are strong macro drivers pushing growth across the sector in India. He points out that companies continue to bolster their sales force, launch new products/new therapy segments, and invest in marketing/brand management.
According to him, India still continues to be regarded as the pharma development/ manufacturing outsourcing hub, due to the strong process chemistry/ pharma development capabilities, low cost of infrastructure, skilled talent at low cost and some of the finest state- of-the-art manufacturing facilities.
He also points out that due to the sheer size of the population and increasing prevalence of chronic lifestyle diseases, and rising disposable incomes, newer MNCs are setting shop in India, or are scaling operations through launching new innovative products. Better penetration of healthcare and access to medical insurance is also driving pharma growth particularly in Tier II and III towns/cities.
Hussain Tinwala General Manager, Teamlease Services |
All these factors augur well for pharma companies, especially when compared to their peers in other manufacturing-based sectors. As Hussain Tinwala, General Manager, TeamLease Services says, “As a generic drug maker, it has an upper hand in terms of offering low cost drugs across global platform. This keeps the manufacturing/production tempo moving as compared to overall manufacturing industry.”
Tinwala points out that today only 40 per cent of the Indian population is able to access medical and health assurance benefits. If this is developed, it would boost the domestic pharma sector and higher consumption would motivate them to spend and invest more on research.
Globalisation of talent search
Would the reputational loss of adverse decisions from overseas regulators impact hiring trends in India? As of now, this does not seem to be the case. Tinwala of TeamLease Services feels that global pharma companies are focussing to increase their presence in emerging countries like China, Brazil and India. Consequently, global HR honchos have a clear five-year plan on human capital development which includes globalisation to leverage on talent supply in emerging cost effective markets. Specific to India, Tinwala says global companies would strengthen their employee base in India and would also look at hiring for back office operations to reduce head count in their base locations.
This trend is already happening: even as Novartis announced job cuts across global locations, a Swiss newspaper reported that some of those positions might be moved to its Hyderabad set up. Earlier this year, the Swiss company reportedly bought 8.7 lakh square feet of office space in Hyderabad, touted as one of the largest deals in office space in the city in recent times. A company official was quoted as saying that the new office space would consolidate its existing operations in the city.
Hiring hot spots
The positive buzz is supported by statistics as well; Randstad India recorded a 12-14 per cent hiring growth in the pharma sector in the current fiscal year, says Uppaluri of Randstad India, with much of the demand concentrated in cities such as Mumbai, Bangalore, Hyderabad and Visakhapatnam.
Suresh of Naukri.com says that in terms of lifescience job listigs, Mumbai was the clear leader, followed by Hyderbad, closely followed by Bangalore. Chennai was at fourth and Ahmedabad at fifth position. In addition to these known hotspots, Suresh says 2014 could see pharma job listings pick up in the Delhi NCR region, Navi Mumbai in Maharashtra, Visakhapatnam and Chandigarh. His prediction is based on three factors critical for expansion, which these emerging hubs have: support from the government in terms of industry-friendly tax rates and the like, availability of land and thirdly, access to talent pool.
In terms of workforce solutions and levels of hiring, Karanth says contingent hiring (direct-hire basis) at mid levels- upper mid levels makes up 50 per cent of the hiring done for pharma clients. Senior level search and leadership hiring makes up 20 per cent while junior level volume hiring accounts for the remaining 30 per cent. Temp staffing is not such a regular sought after service by pharma clients, reveals Karanth.
Among Randstad’s services portfolio, Uppaluri reveals that staffing and selection (volume permanent recruitment) are most sought after by pharma clients with the company handling complex, multiple pan India projects.
Double digit hikes…
A recent Kelly Services India Report tracking salary movements across sectors in India too has identified the pharma sector as one of the few sectors where employees can expect decent salary hikes in 2014. Karanth admits that in terms of monetary gains, the sector is relatively conservative compared to its close peers like FMCG/chemicals/medical devices, etc. “However, niche skills in the areas of drug discovery, regulatory affairs, quality systems/compliance, therapy marketing, brand management, CRAMS, R&D programme management, biologics/biosimilars, international marketing are comparatively well compensated, specially at senior levels.”
Uppaluri of Randstad India too predicts that the pharma sector is expected to dole out an above average of around 20 per cent hike to lateral hires this year.
Tinwala conquers with this saying that in terms of increments, companies would come up with double digit appraisals in the range of 14 per cent to 15 per cent against an overall industry standard of 10 per cent to 12 per cent. Besides hikes, there would be a focus on perks or bonuses to segregate top achievers, with many companies offering family leisure trips or stock options. Speaking about some practices followed by global pharma companies, he points out that they focus more on rewards and performance-based pay outs, with many companies offering a flexible variable basket, allowing employees to decide on the rewards schemes best suited to them.
… for ‘in demand’ skill sets
Karanth of Kelly Services India predicts that in 2014, jobs that will be in demand in India will be in regulatory affairs, supply chain/purchase and environment health and safety.
Tinwala of TeamLease Services puts sales and marketing as the top contributor in terms of openings followed by other functions. Sales openings would flourish more in Tier II cities, as these cities are the growth drivers for organisations. Besides sales and marketing, Tinwala feels WHO and government interventions on transparancy would enable growth in regulatory / legal functions. He also predicts an interesting trend of diversity playing an important role, with companies looking to hire more women employees in Tier II cities and offering flexible working hours.
Alluding to the sheer breadth to talent absorbed by the sector, Uppaluri of Randstand India opines that this highly knowledge-based sector offers candidates a plethora of exciting careers opportunities ranging from medical writers to territory managers to ICU intensivists. At present, he sees a lot of demand for junior and mid level professionals in product development, inventory management and sales and marketing functions.
Beyond these verticals, Uppaluri points out that with pharma companies investing heavily in joint collaborative researches for new drug discoveries, senior level professionals with niche skills and experience such as pharma scientists, radiologists and clinical research associates are being highly sought after.
Competing for talent
On the flip side, pharma companies often find themselves competing with other sectors for the same talent pool and are often found wanting. Tinwala feels that limited resources and lack of cross industry movements would make it challenging for pharma companies to attract talent. He points out that medical insurance companies off lately have started hiring pharma graduates to assess drug prescriptions, a part of the claim settlement process. So also, there is a cross movement of talent between pharma and FMCG in sales and Marketing functions for OTC products. Many personal care companies hire employees with experience in selling or marketing derma based products. Many FMCG – personal care companies hire detailing managers with strong technical knowledge or strong connect with consultants / physicians.
While these factors are good news for employees, employers find that they have to stretch to retain talent. In the war for talent, how is the pharma sector attracting and retaining talent? And in particular are Indian pharma companies fighting a losing battle?
Missing links
There is consensus that inspite of the attractive hiring trends, both employer and job seeker communities will face a certain amount of frustration. The reality is that in lifescience, India has the numbers but not the quality of talent.
As Tinwala points out, “Though India has the right supply of pharma graduates, but not all graduates are employable. They lack soft skills and basic employability skills. This is one of the biggest challenge that Indian pharma is facing.” He opines that India’s biggest challenge is talent management and talent retention; attrition could be as high as 18 per cent – 20 per cent annually.
Uppaluri of Randstad too feels that while from a talent supply point, there’s no dearth of candidates who are keen and passionate to take on pharma as their choice of profession, like other sectors, pharma too is facing skills gap issue. “We have seen that most candidates are strong in the technical knowledge but lack in communication skills.” He says that firms overcome this skills chasm through skill development and training programme initiatives.
Dearth of technical talent
The shortage in quality talent or industry ready talent and the gap in demand/supply is ever widening says Karanth of Kelly Services and in fact is already quite critical in techical areas. For instance, the talent pool in certain specific niche skill areas like translational research, clinical development, drug discovery, medical devices R&D, biosimilars/ biologics research are practically reduced to a few people in few companies. Karanth warns that “unless industry, academia and government do not come together on a common platform to work on producing talent at a university level, things might not improve soon.”
Elaborating further on quality of talent, Tinwala says that the fast growth pace of the industry calls for employees who are risk takers, accountable, creative, innovative and excellent communicators. He rues that this quality “seems to be missing in the fresh bunch.” Since employees working in critical functions like R&D, regulatory, quality and sales / marketing are always in great demand, Tinwala observes that these functions also see maximum attrition. Another challenge these companies face are governments interventions on price control regulations, ever rising expense on R&D and patent expiry with no drug replacements.
Some solutions
All these factors have forced global pharma companies to focus on developing employees. Tinwala points out how global companies have invested in training and development of employees saying, “Global companies focus on developing higher efficiency levels of its employees, focusing on driving performance, making employees take risk and plunge into challenges at early stage of their careers. Developing analytical skillset and changing approach from scientific to analytical.”
Karanth of Kelly Services too confirms that current best practices adopted by big pharma have resulted in all round professional growth and skills development. He also points out that infusion of talent from different sectors and talent from overseas, has challenged conventional thinking/approach and thus resulted in overall quality enhancement of people.
Back home, forward looking companies have already implemented some of the tried-and tested solutions from developed countries. For instance, Biocon has started its own biotech academy to produce biotech specialised professionals, points out Karanth. In a similar vein, there is some movement with several colleges and universities now offering pharma and healthcare management courses, thus improving the quality and number of brand management./pharma marketing professionals.
Thus a globalisation of the workforce benefits both employers and employees; in ways beyond the balance sheet. Both sides can prepare for a year of steady growth, peppered of course with challenges like increased regulator scrutiny and policy changes once the new government takes charge.