“Those who don’t know history are destined to repeat it.”
— Edmund Burke
It is amazing how the drug development industry in the U.S. has changed over the years. Consider the following observations:
Careers in the Drug Development Industry
1970s and 1980s: Get a job in a pharmaceutical company and you were set for life! Show up to work, put your time in, go with the flow, raise your family, and enjoy a comfortable retirement. Large pharmaceutical companies are situated on vast corporate campuses that see the construction of new buildings added on almost a yearly basis.
1980s and 1990s: Try to get a job in a pharmaceutical company (just like your parents did). If you are lucky to get a job in a pharmaceutical company, you think you are set for life. If no pharma jobs are available, there are these firms called CROs where you can at least get some experience until you can land a job at a pharmaceutical company.
Mid-1990s through 2003: This marks the beginning of the end of the “job for life” concept, as some pharma companies announce layoffs. Fortunately, there is an emerging biotechnology industry that provides opportunities for ex-pharma employees and CRO workers seeking better pay.
2003 to 2011: The CRO industry experiences significant growth early in this timeframe and actually hires current and former pharmaceutical employees. The construction of state-of-the art new facilities leads to a significant increase in capacity across the industry, up to 2008. Pharmaceutical and biotechnology companies lay off thousands of employees. Due to the global recession, some CROs are forced to lay off due to a prolonged decline in customer demand. The “job for life” concept has been replaced by the “thank goodness I have a job” mindset.
Day-To-Day Life in Drug Development
1970s to the early 1990s: In the pharmaceutical industry, workers enjoyed good salaries, good benefits, and parties . . . lots of parties. Company-sponsored Christmas parties, parties for retirees, parties for promotions, birthday parties, and parties for no particular reason are popular during this time. After-work and lunchtime sporting events are also popular. We see the emergence of “flex time” which allows workers to establish their own working hours.
Mid-1990s to circa 2003: Pharmaceutical parties decline because they are expensive and it doesn’t look good to be partying while co-workers are losing their jobs. Those companies that still have parties now have “holiday” parties to be politically correct, but there are no more free passes. If you plan to attend the holiday party, be prepared to shell out your own money. Thinking of not attending the holiday party? Do you really want to risk not being regarded as a team player? This is also the dawn of “the era of political correctness”; employees attend mandatory awareness/sensitivity training for every life style imaginable. Pharma companies launch “family friendly” campaigns by introducing telecommuting, shortened work weeks, job sharing, and on-site amenities such as dry cleaners, shops, etc. Family friendly initiatives are necessary as employees now work more hours each day at the office and in the evenings at home. Employees have to spend time working outside of the home because they spend so much time in meetings . . . lots and lots of meetings.
During this same time, the CRO industry is starting to mature and gain the trust of the pharmaceutical industry. These companies may not share the same work environments as the pharmaceutical industry because their focus is on establishing the infrastructure and the capabilities to have pharma projects entrusted to them.
2003 to 2011: The “era of political correctness” runs headlong into the “quest for improved productivity.” Although the desire to improve organizational productivity is rooted in the 1990s for those companies that experienced patent expirations, the entire industry now embraces any initiative that will get drugs to market faster. Flex time is more tightly controlled or eliminated in critical components to assure that employees are present when needed. Shortened work weeks are eliminated. Job sharing is revisited and restricted. Employees that leave companies are not replaced, as remaining employees are urged to “do more with less.” No manager in his right mind would suggest having a party, as that would risk inviting scrutiny as to their commitment to cost controls. Of course, it is not politically correct to suggest that the company’s political correctness initiatives and training are impinging on the critical time necessary to improve productivity; to do so would be to commit career suicide. Accordingly, employees now work even longer, including on weekends, and there are still meetings . . . lots of meetings.
After 2003, the CRO industry enjoys considerable growth as pharmaceutical companies outsource more and more work. Capabilities improve, revenues grow, and, in some companies, salaries increase. CRO employees work long hours each day, including on weekends. Some CROs introduce family friendly initiatives including job sharing and shortened work weeks. Because CROs have expanded rapidly and added new employees, there is an increased need for effective communication so we see an increase in the number of employee meetings . . . lots of meetings.
Preclinical Outsourcing as a Business Strategy
1970s to the early 1990s: Although some pharmaceutical companies dabble in preclinical outsourcing during this time, many companies believe that “no one can do it better than us” (i.e., pharma workers believed that research conducted in their internal facilities was superior to that conducted by a CRO). CRO scientists are not viewed as “equals” by their pharmaceutical counterparts.
Mid-1990s to 2003: CRO capabilities have matured and pharmaceutical companies increase outsourcing activities to address overflow capacity or to fill gaps in technical expertise in their internal capabilities. CRO scientists may not be viewed as “equals” by their pharmaceutical counterparts.
2003 to 2011: Many pharmaceutical companies have fully embraced preclinical outsourcing as a business strategy. Some pharma companies have diminished or eliminated their internal preclinical research capabilities. Some biopharma companies decide not to construct preclinical capabilities and rely solely on CROs to conduct their research. Despite high overhead costs and possibly lower productivity, some pharma companies elect to maintain their internal preclinical capabilities. CRO scientists still may not be viewed as “equals” by their pharmaceutical counterparts.
Employee Training and Career Development
1970s to the early 1990s: Employee training is slow and methodical. Job responsibilities are increased slowly. Senior employees mentor newer staff enough to be contributors, but time on the job, and not necessarily job performance, is the primary determining factor for career growth.
Mid-1990s to 2003: Pharmaceutical companies introduce the concept of paying for performance. Hiring decisions are not necessarily based on who you know, as there is a growing trend toward hiring qualified staff. Some senior employees struggle with the concept of pay for performance and jump at early retirement opportunities while others hunker down to wait for the arrival of a future retirement date. A greater emphasis on structured and well-documented training emerges. The era of organizational change emerges, with management teams periodically shifted to gain new experience. This organizational change undermines the quest for improved productivity, as each new management team implements a new operational strategy. New employees gain increased job responsibilities faster and there are shorter times between promotions for some individuals as companies seek to retain top performers.
2003 to 2011: There is an increasing focus on job performance in pharmaceutical companies. The concept of a sustained career with one company is more challenging because past accomplishments carry little value with a constantly changing management team. Newer employees across the industry are less inclined to wade through structured training programs and meet the time requirements necessary for promotions, so they transfer to other positions in these companies. Training programs are streamlined so that newer employees can contribute sooner and help address heavy workloads. In the CRO industry prior to 2008, new technical staff go through accelerated training programs in some companies and are thrust into revenue-generating roles. Less-trained employees assume critical frontline supervisory roles and become responsible for the accelerated training of more new employees. Quality concerns re-emerge as a key factor for sponsors who are considering placing work at a CRO. An increasing number of senior employees retire, are laid off, or seek jobs where they believe their years of experience will be valued. Pharmaceutical, biotechnology and CRO companies that experience earnings hiccups lay off workers.
1970s to the early 1990s: Budget? What budget? The only reason to curb spending is if you think expenditures will look bad to management.
1990s to 2003: Companies stop providing soft drinks at meetings. In a devastating move that sends shockwaves across the industry, companies then stop providing cookies at meetings! About this time, some managers get cram courses in budgetary management and realize that eliminating soft drinks and cookies is not going to have much of an impact on reducing expenses. More cuts are necessary. The aforementioned parties are first curtailed then eliminated. The once lucrative travel budget is slashed. Scientists are forced to spend time on elaborate justifications to travel at the company’s expense. The concept of sharing a hotel room with a co-worker during a business trip is introduced. The very thought is so uninviting to some that many employees stop seeking the opportunity to travel. The industry signs preferred provider agreements with travel agencies to curb costs when employees actually are allowed to travel, although employees can often find better deals on the internet. Funds remaining in preclinical outsourcing budgets are cut in the third or fourth quarters of each calendar year.
2003 to 2011: The industry experiences explosive growth in preclinical outsourcing up to 2008. Pharmaceutical companies implement hiring freezes. Employee benefits packages are changed to reduce costs. Thousands of employees in the pharmaceutical industry are laid off. Some pharmaceutical preclinical research facilities are closed. Covance purchases and commercializes former Lilly and Sanofi sites. After 2008, the CRO industry implements many of the same cost-cutting initiatives that were seen in the pharmaceutical industry a decade earlier. As customer demand for preclinical outsourcing declines, some CROs implement layoffs while others shorten work weeks and/or cut salaries. By 2011, the CRO industry sees glimmers of hope that the decline in customer demand has bottomed out.
So what does all of this mean? Of course, we have the benefit of 30-plus years of hindsight, so it is easier to critique the drug development industry now than it would have been “back in the day.” It is clear now that the U.S. pharmaceutical industry had to change to survive. Patent expirations, pricing pressures, and other market forces emerged as a reality by the mid-1990s and they continue to challenge the industry today. I never was a big fan of the “job for life” mindset because I thought it promoted mediocrity (but that is just my opinion). However, thousands of U.S. workers were raised in an environment in which getting a job with a large U.S. company would guarantee security because the company would take care of them. Today we know this isn’t true, but we are left to wonder if things would have been different if productivity and performance were valued more than time with the company.
There are some lessons that I hope have been learned from the past. Training is good. An organizational change to provide managers with new experiences is good. Frequent organizational changes are bad. Managers in new roles try to find new ways to impress their bosses and adopt new operational strategies and rules. When a company conducts frequent organizational changes, the strategies and the rules change so much that the employees must spend time trying to figure out the rules instead of getting their work done. Frequent organizational changes hurt functional area productivity and impede the growth of organizational expertise.
I believe we are now seeing a decline in organizational expertise across the industry. Retirements and layoffs are unavoidable, but there is no reason for any company to cater to new employees who are either too impatient to learn the intricate nature of preclinical research or who believe that they are not getting promoted fast enough after minimal time on the job. You may have heard of Generation X or Y but I would suggest that we are now experiencing Generation IG (Instant Gratification). It is better for hiring managers to admit that they made a mistake and fire those individuals who will never be satisfied. Unfortunately, performance assessments in many companies are based more on appearance than results, so hiring errors are not acknowledged and the company is ultimately weakened.
Finally, I believe the industry can learn from the past. I think that it is great that companies have implemented initiatives so that their employees are more sensitive to those with different lifestyles and/or backgrounds. Gosh, anything that can be done to make this world a nicer place can’t be bad! The same goes for family-friendly initiatives. Anything that makes an employee’s day-to-day life just a bit easier can only help them in their jobs and with their family life. On the flipside, with all of these initiatives and all of the scientific research that goes into drug development, it should never be lost on employees that they work for a business that needs to make money for them to keep their jobs. Just as pharma employees in the 1980s and early 1990s may not have appreciated the importance of sound budgetary management, it is important now that today’s employees understand where they fit in the big picture. In other words, management has a responsibility to help employees understand how their actions — and inactions — impact the company’s revenue and expenses.
Can we learn from the past? Read the article again and take notice of how some of the same changes that occurred in the pharmaceutical industry were seen years later in the CRO industry.
Steve Snyder is a consultant with more than 25 years of experience in preclinical toxicology as an outsourcing customer and provider. He can be contacted at email@example.com.