Pharma’s Contraction Leads to Outsourcing Hires

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In a study conducted by KPMG market research and analytics were found to be one of the key functions outsourced as part of the development process.  This is logical, especially at the time of opportunity assessment when success of product launch is uncertain and headcount to support the product prior to launch is less likely budgeted.

Pharma R&D Outsourcing

Source: KPMG: “Outsourcing in the Pharmaceutical Industry 2011 and Beyond”, Charles Arnold and Vicki Phelan

Pharma’s Contraction Leads to Outsourcing Hires

Upstart Business Journal
by Julie M. Donnelly August 14, 2010  |  3:21pm EDT

A recently released Global Life Sciences Hiring Index, conducted by ZRG Partners—which included 30 of the largest pharma, biotech, medical-device, and services and outsourcing firms in the United States—found that services and outsourcing firms are hiring at the fastest rate in the sector.

It also found that the current hiring rate in services was 500 percent higher than in pharmaceutical companies, and 250 percent based than in medical-device firms, on a per-employee basis.

Several factors are at play, including consolidation in the pharmaceutical industry that has led to large numbers of layoffs, particularly among sales and marketing staff—to the advantage of services firms. For instance, the hiring index found that sales and marketing jobs represented only 19 percent of available open positions, down from 30 percent in 2007. The vast number of patents that are about to expire also lowers the need for more salespeople, as market share of branded drugs is expected to dwindle following generic competition.

The so-called “patent cliff” also boosts hiring at outsourcing firms, as pharmaceutical companies increasingly engage contract research organizations (CROs) in an effort to speed up development of new drugs.

“Many of these pharma companies are coming out of a hard 10-year period when research and development was not that productive. They are likely engaged in a new business model. They are not investing less in research and development, but they are more deliberate in how they spend it,” said Josef von Rickenbach, CEO of Parexel. Von Rickenbach and others said that it has been easier to recruit good talent lately, because CROs have less competition from pharmaceutical and biotech companies for the same candidates, and because the image of CROs as a workplace is evolving in a positive direction.

“Five years ago, I couldn’t recruit for a CRO. Candidates didn’t want to hear it, they thought it was minor league,” said Steve Tosches, managing director of life sciences at ZRG Partners. But Tosches said that has changed, as pharmaceutical jobs become more unstable. Tosches said that outsourcing is now often seen as a crucial cost-containment measure for cash-hungry biotechs, as well as pharma companies, post-recession.

“This is a matter of survival. They can’t just sit back and take VC money anymore and wait to be acquired or for an IPO, because that might not happen. They have to leverage expertise from outside the organization, to move ahead quicker,” Tosches said.

For more on how pharma’s contraction is helping outsourcing firms, see the full story from the Boston Business Journal.

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