By 2016, many blockbuster drugs of various pharmaceutical giants, which are currently generating around $100 billion sales, will go off patent. In 2013 itself 15 branded drugs are set to go off patent and these numbers are likely to increase in the coming years. This will open a huge market for the Indian pharma companies as India exports generic medicines worth $11 billion.
Dheeraj Aggarwal, Chief Financial Officer, Venus Remedies informs, “The list of drugs going off patent by 2016 includes Sanofi and Bristol-Myers’ Plavix, Takeda’s Actos, Abbott’s Tricor, GlaxoSimthKline’s asthma drug Advair and many more. Patent expiration of these big sellers will invite generic competition and put the sales of the blockbuster drugs at risk of being undercut by cheaper, duplicate versions.”
The biggest setback to the branded drugs happened when Pfizer’s most popular drug Lipitor lost its patent exclusivity in November 2011. Soon after this, there were another couple of drugs which went off patent and opened the market access to the generic pharma companies. It has opened the competitive market to the generic drug companies and allowed physicians to choose best generics and relieved patients from the healthcare burden.
Ravi Sitaraman, Assistant General Manager – HR, Inventia Healthcare says, ”The generic pharma industry is looking lucrative at this moment with a host of blockbuster drugs ranging from those in pain management to gastroesophageal reflux disease (GERD), from those in asthma to high cholesterol to psychosis going off patent in the current ‘patent cliff’ leading up to 2016. All these small molecule drugs approximately account for $133.0 billion in the US alone that shall be facing generic competition. As per estimates, roughly 70-75 per cent of prescriptions are from generics.”
Planning strategically
Competing with each other and keeping pace with the growing needs of a healthy business environment is a must for individual pharma companies hoping to tap the patent cliff opportunity to its hilt. Besides investing in research and development, technology, etc. companies also need to invest in their people/staff in order to retain a stable employee base to execute the company’s strategies to tap this opportunity.
Ravi Sitaraman Asst. General Manager – HR, Inventia Healthcare |
Sitaraman agrees with this and avers, “We strongly and truly believe in investing in our talent pool by creating the right atmosphere where employees spend more than a third of their day. The company is well placed technically to conform to non-infringing processes. It is also prudent to be focusing on the ‘large molecule drugs’ which are also expected to account for more than 40 per cent of the US sales by 2016. We see the coming years to be very exciting and unfold new vistas. Our business is extremely focused on novel drug delivery systems (NDDS) and accordingly we have prepared the road map for the future by carefully shortlisting the therapies and the potential drugs based on its suitability to our business model.”
He continues, “Our deeply entrenched family values form the perfect binder to keep this framework together. By ensuring a conducive work atmosphere
we aim at striking the right base notes towards gainful employee engagement. Secondly, the focus and demand for constant innovation is inherent of our business model. This in itself creates an invigorating learning experience for the thinkers and doers alike, resulting in huge job satisfaction. Thirdly, we have encouraging reward and recognition programmes to recognise innovation and stretched contributions.”
Ajay Bhatt Regional Human Resources Director, Abbott India |
Ajay Bhatt, Regional Human Resources Director, Abbott India emphasises, “Building a performance culture and developing the next generation of leaders are critical to Abbott’s success. Learning and development and continuing employee education are priorities because we believe that it is only through our people that we can achieve our business goals. At Abbott, we help employees realise their full potential with training, mentoring, growth planning and leadership development programmes. We provide a wide range of courses to help employees develop their skills, and build and advance their careers.”
Ravi C Dasgupta, Group Head, HR, Biocon shares his company’s strategies and says, “At Biocon we believe in driving a performance culture and our performance management system is designed towards identifying top performers. As a part of this process, we look to provide them with opportunities to grow within the company. Our strategy for retaining top performers is to keep them challenged, engaged, and motivated to reach significant career milestones.”
Bhatt reveals, “At Abbott, our robust HR programmes and talent management process are geared to meet the changes in the market. Abbott recognises the value of offering employees both, an extensive benefits programme that is market competitive, as well as a significant investment in their professional development.”
Retention
“Retention strategies are never sporadic, rather a process evolved over time. Hence, our strategies for retention are woven around several dimensions. Appraisal process is therefore just one of the tools in the basket and over-reliance on the outcome of this process alone may not necessarily yield the right dividends. We have invested in automating our performance management system for effective tracking and encouraging key stakeholders to invest quality time in the entire process – be it goal setting or review,” adds Sitaraman.
Recognition
Dheeraj Aggarwal Chief Financial Officer, Venus Remedies |
High potential and top performing employees are key to growth and success. Acknowleding this fact, Aggarwal shares, “At Venus, we organise and celebrate our Annual Raising Day in March where we appreciate and acknowledge the efforts and performances of our employees for their dedicated work in the best interest of the company. Besides this, we engage our employees in various activities within the company’s premises, which include employee stock option plans (ESOPs), half-yearly increments, stability increments linked with performance and long stay in the company, tutor and training programmes, voting for best departments on quarterly basis and committee system wherein various committees are involved in value addition activities apart from the employees’ specific job profile.”
Venus also provides additional perks to its top performers and promising new comers every year on their Annual Raising Day. “We firmly believe that word of appreciation and accolades are the best way to boost the morale of your employees. Apart from this, our employees are also provided with various facilities which includes allotment of cars to senior employees, two-wheelers to other employees, bus facility for pick and drop from Baddi unit and so on,” informs Aggarwal.
However, Inventia Healthcare is still at its policy framing stage. Sitaraman briefs, “Over and above our existing reward and recognition framework, we would explore more innovative ways of incentivising superior performance; modalities of which are at a nascent stage.”
Spur to growth
The Indian pharma market is both cluttered and fragmented. In order to make an impact in such an environment, one needs quality products, good marketing strategies and a competent sales force. So, is the industry able to attract fresh talent to join its ever expanding sales force? Or is the regulated nature of the pharma industry acting as a deterrent?
Ravi C Dasgupta Group Head – HR, Biocon |
Dasgupta shows his concern over regulatory interference commenting, “Doctors prescribe drugs based on their confidence that the drug will work and cure their patients quickly, with little or no side effects. Thus, the recent changes which regulators have introduced as new rules and regulations for the pharma industry would not adversely affect companies with good products and strong brand. That being the case, the inflow of fresh talent should not dry up.”
Another point of view is that this challenge can be overcome, provided the education system trains these new recruits. “Regulations over the years have always become more stringent. In one way it helps us to be more competitive in the global market and thereby attract quality talent which is critical for the organisation’s success. But I do not foresee this as an impediment in attracting fresh talent. The industry will always require fresh infusion of talent at the base of the pyramid. The only concern is the alignment of the curriculum to the industry needs which makes the transition from being ‘student’ to that of a ‘professional’ that much more easy. This fortunately has been happening in the last few years,” remarks Sitaraman.
However, Aggarwal senses, “We don’t think increasing stringency would hamper the process of attracting fresh talent into the industry as rules and regulations are in the best interest of the industry. The pharma industry (in India) is evolving from generic contract manufacturing to a research driven industry. With new innovations and inventions coming, it is required to have strict laws to minimise the chances of duplicacy and maintains exclusivity. This dynamic change in the industry would rather allure more fresh talent into the industry.”
Forward looking
As per the recently released Aon Hewitt 17th Annual Salary Increase Survey 2013, the predictive figures for the pharma sector this year is pegged at 13.5 per cent (last year it was predicted at 13.3 per cent) which is again impressive considering the industry average of 10.3 per cent which in turn is a tad lower as compared to last year. India is seen at the fifth spot in the top five global list of payouts. The survey has also pointed out continuation of the trend that has been set over the last three years or so – around three per cent on an average higher payout for the top talent.
The life sciences sector is also slated to witness high increment of around 13.1 per cent. All these are still impressive figures, given that corporate houses across sectors have not been able to record improved performances early on in the review year due to global and domestic economic uncertainties. This also speaks a lot on the tremendous pressure that companies face in carrying out the ‘balancing act’ to retain their key talent and at the same time not be over adventurous with their overheads.
In this context, sustainability will largely depend on how successful companies are in optimising their resources and processes. Innovation shall be the key differentiator, according to the Aon Hewitt Survey.
Aggarwal anticipates, “It is speculated that the Indian pharma industry will offer its employees an increment of around 10 per cent for the year 2013. As far as sustainability is concerned, it will be sustainable as the pharma industry in India is very promising and is poised to grow at a great pace. In 2012, the industry witnessed a growth of 25 per cent in exports, 17-18 per cent in domestic sales and so on.”
In the pharma industry, salary increases are usually in the 10 per cent to 15 per cent range. Companies need to provide such increases as the job market is volatile and many opportunities exist for job seekers.
Dasgupta predicts and informs, “This year the projected increment is 12.5 per cent for the pharma industry. As long as talent is in short supply and you have multiple organisations vying for the same pool of talent, organisations have to continue to pay such increments. Having said that, in the last few years the differentials between salaries in India and more developed countries are shrinking. For many roles, salaries in India are 40-70 per cent of markets such as the US. As there is also considerable difference between the prices you can command in India vs. abroad, such increases may not be sustainable beyond a few years and organisations have to let talented people go and look at grooming fresh talent.”
Agarwals reveals, “Being a research-driven company, we are very optimistic about our research products. We have a bi-annual appraisal system in Venus Remedies. In 2012, the companies have given approximately 10-11 per cent of salary hike to its employees despite the rising cost and slow growth rate of pharma industry. On an average, we offer 10 per cent salary hike to our employees.”
On the other hand, Inventia Healthcare follows the industry benchmark and it will continue for the current year too.
So far, the reading is that this year and the coming year too have some big opportunities. But the candidates need to match their talent with the companies’ capabilities.
As we have seen in 2012, percentage of increments in the pharma industry was 12.5 per cent; in 2011 it stood at 12.3 per cent, and in 2010 it was 11.7 per cent which reflects a continuous growth curve. Here’s hoping that the ascending opportunities match with the expectations of the industry, employers and employees in the coming years.