Evolving Life Sciences/Healthcare Sector Busier Than Ever for Recruiters
April 17, 2024 – Search consultants continue to say that there is an unprecedented opportunity for visionary healthcare/life sciences leaders to redefine the future of the industry. A shifting economic climate and the rapid pace of innovation have fueled many changes in the healthcare industry through acquisitions, divestitures, and new company formations. The pandemic accelerated the adoption of technologies such as telehealth and remote patient monitoring. At the same time, developments in the life sciences, medicine, pharmaceuticals, and healthcare industries continue to put pressure on businesses to improve their products and services to serve more patients with higher-quality care at a lower cost, according to SPMB.
“These changes have forced companies to look for healthcare leaders who can inject a fresh perspective on how to better manage the challenges and capitalize on the opportunities that inevitably come from disruptions, reforms, and technology innovations,” the firm says. “With such a steep imbalance of demand and supply for top talent, it’s more critical than ever that health-related businesses and organizations understand exactly what they are looking for, adhere to an efficient and streamlined interview process, and have executive alignment when it comes time to negotiate a competitive offer. The best candidates are being pursued by several organizations with multiple offers at one time.”
“Advances in biological and medical research continue to expand the frontiers of healthcare, blurring divisions that once separated pharmaceutical, biotechnology and medical device companies, and healthcare systems and insurers,” according to Spencer Stuart. “In addition, the rapid acceleration and growing importance of digital health, shifting market dynamics and changing patient behaviors are increasing the need for healthcare companies to be more innovative. Experienced leaders who can drive new operational efficiencies amid pricing pressure and soaring R&D costs — while also articulating a strong vision and purpose — are more in demand than ever.”
Spencer Stuart explains that innovative leaders are driving the digital transformation of healthcare. “As healthcare grows more consumer-centric, innovation — not just technology — is driving the ultimate opportunity for convergence,” the firm said. “Multichannel connectivity with the patient (i.e., internet of things) is opening new lines of communication for sustained consumer engagement. Therefore, executive recruiters must understand the trends that are reshaping the industry and can help you identify and develop the right talent to increase the success of your organization.
Evolving Life Sciences Market
Within life sciences, businesses have long been at the tip of the spear when it comes to scientific advances and technological breakthroughs, according to a recent report from Korn Ferry. “But these advancements haven’t rendered the industry immune to disruption,” the firm said. “Pharma businesses are facing significant pressure on several fronts like: payer and regulatory agencies, an evolving patient-centric model and rising competition from new players around the globe. And the industry as a whole has been affected by the rise of digitization. Blockchain and big data are revolutionizing how clinical trials are run, while AI and machine learning are transforming how businesses make decisions. And finally, as part of a purpose-driven industry with a mission to solve the world’s most pressing healthcare challenges to improve lives, life sciences organizations also have been profoundly affected by recent social movements.”
“Only the nimblest life sciences organizations with swift, empowered senior leaders will survive these volatile times,” Korn Ferry said. “Leading life sciences companies cannot adhere to the ways that things have always been done or they risk stifling innovation and falling behind. To survive in this turbulent environment, leaders must be strategic, forward thinking, and able to manage through complexity.”
While 2023 presented challenges across the life sciences sector, including for recruitment professionals, it also fostered a necessary reset, according to Chris Palatucci, U.S. senior client partner at Coulter Partners. “While our team remained busy facilitating successful placements, the pace normalized compared to the prior year’s rapid growth. This recalibration was beneficial for the industry: the talent market had gotten out of whack with candidate compensation exceeding sustainable levels in the preceding years. In 2023 we saw a return to more balanced salary expectations, though we anticipate compensation remaining above pre-pandemic norms.”
Related: How Healthcare Recruiters Help Find Top Senior Talent
Mr. Palatucci also explains that the early pandemic surge in life sciences investment attracted diverse sources of capital, including significant inflows from non-traditional sectors like energy, finance, and sovereign wealth funds. “While initially drawn by the perceived recession-proof nature of the industry, many of these investors lacked deep understanding of the lengthy timelines and high risks associated with drug development,” he said. “Consequently, as the realities of the sector set in, some have exited the market, but before they did, they played a major role in changing the sector’s compensation norms. In 2022, the all-in cost of a chief medical officer was pushing dangerously close to $1 million, giving many pause. In 2023, this shift, coupled with broader economic uncertainties, led to a notable slowdown in decision-making and a reluctance to commit to significant financial outlays when both the private and public funding environments were so rocky. More recently, cautious optimism is emerging with investors demonstrating renewed interest and a return to a more normalized pace of activity.”
Market Downturns Influencing Hiring
Coulter Partners has also seen a change in profiles for some roles. “Market downturns often influence hiring trends, and the life sciences sector is no exception,” Mr. Palatucci said. “We have witnessed a surge in demand for chief business officers and other business development professionals with strong deal-making experience and extensive pharmaceutical networks. This shift prioritizes candidates who can secure non-dilutive deals, a critical skill in a cautious market. Similarly, the ideal chief scientific officer (CSO) profile has evolved. Previously, companies sought highly specialized experts with deep understanding of their specific technology. However, the rise of versatile “platform technologies” with diverse applications necessitates a broader skillset. Today’s ideal CSO is a generalist, capable of collaborating effectively with business development teams to strategically navigate these complex platforms and maximize their potential.”
Growth Fueled by Investments
There has been significant growth in the life sciences industry in the past decade, fueled by investment from venture capital, private, as well as large and mid-cap companies’ growth fueled by similar investment and acquisitions, according to John Baker, managing partner, global life science practice leader at DHR Global. “Most recently the pandemic created more opportunity, and hence hiring was on a steep incline through 2022,” he said. “Heading into 2023, all markets have been impacted by economic headwinds, resulting in a decline in investment and hiring. Multinationals looked to control costs and found the need to normalize their organizations and slowed hiring as well.”
Leadership Void: Change Agents Sought for Life Sciences Sector
Given the integration of technology into all facets of everyday life, the healthcare industry is not alone in facing technology-related issues. These take on increased importance when they impact health, disease diagnosis, treatment and, ultimately, human longevity. Having the right leaders in place to sort through these complex challenges, say recruiters serving the sector, is critical — especially those with vision and transformational skills.
“Despite these challenges, most life science companies seek to develop diverse and talented future leaders,” Mr. Baker said. “They seek to bridge cultures between Gen Z and Baby Boomers. With the maturation of the workforce at the executive level, companies need to find ways to develop their next leaders. Those new leaders have grown up with technology and those experiences will serve them well in a new healthcare technology-focused environment. Studies have shown our population’s overall health has declined over the past few decades. AI and digital applications will be the cornerstone of innovations across all sectors of life sciences, leading to hiring and developing talent.”
Mr. Baker also explains that all companies, large and small, are facing the need to recruit and/or develop top future leaders. “Future CEOs will come from the rank-and-file: CROs, COOs, and more so, CFOs,” he says. “Recruiting the very best in those roles will need to be a focus for all firms. These individuals will need to be empathetic, culture-oriented, diverse leaders with the requisite skill sets aligned with an innovative growth mindset. Companies will need to continue to be open-minded regarding remote and non-relocating scenarios. Candidates will need to be able to invest their time in being on-site to ensure connectivity and culture fit.”
Technology and Science
Leaders in life sciences must have an overwhelming passion for technology and science. “They need to have a deep understanding of its impact on healthcare costs and outcomes,” said Mr. Baker. “They must also have a devotion to ensuring all employees feel valued and are engaged. In addition, they need to be available and visible, and they must have a desire to drive diversity and inclusion.”
Mr. Baker also notes that medical innovation has only grown over the past decade. “This is forcing life sciences executives to look across multiple industries and compete in other sectors,” he says. “As technology and innovation have grown across most industries, everyone is pursuing similar talent, hence the pool is smaller. Creating and marketing a workplace environment offering a strong focus on the talent experience, maximizing flexibility, and investing in diversity, equity, and inclusion, will help companies separate themselves. A focus on developing skills in the current workforce by investing in training will be mandatory. Future leaders will need to embrace and implement practices that support these requirements.”
“My expertise is in Pharma, and I’ve noticed that the job market started to shift in Q3 of 2022,” said Michael Pietrack, managing director, pharmaceutical and biotechnology practice with Kaye/ Bassman International. “It bottomed out in Q1 of 2023 and sputtered throughout the remainder of the year. Now, a quarter into 2024, the market is improving, but slowly. Historically, the prosperity for external recruiting agencies goes up and down based on supply and demand. For the better part of a decade, the job market has experienced a situation where the demand for candidates was higher than the supply of experienced people. In Q3 of 2022, that pendulum started to swing the other way and in early 2023, the market completely changed to where there was a vast supply of experienced candidates and a low demand for their services. Today, we are still in the high supply/low demand market. This environment makes it very challenging for external recruiters and for introductory candidates trying to break into the pharma industry.”
The two biggest drivers causing the downturn in pharma and biotech are both economic, according to Mr. Pietrack. “There was a lack of VC funding for pharma and biotech over the last 18-24 months, so companies weren’t as liquid as they typically were. They started tightening the belts, reducing vendors and unnecessary travel. But then, they had to downsize to reduce the cost burden. The second factor that impacted the downturn was the Inflation Reduction Act (IRA) announced in July of 2022. Since companies will not be able to expect the same margins they historically have had, that also contributed to some of the downsizings in 2022 and 2023. This is in preparation for 2026, when the IRA takes effect.”
Related: How COVID-19 Has Reset the Talent Game in Healthcare and Life Sciences
Whenever there is an abundance of experienced candidates in the market and a limited number of jobs, companies become very selective about who they hire,” Mr. Pietrack explains. “What qualifications and experiences that were considered nice-to-haves two years ago are now must-haves today,” he says. “What I see with pharma companies today is that a person must be an exact functional fit, with all the credentialing, and in the proper therapeutic area. Also, there is a big call to office, which means there are fewer remote accommodations being given to both current and in-coming employees. So, when companies are hiring leadership roles, they are looking for someone that checks every single box… and is a known person with other employees at the company.”
“I’m not sure if this is wishful thinking or not, but I think that in the next six months we will see marketed improvements,” Mr. Pietrack said. “This time next year, I hope that we have returned to 80 percent of normal. That is all based on what I’m hearing in the market and conjecture.”
“Healthcare and life sciences is an industry that provides recruitment firms with a steady stream of work,” said Tim Russell, managing partner of The Tolan Group. “Given the combination of clinical and executive needs that these companies possess, recruiters in both clinical and executive search in the healthcare and life sciences industries tend to remain very active. Other industries have seasonal dynamics that healthcare and life science companies don’t have. Certain industries have busy seasons. Take for instance logistics and transportation, they tend to be busy around the end of year holiday season. Accounting and reporting agencies tend to be busy in the end of year and early year tax season. Recruiters that work in these industries might see a peaks and valleys kind of pace. Recruiters that support travel and entertainment can also experience fluctuations in workflow. Healthcare and life sciences organizations provide a steady workflow for their recruitment partners.”
In the healthcare sector, a necessary skill set that seems like table stakes, is the skill of what Mr. Russell calls doctor speak. “We have a significant healthcare services focus in our firm,” he says. “We do a good bit of recruiting for MSO and DSO organizations. Those companies need to have leaders who can express “do no harm” and assure “good will” to the doctors at the platform and bolt-on companies. For far too long, there’s been a disconnect between leadership and clinical teams. Those executives who can express the aforementioned qualities are effective in fostering a culture of trust. Trust is the currency of relationship and when trust exists, collaboration is an inevitable byproduct.”
Talent Shortages
Mr. Russell also notes that there is a greater talent shortage on the clinical side of healthcare and life sciences more than on the executive side. “The clinical workforce has been operating at a shortage for many years,” he says. “It seems the career interest in medicine or bio tech isn’t as robust as it has been in previous generations. Young people today have a plethora of well-paid employment options to choose from when considering a career choice and many of them don’t require the rigors and expense of healthcare education.”
“As for an executive talent shortage, I would argue that we have plenty of job contenders but we have a shortage in candidates who want to work in traditional environments,” Mr. Russell said. “The lightening rod issue of return-to-work mandates are slow in coming, but many companies have begun to bring people back under the company roof. The candidate expectation of remote and hybrid work is a prominent feature that we recruiters content with every day. It’s astounding to see the number of vehemently determined candidates dig their heels in on the idea of working from an office. I never thought I’d see the day when C-suite executives wouldn’t be required to be on site five days per week. Granted, technology like video conferencing, has been a great addition to corporate life; but there is still a benefit to in-person interaction and team corroboration. I can hear the nay-sayers growl as I write that, but only time will tell if the acquiescing to the candidate’s demand for work from home arrangements is as profitable and efficient as its currently be touted to be.”
Related: Keys to Succession Planning in Healthcare
Contributed by Scott A. Scanlon, Editor-in-Chief; Dale M. Zupsansky, Executive Editor; Lily Fauver, Senior Editor – Hunt Scanlon Media
