New Chemistry

Getting the biopharmaceutical talent formula right

As the biopharmaceutical industry faces a host of pressures that challenge its business model, R&D is undergoing the most dramatic revolution. New organizational models are all pointing outside—to partnerships, alliances, and even crowdsourcing. The human resources function must be more effective in shaping these partnerships and developing an accompanying talent strategy for their scientific workforce.

Key findings:

  • 51% of top executives report that hiring has become more difficult than before.
  • HR must be more tightly integrated to R&D organizational decision making and a strategic function in all cases.
  • Developing and managing outside partnerships and regulatory science are the two most sought after R&D skills.
  • Performance incentives should combine "soft" and "hard" metrics
  • Scientists want career paths that recognize and reward their passion and commitment to science.

Case Studies:

Star Scientists - Necessary but Sufficient?

Star scientists: professionals that lead breakthrough drug discoveries and development of novel medical devices are sought by all companies because they play roles beyond their scientific virtues. It's more than just technical prowess, they act as boundary spanners, linking seemingly disparate fields and tapping new sources of information. Boundary spanners are skilled at gathering external knowledge across silos and organizational barriers, partly because of their clout and influence. They are also gatekeepers who are particularly adept at deciding what information is relevant toward progress. Gatekeepers can translate knowledge across an organization, such as between biologists and chemists. They bring knowledge back into the organization and route it to the right people.

Star scientists can’t thrive on their own. R&D and HR leaders should ensure that the right supporting cast surrounds the stars. Effective supporting players act as sounding boards, run lab experiments and improve on the original concept. They tend to change jobs less frequently than the stars (every 16 years versus 6.5 years), retaining more institutional knowledge.

"You can’t buy yourself success just by hiring a star," cautions biotech industry expert and professor Frank Rothaermel at Georgia Institute of Technology’s Scheller College of Business. "The best performing companies are bringing star scientists in but giving them freedom to craft their own teams and publish as they see fit."

Corporate-Foundation extended R&D Talent Networks

Some alliances work best when a foundation is at the hub. The Cystic Fibrosis Foundation (CF Foundation) and Vertex initiated a research partnership in 2000 at the behest of CF Foundation leader Dr. Robert Beall, resulting in the development and launch of Kalydeco, a targeted therapy for some cystic fibrosis patients.

The partnership gave Vertex access to leading scientists, clinical trial participants, and rich patient information. “Working with the foundation quickly assembled a lot of expertise for us,” said Dr. Eric Olson, who led development work on Kalydeco at Vertex. “For instance, if there were specific investigators we wanted to work with, we had a quick and credible means of introduction.”

Vertex meanwhile was skilled at understanding the type of protein found defective in certain types of CF. The foundation had years of experience sponsoring fundamental research in understanding the disease, an appreciation for the real-world impact on patients and caretakers, and the most comprehensive registry of CF patients in the U.S.

Over the course of the collaboration, CF Foundation invested $76 million contingent on meeting certain research milestones. In return, CF Foundation received future guarantees on sales royalties. CF Foundation provided access to its national clinical trials network for the research, helped recruit patients, provided best practices in clinical trial design, and helped define outcome measures as understanding of the disease evolved.

The agreement held Vertex accountable to progress. Milestones were established jointly but remained flexible, and CF Foundation provided regular scientific advisory feedback. If Vertex scientists met milestones, CF Foundation awarded more money. Kalydeco was reviewed and approved within three months by the FDA. The drug was developed about 12 years after the partnership’s inception, compared to an average of 14 years for most pharmaceuticals.

Today, Vertex is developing two more drugs (in Phase II clinical trials) targeting a much larger sub population with CF. This work is supported by an agreement with CF Foundation for up to $75 million. While mid-sized Vertex benefited from outside expertise and funding, much larger biopharmaceuticals companies are also finding advantage in foundation research partnerships.

InnoCentive Attracts Scientists for "Extreme" Open Innovation

InnoCentive operates on a simple premise -- redefine research as a challenge to be solved by anyone and reward them. Spun off from Eli Lilly in 2005, the company uses 270,000 crowd-sourced participants to help various commercial, government and nonprofit organizations solve problems.

Alph Bingham, founder of InnoCentive, believes the biopharmaceutical and medical device industries can do more open innovation and crowdsourcing. Bingham challenges the industry to redefine its productivity problem. “The first step [for pharma executives] is to realize that they are in the risk management business.”

InnoCentive challenges companies to completely rethink the way they view problems and solutions. First, organizations must understand the power of framing a problem as a “challenge.” Portraying a scientific goal as a competitive challenge is a better way of organizing and distributing work, according to Bingham. It’s also a powerful motivational tool. But it won’t work well unless the sponsor has enough “solvers” for the challenge.

This is where crowdsourcing comes in, sharing questions with the broader community in the hope that someone with a different perspective or unique insight will find a solution. A viable solution requires an inducement sufficient to draw solvers to the challenge -- such as a cash reward.

Not all problems result in a new drug or device. One current challenge offers $25,000 for devising a coating that keeps a biologic medication stable for several years under harsh conditions, such as a tropical climate. The challengers require that the technique work in a standard manufacturing process using readily available materials. The solver must sign over intellectual property rights.

Could open innovation be a means to drastically reduce the cost of new drug development? Bingham thinks so: “It’s about getting others to take the risk that they might not solve the problem or be compensated.”

Executive Summary

A revolution is under way in the biopharmaceutical industry -- a revolution borne out of necessity. The industry faces global economic and demographic pressures, rising customer expectations, and outdated cultural models. Research and development (R&D) stands at the vanguard of this revolution. Some 35% of life science companies have revamped their R&D models in the past three years, according to HRI’s research.

New R&D organizational models based on partnerships, alliances, and even crowdsourcing are changing talent needs. The most needed skill sets for R&D have moved away from pure scientific expertise to regulatory knowledge and relationship skills. Developing and managing outside partnerships and regulatory science are the two most sought-after skills today. As the patent cliff has eroded company profits, the industry has responded with large-scale layoffs, a staggering 150,000 from 2009. While the worst cuts occurred in 2009 and primarily affected sales staff, smaller waves continue to pare the workforce, extending into the scientific community. The industry is left with talent gaps that threaten its ability to perform well in an outcomes-based healthcare model.

Biopharmaceuticals is considered among the most research-intensive industries and the scientific team is the beating heart of the industry. Management expects this highly educated workforce to develop a constant stream of profitable new products. The challenge is immense.

Thousands of drug compounds are in some phase of clinical trial today. But there’s no guarantee the comparatively few compounds that launch will be enough to counteract lost sales from patent expirations. Although drug approvals peaked in 2012, they have remained below 40 per year since 2002 even as R&D spending has increased (Figure 1).

In essence, the industry must make more therapies that fill unmet need, at a lower cost, with fewer resources than ever.

So companies are changing how they conduct R&D, not only reconfiguring existing operations, such as an increasing focus on biologics, but also looking outside for promising new alliances that will help boost capabilities and replenish the pipeline more rapidly.

Partnerships with academic medical centers (AMCs) and third parties, such as contract research organizations (CROs), are the two most common, aside from government contracts.

In the new pressure-cooker environment, traditional competitors are teaming up to tackle shared R&D challenges. Consortiums, alliances with foundations, and even crowdsourcing are among the new approaches. Done well, these relationships complement in-house R&D and allow companies to share both risk and reward with external partners.

But the new models can’t stand on their own without an effective HR strategy. In a recent PwC global survey, CEOs identify talent gaps as the second biggest threat to their growth prospects, behind anxiety about corporate tax burdens. Human resources (HR) leaders should play a key role in shaping partnerships and developing an accompanying talent strategy for their scientific workforce. HR must be at the forefront of ensuring their organizations are properly equipped with the right mix of people and talent in R&D.

To gain a better understanding of how life science organizations are refashioning their R&D organizational models and approach to scientific talent, PwC’s Health Research Institute (HRI) conducted in-depth interviews with human capital and R&D leaders and a telephone survey of 130 US life sciences industry leaders with human capital responsibilities. Among the insights:

  • Fifty-one percent of life science executives, the highest of 19 sectors, report that hiring has become more difficult than before, with only 28% saying they’re very confident they’ll have access to top talent.
  • Some 60% of pharmaceutical executives say they intend to increase investments over the next three years to create a more skilled workforce. And 72% intend to increase their R&D capacity in the next 12 months.
  • Only half of HR professionals surveyed feel their leadership views them as a strategic function, as opposed to tactical. The role is still limited to hiring and firing functions for many companies.
  • Performance incentives should combine "soft" and "hard" metrics, and need not be limited to financial targets.
  • Scientists want career paths that recognize and reward their passion and commitment to research, not just additional responsibilities. Too often, scientists are pushed out of what they do best – research -- and saddled with management chores that distract them.

Finally, senior executives must act as a powerful motivating force for their people. Companies with decades-long legacies have lost their edge due to repeated layoffs, wearing down the morale of scientific staff. Working with HR, leaders can convey a compelling mission that employees will not only accept, but embrace.