Careers and Recruitment

Nature Biotechnology 22, 1189 (2004)

doi:10.1038/nbt0904-1189
Strategic HR for today's biotechnology companies
Mary Yaroshevsky-Glanville
1

1. Mary Yaroshevsky-Glanville is at Anadys Pharmaceuticals, 3115 Merryfield Row, San Diego,
California 92121, USA. e-mail: mglanville@anadyspharma.com
Abstract
To succeed in the biotechnology industry, human resources must be a true
business partner.
Introduction
At a recent conference on strategic human resources (HR)
1
, I was pleasantly surprised by the caliber
of the presenters as well as of the attendees. The biotechnology industry has certainly come a long
way to begin establishing HR as a true business partner. However, many companies still either do not
have HR representation, or add these responsibilities to the busy schedule of an administrative
assistant or finance officer.
When CEOs speak about their companies, they often cite their employees as their most valuable
resourceand understandably so, as the biotech industry is fueled by the intellectual capital produced
by its employees. However, in general the industry does not feel that its most precious resource is
worth supporting fully. Would we ever consider not hiring a financial representative? At best, HR is
considered the function that administers compensation and benefits, institutes training programs,
creates retention programs, hires and fires, and establishes performance management systems.
However for some, visions of an antiquated personnel department come to mind, found in the
basement amid dusty filesa black box, with questionable deliverables hiding behind a curtain of
'confidentiality.' So what added value is missing, and what can competent HR bring to an
organization?
First and foremost, HR is a balance between being the employee advocate and a strategic business
partner. The business plan must serve as a template for the HR strategic plan, enabling organizations
to succeed by turning strategy into action, by managing processes intelligently and efficiently, by
maximizing employee contribution and commitment, and by creating the conditions for seamless
change.
Strategic HR
First, strategic HR must partner with senior executives and managers, helping to move planning from
the boardroom to the organization. It must guide serious discussion of how the company should be
organized to carry out its strategy. At the conference, it was suggested that in this era of mergers and
acquisitions, the question that we should be asking ourselves is "Are we ready?" Research indicates
that senior executives with personal experience of a merger or acquisition rate underestimating the
importance and difficulty of integrating the two cultures as a major cause of M&A failures. According to
a recent study, "83% of all M&As produce no benefit for the shareholders. Interviews with over 100
senior executives involved in some 700 deals over a two-year period reveal that the overwhelming
cause for failure 'is the people and the cultural differences'"
2
. HR has the greatest effect in the process
of integrating the two sets of employees and their daily work processes, but is usually brought in too
late to make a true impact.
Second, strategic HR must be an employee champion, ensuring that employees feel committed to the
company and are able to fully contribute, and taking responsibility for training line management about
the importance of high employee morale and how to achieve it. Strategic HR must also be the
employees' voice in management discussions, offer employees opportunities for personal and
professional growth, and provide resources that help employees meet the demands put on them.
The biotech industry has developed a dangerous pattern of taking its best scientists and making them
managers. We must develop our talent on both sides of the track, scientific and managerial. The best
scientists usually make the worst managers, regardless of any management training provided. We
must be realistic and allow people to grow their careers in the area for which they are best suited.
Third, strategic HR must be an expert in the way work is organized and executed, delivering
administrative efficiency to ensure that costs are reduced while quality is maintained. Within the HR
function there are dozens of processes that can be done better, faster and cheaper. Finding and fixing
those processes is part of the work, and measuring the impact of HR programs and initiatives to the
bottom line is crucial. Just claiming how strategic one is does not make it so, and many companies
cannot really say whether they are delivering pertinent, efficient HR programs and practices to its
employees. This points out the need for metrics and benchmarking. Firms such as The Saratoga
Institute provide great insight into where one's company 'measures up' and what needs to be
improved.
Finally, strategic HR must be an agent of continuous transformation, shaping a culture that together
improves an organization's capacity for change. Change has a way of scaring people into inaction.
HR's role as a change agent is to replace resistance with resolve, planning with results and fear of
change with excitement about its possibilities.
The bottom line
Despite its obvious importance, strategic HR can only bring to the table what it is allowed to
contribute. Usually the question is, "Can we afford to hire an HR representative?" but the question
should be, "How can we not?" According to management expert Dave Ulrich, "The efforts to achieve
excellencethrough a focus on learning, quality, teamwork, and reengineeringare driven by the way
organizations get things done and how they treat people. Those are fundamental HR issues. To state it
plainly: achieving organizational excellence must be the work of HR"
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References
1. CBI Strategic Human Resources for Life Sciences, Philadelphia, PA, July 2627, 2004.
2. KPMG. M&A Survey, 2004.
3. Ulrich D. A new mandate for human resources (Harvard Business School, Boston, 1998).
s HR in the Life Sciences Different From Other Industries?
by Mary Ann Ireland, Founder and Lead of BOLD, and Director of The Stratam Group
Background:
Over the years in leading BOLD, Ive 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.
Overview:
Ive 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)
Biotech/Industry facts:
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 Statistics
2
, 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 California
3
.
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
Diagnostics
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 companies
1
.
The Biopharmaceuticals product category includes human therapeutics (drugs), whether small-molecule chemical
compounds, biologics (genetically engineered proteins) or cell therapies
1
. 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)
states 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 IPOs 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, its 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.
Its a small world: Given the number of science PhDs 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.

Industry Influencers:
Intellectual Property
FDA/Compliance
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
companys 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 PhDs 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 ones scientific focus. Lineage is key as this is also ones network after graduating (like
going to Harvard vs. a community college).
Publishing papers: Its 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.
Resources:
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 Californias biomedical R&D industry www.chi.org, PricewaterhouseCoopers
Pharmaceutical www.pwc.com/pharma, and BayBio, Northern Californias 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/