The Changing Face of HR in the Pharmaceutical Industry

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(PRWEB) March 27, 2004

The Indian Pharmaceutical Industry is on a tremendous growth path. Lets have a snapshot of it. This Industry today is in the front rank of India’s science-based industries with wide ranging capabilities in the complex field of drug manufacture and technology. A highly organized sector, the Indian Pharma Industry is estimated to be worth $ 4.5 billion, growing at about 8 to 9 percent annually. It ranks very high in the third world, in terms of technology, quality and range of medicines manufactured. From simple headache pills to sophisticated antibiotics and complex cardiac compounds, almost every type of medicine is now made indigenously. The Story does not end here.

Over 20,000 registered pharmaceutical manufacturers exist in the country. The domestic pharmaceuticals industry output is expected to exceed Rs260 billion in the financial year 2003, which accounts for merely 1.3% of the global pharmaceutical sector. Of this, bulk drugs will account for Rs 54 bn (21%) and formulations, the remaining Rs 210 bn (79%). In financial year 2001, imports were Rs 20 bn while exports were Rs87 bn.

Now what steps are we taking to further strengthen this industry and what will be the role of HR in this growth path? A study by Elixir Web Solutions, A Talent search firm, reveals some of the alarming facts with respect to the Human resource function of Pharma companies.

Pharma companies are not philanthropic ventures staffed by saints – and despite any noble intentions they remain under pressure to satisfy the commercial expectations of their shareholders. Issues of work life balance and ethics are already recognized as key considerations for ‘knowledge workers’. The ‘spirit’ of an organization captured in its brand values can be a crucial factor in deciding where to work.

Getting it wrong can have serious implications for companies already facing skills shortages.

Ranbaxy    200

Sun Pharmaceuticals    150

Nicholas Piramal    100

Torrent Pharma    100

Zydus Cadila    100

Alembic    150

Cadila    50

Undoubtedly this booming industry is on a hiring spree. To add to this at present pharma companies are hunting for scientists. Doctorate students armed with a degree in bio – sciences are in for good times. In fact, leading pharmaceutical companies are seriously looking to double their existing pool of scientists in one single year.

Apart from the highly lucrative generic market in advanced countries, many new avenues such as clinical research, contract research, new drug delivery system (NDDS) and new chemical entities (NCEs) have opened up before Indian pharma companies. MNCs (multinational corporations) are expected to offer around $ 5 billion in contract research to Indian companies.

Employer WantsPharma wants to maximise return on investment in expensive new technologies and costly capital plant with round – the – clock, round – the – year cover. Employee WantsMany employees want to work agreed hours; they do not want to be on call all the time and at any time.

Pharma wants a mobile workforce. Most employees, especially those with families, want to stay put or be properly compensated for the upheaval. Pharma wants to reduce fixed costs, for example, by outsourcing non – core activities. The majority of employees want job security rather than short term contracts. Pharma wants to employ people with the right skills – and, given the nature of those skills, it will need to assume a greater role as ‘post – graduate learning centres. Highly educated employees are often happy to acquire new skills, but they want to be valued for those skills. If the company is slow to recognise the increase in value or believes they should first repay the investment, they will move elsewhere.

Pharma wants to shake out the poor performers and retain the best, with pay structures that reflect the skills it most prizes.    Employees want transparency and equity. They also want to share in the big wins – even though they may not have chosen to work in a high – risk environment.

People can often join such organisations because they share the same emotional commitment, but arguably, people are questioning the reality behind these objectives. As the sector comes under pressure to deliver shareholder value, the ethics of organisations can come under scrutiny, and affect the image of the sector. A Independent research clarifies the benchmarks between “What Employer want” & “What Employee wants”.

Many companies also offer their most talented employees a stake in business, with share option schemes. One of the aims of share options is, of course, to align the interests of employees and shareholders by allocating the right to purchase equity, usually at a discount at a set date in future. Most such schemes now have some sort of performance criteria, although they are still generally less sophisticated – and less demanding – than long-term incentive plans (LTIPs).

Getting a head start

1.Companies will have to develop more flexible career paths and reward schemes for their most valued workers. If the most able staff believes they are no longer on the fast track, they will move elsewhere.

2.Companies will have to train their employees to cope with new challenges, including radical changes in the direction of business.

3.They will have to manage their employment costs much more carefully, as all these changes drive up the price of the best ‘human capital’.

Service delivery will also be critical in meeting the challenges of the next few years. Starting with the people vision and people plan, our research shows that, correctly implemented, shared service centres and outsourcing can provide a better HR service and reduce costs. But for many companies the first factor is more significant that the second. Together with improvements in technology and the development of self – service solutions, shared service centres and outsourcing should reduce the administrative burden on the HR function, thus enabling the staff to spend more time on strategic issues. This is where companies like Elixir Web Solutions, which provide recruitment solutions across the board, can come into the picture. They can acquire the recruitment function of any company in terms of understanding requirements, shortlisting people and lining them up for interviews.

Advances in web based HR might extend the potential for self service, by providing access to HR management reports, news, guidelines for recruitment and development, personnel policies and so forth. Given the speed at which knowledge is growing, it is becoming more and more difficult for companies to stay at the forefront of learning and development. This is especially true of Pharma, where new sciences and technologies are transforming the R&D process; and where greater competition is accelerating the speed at which products are launched, thus increasing the pressure on sales and marketing. Can e-learning be an answer to this?

E-learning undoubtedly has numerous attractions:

1.it can take place anywhere and at any time. In this way, it meets the expectations of today’s knowledge workers, who expect to be able to learn whenever they want to do so and maintain a work – life balance. It also reduces travel and accommodation costs.

2.it can be used to reach very large numbers of people, regardless of where they are based. As Pharma continues to consolidate, this will become even more important.

3.it provides fast, consistent and standardised training at the same time that it can be tailored to meet individual needs. Novartis has already implemented a e-learning and Knowledge Networking Management centre.

4.it is cheaper than traditional forms of training.

With these benefits, it seems likely that e-learning will become a major contributor to learning in Pharma.

The story of API/Bulk Drugs is equally heartening. Only the bigger players in the market have presence in the API (Active Pharma Ingredient) section. Companies into research like Dr.Reddy’s, Ranbaxy, Cipla, Cadila etc. are actively hiring for APIs.

Pooja Sardana, Pharma Practice, Elixir Web Solutions reveals, “The challenge with the human resource function of the pharmaceutical sector lies in the fact that a typical Pharma company is a mix of an R&D Company , A Production Company and A Sales Company. As opposed to other sectors the talent managers at a Pharma company have to design policies which best suit the three orgainsations under their umbrella.”

Competition for talent in the pharmaceutical, biotech and healthcare industries can be intense. As a result, HR focus is evolving from administration, regulation and support to driver of corporate change and success. Elixir Web Solutions explores some of the opportunities for HR departments in transition, how HR can actually enhance company success and change, and what can be done to foster the evolution of HR staffing functions.

The challenge today is that many HR people have developed their skills within the confines of HR, with little exposure to learning what running a business is all about. HR professionals who need more general business knowledge should consider advancing their educations with an MBA or by taking business practices courses. If an HR department is to rise to a higher level, it needs to have corporate encouragement and support. If management doesn’t insist that HR people perform higher levels, then a lot of blame for having a stagnant function falls on the leaders’ shoulders. Prashant Sachdeva, Business Analyst, Elixir Web Solutions reveals that “The key is to have the strategic staffing plan integrated with corporate strategic plan, so the hiring function is deliberately focusing on bringing in the kind of talent that is going to be needed today and tomorrow to achieve the objectives”.

Different CEOs provide a different level of respect for what the HR department can provide. The question is: Is HR viewed as a partner with leadership or are they strictly viewed as an overhead function just meeting the requirements of the law and brining in exciting employees. The more responsibility that is given to the human resource department as a partner, the more effective it can be in all its functions, including recruiting.

Back when HR was called personnel, it was largely an administrative function. It was designed to process transactions. There was little strategic involvement. Now, because of the talent wars of the “mid to late ‘90s,’ all of a sudden, recruiting became a much more integral and essential part of the strategic equation for the success of the company. “It’s always essential to get and keep the best talent possible. If you are relying on sort of run – of – the – mill and old – fashioned recruiting methods, you’re going to get beaten. Your competitors will reach talent more quickly and effectively than you will.

At least six major forces are poised to overtake Pharma during the next few years. Indeed, they are already at work in the industry – with profound implications for HR.

In short these six major forces will clearly present Pharma with many challenges over the next few years – and they are powerful arguments in favour of developing a HR function that is strategically aligned with the business itself. The need for new sources of human capital, new skills, new methods of recruitment, retention, management and development, new social and environmental sensitivities: all these issues will demand a HR function that can make a major contribution to the direction of the business – not one that simply does the housekeeping. We need a very different way of thinking about people in pharmaceutical organisations.


The author is a Business Analyst with Elixir Web Solutions




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