Following years of growth and favourable market trends, the global life sciences industry now finds itself facing a ‘new normal’. By any measure it is still a stand-out performer globally, and a key strategic area for the EMEA region. However, markets are changing. Life science companies must adopt new business models to achieve the following: Counter slowing sales growth Stem profitability challenges Deliver patient outcomes that reflect higher consumer expectations Position the industry for future success and innovation. Making these adjustments successfully will come down to individual companies’ ability to find, engage and retain the right people. For the most part, the challenge is about talent and the ability of each organisation, regardless of location, to source it. Here, we look at the top five issues facing the industry and how organisations in the region can respond.

1. EMEA
Making ‘life
sciences’ a
magnet for
talent
by Dominic Graham

2. Introduction
Following years of growth and favourable market trends, the global
life sciences industry now finds itself facing a ‘new normal’.
By any measure it is still a stand-out performer globally, and a key
strategic area for the EMEA region. However, markets are changing.
Life science companies must adopt new business models to achieve the following:
1. Counter slowing sales growth
2. Stem profitability challenges
3. Deliver patient outcomes that reflect higher consumer expectations
4. Position the industry for future success and innovation.
Making these adjustments successfully will come down to individual companies’ ability to find,
engage and retain the right people. For the most part, the challenge is about talent and the
ability of each organisation, regardless of location, to source it.
Here, we look at the top five issues facing the industry and
how organisations in the region can respond.
/02

3. /03
Europe is the world’s second largest market for
pharmaceutical sales. It directly employs more
than 660,000 people in the EMEA region, and
around four times this number indirectly.
660,000+
pharmaceutical
employees

4. the top five issues facing the industry
1
Economic factors create headwinds for R&D
Strained public purses and regulatory barriers continue to put pressure on R&D investment in
Europe, and emerging economies are gaining a greater share of this investment worldwide.
For life science companies in the eurozone, the challenge is to invest wisely in R&D activities
– to combat some of the other significant challenges facing the industry – while keeping costs
contained and becoming more competitive.
Although the Treaty of Lisbon target of assigning three per cent of EU gross domestic product
(GDP) to research and development activity by 2010 was not met (largely due to broader
economic factors), it remains one of five key targets in the Europe 2020 strategy1.
Governments and businesses know that R&D investment is a clear determinant of the overall
strength of the pharmaceutical market, as shown by the following graph comparing R&D
investment in the EU with that of the US and Japan (Figure 1). However, even though some
individual countries are investing heavily in R&D activities namely Finland (3.87% of GDP in
2010), Sweden (3.42%) and Denmark (3.06%) – the concentration of investment is disparate and
inequitable across the region.
Figure1: R&D investment
1
http://epp.eurostat.ec.europa.eu/statistics_explained/index.php/R_%26_D_expenditure
/04

5. the top five issues facing the industry
/05
Figure 1:
R&D investment2
4
3
2
1
0
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
Japan (1)
United States (2)
EU-27 (3)
(1) Break in series, 2008
(2) Excludes most or all capital expenditure
(3) Estimates
Source: Eurostat (online data code: tsc00001), OECD
2
http://epp.eurostat.ec.europa.eu/statistics_explained/images/c/c3/Gross_domestic_expenditure_on_R%26D_in_the_Triad%2C_2000-2010_%28%25_share_of_GDP%29.png

6. the top five issues facing the industry
Eurozone life science companies are facing constraints in some local markets given the large
variations in investment across the region. Lifting the longer-term outcomes for the industry partly
depends upon more effective and innovative R&D investment decisions.
However, it no longer appears that governments alone can change the dynamics associated with
R&D investment across the region, so companies themselves must focus on finding innovative
solutions to meet the R&D challenge and boost competitiveness. Among these solutions must
be innovative approaches to accessing R&D talent that has traditionally been concentrated in
specific locations (where investment is high). Better management of the R&D talent supply chain
will require new collaborative models of research and access to a global talent network that can
deliver knowledge and insight across geographical boundaries.
/06

7. /07
Pharmaceuticals face a future with lower growth:
the combined US and eurozone share of spending
will shrink from 61% in 2005 to 44% in 2015.
US and eurozone share
of spend 2005 to 2015
17% reduction
over 10 years
Yet, the world’s pharmaceutical market
is growing. It was worth an estimated
614,583 million euros in 2011.
61%
2005
44%
2015

8. the top five issues facing the industry
2
Generics take the lead
For some time now, big pharmaceutical companies have been losing patent protection and the
generic market has boomed. In 2011, the global generics market was estimated to be worth
approximately $225 billion. By 2016, it is expected that this will have risen to $358 billion,
representing more than 18% of all pharmaceutical sales.
Nowhere is the generics market growing faster than in emerging economies,
creating a two-fold challenge for many large pharmaceutical companies operating within
the EMEA region.
If the cheaper, generic drug market is to be dominated by companies in emerging nations, the
model of relying on one or two ‘blockbuster’ drugs is no longer viable and all organisations are
challenged to find more diverse sources of revenue.
/08

9. the top five issues facing the industry
To do this, companies will need broader and more diverse strategies, as well as new skills to
bring those strategies to fruition. Specifically, these skills will include:
• Technology skills to improve global collaboration and enhance data capture systems
• Big data analysis skills to lower risk and identify new opportunities
• Community engagement and management skills – communities want and expect a greater
say in health outcomes and how government funds are spent.
Figure 2: Major Generics Markets, through 2016 ($ billions)
/09

10. the top five issues facing the industry
/10
Figure 2:
Major generics markets, through 2016 ($ billions)
120
100
$ Billions
80
60
40
20
0
2010
North America
Emerging markets
Major Europe
Japan
Rest of world
2011
2016

11. /11
The number of ‘generic equivalents’ occupying a
position in the top 10 prescription drugs in the US
increased from two (in 1990) to six (in 2003) 3.
Growth of ‘generic
equivalents’ 1990-2003
300% increase
over 13 years
2
6
1990 2003
3
http://www.ncbi.nlm.nih.gov/pubmed/16428148

12. the top five issues facing the industry
3
Emerging markets are driving growth
IMS forecasts show that global spending on medicines will reach $1.1 trillion by 2015, but that
revenue growth will slow (from approximately 6% between 2005 and 2010, to 3% between 2010
and 2015). And the combined US and European share of spending will shrink from 61% in 2005
to 44% by 2015 as emerging markets grow from 12% in 2005 to 28% by 2015.
The impact of $120 billion of product revenues losing patent protection in major western
markets from 2011–2015 will leave emerging market and generic growth as the main drivers of
global pharmaceutical spending. In fact, aggregate emerging market revenues are forecast to
grow at a compound 14% between 2010 and 2015. If the pressure on the US and EU markets
lessens after the ‘patent expiration cliff’, and low levels of growth return (say 3%), global growth
would then be around 4% between 2015 and 2020. Either way, the gap between the two
markets is clear.
The simple message is that the pharmaceutical market globally is still growing, but that
profit margins are declining and a larger share of investment and growth is to be found in
emerging markets.
/12

13. the top five issues facing the industry
For life science companies, the challenge is to balance growth and investment across emerging
and developed markets, and to ensure that their access to the right talent and research (as well
as other key capabilities) matches the market opportunities. The key question companies need
to ask themselves now is, ‘How well-positioned are we to capture growth in emerging markets
and are we adapting our staffing strategies to match?’
Figure 3: Estimated growth 2010–2015 (compound annual growth rates)
/13

14. the top five issues facing the industry
/14
Figure 3:
Estimated growth 2010-2015 (compound annual growth rates)
North America Sales $357.4 bn Growth 1.5%
5.3%
Europe (EU countries) Sales $237.4 bn Growth 2.2%
12.2%
South East & East Asia Sales $147.1bn Growth 15.3%
Japan Sales $120.6 bn Growth 3.3%
1.5%
Latin America Sales $100.9 bn Growth 12.2%
15.3%
15.3%
CIS Sales $33.5 bn Growth 12.2%
3.3%
Indian subcontinent Sales $32.1 bn Growth 15.3%
Europe (non-EU countries) Sales $27.6 bn Growth 5.3%
Africa Sales $25.0 bn Growth 7.9%
12.2%
7.9%
Oceania Sales $16.7 bn Growth 3.9%
Middle East Sales $15.4 bn Growth 7.4%
3.9%
*Ex-manufacturer prices at CER.
Source: IMS Health, IMS Market Prognosis 2011-2015

15. the top five issues facing the industry
4
‘Trust’ and individual solutions
are key strategic issues
For better or worse, the internet has fundamentally changed healthcare. Consumers now have
far greater access to information about their healthcare options, and this has altered the task
facing pharmaceutical companies today.
Not only must pharmaceutical organisations be far more transparent in the way in which they
research, test and deliver drugs to market, they must provide better, faster and more holistic
health solutions. Communities and individuals now have higher expectations about what
science can deliver (and how quickly). The key strategic issue of building trust in pharmaceutical
products now complicates the communication and engagement challenge facing large
pharmaceutical companies globally. Life science companies must now achieve the following:
• Skilfully open the dialogue with consumers, and enhance communication and transparency in
the way that new treatments are brought to market; and
• Deliver personalised health solutions in a timely and affordable way.
/15

16. the top five issues facing the industry
Consumers now seek collaboration and detailed insight regarding the way their treatment is
managed, and pharmaceutical organisations need to be part of facilitating this. Industry leaders
must build relationships and connectivity with medical practitioners and consumers to improve
communication and enable patient centricity.
Trust in the life sciences industry as a whole is a key reputational issue, and it has a flow-on
effect for attracting and retaining talent. Not only must companies address the key reputational
issues that have occurred in communities over recent decades, they must equip their workforces
with new competencies to help organisations adapt to this era of ongoing collaboration
and communication.
Communication is now a priority, and it is the key to rebuilding trust in a growing and
critically important industry that must deliver better, cheaper and more sustainable personalised
medical solutions.
/16

17. /17
2005: There were 329 pharmaceutical and
biopharmaceutical companies with market
capitalisations of around US$150 billion.
Biopharmaceutical
companies
27% reduction
over 5 years
2010: There were only 240 companies worth
more than US$50 million.
329 240
2005 2010

18. the top five issues facing the industry
5
Collaboration between smaller entities is a necessity
One of the issues facing life science companies globally, and which is partially responsible for
driving the trend towards higher investment in emerging economies, is the need to lower costs.
Prices are under pressure from governments as they struggle to maintain and deliver highquality healthcare to large, ageing populations.
A key strategic response to this has been for small and medium-sized enterprises to account for
a larger share of total business sector R&D. As Figure 4 below shows, firms with fewer than 250
employees already account for some 22% of total business sector R&D in the EU, 14% in the US
and 8% in Japan.
The trend towards complex and specialist tasks being outsourced to smaller, niche organisations
is increasing in the life sciences sector (as well as elsewhere) and the EMEA market looks wellpositioned to capitalise on that trend.
Figure 4: Business R&D by firm size (% of business sector R&D, 2005 or latest)
/18

19. the top five issues facing the industry
/19
Figure 4:
Business R&D by firm size (% of business sector R&D, 2005 or latest)
40
35
30
25
20
15
10
5
0
Japan
US
Firms with 50 to 249 employees
Firms with fewer than 50 employees
* Czech Republic, Slovakia, Poland and Hungary
Source: OECD
EU-27
EU Big 4
EU-15 other
NMS-4*

20. the top five issues facing the industry
Retaining focus on core business activities while reducing fixed costs on other tasks is
something many organisations in other industries have been doing for sometime – now life
sciences organisations are tasked with adjusting their business models to do this too. How
individual organisations engage with talent and restructure work to be able to raise productivity
and lower fixed costs in this way is a key strategic issue going forward. It will critically challenge
core concepts of intellectual property, competitive advantage and the role of talent in delivering
return on investment.
/20

21. /21
Around one in ten firms in Europe collaborate
with a partner for their innovation activities4.
OECD 2002–2004
4
http://aei.pitt.edu/32615/1/54._R%26D_in_Europe.pdf

22. the top five issues facing the industry
What does this mean for talent?
Life science companies are facing significant market shifts and challenges to their existing business
models. The market is growing, but not in the ways it did previously.
The need for new business models (from mass market to niche and targeted) translates into the need
for different skill-sets, and new pools of talent across more geographical locations. It also requires
companies to change the way they operate, as well as how they engage with the communities they
operate within.
If the life sciences industry is to become the destination for talent that it simply must become to
meet its challenges, it should engage the broader talent community in its mission to deliver better,
faster and more personalised health solutions.
The key issues for attracting and retaining talent in the industry are:
• Engaging with talent clusters: R&D and STEM skills have formed regional and local clusters that
are often self-reinforcing. Investment in a specific location often leads to more investment, which
attracts more talent as well as more competition. Companies need to find ways to access the
talent within these clusters and to develop new clusters where required without always needing
to compete for the same talent in the same locations. Building their own talent pipeline requires
longer-term planning and analysis, and new partnerships.
/22

23. the top five issues facing the industry
• Distinguishing between productivity and cost-cutting: Boosting productivity and output
must be done through innovative workplace practices. Low staff ratios in critical research and
development roles leads to high turnover and higher recruitment costs overall. The need to lower
costs is real, but it must be achieved sustainably.
• New skill-sets to open dialogue and improve collaboration: Consumer demands and
expectations are changing, and the kinds of skill-sets required must adapt to address these.
• Competition must be balanced with community needs: Competition must not come at
the expense of faster, better health solutions, and collaboration across traditional competitive
landscapes is critical to addressing this. Addressing community concerns through innovative
business models is critical to rebuilding trust and engaging new talent pools (as well as
new consumers).
/23

24. For more thought leadership go to talentproject.com
About the Author
Dominic Graham heads up the Professional and Technical division of Kelly Services in the
UK, where he oversees the Kelly Scientific, Kelly Engineering and Toner Graham brands. He
studied Biological Sciences at the University of Birmingham, which he put to practical use in
his early career before transferring his skills to the specialist recruitment sector. Dominic has
extensive experience in a range of industries dealing with large multinationals through to
small start-up biotech companies.
About Kelly Services®
Kelly Services, Inc. (NASDAQ: KELYA, KELYB) is a leader in providing workforce solutions. Kelly® offers a
comprehensive array of outsourcing and consulting services as well as world-class staffing on a temporary,
temporary-to-hire, and direct-hire basis. Serving clients around the globe, Kelly provides employment to more
than 560,000 employees annually. Revenue in 2012 was $5.5 billion. Visit kellyservices.co.uk and connect with us
on Facebook, LinkedIn, and Twitter. Download The Talent Project, a free iPad app by Kelly Services.
This information may not be published, broadcast, sold, or otherwise distributed without prior written permission from the authorized party.
All trademarks are property of their respective owners. An Equal Opportunity Employer. © 2013 Kelly Services, Inc.
EXIT