Salary survey: Riding the Roller Coaster

Pharmaceutical and medical device packaging professionals are riding the ups and downs of economic recovery, loss of patents, excise taxes, healthcare reform, globalization, and cost control. Production efficiencies and product innovation place many on an upward path.

It could be said of professionals in any industry, but packagers working for pharmaceutical and medical device manufacturers seem to be working harder than ever. They are enduring mergers, acquisitions, layoffs, consolidation, cost cutting, and healthcare reform, all the while striving to innovate, meet complex and evolving regulations, and keep production lines ahead of schedule. When asked how the economy has specifically affected experiences as an employee, one respondent to this year’s annual salary survey conducted exclusively for Pharmaceutical & Medical Packaging News calls it a “roller coaster.” Adds another: “Acquisitions have been especially hard on consistent employment and more than once I had to change direction.”

But because these packaging professionals are loyal to their companies and their industry, they appear willing to ride the economic ups and downs of cost control and other reductions—in hopes of security, economic recovery, and eventual reward.
With an average annual salary of $112,000 as reported by survey respondents, pharmaceutical and medical device packaging professionals do enjoy healthy compensation. They are also being rewarded with raises averaging 4.4%.

As in past surveys, respondents are pretty satisfied with their current positions. A sizable majority (69%) rated their satisfaction a 4 or higher on a scale of 1 to 5 with 5 being “very satisfied.” On average, respondents have been with their current employers for 10.2 years, and they have been in the industry for an average of 15.2 years. Most respondents are not actively looking for new jobs.

Professionals who supervise five or more employees earn on average $130,000, compared with $97,000 who supervise none. Those who authorize or approve during decision-making earn $137,000 on average, whereas those who are part of a committee earn $106,000.

There are differences in employees’ experiences between working for a medical device manufacturer and working for a pharmaceutical manufacturer. Packaging professionals working for medical device manufacturers average $105,000 in annual earnings, compared with $125,000 for those at pharmaceutical manufacturers. 

But survey respondents across the board do report ongoing cost cutting and staff reductions, and many express fears of salary freezes or even lay offs. Many blame such conditions on the economy and on outsourcing. Professionals who are able to support product innovation and regulatory compliance as well as demonstrate cost efficiency may fare the best, as they help their companies compete in a tighter market, both domestically and globally.

Eventful Ride
There is no question that the economy is affecting a significant portion of the industry. “Budgets continue to tighten,” reports one survey respondent. “Budget cuts are forcing us to do more with less,” says another. “I imagine that there are many similar stories across the industry.” And another: “We have to pay attention to every dollar we spend.”

Respondents do report stability and recovery. “Budgets have been tightened, but we continue to perform well and buy new equipment,” reports one professional. Says another: “Capital expenditures are coming back to the level pre-crisis.”

One manager reports being “More aware of operational cost, employee hiring, purchasing needs (equipment needs involving major expense is limited to must have as opposed to improvement needs).”

One respondent does face “challenges in getting lean and mean to cope with the economy. Getting efficient in production and cutting production cost to stay competitive.”

Mergers and acquisitions continue to change the workload and workforce. “Chronic mergers and acquisitions may have a significant impact on tasks performed,” says one professional. And these transactions “seem to make everyone nervous to the point they hesitate to take perceived risks.”

One packaging professional writes: “My location has downsized by 30%. My department is smaller by 25%.” And one manager reports a loss of “50% of head count.”

As staff sizes are reduced, remaining employees and their supervisors are managing higher workloads, often with little additional compensation. One respondent says the economy has resulted in an “increased workload, decreased compensation, decreased number of coworkers, saw work moved overseas.” Reports another: “Regardless of the merit of individual work, stress is high and likelihood of upward mobility and increased compensation are low,” describes one professional.

And one respondent believes fewer resources could impact company innovation. “Staff reductions have lead to a greater volume of work being completed by fewer resources, and thus the amount of time for ideation and design has been restricted,” this professional writes.

In addition, loss of patent exclusivity is hitting manufacturers and therefore employee compensation. “Loss of patents will make raise unlikely,” reports one. Adds another: “The industry problem with no pipelines and expiring patents will continue to affect personal compensation. Industry has no other way to make money than to cut costs, and that means compensation for all but the top players.”

Offshoring production outside the United States concerns several respondents. One reports “increasing transfer of all work to overseas locations with very low cost of operations, including manufacture, R&D and marketing/sales.” Says another: “International industry competition (especially, BRIC and developing countries) with lower initial overhead costs will influence personal compensation and job security in America during the next year.”

Some respondents describe difficulties in finding jobs. “Difficult to find jobs,” this professional writes. “It takes between 4-9 months, which is long compared to previous experiences (2-3 months). Most recent jobs I have found have been with unstable companies leading to short stays; 0-2 years.”

Fear persists. Says one worker: “There is still anxiety left over from 2008 - 2009. There is some hope with the stock market rebounding, but there the job market is nothing like it used to be.”

Others report fewer perks to entice new hires. “Difficult to fill job openings for higher level jobs, due to the fact that companies do not offer generous relocation packages and people are tied to their homes. This has affected me as an employee in terms of higher workload.”

Many say that the Affordable Care Act and its associated medical device excise tax will affect their compensation. “Medical Device Tax and the new health plan will limit our ability to sell new products, which will reduce revenue so there will be [fewer] dollars to earn,” reports one worker.

Respondents link the tax with cost cutting. “Medical device tax will make medical device companies have to look to ways to pay this expense and continue to be profitable for their share holders,” says one respondent. “Raises will be near nothing again due to the need to continue being profitable.” 

Employers may simply not know what to expect. “Obamacare is stifling development project,” says one professional. “Future business is affected by the uncertainty.” Adds another: “Obamacare will continue to create confusion and unknowns to cause companies to hold off investments.” Some fear the worst: “Healthcare is still waiting to see what the current laws will be when rolled out to the industry. That may drive all costs of products down, and affect the total compensation of a company depending upon the profits.”

But not all professionals are impacted. “Medical device tax and decreased reimbursement for devices is impacting budgets, but so far, has not affected compensation in my department,” says one.

And as much as healthcare reform pushes medical device and pharmaceutical manufacturers toward cost control, it also encourages them to innovate healthcare itself, providing opportunity and incentive to those with solutions.

Because regulatory compliance is central to their business, pharmaceutical and medical device manufacturers tend to prioritize their investments in staff and infrastructure according to current regulations. Personal compensation is affected by “increased awareness of regulations and where the standards are going to be,” reports one survey respondent. But further corporate spending may not increase if there is no regulatory driver: “We have the higher standard of product. Everyone is just buying what it takes to get by right now,” adds this respondent.

Upward Trajectory on the Horizon?
Pharma and medical device packaging professionals believe that their contributions can directly impact their companies’ competitiveness and therefore success. Personal compensation depends upon “attending more skills-oriented seminars and/or classes and practical contributions to the company by saving money using the right tools and packaging materials,” explains one professional.

One professional mentions dealing with “continuous Improvement Programs (CIP) and cost reduction goals.”

Innovation and efficiency are encouraged. “I receive a bonus based on how efficient my department is. If we are slow, we aren’t efficient.” Another reports a “request for increase in process efficiencies.”

Technology and automation come into play, says one respondent. “How I use it and the cost savings it brings to the company” will affect compensation, this respondent says.

Adds another: “We have been moving to robotic operations in our company. The more efficient we become the more profit we will gain and pay will adjust accordingly.”

Some believe cost concerns drive improvement. “Cost containment and high speed to next product development milestone has bred lot of innovation and novelty in our approach for drug development,” writes one professional. “This implies high risk taking at the same time.”

Preparing for upcoming requirements is a priority. “The track & trace and serialization legislation currently in place is the main driving trend.”
Also, “the increased emphasis on [Quality by Design] will impact my job more and more, and therefore impact my compensation,” adds one professional.

Says one: “There will be more detailed documentation and validation of formulation and process. It will increase the work loads, and probably the compensation will be increased.”

Managing external forces well could be key: “It will be tight in two major areas; our competition and how we can adjust an sustain a competitive cost base on critical aspects of the economy such as utilities cost, inflation and materials costs increase. If our share in the market decreases my compensations specially bonus will be impacted directly.”

Professionals report a “push for cleaner packaging solutions” and a “push for environmentally friendly packaging.”

Innovation is key for distinction. “Innovation and unique packaging applications for combination products will lead the way over the next 3- 5 years.” And so is ingenuity: “You have to be more clever than you have ever been to be successful,” says one professional. Those with demonstrating “excellence/project management” are positioned for success.

Focusing on market needs is always a plus. “A number of new products that we have in the development pipeline should be introduced to market that are targeted toward OTC customers rather than physicians/professionals and should see a much higher margin. This coupled with a reduction in our waste factors from transitioning to flexible packaging should increase our margins and allow for greater salary negotiations.”

The challenge for manufacturers will be to continue to invest in employee development in learning new skills and technologies despite cost controls. One respondent points out “cutbacks in travel, seminars, conferences. More focus on investigating things before spending in development efforts.”

Managers must find ways to keep employees motivated despite economic uncertainty. “Employees are concerned about layoffs,” reports one manager. Says another: “Employees uncertain about the future. Less focused.”

And managers, too, sound overwhelmed: “Explaining to people why their bonuses and raises are so small and maintaining moral during layoffs has been challenging,” writes one. Says another: “It is hard because you want to reward good work but there is not enough room in the budget.”

Also, “Head count control and identify people with the right capabilities to support our innovation paradigm in an era of tight monetary control has been a significant portion of my job.”

Many respondents say compensation will hinge on the economy. “An economic recovery should loosen the purse strings,” says one professional. Some are hopeful: “I believe adjustments will happen to increase morale and retain key employees.”

Some are hoping for recovery at home: “Our industry is hoping for true signs of economic recovery in NA. We have been living on exports for the last several years.”

Still, others say their fate ultimately depends upon company performance. “What will affect my compensation is how my company is performing.” Concludes another: The economy “hasn’t affected my employment experiences. FDA and our managements’ business decisions are what is affecting my employment experiences.”

METHODOLOGY
Data were obtained during an e-mail survey of PMP News subscribers. The survey was designed by PMP News and Readex Research. A total of 12,483 individuals were invited to complete a Web-based survey from May 31 to June 12. The survey was closed with 817 total responses, an 8% response rate based on the net-effective mailout of 10,227.

The results presented in this article are based on the 516 respondents who indicated that they work full time at organizations best described as one of the following: a manufacturer of medical devices, pharmaceuticals, in vitro diagnostics, or nutritional supplements. Statistically speaking, these 516 represent an estimated 6500 industry professionals. The margin of error for percentages based on 516 usable responses is ±4.2 percentage points at the 95% confidence level. The margin of error for percentages based on smaller sample sizes will be larger. The survey was conducted in accordance with accepted research standards and practices.