Figure 1. Expiring Patents Drive Industry Change (Rev = revenues, all figures in $U.S. millions)
Six Future High-Growth Areas
Six segments of the pharmaceutical industry will offer particularly high growth potential:
1. Commercialization of dormant compounds In the freezers of pharmaceutical companies are thousands of compounds that were abandoned prior to FDA approval, or that were approved but not commercialized. Finding ways to reposition or repurpose these compounds is a high-growth opportunity. Additionally, by repurposing a compound, a pharmaceutical company can extend the life of its patent.
2. Generic or biosimilar versions of biologics The development of generic or biosimilar versions of biologics will also be a high-growth area. While the development and manufacture of such treatments remains difficult and expensive, the size of the market (today, 25% of the new drugs coming to market are biologics) and the near-term expiration of patents on some of the highest-revenue biologics makes it a compelling opportunity.
3. Improving the efficiency of R&D The rapidly increasing costs and risks of developing drugs have led to the creation of a fast-growing business within the pharmaceutical industry: finding ways to improve the efficiency of the R&D process. In particular, there will be great interest in discovering ways of improving the ability to identify early in the research process (and prior to the incurrence of significant costs) those drug targets that are “inherently intractable and undruggable” or are potentially toxic to humans and therefore not viable pursuits.
4. Oncology and central nervous system disorders R&D As the life expectancy for the U.S. population continues to grow, larger portions of the population will be afflicted with conditions such as Alzheimer’s disease and dementia. In addition, cancer will be an even bigger cause of mortality.
5. Stratified medicine and diagnostics While cost-effective “personalized medicine” likely remains decades away, “stratified medicine” — particularly in the field of diagnostics — represents a high-growth opportunity in the near term. This field will focus on finding ways to slightly alter the composition of different medications to make them more effective for sub-segments of the patient population.
6. Fusion of pharmaceuticals and consumer goods While the regulation of consumer goods is nothing new, consumer goods companies, plagued by recent scares from poisoned dog food and toothpaste among other things, are now under far more scrutiny. They also view the areas of health and wellness products as high-growth opportunities. Consequently, consumer goods firms increasingly will seek individuals with experience in the pharmaceutical industry.
Seven Highly-Valued Skill Sets
The six areas cited above will offer great growth potential and, therefore, some of the best employment opportunities over the next decade. However, the changes sweeping through the industry will also create demand for the following seven skill sets:
1. Manage decentralized intellectual capital resources
As more pharmaceutical companies shift to decentralized business models, they will look outside their walls for much of the intellectual capital needed to develop new drugs. Contract research organizations (CROs), independent contractors, research consortiums, universities and foreign laboratories will play increasingly integral roles in solving complex problems more cost-effectively. Individuals able to simultaneously and effectively manage all of these internal and external intellectual capital resources will be in great demand across the industry.
2. Work in joint ventures and across divisions, cultures and countries
The pharmaceutical industry is shifting from fully integrated businesses focused largely on the United States and E.U. markets to more decentralized business models that operate and compete in a global market. This shift will create a demand for individuals who can navigate the demands of working in joint ventures and across divisions within one company, as well as those who have the ability to work with people from different countries and cultures (which requires experience with different languages, regulatory environments and attitudes about life and work).
3. Integrate an understanding of intellectual property laws, scientific expertise and business strategy
Recent advances resulting from the Human Genome Project have led to a flood of patents by companies on different gene sequences. The existence of these patents complicates the development of new drugs because it is unclear whether many (if not most) of these patents are enforceable. Consequently, there will be great demand for those individuals who can integrate an understanding of intellectual property laws (in particular, case law) with a deep understanding of science and business strategy.
4. Spur creativity while managing commercially
In the past, pharmaceutical companies largely operated as silos. The economic demands on pharmaceutical companies will force them — and all of their employees — to place much greater emphasis on finding ways to generate revenues faster. These organizations will need managers who can somehow strike a balance between two conflicting forces: instill a sense of commercial urgency in the development of new products, and do it in a way that still allows the natural creativity of the people in these laboratories to blossom.
5. Knowledge and insight on the decision-making dynamics of payers
The significant shift in bargaining power from pharmaceutical companies to payers has created substantial demand for individuals who have a comprehensive understanding of these organizations.
6. Expertise in the functioning and decision-making of regulatory agencies
One of the industry’s most urgent needs is to reduce the time involved in developing and bringing new drugs to market. Regulatory agencies — both in the U.S. and abroad — are often some of the biggest obstacles to rapidly commercializing a new treatment. Consequently, there will be great demand for regulatory specialists — that is, those individuals who have developed an expertise in how these organizations function and relationships with the individuals who work in them — who can help accelerate the approval process for a particular category of drugs.
7. Human resource skills
Finally, as pharmaceutical companies reengineer their business models, they will need to change the types of people they recruit (and seek to retain) and the programs in which they develop and train them. They also will need to redesign compensation structures and create new career paths for most significant positions in the organization.
Human resources managers who can efficiently administer these changes will play a critical role in the evolution of traditional pharmaceutical companies. While there will be countless new opportunities resulting from the industry’s transition, this new environment also (sadly) means that the relationship between pharmaceutical companies and their employees will change. The paternalistic environment of a quarter century ago that offered the implied promise of a safe, well-paying career at one employer as well as long-term financial well-being is economically unsustainable. Consequently, individuals who work in this industry must also recognize that they now have two businesses to run. In addition to managing their careers, they must manage their wealth. The choices they make will impact their future financial well-being.
Career planning is also now essential to future success in this industry. As part of such a process, participants should closely study the industry so they can determine in which part they would like to work and the role they would like to play. At the same time, however, they also must recognize that the opportunities they may pursue are often constrained by financial resources and an individual’s ability to bear risk. Additionally, each career choice also involves hidden costs and risks. Measuring them is an integral part of making an informed decision.