by Mary Ann Ireland, Founder and Lead of BOLD, and Director of The Stratam Group
Over the years in leading BOLD, I’ve been asked by many people “is there a difference between HR in biotech or the life sciences vs. other industries?”. My response is…. Yes, and No. This whitepaper is intended to clarify why I say “yes - biotech is different than other industries".
This is not a research paper, rather a means to orient HR professionals new to the industry - or refresh veterans - and encourage dialogue around how these factors can and do impact HR, Organizational Development and Learning and Development initiatives.
I’ve divided the topic into a few different sections, each contributing to the uniqueness of the industry:
• Overview - Terms and Relevant Facts about the Industry
• Sectors included in the Life Sciences Industry
• What makes the Biotech Industry Unique
• Market Influencers
• Understanding Scientists (life in academia)
You may see the words Biotech, Biopharma, and Biomed used interchangeably. Each refers to a different type of science within a company, and all fall under the Life Sciences Industry umbrella.
According to BIO (Biotech Industry Organization), the national life science association, biotechnology is defined as a “technology based on biology - biotechnology harnesses cellular and biomolecular processes to develop technologies and products that help improve our lives and the health of our planet.”1
Biotechnology is one of the most research intensive industries in the world. The first biotechnology product earning FDA approval was for synthetic “human” insulin in 1982 and was developed by Genentech and Eli Lilly.
According to the Bureau of Labor Statistics2, there are 2,323 biomedical companies in California, employing an estimated 267,271 people. The Bay Area employs 51,255 people, or 19.2% of this total. Los Angeles (42,383) and Orange (30,092) Counties employ more than San Diego (27,510) County.
By sector, California biomedical employment is greatest in the Medical devices, instruments and diagnostics area with 40.2% of the total (107,467 people). Biopharmaceuticals is next with 30.9% and Academic research at 14.8%. Between 2006 – 2010 there was flat cumulative growth in the biomedical workforce in California3.
BayBio is the independent, non-profit 501(c)(6) trade association serving the life science industry in Northern California, and a resource for industry wide purchasing programs, events and advocacy.4
What sectors are included in the Life Sciences*?
- Biotech and Biopharmaceutics
- Medical Devices
- Tools Companies (those that make the instruments, reagents, consumables and/or software that the above companies use)
- Agribio (Agricultural biotechnology)
- Alternative Fuels
*Some definitions include basic research (academics) and companies that manage the import, export or exchange of supplies in the global market, and exclude agribio and alternative fuels companies1.
The Biopharmaceuticals product category includes human therapeutics (drugs), whether small-molecule chemical compounds, biologics (genetically engineered proteins) or cell therapies1. Another way to say this is that Biotech companies produce a biologic or protein based drug, whereas a pharmaceutical (or specialty pharma) company produces small molecules or chemically synthesized drugs.
Biologics can include products such as vaccines, blood and blood components, gene therapy, tissues, monoclonal antibodies and recombinant therapeutic proteins. Biotech (and specialty pharma) are considered part of the life science industry since they have similar time to market and regulatory hurdles, and are focused on serving unmet medical needs.
“Today, the newest scientific and technological disciplines, such as personalized medicine, regenerative medicine, mobile health, and nanotechnology, are being driven by research, discoveries and developments within the (CA) state’s laboratories.”3
What makes the Biotech/Pharma industry unique?
- Time and cost to market: Biotech and Pharma products take an average of 10 – 15 years to bring a drug to get to market, with costs of over $1.3 billion. According to a recent article in Forbes magazine writer Matthew Herper, “The average drug developed by a major pharmaceutical company costs at least $4 billion, and it can be as much as $11 billion,” Herper also writes “fewer than 1 in 10 medicines that start being tested in human clinical trials succeed.6” Unlike the high tech industry, the life science industry requires significantly more time and money before bringing a drug, device or diagnostic to market.
- Multi-functional Interdependencies: Due to the complex nature of product development in the life sciences, and the likelihood of there being a cross-matrix environment within the company, it can take many years of experience for an executive or individual to develop their expertise, understand cross-functional roles/responsibilities and priorities, and be able to effectively navigate critical decision points in the process.
- Regulatory Agencies: CBER/CDER – There are regulatory hurdles that the FDA has set for small molecules and biologics to ensure their safety before, during and after the drug reaches the market. Unlike other industries, CBER and CDER require truck loads of information (now terabytes of data with electronic submissions) to be documented and submitted before product approval. Highly documented and regulated Good laboratory, clinical and manufacturing practices (also known as GLP, GCP and GMP) are required to be compliant with governing agencies and are audited routinely.
- Clinical Trials/design: This can be an art as much of a science, with a complex set of variables to consider. MD/PhD experts from many disciplines converge to design the optimal trial that will impact the greatest number of patients while limiting toxic side effects.
Post product approval: The FDA often requires that companies continue to collect data from doctors and patients and may require additional post-marketing or registry studies after a product is approved – this takes a significant amount of time and expense. Some findings lead to additional product indications and possible marketing opportunities if the companies are willing to sponsor more clinical trials for those indications (i.e. products can only be promoted for on label indications)
- Financing: A variety of options are necessary for generating capital during research, preclinical and clinical stages. Grants, VC funding, product partnering, out licensing, alliances, are the most likely source of capital. These days IPO’s are extremely rare and generally need to be supported by late stage clinical programs, inferring that it is not always a reliable equity generating strategy for a company.
- Risk: Small biotech/specialty pharma companies are risky businesses – few generate sufficient capital to complete the drug development cycle. Many outside the industry consider the smaller companies the equivalent of a project team in a larger company.
- Profit Margins: Once a drug is on the market, it’s possible to see 75- 80% profit margins, depending on the alternative drugs available. Historically - although less common today - it is not unusual for a biotech company to be public without product revenue for many years.
Virtual Companies: One of the trends in drug development is to hire very experienced experts in their domain and outsource various functions – almost all functions can be outsourced: research, preclinical development, clinical trials, manufacturing, sales, IT – and HR - including staffing and payroll.
- It’s a small world: Given the number of science PhD’s in biotech, and the limited number of biotech “clusters” around the country, there are a lot of people that know each other. More than other industry networks, those who work in the biotech/pharma industry have strong informal connections – including husbands/wives that work in the industry.
• Intellectual Property
• Government & Third Party Payers
• Wall Street
• Patients/ Advocacy Groups
• Academia/Key Opinion Leaders
• Big Pharma
The interdependencies between biotech/specialty pharma companies and these market influences are complex and all impact business strategy. Each industry influencer can adversely impact a company and most are factored into a company’s business strategy.
Understanding Scientists: This has been written to support HR/OD professionals in understanding their internal customers.
- Academics: It takes 5- 8 years of graduate work to be a PhD scientist, some have an additional 1-3 years of post graduate research – and most are funded by grants, earning a minimal living as they go through school.
- Data: Scientists are taught that data, facts and research trumps everything.
- “A” players: Scientists tend to be high achievers and less tolerant of people that are not equally “smart” or data driven. They are used to getting high marks for their creative ideas, rational thinking and intelligence.
- Management Skills: Many Scientists are promoted into management because of their scientific skills and accomplishment which are not always a proxy for their people/managerial talent or prospects.
- Competition: Some PhD’s were taught to thrive on conflict, heated discussions, and arguments to vet ideas so that the best idea would rise to the top. It is not uncommon for some academic labs to purposefully set their graduate students and/or postdocs against each other to maximize productivity and publications.
- Lineage/advisors: In the academic world, who you have studied under can be more important than one’s scientific focus. Lineage is key as this is also one’s network after graduating (like going to Harvard vs. a community college).
- Publishing papers: It’s all about publishing papers in academia - the more papers with your name as one of the authors (preferably “lead” author), and the more referenced the paper, the better. In general, your title, your identity and your career is shaped by the papers you write. This is also a place where companies are different – there is tension between allowing publishing of a paper and divulging program status and corporate intellectual property (IP).
*An electronic version of this article is available. Contact info@growBOLD.com.
1. BIO – Biotech Industry Organization, http://bio.org/about_biotech/
2. California Biomedical Industry 2012 Report – as quoted from the Bureau of Labor Statistics Quarterly Census of Employment and Wages and Company Specific SEC filings.
3. California Biomedical Industry 2012 Report - sponsored by CHI, the California Healthcare Institute non-profit public policy research organization for California’s biomedical R&D industry www.chi.org, PricewaterhouseCoopers Pharmaceutical www.pwc.com/pharma, and BayBio, Northern California’s life science association, www.baybio.org.
4. BayBio website - http://www.baybio.org/about/about-baybio/
5. Biotech Hotbeds - http://www.biospace.com/hotbed.aspx?regionid=11
6. Matthew Herper, “The Truly Staggering Cost Of Inventing New Drugs”, Forbes, (February 10, 2012), http://www.forbes.com/sites/matthewherper/2012/02/10/the-truly-staggering-cost-of-inventing-new-drugs/