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Pharmaceuticals: Strength in Numbers
The global pharmaceutical industry has been a comparative success against many other struggling areas of the world economy over the last two years. While, like any sector, there have been job cut announcements, such as 15 percent of Merck & Co.’s workforce as a consequence of its merger with Schering-Plough in November, the pharmaceutical industry’s redundancies have been considerably lower than in other fields, such as finance or car manufacturing.
In Russia, some companies have continued recruiting and resisted dramatic reactions to the onset of the crisis. Yet this rise in recruitment is not universal within Russia’s pharmaceutical firms, since at the top of many companies, there has not been any particular change, said Irina Okholvenko, director of recruitment consultant Ancor Medicine and Pharmacy.
The pharmaceuticals industry as a whole in Russia has continued to grow throughout the economic downturn, Nikola Milevic, general director of IMS-Health Russia confirmed at the Adam Smith CIS Pharmaceutical Forum in Moscow in February, calling it “one of the highest growth markets, where prices are up despite the dollar value decreasing.” On average, the market is set to grow 11 percent in 2010, Milevic estimated, taking into account that the crisis will hinder growth all the same. A consensus among a number of executives of leading foreign pharmaceutical firms in Russia is that within the next eight years the industry will be worth 50 billion euros ($68.3 billion), as many companies plan investment projects for coming years.
The government in Russia has launched a new program, under the Industry and Trade Ministry, called Pharma-2020, for the stimulation of domestic pharmaceutical research, development and production. The state of Russian scientific publications is a worry for foreign companies looking to expand in the region, said Michael Crow, area director for GlaxoSmithKline in Russia and the CIS, since while other emerging markets have seen publication numbers rise, Russia’s have stayed still. “In general, science has suffered, but every company has its own interests in terms of research and development,” said Okholvenko.
One recent state measure in terms of regulation was its new pricing system, introduced in late 2009. In spite of government price controls, overall prices will probably go up anyway, Sergei Shulyak, general director of analysts DSM Group estimated in February. This could aversely affect the pharmaceutical job market, Okholvenko said, although it is still too early to fully assess the system’s impact.
In terms of consumer spending on pharmaceuticals, the government harbors definite ambitions. Currently, Russians spend an average of 2,500 rubles ($83) per year on medication, versus around $350 in Europe, Shulyak calculated. Dmitry Medvedev, the Russian president, hopes to see this spending increase four-fold in order to help meet European standards of healthcare, Shulyak said.
Meanwhile, Russia also faces an ongoing struggle against counterfeit medicine production, as it ranks third in the world behind China and India in this regard, said Philippe Maillan, a drug regulation manager at Hoffman-La Roche. Russia urgently needs more sophisticated patent legislation to help cut this scourge and aid the market’s growth, Maillan added.
The collective effect of ongoing changes to regulation and local health on the rate of employment in the sector remains a theme under scrutiny. For this special report, we have spoken individually to a number of globally prominent firms operating in the country and to Russia’s biggest pharmaceutical firm on the changing HR issues within their companies and the industry as a whole, seeking insight into the range of positions that the industry actors hold on the future of their employees.
Nycomed is a Switzerland-based pharmaceutical company, founded in 1874 in Norway. Nycomed’s portfolio includes branded generics and innovative, patented products, and it has a focus on neurology, cardiology and osteoporosis.
Previously, it was virtually the norm here that all medical representatives had either medical or pharmaceutical university degrees. We first entered Russia in the 1980s, but I don’t think it makes sense to discuss that era in depth now, as it was the Soviet Union, when there were different laws and regulations. An open pharmaceutical market as a reality appeared in the mid-1990s and indeed it was an employers’ market. Pharmaceutical companies were akin to gods, and employees — mere mortals. A person was very lucky to find a position in a foreign company. There were hundreds and thousands of candidates with prestigious academic backgrounds, but no business experience at all. So we could afford to hand-pick the best people. Our main criteria were doctorate degrees and knowledge of English. Fifteen years have now passed and the situation has changed dramatically.
Nowadays, however, doctors tend to opt for medical practice because they are no longer so attracted to sales careers: salaries in hospitals and clinics have increased. But I am very happy about this development because ultimately this benefits the patient — which is the key. Of course, this makes it a new challenge for the pharmaceutical business, as we now have to deal with people who know very little about medicine.
So, a growing threat for recruitment in Russia concerns the quality and the quantity of candidates. I am not speaking about high-grade professionals, but more about those people just starting their business careers. Unfortunately, educational standards in Russia have significantly decreased and many candidates fail to meet our corporate requirements. Moreover, for pharmaceuticals, today Russia is an employees’ market and over the last decade a lot of young ambitious professionals in sales and marketing have appeared. The choice is now theirs to select a foreign company where they can make their careers. The economic crisis really has not changed the situation much.
The 2008-09 crisis did not affect the pharmaceutical business as much as other industries — people are still getting sick and need to be cured. However, we have developed stricter approaches to recruitment policy. Fortunately our organization keeps growing but we think twice about every vacancy — deciding whether it is crucial for business or just a ‘nice to have’ position.
The growth of the pharmaceutical sector today does not necessarily require extensive growth in the number of employees. The days when more people automatically meant more sales have gradually passed. But I do believe that there is still potential for growth through an increased coverage because Russia is a vast country. There are many cities where the population is over 500,000 people and these places have potential for sales. We currently employ maybe only one or two medical representatives in such areas, so this is one way our organization might grow. But we have to focus on the quality of our employees and on their increased responsibilities. First comes quality, not quantity. In addition, the new legislative initiatives regarding the limitations of medical representatives’ visits to doctors may result in a totally new approach to our business structure.
Our aim is to build a strong Russian organization because in the future a fully Russian management will lead it. Nycomed Russia is a relatively young operation and there is still a shortage of top professionals in marketing and strategic planning. Indeed, many foreign companies prefer to have expats as CFOs; we have three expats in our team: two colleagues in charge of strategy and business development, and myself. But personally I feel almost Russian after 20 years living here!
A Russian pharmaceutical firm, Pharmstandard produces products to treat disorders including diabetes, growth hormone deficiency, cardiovascular diseases, gastroenterological and neurological disorders, infectious diseases, and cancer. Founded in 2003, it has become the largest domestic pharmaceutical company in Russia and the second-largest overall in the country.
The main change in our recruiting policy since the company joined the market has perhaps been that back then we used no recruitment consultants whatsoever. At the early stages of setting up business, the company sought stability and there was no serious increase in staff headcount. A personal — I would even say “custom-made” — screening process was used to gather our first team; we needed professionals and highly respected figures. We looked for these people through a number of acquaintances. Once we had established and stabilized our business processes, we then seriously had to increase the company’s workforce. At that point we needed to turn to recruitment consultants.
For us, people of interest must have the potential for development, an entrepreneurial mindset and character, adaptability and a constant drive for perfection. We don’t particularly attract foreign professionals; we could probably consider them for positions in upper management, but we have a stable team of top managers, formed between 2003 and 2004, so currently there is no great need.
Our approach to recruiting does not dramatically stand out from that of other companies except that when we search for and select the most appropriate candidates to fulfill concrete roles in our company we put a slightly alternative emphasis on the sequence and priority of the techniques and methods that we use. Pharmstandard singularly gives priority to the internal search for candidates; inside the company there is a well-established system of internal development and promotion for employees. We widely use employees at the company to help in searches for employees, through our “Introduce a Comrade” program, Internet resources, and responses to vacancy postings on the company web site.
Only after an exhaustive internal search has been carried out yielding no result, will we turn to the outside job market for a suitable candidate. Similarly, we only turn to a recruitment consultant if there is inadequate response to vacancy postings or if there are extraneous qualification needs for the desired candidate and no such candidate is available inside the company. When working with recruitment consultants, we commonly use panel and group interview processes.
For us, people of interest must have the potential for development, an entrepreneurial mindset and character, adaptability and a constant drive for perfection.
In terms of strategy when searching, competing for and selecting qualified employees on the external market, we use medical representatives in various disciplines. Several regional managers also take part in the selection process. Through our panel interview techniques, we reach a collective decision as to which area the candidate will serve best. We also have an effective system up and running to deal with position transfers from one department to another, involving candidacy offers for employee promotion — vertically and horizontally. You could say that we have well-managed in-house competition.
We always need strong and professional people as employees, especially in harder times, so we did not halt staff recruitment even during the height of the recent crisis. Time has shown that our actions were justified in this regard, something further evidenced by our financial indicators for 2009.
The outbreak of swine flu was accompanied by a drastic increase in demand for anti-viral preparations and vitamin and mineral complexes, including Arbidol. However, as the outbreak began, we did not pursue any discernable campaign to increase our staff numbers. Even judging by market reactions, the increase in demand did not require an increase in production facilities or marketing, nor did it require us to increase our field strength. We had to refocus our production personnel onto the manufacture of relevant products during the epidemic as production lines were working constantly in response to the market’s needs for anti-viral preparations.
Our logistics service worked at a more intense pace, but coped well. By not taking on added staff at the beginning of the epidemic, we did not therefore encounter problems with recruitment or with redundancies once the needs of the market curtailed. We also felt that staffing schemes such as outsourcing or leasing would be of low productivity since the market demand for medicines grew rapidly and the situation developed by the hour. In our experience, there is no supply for outside personnel at such short notice on the Russian market. Therefore we got by using internal reserves.
The Pharmstandard management is currently laying down new goals and is tending to the increase in staffing needs. We are currently considering concepts for the company’s growth and will widen our regional presence, as we also increase our medical representative staff.
Novo Nordisk is a Denmark-based, family-owned pharmaceuticals firm, established in 1923. The firm opened an office in Russia in 1991, which now has more than 200 employees. It specializes in diabetes care, haemostasis management and hormone therapy.
A global company, Novo Nordisk employs more than 29,000 people in more than 80 countries worldwide and the company markets its products in 179 countries. Despite the differences between these countries, we have a unified approach to working with employees, not only during the recruitment process, but in all other spheres of HR. Our recruitment principle is to attract and retain talented employees who are motivated to work in our company. Recruitment is fair and we give all candidates an equal chance, in line with the laws of the countries in which we operate.
Novo Nordisk has a long-term commitment to the treatment of diabetes in Russia, having supplied insulin here for over 50 years. We have had a business entity established in the country for more than 15 years. In line with the Russian Government’s Pharma-2020 program, the company intends to build a high technology and fully GMP-compliant production facility for modern insulin products in Russia. This will create additional jobs in the location chosen. Once we begin work on the construction of the plant, its build-up and expansion is planned to be gradual over the course of a number of years to ensure high-quality products and the sustainable transfer of technology, knowledge and local employees to the new plant.
Within the Russian pharmaceutical labor market, Novo Nordisk has always been considered an attractive place to work; it is a sustainable, transparent, responsible and highly ethical company. We always have quite a number of candidates seeking to join the company. The number of candidates for every newly available position has increased over the crisis, a consequence of the general situation on the Russian labor market.
The people we hire want to be a part of a successful international company. The company is innovation-focused and many candidates consider our specialty in insulin-related products an advantage. Our efforts are focused on one problem: to maintain long-term relations with stakeholders within diabetes care. During interviews, candidates often say that they are attracted by the company’s honorable activities, its high ethical standards in business and the warm, friendly working climate they have heard about.
GlaxoSmithKline is a British pharmaceutical company, formed through mergers in 2000, but which dates back to the early eighteenth century. It is one of the largest global pharmaceutical companies in terms of employees and has been operating in Russia since the 1980s.
There was a time when the pharmaceutical industry in Russia could choose from two approaches to recruitment of “field” personnel. You could hire doctors and teach them sales techniques or find sales professionals and give them the knowledge they needed on medicine. The industry chose the first method — but it was only a short-term fix. It provided access to doctors, but closed the door to many future commercial opportunities. A balance needs to be found between hiring doctors and sales professionals. The supply of medics with commercial skills is decidedly smaller than the general supply of candidates with commercial skills and who are quick to learn.
The face of the medical industry is changing because its clients are changing. Nowadays, we need people who can deal with finance and economics and can work with clients on their wavelength, explaining to them why it is beneficial to buy this or that pharmaceutical product. If previously, clients used to be doctors, now we deal more with medical center administrators or managers in state organizations. But, of course, as with everywhere, they are people with leadership abilities.
I joined the pharmaceutical sector in 2005, at a turning point in the industry, when the federal program for additional medical provision was established. This was a powerful stimulus for the sector to grow and develop. This trend has continued through to the present day and the current high level of business activity sets the pharmaceutical industry apart from other industries.
During the crisis, when many companies made redundancies on the Russian market, GlaxoSmithKline took the strategic decision to invest in increasing its presence in Russia. The considerable increase of the number of employees in the company’s commercial department during the second half of 2009 is as a result of this strategic investment.
The industry is changing… clients used to be doctors, now we deal more with medical center administrators or managers in state organizations.
At GSK, we have a program for developing company interns. We choose the most able students from the third, fourth and fifth years at university and take them on for the summer months as interns. The most successful of these we then invite to work for the company.
Students who are considered for the program specialize in economics, management, finance, marketing, technical and natural sciences, and need to speak fluent English. We define several basic criteria that are particularly important not just for such candidates, but also for general professional development: the ability to think quickly and analyze information, and take decisions based on facts; the ability to lay down tasks for oneself and others and carry them out to their completion; independence, self-confidence and perfectionism in professional and personal skills in career development.
We also take on young specialists to work in the commercial department as medical representatives. As soon as they arrive at the company, they undergo a series of training programs that allow them quickly to pick up new skills and rise to a new professional level. Similarly, this would help them strive towards managerial positions in the same department over the course of three or four years.
Up until now our development in Russia has, in general, progressed effectively. In 2010 we need to concentrate on improving the efficiency of our work and improving the quality of our management.
With the pharmaceutical market developing here, we do not exclude further increasing the company’s headcount. GSK is constantly releasing new products onto the market that are unique in their area of treatment.
Our aims are very ambitious and we are trying to grow more quickly than the market. At the moment we are succeeding, thanks to the professionalism of our employees, clear aims and criteria on how to achieve them, a collective charisma and a conscientious and responsible attitude toward the organization’s values. It is key that a company’s real values and those of the employee are compatible. Very often a person joins a company attracted by the values it advertises and then realizes that they differ greatly from reality.
The key characteristic of GSK is the relationship between the company’s declared and real-world values — not only on a corporate level but also in the daily work of our local offices. As a consequence we attract those people who really share our values — a focus on patients, a respect for people, openness, transparency and honesty — and who are not prepared to forego these principles in any situation. If you consider these traits in the context of Russia’s complex reality, you will realize that it is not that easy for us to achieve.
The culture of a company is the main indicator as to how effectively individuals can work and fulfill their potential in that firm, since that can only be achieved in an environment that they feel a part of. An organization’s financial and economic goals and challenges demonstrate what it wants to achieve, and the culture defines how it will do that. It is possible to trace organizational culture through a combination of values, views, expectations, beliefs, traditions and norms of conduct, as shared by most of the members of that organization.