Recruitment
A workforce in perspective
Despite proven growth, 2009 was a tough year for life science companies in Ireland. And while we will fare better in 2010, it is not yet time to breathe a sigh of relief. Eamonn O'Raghallaigh reports.
The life science industry, is still by far the largest merchandise exporter in the country, and is watched closely as a potential indicator of future economic trends in Ireland. Therefore, the modest growth of its exports observed in 2009 intonates a positive outlook in terms of exports for 2010. However, trends in employment in the sector are not in line with exports and it has been noted that the sector continues to face challenges in terms of stabilisation of the workforce.
In China, 2009 will be remembered as the year of the Ox. In Ireland, 2009 will be remembered as the year of the merger and acquisition. Big names such as Pfizer, Wyeth, Merck and Schering Plough formed strategic alliances to consolidate their organisations. In a deal effected on October 15th, 2009, Pfizer acquired Wyeth in a cash and stock merger for $67 billion. The deal is expected to create billions in cost savings over the coming years through the consolidation of back-office operations, research and development, sales and manufacturing.
In January 2010, Pfizer announced that it has cut more than 15% of its combined drug development programmes following the recent merger and that it has also boosted its vaccines and biotechnology projects through its acquisition of Wyeth, with six vaccines and 27 biotech drugs now in development, up from one vaccine and 16 biologics it had in the pipeline in early 2009. One of the primary reasons for the purchase of Wyeth was to gain access to its promising pipeline of vaccines and biologics at a time when Pfizer is facing the late-2011 loss of patent protection on its $12bn-a-year cholesterol blockbuster Lipitor, the world's biggest-selling medicine.
2009 was a year of few employment opportunities in the life sciences sector here in Ireland. Redundancies were the buzz word of the year and a number of facilities closed their doors due to lack of competitiveness, particularly in "low-tech" manufacturing facilities. The impending closure of the solid-dosage pharmaceutical production facility at Teva in Waterford was announced, with the loss of 315 jobs due to go in January 2010 (however as of February 2010, it seems that these redundancies have been deferred for a number of months). Part of the production process is being transferred to a facility in Hungary, where labour costs are significantly lower.
In April 2009, it was announced that Schering-Plough in Bray, which manufacturers veterinary products, was to cease operations with the loss of 240 jobs - the plant is expected to close by mid-2011. Where opportunities did exist in 2009, expectations from employers were much higher than that of 2007 or 2008, with a longer lead time in the recruitment process, and candidates who were over-qualified and over-experienced usually securing the position. In all, it was a dreadful year for the graduate life scientist, with many forced into further education, emigration or lateral industries by the lack of opportunities.
Many economic pundits predict that a return to growth will be seen in 2010 in Ireland. It's hard not to see this happening, considering how group psychology has such a major effect on economics. The analysts predict the tipping point to occur in Q3, and early signs show the trend is heading in that direction. However, a new set of challenges now have presented themselves in 2010 for the life science sector, particularly in the areas of generic pharmaceuticals, budgetary constraints in R&D and continued efforts to increase the competitiveness of the workforce.
On the February 1st, 2010 Minister for Health and Children Mary Harney announced that a deal had been reached between the HSE and the Irish Pharmaceutical Healthcare Association (IPHA) in relation to the cost of off-patent pharmaceuticals. These 40% price cuts on 300 of the most common off-patent drugs will save taxpayers and consumers considerable amounts of money - well over €90 million for taxpayers and several millions for consumers when they pay for drugs themselves. However, this move now presents a major challenge for both the ‘ethical' and generic pharmaceutical manufacturers. If branded products are positioned at the same price point as generic products - which will the procurer purchase or the pharmacist dispense? Combine this with the considerable loss in revenue for the ‘ethical' pharmaceutical manufacturers, 2010 represents a year of significant challenges, particularly in sales and marketing, for the sector.
2010 will also represent a year of significant challenges for the Government-funded research agencies. With the inevitable tightening of budgets, it is certain that research activities will need to be more efficient, targeted and patient-centric. In November 2009, the HRB announced a new strategic direction in terms of the funding of research, with a shift in focus from basic biomedical research to patient-oriented research. Their plan is to concentrate their resources into research that offers the most potential for rapid translation into impacts and benefits for patients, for population health and for the health system. The HRB will no longer fund research projects that are classified as wholly, or predominantly, basic biomedical research - often termed fundamental or ‘pure' research - which is not directed to solving any particular biomedical problem in humans or animals.
Other agencies, such as SFI, have also shown signs of a change in direction with regards to funding strategy. In the SFI Community Webinar in December 2009, available online, the implications of the December 2009 Budget on SFI's strategy in 2010 were discussed. Key points to note from the Webinar were the overarching principal of minimising the impact of the budgetary cuts, with a change in direction from expansion to stabilisation, while minimising contraction. SFI plans to adopt a ‘holding pattern' in 2010. SFI's budget in 2010 is €162m, €142m of which is required to keep existing grants going, €10m available for new grants and €10 m for pay/non-pay expenses. Although all existing grants will continue to be funded, no new SRC grants will be awarded, no research professor recruitment will take place and there will be no second annual PI call.
The coming year will also represent a year of challenges for the Irish workforce. The inevitable salary reductions required to increase our competitiveness and bring us in line with the new class of eastern tiger economies will be unsettling for the workforce. Ireland has earned a reputation in global circles as having a highly-skilled and educated workforce, however these skills were perceived to come at a premium. Now, in an increasingly globalised economy, and with new economies such as India and China pushing significant resources into education and in building their own knowledge economies, we will need to adjust and stabilise our salary expectations and living standards to compete.
It will not be all doom and gloom in the coming year, however, as 2010 will conversely present a number of opportunities for the life science sector in Ireland. Innovation is critical if Ireland's economy is to move forward. The alien environment we now find ourselves in will refocus Ireland's resources to drive research and development and innovation to build a more sustainable knowledge-based economy. Emphasis will shift from "low-tech" manufacturing to "hi-tech" operations, research and development and knowledge-driven, value-added services, and this shift will stabilise the workforce in the life science sector.
Historically, recessionary conditions have always produced conditions conducive for change and in the coming year, economic circumstances will drive positive change within organisations, leading to more cost-effective and efficient operations, driving productivity and leading to a more streamlined economy. These changes, albeit difficult, will in the long run increase Ireland's competitiveness in the global life science sector.
2010 will see a greater emphasis on Ireland to be an export-led economy, and the vast proportion of Ireland's merchandise exports are from the life science sector. In 2009, merchandise exports from the pharmaceutical/chemical sector grew from €44.1bn to €49.4bn, a gain of 12%. Merchandise exports from the medical device sector grew from €3.6bn to €3.8bn, a gain of 4%. Pharmaceuticals/chemicals and medical devices made up 62.3% of Irelands total merchandise exports of €85.4bn in 2009. To put these figures in context, in the same year merchandise exports of computer hardware from Ireland fell 29%, agri-food fell 14% and crude materials fell 21%. These figures emphasise the importance of the life science sector to the Irish economy, and although our dependence on property has led us to our current situation, the strong and robust performance of the sector's exports has resulted in a net 1% in total exports across the whole economy, buoyed up by the strong performance of the life science sector. Strong growth in exports in the life science sector is expected to continue to grow in 2010 and this can only bode positively for a stabilisation of the job market in the sector.
Employment in the life science sector in 2010 is set to remain difficult in the first nine months of the year, with a modest stabilisation expected in the last quarter and into 2011. Feedback from employers received here at Lifescience.ie indicates an air of cautious optimism in terms of employment opportunities. Companies are consolidating staff, redistributing human resources and delaying non-critical projects in an effort to streamline business operations and reduce overheads. The recruitment process, when needed, is also much more cautious and lengthy and usually aims at ‘hiring in' expertise in a particular area, such as regulatory affairs, quality management or research and development. There is also an increased demand for experienced commercially-aware senior scientists, and this technical-commercial skill-set is one where employers will place increased emphasis on in the future.
Employers are much more conscious of the potential costs associated with an incorrect hiring decision, and as such interview more candidates, over more stages and involve more decision makers, prolonging the hiring process significantly. The term ‘redundancy' will not be made redundant in 2010 , with the results of consultation phases from a number of mergers and acquisitions in 2009 yet to be felt. Inevitably these companies will need to restructure their operations here and this will most likely lead to more job losses. However, on balance, a number of other companies, who have been planning in silence over the last two years how to strategically attack the market, will implement new projects and create new jobs, counteracting any losses felt.
When all factors are taken into account, 2010 is set to be a year of stabilisation in the life science sector in Ireland. Although there will be continued job losses in specific sub-sets of the sector, the overall employment situation is set to stabilise towards the end of the year. Exports are set to continue to grow and if the unfavourable exchange rate with sterling improves as expected, strong growth in exports is likely in the sector.
The economic reboot may have thrown the country into turmoil temporarily, and we are still some way from the exit, but what will emerge on the other side is an ambitious workforce with a fresh outlook on the future and a sense of economic reality. Furthermore, our forbearers worked hard in times past to achieve financial freedom and the respect of the economic community. There is nothing stopping this generation from doing the same and regaining our once enjoyed prosperity.
Eamonn O'Raghallaigh works with Life Science Recruitment. http://www.lifescience.ie/
